CALGARY, ALBERTA–(Marketwired – May 27, 2014) – Lightstream Resources Ltd. (“Lightstream” or the “Company”) (TSX:LTS), is pleased to announce that our new Swan Hills battery is operational and that we have entered into an agreement to complete a further non-core asset disposition for gross proceeds of $98 million. In connection with the disposition, we have updated our production guidance for the year.
The Swan Hills region of our Alberta/BC business unit has become an area of focus and growth for Lightstream. To support this growth we have built a 3,500 bopd battery, which has been 100% commissioned and is now commencing operations. The seven wells we drilled and completed during this past winter drilling season are being brought on-stream through this facility and are expected to add over 2,000 boepd (95% light oil) of production for the full month of June. In addition, four other wells that currently produce through multi-well truck-out batteries are now tied-in to our new facility, resulting in additional conserved sales gas volumes. The battery and extensive tie-in activities, including a 1.8 km sales oil pipeline and 7.6 km gas pipeline, have been completed on budget at a total cost of $26 million and will provide us a platform to expand operations in the area. We plan to drill at least four additional wells in the second half of the year, which will also be tied into this facility. With this battery coming on-stream, we expect second quarter production to be in-line with our first quarter.
We continue to execute on our asset disposition plan and have entered into an agreement, expected to close mid-July, to sell a portion of our Conventional business unit assets in southeast Saskatchewan for gross proceeds of $98 million. These non-core assets consist of approximately 1,000 boepd of production (96% liquids weighted), 3.9 MMboe of proved plus probable (“2P”) reserves, and 36,250 net acres of land (20,160 net undeveloped acres).
The asset disposition package represents 20% of the production associated with our Conventional business unit and includes 700 (356 net) wells, representing 36% of our Conventional business unit wellbores. Transaction metrics for this non-core asset disposition are:
- Annualized Q1 2014 Cash flow: 5.2x
- Q1 2014 Production: $98,000/boepd
- Proved and Probable Reserves: $25.13/boe ($29.10/boe, including future development costs)
Subject to the successful closing of this disposition, we also expect to reduce our decommissioning liabilities by approximately $17 million.
This property sale advances our 2014 and 2015 objectives to reduce debt and achieve $600 million of non-core asset disposition proceeds. Including this current transaction, our cumulative 2014 asset disposition proceeds are $351 million. While we have exceeded our 2014 minimum target of $300 million, we plan to continue to actively pursue additional dispositions this year. The table below is a summary of our 2014 non-core asset sales.
|Production||2,015 boepd||1,000 boepd||3,015 boepd||$116,418/boepd|
|Reserves (2P)||3.8 MMboe||3.9 MMboe||7.7 MMboe||$48.38/boe(1)|
|Cash Flow||$ 25 M||$19 M||$44 M||8.0x|
|Disposition Proceeds||$ 253 M||$ 98 M||$351 M|
|(1)||Future development costs of $21.5 million included in reserve metric calculation|
On a go-forward basis, the cash flow impact of these dispositions is improved by at least $12 million in cash interest savings.
2014 Guidance Update
In connection with our $98 million non-core asset disposition, we are revising our full year average production guidance, with the remainder of guidance unchanged for 2014.
May 27, 2014
March 3, 2014
|Average Production (boe/d)||43,000 – 45,000||43,500 – 45,500|
|Exit Production (boe/d)||unchanged||45,000 – 47,000|
|Oil and Liquids Weighting||unchanged||80%|
|Funds Flow from Operations (‘000)||unchanged||$635,000 – $665,000|
|Funds Flow per share(2)||unchanged||$3.19 – $3.34|
|Dividends per share||unchanged||$0.48|
|Drill, Complete, Equip and Tie-in (‘000)||unchanged||$350,000 – $370,000|
|Facilities, Workovers and Optimizations (‘000)||unchanged||$120,000 – $140,000|
|Land, Seismic and Other (‘000)||unchanged||$55,000 – $65,000|
|Total Capital Expenditures (‘000)||unchanged||$525,000-$575,000|
|(1)||Commodity price assumptions include WTI US$95.00/bbl, AECO CDN$4.00/Mcf, foreign exchange rate of US$/CDN$0.90, and corporate light oil differential of 10%.|
|(2)||Funds flow per share calculation based on 199 million shares outstanding for 2014.|
|(3)||Projected capital expenditures exclude acquisitions, which are evaluated separately.|
Lightstream Resources Ltd. is an oil and gas exploration and production company combining light oil Bakken and Cardium resource plays with conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. Lightstream is applying leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with other emerging resource play opportunities. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.
BOEs. Natural gas volumes have been converted to barrels of oil equivalent (“boe“). Six thousand cubic feet (“Mcf“) of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.
Well Counts. All references to well counts are on a net basis.
John D. Wright
President and Chief Executive Officer
Peter D. Scott
Senior Vice President and Chief Financial Officer
William A. Kanters
Vice President, Capital Markets
Eighth Avenue Place, 2800, 525 – 8th Avenue S.W.
Calgary, Alberta T2P 1G1