CALGARY, AB–(Marketwired – November 26, 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 September 30, 2015.
Highlights
During Q3 2015, Canamax completed two significant acquisitions and a financing which resulted in the Company materially increasing its production base and substantially eliminating its debt. Canamax’s production averaged 1,244 boe/d during Q3 2015 (62% oil & NGL’s) and the Company exited September 30, 2015 with net debt of only $1.3 million with an undrawn operating loan facility of $21 million. Due to the acquisitions and a successful fall drilling program, the Company is currently producing approximately 1,550 boe/d with a further 500 boe/d (primarily gas) of shut-in production.
As a result of its strong financial base, the Company is well positioned to take advantage of strategic acquisition opportunities that may arise given the number of companies in financial distress in western Canada. The significant transactions during Q3 2015 are summarized as follows:
Operational highlights during Q3 2015:
Significant Events subsequent to Q3 2015:
Financial and Operational Summary | ||||||||||||||||
($000 except share, per share and per boe amounts) | Three months ended 1 | Nine months ended 1 | ||||||||||||||
Sept 30, 2015 | Aug 31, 2014 | Sept 30, 2015 | Aug 31, 2014 | |||||||||||||
Financial | ||||||||||||||||
Revenue | 4,023 | 4,646 | 9,929 | 9,860 | ||||||||||||
Operating netback 2 | 1,443 | 2,463 | 3,853 | 5,136 | ||||||||||||
Funds from operations 2 | 673 | 1,795 | 1,693 | 2,877 | ||||||||||||
Per share – basic and diluted 2 | 0.01 | 0.04 | 0.03 | 0.09 | ||||||||||||
Net loss | (4,810) | 70 | (8,137) | (212) | ||||||||||||
Per share – basic and diluted | (0.05) | – | (0.14) | (0.01) | ||||||||||||
Net capital expenditures 3 | 7,718 | 7,006 | 9,708 | 16,230 | ||||||||||||
Net proceeds from financings | 14,233 | (13) | 14,233 | 15,394 | ||||||||||||
(Net Debt) / working capital surplus – end of period 4 | (1,336) | 1,788 | (1,336) | 1,788 | ||||||||||||
Weighted average shares outstanding (in 000) | 95,054 | 41,479 | 60,037 | 33,143 | ||||||||||||
Common shares outstanding – end of period (in 000) | 114,766 | 41,626 | 114,766 | 41,626 | ||||||||||||
Operating | ||||||||||||||||
Average Daily Production | ||||||||||||||||
Oil and NGL’s (bbls/d) | 770 | 469 | 612 | 328 | ||||||||||||
Natural gas (mcf/d) | 2,844 | 2,587 | 2,497 | 2,235 | ||||||||||||
Oil equivalent (boe/d) | 1,244 | 900 | 1,028 | 700 | ||||||||||||
Average Price | ||||||||||||||||
Oil and NGL’s ($/bbl) | 45.68 | 84.27 | 47.66 | 77.67 | ||||||||||||
Natural gas ($/mcf) | 3.01 | 4.25 | 2.90 | 4.71 | ||||||||||||
Oil equivalent ($/boe) | 35.16 | 56.16 | 35.39 | 51.39 | ||||||||||||
Royalties ($/boe) | (2.73) | (6.87) | (1.31) | (9.13) | ||||||||||||
Operating expenses ($/boe) | (14.20) | (16.62) | (14.74) | (12.09) | ||||||||||||
Transportation ($/boe) | (5.62) | (2.89) | (5.60) | (3.42) | ||||||||||||
Operating netback ($/boe)2 | 12.61 | 29.78 | 13.74 | 26.75 | ||||||||||||
G&A expense ($/boe) | (5.66) | (8.16) | (7.07) | (11.79) | ||||||||||||
Finance expenses ($/boe) | (1.07) | 0.10 | (1.56) | 0.02 | ||||||||||||
Realized hedging gain ($/boe) | 0.01 | – | 0.09 | – | ||||||||||||
Corporate netback ($/boe)2 | 5.89 | 21.72 | 5.20 | 14.98 |
1. | During September 2014, Canamax changed its year-end from February 28 to December 31, which resulted in a 10-month stub year-end period of December 31, 2014. As a result of this year-end change, the comparative financial periods to the three and nine-months ended September 30, 2015 are the three and nine-month periods ended August 31, 2014. |
2. | See “Non-IFRS Measures”. |
3. | Net capital expenditures reflect drilling, completion, facility and undeveloped land expenditures combined with property acquisitions net of property disposals. |
4. | Net debt / working capital surplus at September 30, 2015 includes the Company’s operating loan balance. |
Outlook
The significant erosion in oil and gas prices have presented a challenging operating environment for all oil and gas companies, including Canamax. However, as a result of the significant transactions completed during Q3 2015, the Company has been re-capitalized and has substantially grown its production base. The acquired Greater Grimshaw assets add significant development inventory to the Company’s existing development portfolio. As a result of having minimal net debt, Canamax is in a strong financial position with operating flexibility moving forward.
The Company’s management is encouraged by the results of the new completion techniques utilized for the horizontal wells recently drilled and re-entered at Flood Lake and is hoping to achieve higher production rates and recoverable reserves for future horizontal wells drilled at Flood Lake and Grimshaw using this technology. As previously announced, Canamax’s capital expenditure budget for Q4 2015 has been set at $3.3 million, with $2.8 million of this amount allocated to the drilling and completion of the two horizontal wells at Grimshaw. Going forward, the Company’s capital expenditure budgets will be set on a quarter by quarter basis until more clarity is obtained on future commodity prices and the Province of Alberta royalty program. Canamax continues to evaluate strategic acquisition opportunities which become available as a result of the challenging environment with the primary objective of maintaining the Company’s strong balance sheet.
Reconciliation of Funds from Operations
The reconciliation from cash flow from (used in) operating activities as reported in the condensed interim consolidated financial statements to funds from operations is as follows:
(in $000’s) | Three months ended | Nine months ended | ||||||
Sept 30, 2015 | Aug 31, 2014 | Sept 30, 2015 | Aug 31, 2014 | |||||
Cash flow from (used in) operating activities (per financial statements) | $1,977 | $1,026 | $516 | ($2,719) | ||||
Add (deduct): | ||||||||
Change in non-cash working capital | (1,895) | 724 | 71 | 5,035 | ||||
Cash paid finance expenses associated with Bridge loan facility | – | – | 240 | – | ||||
Decommissioning expenditures | 1 | 39 | 10 | 39 | ||||
Transaction costs-acquisitions | 590 | 6 | 856 | 522 | ||||
Funds from operations | $673 | $1,795 | $1,693 | $2,877 | ||||
[expand title=”Advisories & Contact”]About Canamax
Canamax is a Montney oil focused junior oil and gas company with its core assets located in the Greater Grimshaw area of Northwestern Alberta.
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, utilization of new completion techniques at Flood Lake and Grimshaw, delineation of the Worsley and Montney B reservoirs in Flood Lake, completion of the newly drilled horizontal wells in Grimshaw, tie-in of the recently re-entered horizontal well in Flood Lake, capital expenditures, cashflow, operating costs and earnings, debt levels, working capital surplus levels, completion of drilling and re-completion programs, timing of placing production on stream, shut-in of existing production, realization of reductions in finance expenses and general and administrative costs.
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
Website – www.canamaxenergy.ca
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