CALGARY, ALBERTA–(Marketwired – April 23, 2013) – Alexander Energy Ltd. (“Alexander” or the “Company”) (TSX VENTURE:ALX)announces that it has filed its Audited Financial Statements and related Management’s Discussion and Analysis for the year ended December 31, 2012, along with other disclosure documents for 2012, all of which are available on the Company’s profile at www.SEDAR.com (“SEDAR”).
Message to Shareholders
Alexander Energy Ltd. has made consistent progress since the September, 2012 Annual General Meeting; we have a new CEO, Jim Sanden, and a new COO, David Oginski. All of our people are motivated and working diligently. The Company has had drilling and workover success, production and cash flow are up, the debt to cash flow ratio is decreasing, and our share price has increased.
Alexander’s December, 2012 production averaged 929 barrels of oil equivalent per day (48 % oil), an increase of 263 barrels of oil equivalent per day or 30% over average third-quarter 2012 production.
As announced by the Company in its press release of March 4, 2013, at December 31, 2012, the Company had an 8% increase in the value of proved plus probable reserves (NPV 10%) to $35.5 million notwithstanding the lower price deck of forecast commodity prices. The Company replaced 169% of 2012 production on a proved plus probable basis. A summary of the McDaniel Report, and additional oil and gas information, is contained in the Company’s 51-101F1 report included with the Company’s year- end filings on SEDAR. The estimated future net revenue and NPV’s contained in the McDaniel Report does not necessarily represent the fair market value of the Company’s reserves.
In Q4 2012 and Q1 2013 the Company drilled and cased three Detrital sand oil wells on its Alexander property at an average working interest (“WI”) of 89%:
There are several projects Alexander expects to complete during the balance of 2013. All of these projects should add significant value:
Your Company has turned around since the AGM of September, 2012. Your CEO, COO and CFO are providing a positive environment and direction for your Company. They have been successful in increasing production, reducing operating costs and creating some room to grow. Alexander has made progress in each of these areas and we are optimistic that we can continue to be successful in 2013.
| Highlights | |||||||||||||||
| Three months ended Dec. 31, |
Years ended Dec. 31, |
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| 2012 | 2011 | 2012 | 2011 | ||||||||||||
| Financial (thousands, except per share) | |||||||||||||||
| Production revenues | $ | 3,398 | $ | 2,293 | $ | 12,076 | $ | 9,745 | |||||||
| Cash flow from operations | 990 | (35 | ) | 4,291 | 3,151 | ||||||||||
| Per share | 0.02 | – | 0.07 | 0.05 | |||||||||||
| Comprehensive income (loss) | (118 | ) | (5,636 | ) | 820 | (6,516 | ) | ||||||||
| Per share | $ | – | $ | (0.09 | ) | $ | 0.01 | $ | (0.11 | ) | |||||
| Three months ended Dec. 31, |
Years ended Dec. 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Operating (boe conversion 6:1 basis) | ||||||||||||||||
| Production | ||||||||||||||||
| Oil (bbl/day) | 415 | 182 | 376 | 207 | ||||||||||||
| Natural gas (mcf/day) | 2,132 | 2,559 | 2,121 | 2,670 | ||||||||||||
| Oil equivalent (boe/day) | 770 | 608 | 730 | 652 | ||||||||||||
| Product prices | ||||||||||||||||
| Oil ($/bbl) | $ | 71.65 | $ | 88.59 | $ | 73.50 | $ | 79.61 | ||||||||
| Natural gas ($/mcf) | 3.38 | 3.45 | 2.57 | 3.83 | ||||||||||||
| Oil equivalent ($/boe) | $ | 47.95 | $ | 40.98 | $ | 45.32 | $ | 40.96 | ||||||||
| Three months ended Dec. 31, |
Years ended Dec. 31, |
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| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Netbacks ($/boe) | ||||||||||||||||
| Production revenues | $ | 47.95 | $ | 40.98 | $ | 45.32 | $ | 40.96 | ||||||||
| Royalties | (10.95 | ) | (3.04 | ) | (6.78 | ) | (5.59 | ) | ||||||||
| Operating expenses | (15.14 | ) | (16.30 | ) | (13.12 | ) | (13.95 | ) | ||||||||
| Field netback | 21.86 | 21.64 | 25.42 | 21.42 | ||||||||||||
| General and administrative expense | (6.22 | ) | (18.16 | ) | (7.00 | ) | (7.57 | ) | ||||||||
| Interest expense | (1.95 | ) | (3.25 | ) | (2.10 | ) | (2.06 | ) | ||||||||
| Realized hedging gains (losses) | 0.28 | (0.86 | ) | (0.21 | ) | 1.45 | ||||||||||
| Cash flow from operations | $ | 13.97 | $ | (0.63 | ) | $ | 16.10 | $ | 13.25 | |||||||
| Net asset value | |||||||||
| (thousands – CDN$) | December 31, | December 31, | % | ||||||
| 2012 | 2011 | Change | |||||||
| Present value of proved plus probable reserves, before tax at 10% | 1 | 35,476 | 32,792 | 8 | |||||
| Undeveloped land and seismic | 2 | 2,347 | 2,017 | 16 | |||||
| Net debt | 3 | (12,602 | ) | (12,833 | ) | (2 | ) | ||
| Net asset value before tax | 25,221 | 21,976 | 15 | ||||||
| Common shares outstanding (000s) | 62,239 | 62,239 | – | ||||||
| Net asset value per common share ($/share) | 0.41 | 0.35 | 15 |
| Notes: | |
| 1 | Based on the McDaniel Report |
| 2 | Based on management’s estimate of fair value |
| 3 | Net debt includes bank borrowings and working capital deficiency, but excludes financial derivative instruments |
Oil and Natural Gas Revenue by Product
Despite lower oil prices, oil and NGL revenue increased substantially in 2012 as oil volumes more than doubled from Q4 2011 to Q4 2012 as the Company brought three new oil wells on-stream. For the year ended December 31, 2012 oil and NGL revenue comprised 84% of total revenue as compared to 62% in 2011.
| Three months ended December 31 | 2012 | 2011 | % Change | ||||||
| Thousands – CDN$ | |||||||||
| Oil and NGL revenue | 2,736 | 1,486 | 84 | ||||||
| Natural gas revenue | 662 | 807 | (18 | ) | |||||
| Total revenue | 3,398 | 2,293 | 48 | ||||||
| % Oil and NGLs | 81 | % | 65 | % | |||||
| % Natural gas | 19 | % | 35 | % | |||||
| Years ended December 31 | 2012 | 2011 | % Change | ||||||
| Thousands – CDN$ | |||||||||
| Oil and NGL revenue | 10,089 | 6,080 | 66 | ||||||
| Natural gas revenue | 1,987 | 3,665 | (46 | ) | |||||
| Total revenue | 12,076 | 9,745 | 24 | ||||||
| % Oil and NGLs | 84 | % | 62 | % | |||||
| % Natural gas | 16 | % | 38 | % |
Liquidity and Financial Condition
As at December 31, 2012, bank debt including working capital (net debt) was $12.6 million. The Company’s net debt to fourth quarter 2012 annualized cash flow from operations was 3.2:1 (December
31, 2011 – 4.0:1).
Alexander has flexibility to finance future expansions of its capital programs, through the use of its current funds generated from operations and its debt facilities. The Company expects to continue to improve the net debt to cash flow ratio in 2013.
Effective March 20, 2013 the Company renewed its credit facilities with a Canadian Chartered Bank. Facility A is a revolving operating demand loan with a maximum limit of $13.0 million. Facility B is a non- revolving acquisition/development demand loan that provides an additional $2.5 million of financing subject to bank approval. Interest is at prime plus 2.0% per annum for Facility A and prime plus 2.5% per annum for Facility B. The Company has the ability to draw on the development loan for acquisitions and the drilling of new wells subject to certain working capital ratio restrictions.
On March 20, 2013 the Company drew down the non-revolving acquisition/development demand loan in the amount of $1.2 million.
For 2013, Alexander plans to invest approximately $6.0 million on its capital program within its core area. Alexander intends on financing this capital program with cash flow from operations.
Risk Management
The Company had the following financial derivative instrument contract in place at December 31, 2012:
| Description | Total Quantity | Price | Term |
| WTI (CDN$) – Swap | 150 bbls/d | CDN$104.94 | January 1 – December 31, 2013 |
On January 17, 2013 the Company entered into two financial derivative instrument contracts.
| Description | Total Quantity | Price | Term | ||
| Oil WTI (CDN$) – Sold Call | 100 bbls/day | CDN$100.08/bbl | April 1 – October 31, 2013 | ||
| Gas AECO (CDN$) – Bought Put | 1,000 gj/day | CDN$3.00/gj | April 1 – October 31, 2013 |
On April 12, 2013 the Company entered into a financial derivative instrument contract.
| Description | Total Quantity | Price | Term |
| Gas AECO (CDN$) – Swap | 700 gj/day | CDN$3.58/gj | January 1 – December 31, 2014 |
Forward-Looking Statements: All statements, other than statements of historical fact, set forth in this news release, including without limitation, assumptions and statements regarding the volumes and estimated value of the Company’s proved and probable reserves, future production rates, exploration and development results, financial results, and future plans, operations and objectives of the Company are forward-looking statements that involve substantial known and unknown risks and uncertainties. Some of these risks and uncertainties are beyond management’s control, including but not limited to, the impact of general economic conditions, industry conditions, fluctuation of commodity prices, fluctuation of foreign exchange rates, environmental risks, industry competition, availability of qualified personnel and management, availability of materials, equipment and third party services, stock market volatility, timely and cost effective access to sufficient capital from internal and external sources. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.
These assumptions and statements necessarily involve known and unknown risks and uncertainties inherent in the oil and gas industry such as geological, technical, drilling and processing problems and other risks and uncertainties, as well as the business risks discussed in Management’s Discussion and Analysis of the Company under the heading “Business Risks”. The Company does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.
Barrels of oil equivalent (boe) is calculated using the conversion factor of 6 mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
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Contact:
Alexander Energy Ltd.
1540, 521-3rd Avenue S.W.
Calgary, Alberta T2P 3T3
www.alexanderenergy.ca