CALGARY, Nov. 28, 2016 /CNW/ – Toro Oil & Gas Ltd. (TSXV: TOO) (“Toro” or the “Company”) announces its financial and operating results for the three and nine month period ended September 30, 2016. Selected financial and operational information is set out below and should be read in conjunction with Toro’s September 30, 2016 interim financial statements and the related management’s discussion and analysis, which are available for review at www.sedar.com or the Company’s website at www.torooil.com.
Third Quarter Financial and Operational Highlights
- Averaged 748 boe/d in production during Q3 2016, of which 56% represents oil and liquids compared to 710 boe/d of production in Q3 2015 and 766 boe/d in Q2 2016. Q3 2016 production decreased only 2% from the prior quarter, despite no drilling activity or other significant fieldwork in Q3 2016, evidencing the low decline characteristic of the Hamilton Lake Viking pool. Toro’s Alberta Viking production continues to correlate highly with well type curves forecasted in the Company’s independent reserve report;
- Raised approximately $13 million in gross proceeds via a bought deal offering. Net proceeds were used to eliminate bank debt outstanding, enhance cash reserves and improve overall liquidity to partially fund future drilling programs;
- Based primarily on a 70% increase in realized gas sales prices over the second quarter of 2016, on an activity basis, Toro generated a positive operating income of $632 thousand for Q3 2016. This compares $593 thousand in Q2 2016 and a loss of $26 thousand in Q1 2016. Toro continues to hold absolute production costs at low levels and with production increases, should result in better economies of scale. Per unit operating costs slightly increased to $19.03 per boe for Q3 2016 as compared to $17.50 per boe in Q2 2016, however current quarter operating costs per unit were significantly lower than reported Q3 2015 production costs of $25.92 per boe. Per unit operating costs were higher in Q3 2016 primarily due to lower production levels and higher gas processing charges;
- Subsequent to the quarter, Toro successfully closed three separate divestitures of non-core properties netting proceeds of approximately $2.3 million for a gain of approximately $0.5 million. These proceeds combined with cash reserves at the end of quarter, results in a pro-forma debt-free working capital position of approximately $6 million.
Financial Results
(CAD$ thousands unless otherwise specified) |
||||||||
Three months ended September 30 |
Nine months ended September 30 |
|||||||
2016 |
2015 |
% Change |
2016 |
2015 |
% Change |
|||
Operational Performance |
||||||||
Production Volumes |
||||||||
Oil and NGLs (bbls/d) |
419 |
414 |
1 |
483 |
319 |
52 |
||
Natural gas (mcf/d) |
1,970 |
1,775 |
11 |
1,875 |
1,781 |
5 |
||
Oil equivalent (boe/d) |
748 |
710 |
6 |
796 |
615 |
29 |
||
Financial Performance |
||||||||
Production revenue (1) |
2,352 |
2,458 |
(4) |
6,832 |
6,056 |
13 |
||
Net comprehensive loss |
(1,763) |
(569) |
210 |
(12,608) |
(7,505) |
68 |
||
Per share – basic and diluted |
(0.02) |
(0.01) |
56 |
(0.17) |
(0.13) |
23 |
||
Cash deficiency from operations (2) |
(520) |
(601) |
(13) |
(1,094) |
(1,188) |
(8) |
||
Per share – basic and diluted |
(0.005) |
(0.01) |
(57) |
(0.01) |
(0.08) |
(81) |
||
Realized Sale Prices |
||||||||
Oil and NGL’s ($/bbl) |
50.03 |
51.80 |
(3) |
44.33 |
53.72 |
(17) |
||
Natural Gas ($/mcf) |
2.33 |
2.98 |
(22) |
1.87 |
2.83 |
(34) |
||
Oil Equivalent ($/boe) |
34.19 |
37.65 |
(9) |
31.34 |
36.07 |
(13) |
||
Netback ($/boe) |
||||||||
Realized sales price |
34.19 |
37.65 |
(9) |
31.34 |
36.07 |
(13) |
||
Royalties |
(7.40) |
(6.43) |
15 |
(5.73) |
(4.43) |
29 |
||
Production expenses |
(19.03) |
(25.92) |
(27) |
(18.17) |
(22.82) |
(20) |
||
Transportation expenses |
(1.27) |
(3.92) |
(68) |
(2.37) |
(3.05) |
(22) |
||
Operating netback ($/boe) (2) |
6.49 |
1.38 |
370 |
5.07 |
5.77 |
(12) |
||
General and administrative (3) |
(13.91) |
(12.81) |
9 |
(10.99) |
(18.08) |
(39) |
||
Interest expense |
(0.43) |
(0.47) |
(9) |
(0.87) |
(0.44) |
97 |
||
Other income |
– |
1.38 |
nmf (6) |
– |
4.82 |
nmf (6) |
||
Income on assets held for sale |
0.14 |
0.88 |
(85) |
0.09 |
0.42 |
(79) |
||
Cash netback ($/boe) |
(7.71) |
(9.64) |
(20) |
(6.70) |
(7.51) |
(11) |
||
Capital expenditures |
||||||||
Capital expenditures (4) |
(142) |
11,002 |
nmf (6) |
563 |
14,245 |
(96) |
||
Net acquisitions (dispositions) (5) |
(21) |
(11,850) |
(100) |
(155) |
(9,391) |
(98) |
||
Total capital expenditures |
(163) |
(848) |
(81) |
408 |
4,854 |
(92) |
||
Liquidity |
||||||||
Net debt (surplus) (2) |
(4,014) |
(1,936) |
107 |
(4,014) |
(1,936) |
107 |
||
Bank facility – undrawn portion |
– |
25,000 |
nmf (6) |
– |
25,000 |
nmf (6) |
||
Weighted average shares outstanding |
||||||||
Basic |
113,193,357 |
56,853,281 |
99 |
76,045,453 |
55,840,702 |
36 |
||
Diluted |
113,193,357 |
56,853,281 |
99 |
76,045,453 |
55,840,702 |
36 |
||
(1) Production revenue is presented gross of royalties and inclusive of realized hedging gains (losses). |
||||||||
(2) Cash deficiency in operations, operating netback and net surplus are non-IFRS measures. See “Non-IFRS Measures”. |
||||||||
(3) General and administrative expenses for the three and nine months ended September 30, 2016 include one-time restructuring costs of $454. |
||||||||
(4) Three and nine months ended September 30, 2016 include SR&ED credit received of $287. |
||||||||
(5) Represents the cash expenditures (proceeds) from the acquisition (sale) of assets, as applicable. |
||||||||
(6) No meaningful figure. |
Operational and Corporate Update
While crude oil prices were neutral to slightly negative in Q3 2016 compared to Q2 2016, natural gas prices rose significantly which served to strengthen the Company’s operational profitability. Corporately, primarily due to one-time staff restructuring costs, Toro incurred a corporate cash deficiency of approximately $520 thousand during the third quarter. These reorganization costs were considered necessary to right-size the business and achieve further efficiencies in the midst of continued commodity price uncertainty. However, with an expectation of further appreciation in commodity prices due to macro-economic factors, the Company forecasts positive cash flow from operations, inclusive of corporate costs. As press released on October 11, 2016, Toro also has begun certain steps to prepare for an up to ten well drill program. Final financial and operational commitments to this program however will not occur until the Company believes a sustained recovery in oil commodity prices exists which generate appropriate rates of return to grow the business. Notionally, the Company targets a minimum of US$50 West Texas Intermediate as the threshold oil price.
About Toro Oil & Gas Ltd.
Toro is a junior oil and gas energy company listed on the TSX Venture Exchange. Toro is focused on acquiring, developing and exploiting large oil in place pools within the Alberta-Saskatchewan Viking light oil fairway. Toro intends to grow by way of organic development and strategic acquisitions while maintaining strict financial discipline to maximize shareholder return.