CALGARY, Alberta, Aug. 14, 2017 (GLOBE NEWSWIRE) — RMP Energy Inc. (“RMP” or the “Company”) (TSX:RMP) today reports its financial and operating results for the quarter ended June 30, 2017, in addition to providing initial production information from its Elmworth Montney asset.
Elmworth Montney Update
In June, the Company commissioned the operational start-up of its wholly-owned and operated Elmworth 2-23 facility (“2-23 Facility”). This marks an important corporate milestone as the Company begins to commercialize its multi-year investment in this new and emerging core area. The 2-23 Facility has initial design capacity to handle 1,500 bbls/d of crude oil, 8.2 MMcf/d of natural gas and 7,500 bbls/d of emulsion. Plans are underway to increase the gas compression capacity at the 2-23 Facility.
The 2-23 Facility is presently handling the crude oil, emulsion and natural gas production from two (2.0 net) of RMP’s Middle Montney horizontal wells. These two wells, the 3-22-68-3W6 (“3-22 Well”) and the 4-18-68-2W6 (“4-18 Well”), were placed on-production in mid-June. During the first thirty producing days (“IP30”), the 3-22 Well produced on average approximately 1,000 boe/d, consisting of approximately 200 bbls/d of light oil, 4.3 MMcf/d of natural gas sales, and 85 bbls/d of expected NGLs yield. The IP30 for the 4-18 Well was approximately 625 boe/d, consisting of 235 bbls/d of light oil, approximately 2.1 MMcf/d of gas, and 40 bbls/d of expected NGLs yield. As a result of complications with downhole equipment during the completion of the 4-18 Well, there is potential that there is not full wellbore contribution to production flow. A workover is planned to investigate and attempt to remove the potential downhole obstruction and future completion operations will be planned and designed in order to mitigate such occurrence.
The Company recently drilled and completed its fourth, 100% working interest Elmworth Montney horizontal well (15-23-68-3W6) (“15-23 Well”), from the same surface lease pad as the 2-23 Facility. The horizontal section of the 15-23 Well, with 1,462 metres of lateral length, was shorter than the previous three wells due to working interest land positioning. However, this well was stimulated with a designed increase in both frac intensity (stages) and proppant. The 15-23 Well was recently completed using a 30 stage completion, placing 60 tonnes of proppant per stage with slickwater into the formation. The 15-23 Well is having final production tubing installed and will be tied-in to the 2-23 Facility for production testing.
At Elmworth, the Company holds a large undeveloped land base consisting of 83 (82.5 net) sections (52,800 net acres) of operated acreage, with substantial resource potential. Future asset development of the Middle Montney will be focused on extended reach horizontals with increased frac and proppant intensity. These technical improvements coupled with operational efficiencies in spud-to-on-stream cycle times, emulsion management and infrastructure optimization will provide the key to unlocking the vast potential of the Elmworth Montney fairway.
On July 26, 2017, the Company announced a series of appointments resulting in the formation of a new executive management team (“New Management Team”). Each of the new executive management team have a demonstrated track record of operational excellence and long-term shareholder value generation in highly-successful Canadian energy companies. Since their respective appointment on August 1, 2017, the New Management Team continues to undertake a thorough engineering and geotechnical evaluation and assessment of RMP’s Elmworth asset in addition to the Company’s other assets and operations. The team’s extensive Montney experience will be brought to bear on developing the appropriate go-forward business plan in light of the current commodity price environment and prevailing capital market conditions. Details of the Company’s updated business plan will be provided in due course.
Second Quarter 2017 Highlights
Second quarter 2017 financial and operating highlights are detailed in the table below. It is noteworthy that the reported second quarter 2017 results do not reflect a full quarter of production and financial contribution from its Elmworth asset given the late-quarter start-up of the 2-23 Facility. Additionally, the reported financial and operating results for the comparative 2016 periods detailed hereafter includes the operations from the Company’s previously-owned Ante Creek asset, which was sold mid-fourth quarter of 2016.
|Financial Highlights (1)||Three Months Ended June 30,||Six Months Ended June 30,|
|(thousands except share and per boe data) (6:1 oil equivalent conversion)||2017||2016||% Change||2017||2016||% Change|
|Petroleum and natural gas revenue (2)||9,552||20,325||(53)||19,010||41,936||(55)|
|Funds from operations (3)||2,803||7,429||(62)||5,201||16,921||(69)|
|Per share – basic and diluted||0.02||0.05||(60)||0.03||0.12||(75)|
|Per share – basic and diluted||(0.02)||(0.05)||(60)||(0.04)||(0.11)||(64)|
|Total capital expenditures||6,516||17,525||(63)||31,130||35,776||(13)|
|Net debt (4) – period end||26,814||104,519||(74)||26,814||104,519||(74)|
|Weighted average basic shares||151,019,234||150,970,068||–||151,003,622||139,799,271||8|
|Weighted average diluted shares||151,019,234||150,970,068||–||151,003,622||139,799,271||8|
|Issued and outstanding shares (5)||151,019,234||150,970,068||–||151,019,234||150,970,068||–|
|Operating Highlights (1)|
|Average daily production:|
|Natural gas (Mcf/d)||14,572||28,779||(49)||13,382||32,111||(58)|
|Crude oil (bbls/d)||902||3,307||(73)||933||3,764||(75)|
|Oil equivalent (boe/d)||3,556||8,425||(58)||3,382||9,421||(64)|
|% Liquids (Oil and NGLs)||32%||43%||(26)||34%||43%||(21)|
|Average sales price (2) :|
|Natural gas ($/Mcf)||3.03||1.60||89||3.01||1.87||61|
|Crude oil ($/bbl)||56.72||51.44||10||59.12||43.61||36|
|Oil equivalent ($/boe)||29.52||26.51||11||31.05||24.46||27|
|Operating netback (6) ($/boe)||13.46||12.78||5||14.22||12.71||12|
|Wells drilled: gross (net)||–||3 (3.0)||(100)||3 (3.0)||7 (7.0)||(57)|
- Reported financial and operating results for the three and six months ended June 30, 2017 exclude the results associated with the Ante Creek asset whilst the financial and operating results for the three and six months ended June 30, 2016 include the results associated with the Ante Creek asset.
- Petroleum and natural gas revenue and pricing includes realized gains or losses from risk management commodity contracts.
- Funds from operations does not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”). Please refer to the Reader Advisories hereinafter.
- Net debt is not a recognized measure under IFRS. Please refer to the Reader Advisories hereinafter.
- As of August 14, 2017, there are 151,019,234 common shares outstanding.
- Operating netback is not a recognized measure under IFRS. Please refer to the Reader Advisories hereinafter.
Second Quarter 2017 Commentary
- RMP’s average daily production in the second quarter was 3,556 boe/d (weighted 32% crude oil and NGLs). The mid-November 2016 Ante Creek property disposition, along with pared-back drilling activities in 2016, resulted in lower reported second quarter 2017 production in comparison to the second quarter of 2016. Notwithstanding, second quarter 2017 production was 4% higher than the pro-forma, normalized second quarter 2016 production of 3,427 boe/d (excluding volumes attributable to the Ante Creek field). The start-up of the Elmworth 2-23 Facility, which facilitated bringing on-production two (2.0 net) horizontal wells in mid-June, contributed to an 11% increase in the second quarter 2017 corporate production level from the preceding first quarter of 2017.
- Petroleum and natural gas (“P&NG”) revenue amounted to $9.6 million in the second quarter (58% from crude oil and NGL sales). RMP’s realized crude oil sales price in the second quarter was $56.72/bbl, which reflects an oil quality discount to the Canadian-dollar converted WTI price of $8.00/bbl, as compared to a $7.37/bbl differential in the comparative second quarter of 2016. The Company’s high heat content gas coupled with its gas price hedging resulted in a realized natural gas sales price of $3.03/Mcf in the second quarter, 9% higher than the AECO 5A average price for the same three-month period. As part of its commodity price risk management, a certain component of RMP’s natural gas revenue is presently protected from gas price weakness through a fixed swap hedge with 3,000 GJs/d fixed at an AECO 5A price of $3.00/GJ ($3.16/Mcf) through to October 31, 2017.
- P&NG royalties in the second quarter amounted to $440 thousand (4.7% of P&NG revenue excluding realized amounts on risk management contracts), as compared to royalties of $3.7 million (18.4% of P&NG revenue) for the comparative second quarter of 2016. The decrease in the effective royalty rate is attributable to a Crown royalty annual adjustment credit recorded in the second quarter of 2017 resulting from the Crown’s annual recalculation and adjustment of its gas cost allowance.
- Field operating costs on an oil equivalent basis were $10.91/boe in the second quarter, a 5% decrease from the field operating expenses of $11.45/boe in the preceding first quarter of 2017. The Company’s reported, non-controllable per-unit transportation costs were $3.79/boe in the second quarter of 2017, as compared to second quarter 2016 transportation costs of $3.58/boe. Second quarter 2017 general and administrative expenses (“G&A”) of $1.3 million were 31% lower than preceding first quarter 2017 amount of $1.9 million, primarily the result of a retiring allowance distributed to a former executive in the first quarter of 2017. Second quarter 2017 G&A was 10% lower than the comparative second quarter 2016 amount of $1.4 million due to reductions in staff compensation levels effective January 1, 2017. RMP presently employs 20 head office personnel and engages the services of two consultants on a part-time basis.
- Funds from operations amounted to $2.8 million ($0.02 per basic share) in the second quarter, a 17% increase over the $2.4 million generated in the preceding first quarter of 2017. The Company’s corporate field operating netback was $13.46/boe for the second quarter, an 11% decrease from the first quarter of 2017, primarily the result of lower crude oil prices realized in the second quarter.
- In the second quarter, the Company invested $6.5 million in capital expenditures, with $1.1 million directed to drilling and completions activities and $5.1 million to field facilities and well equipment. The majority of the Company’s infrastructure capital investment in the second quarter relates to the finalization of the construction of RMP’s Elmworth 2-23 Facility.
- As at June 30, 2017, the Company’s net debt amounted to $26.8 million. Bank interest charges on its outstanding bank debt during the second quarter were $257 thousand or $0.79/boe. The next borrowing base re-determination is scheduled for August 31, 2017. The current borrowing base limit with the bank credit facility is $40 million. Under its bank credit facility, there is one prescribed financial covenant, an interest-coverage ratio requirement of at least 3.5 times. At June 30, 2017, the Company’s ratio was significantly above this threshold, with interest coverage of 11.7 times. Please refer to RMP’s second quarter 2017 MD&A for details on the calculation of this covenant.
RMP’s interim condensed consolidated financial statements and Management’s Discussion and Analysis for the three months ended June 30, 2017 are available on RMP’s website at www.rmpenergyinc.com within “Investors” under “Financials”. Additionally, these documents will be filed later today on the System for Electronic Document Analysis and Retrieval (“SEDAR”). After such filing, these documents can be retrieved electronically from the SEDAR system by accessing RMP’s public filings under “Search for Public Company Documents” within the “Search Database” module at www.sedar.com.
|bbl or bbls||barrel or barrels||Mcf/d||thousand cubic feet per day|
|Mbbl||thousand barrels||MMcf/d||million cubic feet per day|
|bbls/d||barrels per day||MMcf||Million cubic feet|
|boe||barrels of oil equivalent||Bcf||billion cubic feet|
|Mboe||thousand barrels of oil equivalent||psi||pounds per square inch|
|boe/d||barrels of oil equivalent per day||kPa||kilopascals|
|NGLs||natural gas liquids||GJ||Gigajoule|
|WTI||West Texas Intermediate||GJ/d||Gigajoules per day|