CALGARY, Alberta, Aug. 16, 2018 (GLOBE NEWSWIRE) — Strategic Oil & Gas Ltd. (“Strategic” or the “Company”) (TSXV: SOG) is pleased to report financial and operating results for the three and six months ended June 30, 2018. Detailed results and additional information are presented in Strategic’s interim condensed consolidated financial statements and related Management’s Discussion and Analysis (“MD&A”) which will be available through the Company’s website at www.sogoil.com and on SEDAR at www.sedar.com.
|FINANCIAL AND OPERATIONAL SUMMARY|
|Three months ended June 30
||Six months ended June 30
|Financial ($thousands, except per share amounts)||2018||2017||% change||2018||2017||% change|
|Oil and natural gas sales||10,639||10,312||3||20,720||19,200||8|
|Funds from operations (1)||47||2,991||(98)||1,601||5,374||(70)|
|Per share basic (1) (2)||0.00||0.06||(100)||0.03||0.12||(75)|
|Cash provided by operating activities||972||1,828||(47)||1,742||1,879||(7)|
|Per share basic (2)||0.02||0.04||(50)||0.04||0.04||–|
|Per share basic (2)||(0.14)||(0.15)||(7)||(0.25)||(0.25)||–|
|Net capital expenditures||940||12,784||(93)||10,101||30,851||(67)|
|Working capital (deficiency) (comparative figure is as of December 31, 2017)||(1,991)||13,087||–||(1,991)||13,087||–|
|Net debt (comparative figure is as of December 31, 2017) (1)||112,046||95,801||17||112,046||95,801||17|
|Average daily production|
|Crude oil (bbl per day)||1,660||1,942||(15)||1,680||1,786||(6)|
|Natural gas (mcf per day)||2,865||4,317||(34)||2,883||4,096||(30)|
|Barrels of oil equivalent (boe per day)||2,138||2,661||(20)||2,161||2,468||(12)|
|Oil & NGL, before risk management ($ per bbl)||68.17||51.69||32||65.17||52.68||24|
|Oil & NGL, including risk management ($ per bbl)||67.88||51.69||31||65.04||52.68||23|
|Natural gas ($ per mcf)||1.30||3.00||(57)||1.73||2.93||(41)|
|Operating netback ($ per boe) (1)|
|Oil and natural gas sales||54.68||42.58||28||52.99||42.97||23|
|Operating Netback (1)||18.80||17.98||5||17.95||17.94||–|
|Common Shares (2) (thousands)|
|Common shares outstanding, end of period||46,421||46,388||–||46,421||46,388||–|
|Weighted average common shares (basic & diluted)||46,405||46,384||–||46,401||45,969||1|
|(1) Funds from operations, net debt and operating netback are Non-GAAP measures; see “Non-GAAP measures” in the MD&A.|
|(2) Adjusted for the share consolidation on a 20:1 basis on March 6, 2017.|
PERFORMANCE OVERVIEW AND OUTLOOK
In the second quarter, Strategic’s new management team was focused on the evaluation of the Company’s asset base and formulation of a development capital expenditure plan intended to debottleneck the West Marlowe field to optimize production and reserves on existing and future drill locations. In addition, a detailed technical evaluation of the Muskeg zone was developed to obtain “first principle” technical data associated with the Muskeg reservoir to better quantify the deliverability of the play. In the near term it is Management’s intention to identify and evaluate funding alternatives for its capital expenditure plan, and the Company will provide additional information as it becomes available.
With respect to the two well Muskeg drilling program completed in the first quarter of 2018, despite the negative impact of pipeline pressures and surface restrictions, the new wells are producing steadily with 98% runtime for the second quarter. Average rates over the first 60 and 90 days of production are as follows:
|Well||Total (boe/d)||% oil||Total (boe/d)||% oil|
- Capital expenditures of $0.9 million were incurred in the quarter relative to guidance of $1.0 million provided on May 23, 2018. Expenditures included minor facilities projects and completion costs related to the two well Muskeg development drilling program initiated in the first quarter of 2018.
- Revenues increased 3% from the second quarter of 2017 to $10.6 million for the period due an increase in realized oil prices, which were partially offset by lower production. The average WTI oil price for the quarter was US $67.88/bbl. Revenues for the six months ended June 30, 2018 increased by 8% to $20.7 million compared to $19.2 million for the comparative period in 2017 due to an increase in realized oil prices.
- Despite higher revenues, funds from operations decreased to $nil for the quarter from $3.0 million for the three months ended June 30, 2017 and $1.6 million for the first quarter of 2018. The decrease was primarily related to higher operating costs, higher royalty rates driven by the increase in commodity prices and cash interest expense on the Company’s convertible debentures starting March 1, 2018.
- Average production decreased 20% from the second quarter of 2017 to 2,138 boe/d for the second quarter of 2018 due to a slower pace of drilling activity, as only 2 Muskeg wells were drilled in 2018 compared to 5 wells drilled in the first half of 2017. Production volumes in the current period were also affected by elevated pipeline pressures at west Marlowe and a pipeline shutdown at North Marlowe.
- Subsequent to the reporting date, a minor non-core asset producing 50 boe/d was sold for nominal consideration, decreasing the Company’s decommissioning obligations by approximately $2 million.
Strategic is a junior oil and gas company committed to becoming a premier northern oil and gas operator by exploiting its light oil assets primarily in northern Alberta. The Company maintains control over its resource base through high working interest ownership in wells, construction and operation of its own processing facilities and a significant undeveloped land and opportunity base. Strategic’s primary operating area is at Marlowe, Alberta. Strategic’s common shares trade on the TSX Venture Exchange under the symbol SOG.
For more information, please contact:
President & Chief Executive Officer
Chief Financial Officer
|Strategic Oil & Gas Ltd.
1100, 645 7th Avenue SW
Calgary, AB T2P 4G8