CUT BANK, MT, May 21, 2015 /CNW/ – Mountainview Energy Ltd. (“Mountainview” or the “Company”) (TSX-V: MVW) announces its operating and financial results for the quarter ended March 31, 2015. The Company also announces that its financial statements and management’s discussion and analysis for the quarter ended March 31, 2015, are available on SEDAR at www.sedar.com, and on Mountainview’s website at www.mountainviewenergy.com.
Quarter End Financials
During the first quarter of 2015, Mountainview, like all similarly situated oil and gas companies, continued to face a depressed commodity price environment. In addition, equipment replacement in the field and tie-in operations to connect wells to a third party salt water disposal system lead to sporadic production interruptions in the quarter. These factors combined resulted in a decrease in quarterly revenue. The Company remains focused on reducing costs going forward and management is reviewing strategic options available to the Company at this time.
Highlights of Mountainview’s performance in 2014 are as follows:
Certain selected financial and operational information for the three months ended March 31, 2015 and 2014, and twelve months ended December 31, 2014 and 2013, is outlined below and should be read in conjunction with Mountainview’s reviewed financial statements for the quarters ended March 31, 2015 and 2014, and the audited financial statements for the years ended December 31, 2014 and 2013 and the accompanying management’s discussion and analysis filed with the Canadian securities regulatory authorities which may be accessed through the SEDAR website (www.sedar.com) and also on the Company’s website: www.mountainviewenergy.com.
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Three months March 31 |
Twelve months ended December 31 |
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|
2015 |
2014 |
% Change |
2014 |
2013 |
% Change |
|
|
Financial (US $ 000’s, except per share amounts) |
||||||
|
Petroleum and natural gas sales |
2,050 |
6,108 |
-66% |
24,108 |
20,527 |
17% |
|
Funds flow from operations (1) |
(2,879) |
310 |
-1029% |
(1,973) |
3,359 |
-159% |
|
Per share basic |
(0.03) |
0.00 |
-1029% |
(0.02) |
0.07 |
-131% |
|
Per share diluted |
(0.03) |
0.00 |
-1029% |
(0.02) |
0.06 |
-131% |
|
Expiries and Impairment (2) |
(584) |
(267) |
-119% |
(46,474) |
(2,795) |
-1563% |
|
Net loss |
(5,011) |
(1,542) |
-225% |
(54,347) |
(5,974) |
-810% |
|
Per share basic |
(0.06) |
(0.02) |
-225% |
(0.62) |
(0.07) |
-786% |
|
Per share diluted (3) |
(0.06) |
(0.02) |
-225% |
(0.62) |
(0.07) |
786% |
|
Capital expenditures (4) |
307 |
7,910 |
-96% |
23,553 |
48,707 |
-52% |
|
Net debt (5) |
88,109 |
65,314 |
35% |
84,658 |
59,244 |
43% |
|
Operating |
||||||
|
Average daily production |
||||||
|
Light crude oil (bbl per day) |
627 |
778 |
-19% |
802 |
644 |
25% |
|
Natural gas (Mcf per day) |
211 |
719 |
-71% |
219 |
632 |
-65% |
|
Natural Gas Liquids (bbl per day) |
18 |
– |
N/A |
14 |
– |
N/A |
|
Barrels of oil equivalent (boe per day, 6:1) |
680 |
898 |
-24% |
853 |
749 |
14% |
|
Three months March 31 |
Twelve months ended December 31 |
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|
2015 |
2014 |
% Change |
2014 |
2013 |
% Change |
|
|
% Oil and NGLs |
92% |
87% |
6% |
94% |
86% |
9% |
|
Average sales price |
||||||
|
Light crude oil ($ per bbl) |
35.36 |
85.28 |
-59% |
80.81 |
86.20 |
-6% |
|
Natural gas ($ per Mcf) |
1.91 |
1.35 |
41% |
3.53 |
2.98 |
19% |
|
Natural Gas Liquids ($ per bbl) |
14.85 |
– |
N/A |
41.89 |
– |
N/A |
|
Barrels of oil equivalent ($ per boe, 6:1) |
33.51 |
75.01 |
-55% |
77.78 |
75.08 |
4% |
|
Operating netback ($ per boe) (6) |
||||||
|
Petroleum and natural gas sales |
33.51 |
75.01 |
-55% |
77.78 |
75.08 |
4% |
|
Realized gain (loss) on derivatives |
7.14 |
(0.40) |
1885% |
(0.04) |
– |
N/A |
|
Royalties |
(6.04) |
(13.02) |
54% |
(14.24) |
(12.18) |
-17% |
|
Operating expenses |
(31.01) |
(27.43) |
-13% |
(35.60) |
(24.06) |
-48% |
|
Operating netback |
3.60 |
34.16 |
-89% |
27.90 |
38.84 |
-28% |
|
Wells drilled |
||||||
|
Gross |
– |
2.0 |
– |
3.0 |
8.0 |
-63% |
|
Net |
– |
1.4 |
– |
1.3 |
4.8 |
-73% |
|
Success (%) |
N/A |
100 |
– |
100 |
100 |
0% |
|
Common Shares |
||||||
|
Shares outstanding, end of period |
87,820,443 |
87,820,443 |
0% |
87,820,443 |
87,820,443 |
0% |
|
(1) |
Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with International Financial Reporting Standards as an indicator of Mountainview’s performance. Funds flow from operations represents cash flow from operating activities prior to changes in non-cash working capital, transaction costs and decommissioning provision expenditures incurred. Mountainview also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. |
|
(2) |
The low commodity price environment at year end 2014 led the Company to assess for indicators for impairment. The indicators for impairment noted include no future capital allocated for undeveloped land in the Stateline area, low market value for acreage in Divide County, North Dakota, and fair value less cost to dispose of existing oil and gas assets that was below the carrying value. The resulting $16.9 million impairment charge on undeveloped acreage reduced the carrying value of undeveloped land in the Stateline area, which straddles the border between Montana and North Dakota, and in Divide County, North Dakota. In addition, undeveloped leases on 7,511 net acres of land expired in 2014, which had a carrying value of $6.7 million. An impairment charge on the Company’s developed oil and gas properties reduced the value by $22.9 million. For additional information on the indicators of impairment and resulting impairment charges, please see Notes 9 & 10 of the Company’s audited annual financial statements. |
|
(3) |
Due to the anti-dilutive effect of Mountainview’s net loss for the three months and year ended March 31, 2015 and 2014, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts. |
|
(4) |
Capital expenditures are a non-GAAP measure, calculated as the purchase or sale price of an asset, plus development capital expenditures added to PP&E. Corporate acquisitions are excluded from this measure. |
|
(5) |
Net debt is a non-GAAP measure representing the total of bank indebtedness, accounts payables and accrued liabilities and long-term debt, less accounts receivables, deposits and prepaid expenses. |
|
(6) |
Operating netback is a non-GAAP measure calculated as the average per boe of the Company’s oil and gas sales plus realized gains on derivatives, less royalties, production taxes, operating and transportation expenses. |
Corporate Update
A sharp decline in oil prices in the latter half of 2014 and continued low prices during the first four months of 2015 has materially reduced the Company’s operating cash flow. In response, the Company has taken steps to reduce G&A expenses, including layoffs, salary reductions, decreasing or delaying field operating expenses and plans and a freeze on new capital drilling and/or completions in efforts to maximize available cash on hand during these difficult times. These austerity measures aside, the Company there has been no significant change in the Company’s financial, liquidity and debt challenges since the news release dated April 30, 2015. As at March 31, 2015 Mountainview has a working capital deficit of $76.9 million consisting of current assets of $4.6 million ($ 1.0 million cash) and current liabilities of $79.4 million. The Company owes $51.1 million under its credit facility with Wells Fargo, $8.5 million to First Interstate Bank and trade payables and other of $19.7 million. With respect to the credit facility with Wells Fargo, the Company’s US subsidiary borrower was in breach of its current ratio covenant at March 31, 2015 and remains in breach. In addition, the Company is in breach of covenants around timely payments of trade payables and requirements that oil and gas assets remain free of liens. Liens have been filed totaling $7.9 million; however, agreements with certain lienholders have allowed for continued receipt of production revenues to fund interest payments and critical ongoing operations and administration. Wells Fargo is aware of these issues and has not taken any formal action to exercise rights and/or remedies under the credit agreement. Under the bank line of credit the Company was in default due to non-payment of principal and interest in December and has not made payments for February, March and April of 2015. At this time, the bank has not taken any formal action to exercise its rights and/or remedies under the credit agreement. The Company is involved in active discussions with its lenders and trade creditors to negotiate a comprehensive solution to resolve its financial challenges. In addition the Company has long- term debts consisting of an aggregate of $10.9 million pursuant to outstanding promissory notes with an officer and director of the Company and two major shareholders and $2.6 million pursuant to a convertible debenture, a portion of which is with an officer and director of the Company. These debts mature July 1, 2016 and are in good standing. The Company is looking to include them in any debt solution plan and is currently engaged in discussions to this end.
The Company plans to continue negotiations and discussions with creditors to resolve its liquidity and debt challenges. In parallel the Company is actively considering debt and equity financing solutions, assets sales and corporate transactions among other available alternatives, with a view to the best interest of the Company.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas company listed on the TSX Venture Exchange, with a primary focus on the exploration, production and development of the Bakken and Three Forks Shale in the Williston Basin and the South Alberta Bakken.
[expand title=”Advisories & Contact”]Forward Looking Statements
Statements in this press release contain forward-looking information and forward-looking statements within the meaning of applicable securities laws (collectively, “forward-looking information”). Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to the challenges facing the Company and its subsidiaries and the various alternatives available.
Although the Company believes that the expectations and assumptions reflected in the forward-looking information are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and is subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of Mountainview) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to: operational risks in exploration, development and production; delays or changes in plans; competition for and/or inability to retain drilling rigs and other services; competition for, among other things, capital, acquisitions of reserves, skilled personnel and supplies; risks associated to the uncertainty of reserve and resource estimates; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical, drilling and processing problems and other difficulties in producing reserves; the uncertainty of estimates and projections of production, costs and expenses; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; incorrect assessments of the value of acquisitions; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; access to capital; the outcome and impact of litigation to which the Company or its subsidiaries may become party; turnover in management; uncertainty with respect to the various alternatives available to the Company and its subsidiaries and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. Mountainview does not undertake any obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in its expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on this forward-looking information.
Meaning of BOE
The term “BOE” or barrels of oil equivalent may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (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. Additionally, 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 ratio of 6:1 may be misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Mountainview Energy Ltd.