CALGARY, ALBERTA–(Marketwired – April 27, 2016) – LEUCROTTA EXPLORATION INC. (TSX VENTURE:LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three months and year ended December 31, 2015. All dollar figures are Canadian dollars unless otherwise noted.
- Maintained a cash and working capital balance of $45.6 million at December 31, 2015
- Successfully drilled and completed three horizontal wells targeting the Lower Montney Turbidite play resulting in two liquids-rich natural gas wells and one light oil well
- Acquired an additional 10 net sections in the Montney play adjacent to recent successful drilling by the Company in the Greater Dawson-Doe area of Northeast BC
- Reduced pipeline commitments by $50.0 million to increase financial and capital flexibility
Leucrotta commenced active oil and natural gas operations on August 6, 2014 as a result of the closing of an arrangement agreement between Leucrotta, Crocotta Energy Inc. (“Crocotta”) and Long Run Exploration Ltd. (“Long Run”) whereby Crocotta transferred its oil and natural gas assets located in British Columbia (“BC Assets”) to Leucrotta (the “Arrangement”). Long Run acquired all of the issued and outstanding common shares of Crocotta in exchange for 0.415 of a common share of Long Run. Immediately prior to the exchange for Long Run common shares, Crocotta transferred the BC Assets to Leucrotta and each Crocotta shareholder received 1.0 common share of Leucrotta and 0.2 of a Leucrotta common share purchase warrant.
The financial and operating results below present the historic financial position, results of operations and cash flows of the transferred BC Assets for all prior periods up to and including August 6, 2014 on a carve-out basis as if they had operated as a stand-alone entity subject to Crocotta’s control (carve-out financial statements). The financial position, results of operations and cash flows from June 10, 2014 (the date of incorporation of Leucrotta) to August 6, 2014 include both the BC Assets and Leucrotta on a combined basis and from August 6, 2014 forward include the actual historical results of Leucrotta after assuming the BC Assets upon close of the Arrangement.
|Three Months Ended December 31||Year Ended December 31|
|($000s, except per share amounts)||2015||2014||% Change||2015||2014||% Change|
|Oil and natural gas sales||2,819||6,801||(59||)||10,859||29,322||(63||)|
|Funds from operations (1)||464||2,995||(85||)||615||15,210||(96||)|
|Per share – basic and diluted||–||0.02||(100||)||–||0.12||(100||)|
|Net (loss) earnings||(15,205||)||(171||)||8,792||11,412||3,090||269|
|Per share – basic and diluted||(0.09||)||–||(100||)||0.07||0.02||250|
|Capital expenditures and acquisitions||29,544||35,234||(16||)||59,237||102,868||(42||)|
|Proceeds from property dispositions||–||–||–||79,342||–||100|
|Common shares outstanding (000s)|
|Weighted average – basic and diluted||165,227||165,227||–||165,227||126,329||31|
|End of period – basic||165,227||165,227||–|
|End of period – diluted||189,272||185,049||2|
(1) See “Non-GAAP Measures” section.
|OPERATING RESULTS (1)||Three Months Ended December 31||Year Ended December 31|
|2015||2014||% Change||2015||2014||% Change|
|Oil and NGLs (bbls/d)||479||486||(1||)||316||376||(16||)|
|Natural gas (mcf/d)||3,585||12,309||(71||)||6,112||10,750||(43||)|
|Oil equivalent (boe/d)||1,076||2,538||(58||)||1,335||2,168||(38||)|
|Oil and NGLs ($/bbl)||46.85||62.08||(25||)||45.74||78.98||(42||)|
|Natural gas ($/mcf)||2.29||3.55||(35||)||2.50||4.71||(47||)|
|Oil equivalent ($/boe)||28.47||29.13||(2||)||22.29||37.06||(40||)|
|Oil and NGLs ($/bbl)||8.90||6.66||34||6.91||4.14||67|
|Natural gas ($/mcf)||0.12||0.53||(77||)||0.08||0.31||(74||)|
|Oil equivalent ($/boe)||4.37||3.84||14||1.98||2.24||(12||)|
|Oil and NGLs ($/bbl)||16.58||6.61||151||12.58||6.73||87|
|Natural gas ($/mcf)||0.96||1.10||(13||)||1.16||1.12||4|
|Oil equivalent ($/boe)||10.56||6.61||60||8.29||6.72||23|
|Oil and NGLs ($/bbl)||5.35||3.51||52||4.54||3.43||32|
|Natural gas ($/mcf)||0.32||0.24||33||0.30||0.21||43|
|Oil equivalent ($/boe)||3.46||1.85||87||2.47||1.63||52|
|Operating netback (2)|
|Oil and NGLs ($/bbl)||16.02||45.30||(65||)||21.71||64.68||(66||)|
|Natural gas ($/mcf)||0.89||1.68||(47||)||0.96||3.07||(69||)|
|Oil equivalent ($/boe)||10.08||16.83||(40||)||9.55||26.47||(64||)|
|Depletion and depreciation ($/boe)||(52.91||)||(8.02||)||560||(17.67||)||(10.40||)||70|
|Asset impairment ($/boe)||(83.53||)||–||100||(18.91||)||–||100|
|General and administrative expenses ($/boe)||(7.50||)||(4.73||)||59||(9.46||)||(4.27||)||122|
|Share based compensation ($/boe)||(10.82||)||(4.16||)||160||(11.02||)||(2.59||)||325|
|Finance expenses ($/boe)||(0.46||)||(0.24||)||92||(0.49||)||(3.31||)||(85||)|
|Finance income ($/boe)||2.26||0.80||183||1.38||0.24||475|
|(Loss) gain on sale of assets ($/boe)||(3.35||)||–||100||93.19||–||100|
|Deferred tax expense ($/boe)||(7.28||)||(1.21||)||502||(23.14||)||(2.23||)||938|
|Net (loss) earnings ($/boe)||(153.51||)||(0.73||)||20,929||23.43||3.91||499|
(1) See “Frequently Recurring Items” section.
(2) See “Non-GAAP Measures” section.
Selected financial and operational information outlined in this news release should be read in conjunction with Leucrotta’s audited financial statements and related Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2015, which are available for review at www.sedar.com and on our website at www.leucrotta.ca.
In Q4 2015, Leucrotta made major strides in furthering the Company’s major objectives. Three very successful Lower Montney Turbidite wells were drilled and highly prospective lands were acquired offsetting the most productive of the three wells.
The drilling program covered a large area of Leucrotta’s expansive land base with each well serving a specific purpose to support the larger objective of proving up the land base for future development.
The first well yielded a test rate of 1,290 boe/d of liquids-rich gas and helped prove up the rate and composition of Leucrotta’s East Doe area. Following up on the well, Leucrotta was able to acquire approximately 10 net sections of land contiguous to this discovery through Crown and private land sales. The second well was an offset to Leucrotta’s original discovery well at Doe and helped prove up the area-specific type curve with an IP30 of 878 boe/d of liquids-rich gas. This well was immediately placed on production given its proximity to Leucrotta’s owned and operated infrastructure. The third Montney Lower Turbidite well was drilled approximately 5 miles southwest of Leucrotta’s previous Mica oil discovery well. The well encountered light oil and tested 713 boe/d including 300 boe/d of light oil over an 8-day test period. This test significantly expanded the known boundary of the oil window in the Lower Montney and places significant potential oil reserves on Leucrotta’s lands.
Leucrotta currently has approximately $40 million in cash and no debt. This position will allow the Company to dictate the pace of its development as well as react to opportunities as they arise.
Leucrotta has developed a longer-term plan to expand its infrastructure to East Doe as well as through the oil window located northeast of the current Doe plant site while delineating the large Montney resource base. Any infrastructure capital to be spent would be dependent on commodity prices allowing a satisfactory return on such projects and the Company will look to mitigate commodity risk through financial derivatives prior to commencing these projects. In conjunction with the infrastructure, Leucrotta will look to drill additional development wells in the vicinity of the infrastructure to augment the payback and rates of return on the project.
Leucrotta is currently in process of surveying and licensing the infrastructure and drilling projects to provide flexibility with respect to the timing of the capital projects. Management will make a decision on the extent and pace of development by mid-July based on the forward prices at the time and Leucrotta’s ability to hedge volumes sufficient to secure a reasonable payback and a reasonable rate of return on capital employed.