CALGARY, AB–(Marketwired – June 01, 2015) – Canamax Energy Ltd. (“Canamax” or the “Company“) (TSX VENTURE: CAC) is pleased to announce the Company’s financial and operational results for the interim period ended March 31, 2015.
Highlights
During the three-month period ended March 31, 2015, Canamax continued to execute its operational plan in its core areas. This included activation of significant new gathering and emulsion handling facilities at Flood and tie-in of the Company’s new Cardium oil well at Wapiti.
Below are some of the significant highlights during Q1 2015:
On May 29, 2015, Canamax entered into a binding purchase and sale agreement with an intermediate oil and gas company to acquire certain assets in Alberta (the “Acquisition”) for cash consideration of $24.0 million, subject to customary closing adjustments. The Acquisition is expected to close on or before July 31, 2015. The assets acquired consist primarily of two producing properties located in northwest Alberta near Grimshaw and Grande Prairie. The Acquisition is expected to add low decline production of approximately 750 boe/d (54% oil & NGL) at the closing date and includes 110 (64 net) sections of land. The Grande Prairie and Grimshaw properties each have contiguous, substantially 100%-owned acreage and facilities with significant development potential for Montney oil. The Grimshaw property is located just south of Canamax’s largest core area, Flood, with both properties producing from the same Montney fairway. This acquisition will be funded through a combination of equity and debt financing (the details of which are outlined in the “Subsequent Events” section below) and is subject to the approval of the TSX Venture Exchange.
During September 2014, the Company’s Board of Directors approved a change in year-end from February 28 to December 31 which resulted in a ten-month stub year-end period of December 31, 2014. As a result of the year-end change in 2014, the comparative three-month period for the Q1 2015 results is the three-month period ended February 28, 2014.
Financial and Operational Summary
| ($000 except share, per share and per boe amounts) | ||||
| Three months ended March 31, 2015 |
Three months ended February 28, 2014 |
|||
| Financial | ||||
| Revenue | 2,572 | 1,964 | ||
| Operating netback (1) | 892 | 1,111 | ||
| Funds from operations (1) | 300 | 554 | ||
| Per share – basic and diluted (1) | 0.01 | 0.02 | ||
| Net income (loss) | (1,163) | 939 | ||
| – basic per share | (0.03) | 0.04 | ||
| – diluted per share | (0.03) | 0.03 | ||
| Net capital expenditures (2) | 1,467 | 6,171 | ||
| Net proceeds from financings | – | 3,328 | ||
| Proceeds from share purchase warrant and stock option exercises | – | 15 | ||
| Working capital surplus (deficit) – end of period (3) | (8,003) | 119 | ||
| Weighted average shares outstanding (in 000) | 41,960 | 26,302 | ||
| Common shares outstanding – end of period (in 000) | 41,960 | 26,994 | ||
| Operating | ||||
| Average Daily Production | ||||
| Oil and NGL’s (bbls/d) | 518 | 178 | ||
| Natural gas (mcf/d) | 2,420 | 1,530 | ||
| Oil equivalent (boe/d) | 921 | 433 | ||
| Average Price | ||||
| Oil and NGL’s ($/bbl) | 41.65 | 72.34 | ||
| Natural gas ($/mcf) | 2.89 | 5.87 | ||
| Oil equivalent ($/boe) | 31.02 | 50.48 | ||
| Royalties ($/boe) | 1.70 | 14.47 | ||
| Operating and transportation expenses ($/boe) | 18.56 | 7.41 | ||
| Operating netback ($/boe)(1) | 10.76 | 28.60 |
| (1) | See “Non-IFRS Measures”. |
| (2) | Net capital expenditures reflect drilling, completion, facility and undeveloped land expenditures combined with property acquisitions net of property disposals. |
| (3) | Working capital deficit at March 31, 2015 includes the Company’s operating loan balance. |
As a result of the land acquisitions at Flood in Q1 2015, and an additional 0.5 (net 0.5) section acquired at Wapiti in April, Canamax increased its strategic acreage positions in these areas. Below is a summary of the acreage, facilities and production of each of the Company’s core areas as at May 29, 2015:
Outlook
The acquisition of the Grimshaw and Grande Prairie properties (expected to close on or before July 31, 2015) will add significant production, land and development opportunities to Canamax and continues the Company’s plan of consolidating strategic opportunities. With 100% ownership of the key facilities, production and acreage at Grimshaw, Grande Prairie and Flood, Canamax is well positioned to be a focused, Montney oil player going forward.
Reconciliation of Funds from Operations
The reconciliation from cash flow from operating activities as reported in the condensed interim financial statements to funds from operations is as follows:
| Three months ended (in $000’s) |
March 31, 2015 | February 28, 2014 | ||
| Cash flow from operating activities (per financial statements) | ($911) | $425 | ||
| Add (deduct): | ||||
| Change in non-cash working capital | 1,204 | 57 | ||
| Decommissioning expenditures | 7 | – | ||
| Transaction costs-acquisitions | – | 72 | ||
| Funds from operations | $300 | $554 | ||
Subsequent events
1. On May 29, 2015, Canamax entered into a binding purchase and sale agreement with an intermediate oil and gas company to acquire certain assets in Alberta for cash consideration of $24.0 million subject to certain closing adjustments. The Acquisition, which is scheduled to close on or before July 31, 2015, will be funded through a combination of equity and debt financing and is subject to TSX Venture Exchange approval.
To finance the Acquisition, Canamax has entered into an engagement agreement involving a group of investment dealers for a private placement financing for minimum gross proceeds of $15 million. The Company has granted the investment dealers an option to increase the size of the financing by up to 15% for maximum gross proceeds of $17.25 million. The private placement will be on a best efforts basis, with an offering price of $0.60 per Canamax common share, and is expected to close by the end of June.
As a backstop for the funding required for the Acquisition, Canamax has established a standby bridge loan facility with an arms-length lender which provides lending capability of up to $20.0 million, if required. The standby bridge facility with the arms-length lender required an upfront fee of 5.25% (1.0% in cash and 4.25% in common shares). Canamax made the common share payment by issuing the lender 1.532 million common shares on a private placement basis pursuant to a prospectus exemption in accordance with the terms of the credit agreement governing the standby facility. Such shares will be subject to a four-month hold. If Canamax draws on the facility to fund a portion of the Acquisition, an additional fee of 4.25% of the funds drawn will be payable to the lender in the form of common shares. Drawn funds on the bridge facility will carry a maximum term of 14 months and carry an annual interest rate of 9.5% for the first 12 months and 12% per annum thereafter. There will be no early payout penalty as long as the drawn amounts are outstanding for at least 3 months. Prior to any funding being available from the facility, Canamax must raise a minimum of $10 million in equity financing.
2. Effective April 1, 2015, the Company entered into a financial commodity price contract for 1,000 GJ per day of natural gas at CAD $2.77 per GJ with a termination date of December 31, 2015.
About Canamax
Canamax is a junior oil and gas company in the business of consolidating micro-cap oil and gas companies and exploiting low risk development opportunities in the Western Canadian Sedimentary Basin.
Website – www.canamaxenergy.ca
[expand title=”Advisories & Contact”](Not for dissemination in the United States of America)
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Reader Advisories
Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expects”, “seeks”, “potential”, “plans”, “estimates”, and similar expressions. Specific forward-looking statements included in this press release include comments related to expected production rates, cashflow, operating costs and earnings, reserve estimates, debt levels, and completion of drilling programs, facilities, infrastructure and tie-ins for the Company’s production.
Forward-looking statements necessarily involve known and unknown risks and uncertainties, including, without limitation, the impact of general economic conditions, the risks and liabilities inherent in oil and natural gas operations; marketing and transportation; loss of markets; volatility of commodity prices; currency and interest rate fluctuations; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions or dispositions; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters, including changes in how they are interpreted and enforced; changes in incentive programs related to the oil and natural gas industry generally; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. Readers are cautioned that the foregoing list of factors is not exhaustive.
Readers are cautioned not to place undue reliance on forward-looking statements. 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. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
The forward looking statements contained in this press release are made as of the date of this press release, and Canamax 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 expressly required by securities law.
Conversion
BOE’s 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. In addition, 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.
For further information contact:
Brad Gabel
President & CEO
(587) 349-5186
Chris Martin, CA
Vice President, Finance & CFO
(587) 349-5186
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