CALGARY, ALBERTA–(Marketwired – July 31, 2013) – Long Run Exploration Ltd. (“Long Run” or the “Corporation”) (TSX:LRE) is pleased to report financial and operational results for the quarter ended June 30, 2013. The unaudited financial statements of Long Run for the quarter ended June 30, 2013 and the related Management’s Discussion and Analysis (“MD&A”) can be accessed on-line on SEDAR at www.sedar.com or on Long Run’s website at www.longrunexploration.com.
ACCOMPLISHMENTS
During the second quarter of 2013, Long Run:
COMMODITY ENVIRONMENT
OPERATIONS UPDATE
As outlined in the operations update released on July 2, 2013, Long Run continues to steadily increase production, in-line with internal forecasts. During the second quarter, development work continued on Long Run’s two key play areas.
Peace Area
Redwater Viking
Results Overview | |||||||||||||||
Six months ended June 30 | 2013 | 2012 | 2011 | ||||||||||||
($000s, except per share) | 2013 | 2012 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||
Funds flow from operations1 | 111,871 | 63,766 | 63,227 | 48,644 | 38,407 | 26,546 | 34,385 | 29,381 | 29,896 | 27,448 | |||||
Per share, basic & diluted 1 | 0.89 | 0.77 | 0.50 | 0.39 | 0.33 | 0.32 | 0.41 | 0.35 | 0.36 | 0.33 | |||||
Net earnings (loss) | 20,272 | 18,685 | 21,099 | (827 | ) | (56,590 | ) | (4,747 | ) | 17,506 | 1,179 | (66,612 | ) | 11,427 | |
Per share, basic & diluted | 0.16 | 0.22 | 0.17 | (0.01 | ) | (0.49 | ) | (0.06 | ) | 0.21 | 0.01 | (0.80 | ) | 0.14 | |
Production | |||||||||||||||
Liquids (Bbl/d) | 12,473 | 7,212 | 12,587 | 12,358 | 11,995 | 7,854 | 8,291 | 6,133 | 5,872 | 5,499 | |||||
Natural Gas (Mcf/d) | 69,297 | 17,918 | 71,058 | 67,516 | 56,453 | 18,214 | 19,548 | 16,288 | 16,376 | 17,766 | |||||
Total (BOE/d) | 24,023 | 10,198 | 24,431 | 23,611 | 21,405 | 10,890 | 11,549 | 8,848 | 8,601 | 8,460 | |||||
Prices, including derivatives | |||||||||||||||
Liquids ($/Bbl) | 76.90 | 82.57 | 80.67 | 73.03 | 75.49 | 77.67 | 80.68 | 85.15 | 88.74 | 85.97 | |||||
Natural Gas($/Mcf) | 3.76 | 2.10 | 3.89 | 3.63 | 4.19 | 2.44 | 1.94 | 2.29 | 3.41 | 4.20 | |||||
Total ($/BOE) | 51.26 | 63.02 | 53.29 | 49.12 | 53.99 | 61.34 | 61.57 | 64.92 | 69.26 | 66.79 | |||||
Revenues, before royalties | 220,823 | 117,511 | 117,210 | 103,613 | 99,000 | 60,094 | 64,025 | 53,486 | 56,192 | 51,568 | |||||
Capital expenditures | 141,797 | 108,789 | 38,878 | 102,919 | 58,342 | 29,192 | 44,615 | 64,173 | 72,443 | 58,451 | |||||
Net acquisitions (divestitures) | 19,103 | 5,718 | 1,158 | 17,945 | (169,734 | ) | (138 | ) | 466 | 5,252 | 109 | 858 | |||
1 | See Non-GAAP Measures section. |
Capital Investment | ||||||||
($000s) | Six months ended June 30 | |||||||
2013 | 2012 | Q2 2013 | Q1 2013 | Q2 2012 | ||||
Drilling and completion | 100,308 | 83,715 | 19,541 | 80,767 | 30,374 | |||
Plant and facilities | 37,349 | 21,662 | 17,697 | 19,652 | 12,003 | |||
Geological and geophysical | 2,093 | 1,833 | 779 | 1,314 | 999 | |||
Other assets | 2,047 | 1,579 | 861 | 1,186 | 1,239 | |||
Capital expenditures | 141,797 | 108,789 | 38,878 | 102,919 | 44,615 | |||
Acquisitions | – land & facilities | 11,087 | 5,718 | 968 | 10,119 | 466 | ||
– properties | 13,869 | – | 20 | 13,849 | – | |||
Dispositions | (5,853 | ) | – | 168 | (6,021 | ) | – | |
Capital investment | 160,900 | 114,507 | 40,036 | 120,864 | 45,081 |
Share Capital | |||
# of units (000s) | July 31, 2013 | June 30, 2013 | December 31, 2012 |
Common Shares | 110,107 | 110,107 | 110,107 |
Non-Voting Convertible Shares | 15,513 | 15,513 | 15,513 |
Options | 9,538 | 9,538 | 8,042 |
Warrants1 | 2,300 | 2,300 | 2,300 |
1 | Each common share purchase warrant (“Warrant”) entitles the holder to purchase 0.4167 of a common share at an exercise price of $3.10 per 0.4167 of a share until September 15, 2014. The Warrants are not exercisable until the twenty-day volume weighted average trading price of the common shares exceeds $12.00 per share. |
Non-GAAP Measures
This press release contains terms commonly used in the oil and natural gas industry, such as funds flow from operations, and funds flow from operations per share. These terms are not defined by International Financial Reporting Standards (IFRS) and should not be considered an alternative to, or more meaningful than, cash provided by operating activities or net earnings as determined in accordance with IFRS as an indicator of Long Run’s performance. Management believes that funds flow from operations is a useful financial measures which assists in demonstrating the Corporation’s ability to fund capital expenditures necessary for future growth or to repay debt. Long Run’s determination of funds flow from operations may not be comparable to that reported by other companies. All references to funds flow from operations throughout this report are based on cash flow from operating activities before changes in non-cash working capital and abandonment expenditures. The Corporation calculates funds flow from operations per share by dividing funds flow from operations by the diluted weighted average number of Common Shares outstanding.
Long Run uses the term net debt herein. This measure does not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies.
With respect to funds flow from operations and net debt, reference is made to the Corporation’s Management’s Discussion and Analysis for the six months ended June 30, 2013 which includes a table showing how they have been determined.
Long Run is a Calgary-based intermediate oil company focused on light-oil development and exploration in western Canada. For further information about Long Run, visit the Company’s website at www.longrunexploration.com.
ADVISORIES
Forward Looking Statements:
Certain information in this news release including management’s assessment of future plans and operations, 2013 and second half of 2013 average production guidance, expected 2013 and second half of 2013 capital expenditures and type and timing of expenditures, expectations as to recoveries at Normandville and Girouxville Montney oil play and potential for the play, drilling plans and estimated costs, expectations that near-term results from EOR will provide better visibility on ultimate recoveries at Normandville Montney project and plans to expand project in 2014 assuming positive results and anticipated pilot EOR project at Redwater are forward looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties including, without limitation, risks related to closing of the disposition, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.
Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Corporation believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Corporation can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Corporation operates; the timely receipt of any required regulatory approvals; the ability of the Corporation to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration results; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Corporation to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors and assumptions is not exhaustive. Additional information on these and other factors that could affect Long Run’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at Long Run’s website (www.longrunexploration.com). Furthermore, the forward looking statements contained in this news release are made as at the date of this news release and Long Run does not undertake any obligation to update publicly or to revise any of the included forward looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
BOES:
Disclosure provided herein in respect of barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl 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.
Discovered Petroleum-Initially-in-Place:
DPIIP referred to herein is based on the resource assessment effective December 31, 2012, prepared by Sproule Associates Limited. DPIIP is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable petroleum initially-in-place includes cumulative production, reserves and contingent resources; the remainder is categorized as unrecoverable. DPIIP disclosed herein includes cumulative production to December 31, 2012 of 1.9 million barrels and proved and probable reserves of 13.6 million barrels, as evaluated by Sproule in its year-end evaluation effective December 31, 2012. For low, best and high estimates of DPIIP, further definitions related thereto, positive and negative factors related to the DPIIP and risk factors related thereto, please refer to the press release of the Corporation dated July 2, 2013. There is no certainty that it will be commercially viable to produce any portion of the resources.
Long Run Exploration Ltd.
Dale A. Miller
President
(403) 261-6012
Long Run Exploration Ltd.
Jason Fleury
Vice President, Capital Markets
(403) 261-8302
Long Run Exploration Ltd.
Investor Relations
(888) 598-1330
information@longrunexploration.com
www.longrunexploration.com