CALGARY, ALBERTA–(Marketwired – June 6, 2016) – Eagle Energy Inc. (TSX:EGL) (“Eagle“) announces that, pursuant to the new term in its credit agreement that restricts Eagle from paying dividends exceeding $0.005 (half a cent) per share per month, Eagle has reduced its monthly dividend to $0.005 per share ($0.06 annualized) beginning with the June 2016 dividend payable on July 22, 2016 to shareholders of record on June 30, 2016. The ex-dividend date is June 28, 2016. Eagle’s dividend has been designated as an “eligible dividend” for Canadian income tax purposes.
This news release contains non-IFRS financial measures and statements that are forward-looking. Investors should read “Non-IFRS Financial Measures” and “Note about Forward-looking Statements” near the end of this news release. Figures in this news release are presented in Canadian dollars unless otherwise indicated.
Eagle’s 2016 capital budget, production and operating cost guidance remains the same as previously disclosed in Eagle’s May 5, 2016 news release, in which Eagle had revised its initial guidance to include royalty interest barrels thereby increasing its production guidance and reduced its expected monthly operating costs. Eagle’s current 2016 guidance is as follows:
|Capital Budget||$5.0 million||(1)|
|Full Year Average Production||3,400 to 3,800 boe/d||(2)|
|Operating Costs per Month||$2.0 to $2.4 million|
- The 2016 capital budget of $CA 5.0 million consists of $US 3.0.million for Eagle’s operations in the United States and $0.8 million for Eagle’s operations in Canada. At an assumed $US 50.00 per barrel West Texas Intermediate (“WTI“) crude oil price, Eagle’s 2016 capital budget of $5.0 million and dividend of $0.005 per common share per month ($0.06 per share annualized) results in a corporate payout ratio of 80%.
- The 2016 production is expected to consist of 87% crude oil, 10% natural gas and 3% natural gas liquids (“NGLs“) and includes both working interest production and royalty interest production.
Eagle’s Expected Funds Flow from Operations and Corporate Payout Ratio
The reduction in Eagle’s monthly dividend combined with updated commodity price and foreign exchange rate assumptions results in a change in Eagle’s expected 2016 funds flow from operations and corporate payout ratio as follows:
|2016 Full Year||Amount||Notes|
|Funds Flow from Operations(4)||$11.1 million||(1)|
|Basic Payout Ratio(4)||35%||(2)|
|Plus: Capital Expenditures||45%|
|Equals: Corporate Payout Ratio(4)||80%||(3)|
- 2016 funds flow from operations is expected to be approximately $CA 11.1 million based on the following assumptions:
- average production of 3,600 boe/d (the mid-point of the guidance range);
- pricing at $US 50.00 (previously $US 45.00) per barrel WTI oil, $CA 1.75 per Mcf AECO and $US 17.50 per barrel of NGL (NGL price is calculated as 35% of the WTI price);
- differential to WTI is $US 3.10 discount per barrel in Salt Flat, $US 3.50 discount per barrel in Hardeman, $CA 16.17 discount per barrel in Dixonville and $CA 12.67 discount per barrel in Twining;
- average operating costs of $CA 2.2 million per month ($US 0.8 million per month for Eagle’s operations in the United States and $CA 1.1 million per month for Eagle’s operations in Canada), the mid-point of the guidance range;
- foreign exchange rate of $US 1.00 equal to $CA 1.31 (previously $CA 1.26); and
- field netback (excluding hedges) of $16.59 per boe.
- Basic payout ratio is calculated as follows:
|Shareholder Dividends||=||Basic Payout Ratio|
|Funds Flow from Operations|
- Corporate payout ratio is calculated as follows:
|Capital Expenditures + Shareholder Dividends||=||Corporate Payout Ratio|
|Funds Flow from Operations|
- Funds flow from operations, field netback, basic payout ratio and corporate payout ratio are non-IFRS measures. See the advisory titled “Non-IFRS Financial Measures”, below.
The following tables show the sensitivity of Eagle’s expected 2016 funds flow from operations, corporate payout ratio and debt to trailing cash flow to changes in commodity prices, exchange rates and production:
|Sensitivity to Commodity Price||2016 Average WTI
(Production 3,600 boe/d)
|$US 45 (FX 1.34)||$US 50 (FX 1.31)||$US 55 (FX 1.28)|
|Funds Flow from Operations||$10.6 million||$11.1 million||$11.5 million|
|Corporate Payout Ratio||83%||80%||76%|
|Debt to Trailing Cash Flow||6.0x||5.7x||5.4x|
|Sensitivity to Production||2016 Average Production (boe/d)
(WTI $US 50, F/X 1.31)
|Funds Flow from Operations||$10.0 million||$11.1 million||$12.3 million|
|Corporate Payout Ratio||89%||80%||72%|
|Debt to Trailing Cash Flow||6.3x||5.7x||5.1x|
- Annualized dividends are assumed to be $0.06 per share per year.
- Operating costs are assumed to be $2.2 million per month (mid-point of guidance range).
- Differential to WTI held constant.
- Foreign exchange rate is assumed to be $US 1.00 equal to $CA 1.31 unless otherwise indicated in the table.
Eagle’s 2016 Annual Shareholders’ Meeting
Eagle’s board of directors and management would also like to remind Eagle’s shareholders of Eagle’s upcoming 2016 annual shareholders’ meeting to be held on Wednesday, June 8, 2016 at 3:00 p.m. MDT in the Devonian Room at the Calgary Petroleum Club, 319 – 5th Avenue S.W., Calgary, Alberta.