CALGARY, ALBERTA–(Marketwired – May 14, 2014) – RMP Energy Inc. (“RMP” or the “Company“) (TSX:RMP) is pleased to announce for the three months ended March 31, 2014 a record level of funds from operations of $35.5 million ($0.30 per basic share) on revenue of $56.5 million and average daily production of 9,229 barrels of oil equivalent (60% light oil and NGLs weighted). Detailed first quarter results are as follows:
|Financial Highlights||Quarterly Summary|
|(thousands except share and per boe data) (6:1 oil equivalent conversion)||March 31, 2014||March 31, 2013||% change|
|P&NG revenue (1)||56,505||32,597||73|
|Funds from operations (2)||35,534||20,128||77|
|Per share – basic||0.30||0.19||58|
|Per share – diluted||0.28||0.18||56|
|Per share – basic||0.08||0.02||300|
|Per share – diluted||0.08||0.02||300|
|Total capital expenditures||56,264||39,128||44|
|Net debt (3) – period end||134,542||95,667||41|
|Weighted average basic shares||118,876,223||104,281,424||14|
|Weighted average diluted shares||126,590,500||108,889,264||16|
|Issued and outstanding shares (4)||119,254,756||104,281,424||14|
|Average daily production:|
|Natural gas (Mcf/d)||22,086||18,274||21|
|Crude Oil (bbls/d)||5,310||3,428||55|
|% Liquids (Oil and NGLs)||60||%||55||%||9|
|Oil equivalent (boe/d)||9,229||6,727||37|
|Average sales price (1):|
|Natural gas ($/Mcf)||5.68||3.50||62|
|Crude Oil ($/bbl)||91.56||82.58||11|
|Oil equivalent ($/boe)||68.02||53.85||26|
|Operating expenses ($/boe)||6.74||7.93||(15||)|
|Operating netback (5) ($/boe)||46.42||36.69||27|
|Wells drilled: gross (net)||6 (6.0||)||6 (6.0||)||–|
- Petroleum and natural gas (“P&NG“) revenue and average sales pricing includes realized gains or losses from risk management commodity contract settlements.
- Funds from operations does not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS“). Please refer to the Reader Advisories at the end of the news release.
- Net debt is not a recognized measure under IFRS. Please refer to the Reader Advisories at the end of the news release.
- As of May 14, 2014, 121.0 million common shares were outstanding.
- Operating netback is not a recognized measure under IFRS. Please refer to the Reader Advisories at the end of the news release.
First Quarter 2014 Highlights
- On March 1, 2014, in spite of abnormally cold winter conditions with significant snow accumulation, the Company commissioned its expanded Ante Creek battery facility and commenced delivering light oil and associated natural gas through its Ante Creek-to-Waskahigan pipelines. This new infrastructure enabled RMP to achieve a record level of production in the first quarter of 2014, with an average daily production level of 9,229 boe/d, weighted 60% light oil and NGLs, representing a 27% increase over fourth quarter 2013 production of 7,266 boe/d. On April 24, 2014, the Company increased its fiscal 2014 average daily production market guidance forecast to approximately 10,500 boe/d, which represents a 53% targeted increase over fiscal 2013. RMP’s production during the second half of this year is budgeted to exceed 12,000 boe/d. Due to downstream sales pipeline capacity constraints at Waskahigan, the Company continues to truck and offload crude oil into a RMP-dedicated riser at a Fox Creek pipeline terminal on oil volumes in excess of the Company’s pipeline deliveries.
- Petroleum and natural gas revenue for the first quarter amounted to $56.5 million, of which 80% was derived from crude oil and NGLs (including a realized commodity hedging loss of $2.3 million). The Company’s crude oil discount to the Canadian-dollar converted WTI price averaged $13.74/bbl during the first quarter, as compared to the $23.80/bbl in the preceding fourth quarter of 2013 and $13.50/bbl in the comparable first quarter of 2013 (excluding realized commodity hedging loss).
- Petroleum and natural gas royalties amounted to $10.3 million (18% of petroleum and natural gas sales excluding a realized loss on risk management commodity contracts), as compared to $4.2 million (13% of petroleum and natural gas sales) in the comparative first quarter of 2013. The effective field royalty rate on the Company’s Ante Creek production in the first quarter was 24%, as compared to 25% in the fourth quarter of 2013 and 22% in the first quarter of 2013.
- First quarter corporate operating costs of $6.74/boe decreased by 15% on a per boe basis, when compared to the operating costs for the first quarter of 2013 of $7.93/boe. First quarter 2014 field operating costs at RMP’s Ante Creek and Waskahigan light oil fields were $3.06/boe and $8.88/boe, respectively. Increased well maintenance activities at Waskahigan due to harsh winter conditions in the first quarter resulted in higher field operating costs relative to its historical cost profile.
- Record quarterly funds from operations of $35.5 million ($0.30 per basic share) for the three months ended March 31, 2014, a 77% increase over the $20.1 million generated in the first quarter of 2013.
- RMP’s operating netback in the first quarter of 2014 was $46.42/boe, a 27% increase over the $36.69/boe netback realized in the comparative first quarter of 2013. Field operating netbacks during the quarter at Ante Creek and Waskahigan were $55.52/boe and $57.03/boe, respectively.
- For the quarter ended March 31, 2014, RMP reported net income of $9.9 million, a significant increase as compared to net earnings in the first quarter of 2013 of $1.7 million.
- In the first quarter, the Company incurred capital expenditures of $56.3 million, including a horizontal light oil drilling and completions program encompassing four (4.0 net) Ante Creek wells, two (2.0 net) Waskahigan wells (including a long-reach horizontal commitment well, providing for the earning of two sections of land), and the completion and tie-in of one (1.0 net) exploration well at Grizzly that was drilled in December 2013. Of the Ante Creek wells drilled in the quarter, one was a successful step-out well delineating the areal extent of the Montney formation to the south. Details on the well completion results were previously disclosed in RMP’s February 27, 2014 and March 19, 2014 news releases. Additionally, $19.3 million of the remaining capital related to the Company’s Ante Creek pipeline interconnect and its battery expansion project was recognized in the first quarter, including approximately $5.8 million for the installation of an oil trunk line loop downstream of its Waskahigan battery. To facilitate RMP’s future drilling and well tie-in plans at Waskahigan to the south, in the first quarter, gathering lines were also installed underneath the West Waskahigan river for a cost of $2.4 million. The Company also participated in a joint venture, 38 square mile 3-D seismic shoot at Waskahigan for $1.6 million (net to RMP). For fiscal 2014, RMP has set a capital spending budget of $130 million, targeting the Montney formation at Ante Creek, Waskahigan and Grizzly in West Central Alberta. Due to prevailing ‘spring break-up’ surface conditions, the Company is presently not conducting any drilling and/or well completion operations. RMP expects to re-commence drilling operations by the end of May 2014.
- Net debt at March 31, 2014 was $134.5 million, as compared to $116.2 million at December 31, 2013. The Company’s borrowing limit under its bank credit facility is currently set at $160.0 million. As at May 13, 2014, the Company was drawn approximately $129 million on the bank credit facility.
The Company’s interim condensed consolidated financial statements and associated Management’s Discussion and Analysis, for the three month period ended March 31, 2014 is available on RMP’s website at www.rmpenergyinc.com within “Investors” under “Financials”. Additionally, these documents were filed today on the System for Electronic Document Analysis and Retrieval (“SEDAR“). These documents can be retrieved electronically from the SEDAR system by accessing RMP’s public filings under “Search for Public Company Documents” within the “Search Database” module at www.sedar.com.
Annual Shareholders Meeting
RMP’s annual meeting of shareholders is scheduled for 3:00 p.m. on Thursday, June 5th, 2014 in the McMurray Room of the Calgary Petroleum Club, located at 319 – 5th Avenue S.W., Calgary, Alberta.
|bbl or bbls||barrel or barrels||Mcf/d||thousand cubic feet per day|
|Mbbl||thousand barrels||MMcf/d||million cubic feet per day|
|bbls/d||barrels per day||MMcf||Million cubic feet|
|boe||barrels of oil equivalent||Bcf||billion cubic feet|
|Mboe||thousand barrels of oil equivalent||psi||pounds per square inch|
|boe/d||barrels of oil equivalent per day||kPa||kilopascals|
|NGLs||natural gas liquids||GJ/d||Gigajoules per day|
|WTI||West Texas Intermediate|
The information in this news release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “approximate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “would” and similar expressions. More particularly and without limitation, this new release contains forward looking information relating to: 2014 budgeted and forecasted items including full year and second half corporate average daily production and full year capital expenditures; and the re-commencement timing of drilling operations after ‘spring break-up’. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company’s control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are, interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that the Company will derive from them. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
In this news release RMP has adopted a standard for converting thousands of cubic feet (“mcf“) of natural gas to barrels of oil equivalent (“boe“) of 6 mcf:1 boe. Use of boes may be misleading, particularly if used in isolation. The boe rate is based on an energy equivalent 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 than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value.
As an indicator of the Company’s performance, the term funds from operations contained within this news release should not be considered as an alternative to, or more meaningful than, cash flow from operating, financing or investing activities, as determined in accordance with International Financial Reporting Standards (“IFRS“). This term is not a recognized measure, does not have a standardized meaning nor is it a financial measure under IFRS. Funds from operations is widely accepted as a financial indicator of an exploration and production company’s ability to generate cash which is used to internally fund exploration and development activities and to service debt. This measure is widely used by shareholders and investors in the valuation, comparison and investment recommendations of companies within the natural gas and crude oil exploration and production industry. Funds from operations, as disclosed within this news release, represents cash flow from operating activities before: expensed corporate acquisition-related costs, decommissioning obligation cash expenditures and changes in non-cash working capital from operating activities. The Company presents funds from operations per share whereby per share amounts are calculated consistent with the calculation of earnings per share.
Net debt refers to outstanding bank debt plus working capital deficit or less any working capital surplus (excludes current unrealized amounts pertaining to risk management commodity contracts). Net debt is not a recognized measure under IFRS and does not have a standardized meaning.
Field operating netback or operating netback refers to realized wellhead revenue less royalties, operating expenses and transportation costs per barrel of oil equivalent. Field operating netback or operating netback is not a recognized measure under IFRS and does not have a standardized meaning.
RMP Energy Inc.
President and Chief Executive Officer
RMP Energy Inc.
Vice President, Finance and Chief Financial Officer