CALGARY, ALBERTA–(Marketwired – Aug. 3, 2016) – Gear Energy Ltd. (“Gear” or the “Company”) (TSX:GXE) is pleased to provide the following second quarter operating update to shareholders. Gear’s Interim Financial Statements and related Management’s Discussion and Analysis (MD&A) for the period ended June 30, 2016 are available for review on Gear’s website at www.gearenergy.com and on www.sedar.com.
Financial Summary
Three months ended | Six months ended | ||||||||||
(Cdn$ thousands, except per boe amounts) | Jun 30, 2016 | Jun 30, 2015 | Mar 31, 2016 | Jun 30, 2016 | Jun 30, 2015 | ||||||
FINANCIAL | |||||||||||
Cash flow from operations (1) | 8,333 | 14,900 | 3,985 | 12,317 | 27,110 | ||||||
Per weighted average diluted share | 0.10 | 0.21 | 0.05 | 0.14 | 0.38 | ||||||
Cash flow from operating activities | 5,066 | 14,432 | 3,556 | 8,622 | 26,871 | ||||||
Per weighted average diluted share | 0.06 | 0.20 | 0.04 | 0.10 | 0.38 | ||||||
Net (loss) income | (7,312) | (2,301) | (1,716) | (9,028) | (6,658) | ||||||
Per weighted average diluted share | (0.08) | (0.03) | (0.02) | (0.11) | (0.09) | ||||||
Capital expenditures | 1,165 | 4,286 | 101 | 1,267 | 4,457 | ||||||
Net acquisitions (2) | 26 | (553) | (480) | (454) | (685) | ||||||
Net debt outstanding (1) | 34,200 | 71,678 | 59,550 | 34,200 | 71,678 | ||||||
Weighted average shares, basic and diluted | 86,117 | 70,817 | 85,484 | 85,800 | 70,817 | ||||||
Shares outstanding, end of period | 114,234 | 70,817 | 85,484 | 114,234 | 70,817 | ||||||
OPERATING | |||||||||||
Production | |||||||||||
Oil and liquids (bbl/d) | 4,358 | 5,492 | 4,192 | 4,275 | 5,976 | ||||||
Natural gas (mcf/d) | 1,070 | 838 | 1,459 | 1,265 | 890 | ||||||
Total (boe/d) | 4,536 | 5,632 | 4,435 | 4,485 | 6,125 | ||||||
Average prices | |||||||||||
Oil and liquids ($/bbl) | 39.00 | 50.72 | 20.90 | 29.95 | 43.37 | ||||||
Natural gas ($/mcf) | 1.20 | 2.31 | 1.52 | 1.39 | 2.23 | ||||||
Oil equivalent ($/boe) | 37.75 | 49.81 | 20.25 | 29.10 | 42.06 | ||||||
Netback ($/boe) | |||||||||||
Commodity and other sales | 37.75 | 49.81 | 20.25 | 29.10 | 42.06 | ||||||
Royalties | 2.96 | 5.96 | 1.63 | 2.30 | 6.13 | ||||||
Operating costs | 13.44 | 18.66 | 15.34 | 14.38 | 18.26 | ||||||
Operating netback (before hedging) (1) | 21.34 | 25.19 | 3.28 | 12.41 | 17.67 | ||||||
Realized risk management gains (losses) | 4.91 | 9.37 | 12.71 | 8.76 | 11.28 | ||||||
Operating netback (after hedging) (1) | 26.25 | 34.56 | 15.99 | 21.17 | 28.95 | ||||||
General and administrative | 3.28 | 3.87 | 3.67 | 3.47 | 3.28 | ||||||
Transaction costs | 1.22 | – | – | 0.62 | – | ||||||
Interest | 1.56 | 1.42 | 1.53 | 1.54 | 1.40 | ||||||
Foreign exchange (gain) loss | – | 0.17 | – | – | (0.20) | ||||||
Drilling commitments | – | – | 1.19 | 0.59 | – | ||||||
Corporate netback (1) | 20.19 | 29.10 | 9.60 | 14.95 | 24.47 | ||||||
TRADING STATISTICS ($ based on intra-day trading) | |||||||||||
High | 0.82 | 2.60 | 0.61 | 0.82 | 2.62 | ||||||
Low | 0.46 | 1.78 | 0.25 | 0.25 | 1.38 | ||||||
Close | 0.61 | 1.88 | 0.54 | 0.61 | 1.88 | ||||||
Average daily volume (thousands) | 272 | 147 | 139 | 206 | 196 |
(1) | Cash flow from operations, net debt, operating netback and corporate netback are non-GAAP measures and additional information with respect to these measures can be found under the heading “Non-GAAP Measures“. |
(2) | Net acquisitions exclude non-cash items for decommissioning liability and deferred taxes and is net of post-closing adjustments. |
HIGHLIGHTS
On July 27, 2016, Gear completed the acquisition of Striker Exploration Corp. (“Striker”) in exchange for 76.2 million Gear shares and the assumption of approximately $9 million in net debt. The acquisition provides Gear with an additional 2,000 boe/d of 60 per cent light and medium oil production, approximately 90 net sections of undeveloped land, a new core focus area in the emerging Belly River light oil resource play, and a materially strengthened balance sheet. Gear currently estimates a total inventory of approximately 450 heavy and light oil drilling opportunities and plans on drilling its first well into the Belly River resource play in the fourth quarter of 2016. Gear will continue to aggressively target further strategic acquisition opportunities within its existing and new core areas. The following summarizes guidance for the full year 2016 and second half of 2016:
Full Year 2016 Guidance | H2 – 2016 Guidance | |||
Production – Annual (boe/d) (1) | 5,250 | 6,000 | ||
Exit Production (boe/d) | 6,400 | 6,400 | ||
Percent oil and liquids (%) | 88 | 85 | ||
Royalty rate (%) | 11 | 12 | ||
Operating costs ($/boe) | 14.00 – 16.00 | 14.00 – 16.00 | ||
General and administrative expense ($/boe) | 2.80 | 2.50 | ||
Interest expense ($/boe) | 1.25 | 1.00 | ||
Capital expenditures ($ millions) | 12.5 | 11.2 | ||
Year-end shares outstanding (millions) | 190.5 | 190.5 |
(1) Striker volumes are included commencing July 27, 2016.
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