CALGARY, Alberta, Nov. 29, 2017 (GLOBE NEWSWIRE) — LEUCROTTA EXPLORATION INC. (TSXV:LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three and nine months ended September 30, 2017. All dollar figures are Canadian dollars unless otherwise noted.
- Increased production 216% to 3,123 boe/d in Q3 2017 from 989 boe/d in Q3 2016 (increased 19% from 2,629 boe/d in Q2 2017).
- Increased funds from operations 1,509% to $1.7 million in Q3 2017 from funds used in operations of $0.1 million in Q3 2016.
- Tied-in Mica 8-4 and Mica A8-22 Lower Montney Oil wells.
- Drilled two Lower Montney wells at Doe/Mica awaiting completions/results.
|Three Months Ended September 30||Nine Months Ended September 30|
|($000s, except per share amounts)||2017||2016||% Change||2017||2016||% Change|
|Oil and natural gas sales||5,908||2,309||156||17,258||6,563||163|
|Funds from (used in) operations (1)||1,747||(124||)||1,509||5,140||(898||)||672|
|Per share – basic and diluted||0.01||–||100||0.03||(0.01||)||400|
|Per share – basic and diluted||(0.01||)||(0.03||)||(67||)||(0.02||)||(0.06||)||(67||)|
|Capital expenditures and acquisitions||16,316||5,775||183||77,644||10,856||615|
|Proceeds from sale of equipment||–||4,000||(100||)||–||4,000||(100||)|
|Common shares outstanding (000s)|
|Weighted average – basic and diluted||200,479||165,227||21||185,633||165,227||12|
|End of period – basic||200,479||165,227||21|
|End of period – diluted||227,108||189,297||20|
(1) See “Non-GAAP Measures” section.
|OPERATING RESULTS (1)||Three Months Ended September 30||Nine Months Ended September 30|
|2017||2016||% Change||2017||2016||% Change|
|Oil and NGLs (bbls/d)||857||300||186||661||345||92|
|Natural gas (mcf/d)||13,593||4,138||228||11,324||4,588||147|
|Oil equivalent (boe/d)||3,123||989||216||2,549||1,110||130|
|Oil and NGLs ($/bbl)||50.97||48.28||6||53.71||43.08||25|
|Natural gas ($/mcf)||1.51||2.57||(41||)||2.45||2.00||23|
|Oil equivalent ($/boe)||20.56||25.37||(19||)||24.80||21.67||14|
|Oil and NGLs ($/bbl)||5.66||5.88||(4||)||5.98||4.16||44|
|Natural gas ($/mcf)||0.03||0.10||(70||)||0.07||0.03||133|
|Oil equivalent ($/boe)||1.67||2.20||(24||)||1.88||1.42||32|
|Oil and NGLs ($/bbl)||7.16||18.92||(62||)||8.40||16.76||(50||)|
|Natural gas ($/mcf)||1.10||1.29||(15||)||1.14||1.14||–|
|Oil equivalent ($/boe)||6.75||11.12||(39||)||7.24||9.94||(27||)|
|Oil and NGLs ($/bbl)||2.22||6.02||(63||)||3.07||5.06||(39||)|
|Natural gas ($/mcf)||0.54||0.44||23||0.71||0.43||65|
|Oil equivalent ($/boe)||2.94||3.65||(19||)||3.96||3.37||18|
|Operating netback (2)|
|Oil and NGLs ($/bbl)||35.93||17.46||106||36.26||17.10||112|
|Natural gas ($/mcf)||(0.16||)||0.74||(122||)||0.53||0.40||33|
|Oil equivalent ($/boe)||9.20||8.40||10||11.72||6.94||69|
|Depletion and depreciation ($/boe)||(9.93||)||(15.46||)||(36||)||(10.05||)||(13.07||)||(23||)|
|General and administrative expenses ($/boe)||(3.58||)||(10.90||)||(67||)||(4.76||)||(11.11||)||(57||)|
|Share based compensation ($/boe)||(1.41||)||(9.53||)||(85||)||(1.71||)||(9.93||)||(83||)|
|Finance expenses ($/boe)||(0.21||)||(0.52||)||(60||)||(0.25||)||(0.41||)||(39||)|
|Finance income ($/boe)||0.54||1.31||(59||)||0.51||1.30||(61||)|
|Loss on sale of assets ($/boe)||–||(28.15||)||(100||)||–||(8.46||)||(100||)|
|Net loss ($/boe)||(5.39||)||(54.85||)||(90||)||(4.54||)||(34.74||)||(87||)|
(1) See “Frequently Recurring Terms” section.
(2) See “Non-GAAP Measures” section.
Selected financial and operational information outlined in this news release should be read in conjunction with Leucrotta’s unaudited condensed interim financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2017, which are available for review at www.sedar.com.
In Q3 2017, Leucrotta focused its efforts on refining the completion techniques for the Lower Montney. The first well with increased frac intensity was the A8-22 well that had 41 frac stages versus previous wells with 28 frac stages. As previously released, this well had IP90 production of 838 boe/d that was 61% above Leucrotta’s type curve of 521 boe/d for the area and continues to produce significantly above the type curve. Leucrotta has continued to increase the frac intensity in subsequent wells that have recently been completed with 50 frac stages over the same one mile horizontal lateral length.
Leucrotta will continue to monitor the production of the wells to determine the effect of the increased frac intensity over a longer term period and its effect on the ultimate recoveries of the wells. Future wells will be focused primarily on the oil window of the Lower Montney and will be a combination of delineation and higher intensity frac wells. We anticipate the extent of the 2018 capital program will be released in early 2018.
Production continues to increase as new wells are placed on production and is projected to average 3,600 boe/d (30% oil and liquids) for Q4 2017. Leucrotta’s gathering system is currently running higher than optimal pressures with several wells having to flow against significant back pressure. While future opportunities exist to optimize the production through debottlenecking and reducing wellhead operating pressures, Leucrotta has chosen to focus its near term capital on drilling and completion.
At the end of Q3 2017, Leucrotta had approximately $29 million of working capital, no debt, and a $20 million undrawn bank credit facility. Leucrotta estimates that it will have approximately $18 million of working capital, no debt and an undrawn bank credit facility of $20 million at the end of 2017.
We look forward to reporting on the results of the new wells and other business developments in the near future.
FREQUENTLY RECURRING TERMS
The Company uses the following frequently recurring industry terms in this news release: “bbls” refers to barrels, “mcf” refers to thousand cubic feet, and “boe” refers to barrel of oil equivalent. Disclosure provided herein in respect of a boe may be misleading, particularly if used in isolation. A boe conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent has been used for the calculation of boe amounts in this news release. This boe conversion rate is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Any references to peak rates, test rates, IP30, IP90 or initial production rates or declines are useful for confirming the presence of hydrocarbons, however, such rates and declines are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or ultimate recovery. IP30 is defined as an average production rate over 30 consecutive days and IP90 is defined as an average production rate over 90 consecutive days. Readers are cautioned not to place reliance on such rates in calculating aggregate production for the Corporation.
This news release contains references to type well, or “type curve”, production and economics, which are derived, at least in part, from available information respecting the well performance of other companies and, as such, may be considered “analogous information” as defined in NI 51-101. Production type curves are based on a methodology of analog, empirical and theoretical assessments and workflow with consideration of the specific asset, and as depicted in this presentation, is representative of the Company’s current program, including relative to current performance. Some of this data may not have been prepared by qualified reserves evaluators, may have been prepared based on internal estimates, and the preparation of any estimates may not be in strict accordance with COGEH. Estimates by engineering and geo-technical practitioners may vary and the differences may be significant. The Company believes that the provision of this analogous information is relevant to the Company’s oil and gas activities, given its acreage position and operations (either ongoing or planned) in the areas in question, and such information has been updated as of the date hereof unless otherwise specified.
The Montney Type Curves disclosed in this news release are an internal estimate prepared by a Qualified Reserves Evaluator (“QRE”) and are based on an average of the proved plus probable type curves used by GLJ for booked undeveloped horizontal wells in the Lower Montney formation as per the year-end 2016 corporate reserves evaluation effective December 31 2016. The curves represent an internal “best-estimate” expectation.
This news release refers to certain financial measures that are not determined in accordance with IFRS (or “GAAP”). This news release contains the terms “funds from (used in) operations”, “funds from (used in) operations per share”, and “operating netback” which do not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures used by other companies. The Company uses these measures to help evaluate its performance.
Management uses funds from (used in) operations to analyze performance and considers it a key measure as it demonstrates the Company’s ability to generate the cash necessary to fund future capital investments and to repay debt. Funds from (used in) operations is a non-GAAP measure and has been defined by the Company as cash flow from operating activities excluding the change in non-cash working capital related to operating activities and expenditures on decommissioning obligations. The Company also presents funds from (used in) operations per share whereby amounts per share are calculated using weighted average shares outstanding, consistent with the calculation of loss per share. Funds from (used in) operations is reconciled from cash flow from operating activities under the heading “Funds from (used in) Operations” in the Company’s MD&A for the three and nine months ended September 30, 2017, which is available on SEDAR at www.sedar.com.
Management considers operating netback an important measure as it demonstrates its profitability relative to current commodity prices. Operating netback, which is calculated as average unit sales price less royalties, production expenses, and transportation expenses, represents the cash margin for every barrel of oil equivalent sold. Operating netback per boe is reconciled to net loss per boe under the heading “Operating Netback” in the Company’s MD&A for the three and nine months ended September 30, 2017, which is available on SEDAR at www.sedar.com.