FIRST QUARTER 2016 HIGHLIGHTS
- Received securityholder approval on February 29, 2016 for the plan of arrangement (the “Arrangement”) between Long Run, Calgary Sinoenergy Investment Corp. (the “Purchaser”) and Long Run securityholders pursuant to which the Purchaser will acquire all of the outstanding Long Run common shares and all of the outstanding Long Run 6.40% convertible unsecured subordinated debentures. On March 2, 2016, Long Run received approval from the Court of Queen’s Bench of Alberta for the Arrangement.Subsequent to the end of the quarter, the outside date for completion of the Arrangement was extended from April 30, 2016 to May 30, 2016 as a result of the ongoing review under the Investment Canada Act. Approval of the Arrangement under the Competition Act (Canada) was received on April 20, 2016. Long Run and the Purchaser anticipate that closing of the Arrangement will occur shortly following the receipt of approval under the Investment Canada Act.
- Recorded a funds flow from operations deficit of $2.1 million, including $2.8 million of transaction costs related to the Arrangement and the incremental interest costs incurred in January prior to finalizing the credit facilities amendments. Excluding these costs, funds flow from operations of $0.7 million compared to $40.0 million in 2015, primarily reflecting lower commodity prices, lower production and a lower realized gain on financial derivatives, partially offset by lower royalties and lower operating costs.
- Reduced capital expenditures to $4.3 million from $45.3 million in 2015 in response to the low commodity price environment.
- Averaged 27,775 Boe/d of production compared to 35,602 Boe/d in 2015 resulting from reduced capital spending over the past 15 months.
- Realized an oil price including derivatives of $36.25/Bbl compared to $65.34/Bbl in 2015 as a result of a decrease in West Texas Intermediate benchmark pricing and a lower realized gain on financial derivatives.Average NGLs pricing decreased to $19.58/Bbl from $22.50/Bbl in 2015, reflecting lower market prices.
Natural gas prices including derivatives averaged $2.46/Mcf compared to $3.17/Mcf in 2015, primarily attributable to weaker AECO benchmark prices, partially offset by a higher realized gain on financial derivatives.
- Generated an operating netback of $6.08/Boe compared to $16.94/Boe in 2015. The 2016 netback reflects weak commodity prices and a lower gain on financial derivatives, partially offset by lower operating costs and lower royalties. Operating costs improved to $11.84/Boe from $12.85/Boe in 2015 primarily due to lower maintenance, chemical and fluid trucking costs.
- Reported a net loss of $41.5 million compared to a net loss of $22.8 million in 2015. The change reflects lower funds flow from operations, partially offset by lower depletion expense and an unrealized gain on financial derivatives.
- Exited with bank debt of $584.2 million. On January 29, 2016, the Company entered into an amending credit facilities agreement with its bank syndicate. The Company’s total credit facilities of $620.0 million terminate six months following the close of the Arrangement, which is consistent with the Purchaser’s plan to repay the credit facilities in due course following completion of the Arrangement. If the Arrangement is not completed, Long Run will be in default under its credit facilities agreement and will be significantly challenged to address its bank indebtedness and to continue as a going concern in the current depressed commodity price environment.
Selected financial and operational information outlined in this news release should be read in conjunction with Long Run’s financial statements and related Management’s Discussion and Analysis for the quarter ended March 31, 2016, which will be available for review at www.sedar.com and on our website at www.longrunexploration.com.
|SUMMARY OF QUARTERLY RESULTS|
|Three months ended March 31|
|($000s, except per share amounts or unless otherwise noted)||2016||2015|
|Funds flow from operations1||(2,054||)||39,958|
|Per share, basic 1||(0.01||)||0.21|
|Per share, diluted1||(0.01||)||0.21|
|Net earnings (loss)||(41,504||)||(22,818||)|
|Per share, basic||(0.21||)||(0.12||)|
|Per share, diluted||(0.21||)||(0.12||)|
|Natural Gas (Mcf/d)||100,608||119,007|
|Prices, including derivatives|
|Natural Gas ($/Mcf)||2.46||3.17|
|Revenues, before royalties||45,690||81,324|
|Net acquisitions (divestitures)||(83||)||(1,392||)|
|Net capital expenditures||4,233||43,923|
|Non-current financial liabilities, excluding bank loan||69,977||68,765|
|1See Advisories – Non-GAAP Measures.|