Calgary, Alberta (FSCwire) – Point Loma Resources Ltd. (TSX VENTURE: PLX) (the “Corporation” or “Point Loma”) is pleased to report financial and operating results for the three and six months ended June 30, 2018. Highlights of the period and additional updates are summarized below:
- Current oil and NGL production has increased approximately 100% from the first quarter to 260 bbl/d.
- Overall boe/d production increased 36% from the first quarter.
- Operating costs per boe reduced by 12% from first quarter.
- Even in an extreme low gas price environment, the Corporation is back to positive cash flow in forward projections.
- Point Loma plans to resume drilling in the second half of 2018 and is anticipating growth from development and exploratory targets, subject to available funding.
|Financial||Three months ended||Three months ended||Six months ended||Six months ended|
|($ thousands, except share amounts)|
|Cash flow from (used in) operating activities(1)||145||-513||-791||-173|
|Funds used in operations(1)(2)(3)||-696||-576||-1,526||-637|
|Per share – basic and diluted(2)||-0.01||-0.02||-0.03||-0.02|
|Net income (loss)||505||421||-1,074||-351|
|Per share – basic and diluted||0.01||0.01||-0.02||-0.01|
|Working capital (deficit)||-2,990||5,305||-2,990||5,305|
|Weighted average shares outstanding for period||55,244,883||35,299,813||55,073,344||32,435,027|
|Shares outstanding at end of period||60,322,773||42,078,907||60,322,773||42,078,907|
|Daily average production|
|Crude oil and liquids (bbls/d)||204||131||171||167|
|Natural gas (mcf/d)||3,388||2,611||3,098||2,434|
|Total production (boe/d at 6:1)||768||566||687||573|
|Average sales price|
|Crude oil and liquids ($/bbl)||61.53||48.66||59.76||50.62|
|Natural gas ($/mcf)||1.02||2.53||1.43||2.63|
|Net operating expense ($/boe)(3)||-18.21||-19.17||-19.12||-18.23|
|Transportation expense ($/boe)||-0.61||-0.7||-0.71||-0.87|
Funds used in operations is cash flow from (used in) operating activities less changes in non-cash working capital.
- Six months ended June 30, 2017 includes four months of Judy Creek Acquisition production and reflects the sale of 20% of the oil and gas assets to Salt Bush Energy Ltd. (“Salt Bush”) effective April 1, 2017.
- Funds used in operations is cash flow from (used) in operating activities less changes in non-cash working capital.
- Funds used in operating activities, netback and net operating expense are non-GAAP measures; see “Non-GAAP Measures” below.
Second Quarter Summary
During the second quarter of 2018, Point Loma was negatively impacted by low natural gas prices which reduced anticipated netback. Only modest gains were recovered through physical natural gas commodity contracts during the second quarter, with AECO prices decreasing over 40% from the 2018 first quarter.
On April 30, 2018, Point Loma acquired certain oil and gas assets. With an effective date of November 1, 2017, the net purchase price was approximately $0.8 million, and resulted in the recording of a gain on acquisition of $2.1 million as the estimated fair value of the net assets acquired amounted to more than what was paid. During May 2018, Point Loma sold a gross overriding royalty and 448 acres of undeveloped land, related to the assets acquired on April 30, 2018, for cash proceeds of $0.4 million, with no gain or loss resulting. To date, the acquisition has provided incremental production of approximately 300 boe/d, comprised of approximately 30 percent oil and NGLs. Expectations of 315 boe/d and 35 percent oil and NGLs are still estimated on a go forward basis.
On June 28, 2018, the Corporation acquired a private entity in exchange for 5,192,000 common shares, valued at $0.25 per share on the date of closing, with no gain or goodwill resulting. Incremental production is anticipated to be 130 boe/d with a 25 percent oil and NGL weighting. An additional working interest in one of the oil producing properties was acquired on August 20, 2018, adding 12 bbl/d of oil production.
Point Loma is proposing to drill two exploratory wells and one development well in the second half of 2018, subject to available funding. Opportunities include a significant Banff target (July 25 press release) that appears analogous to area pools that are in the range of 20 to 90 millions of barrels of original oil in place, as per Alberta Energy Regulator data. Typical primary recoveries for these pools are 5 to 10% with some pools reaching 30% recovery under waterflood. These offset pools have not been previously developed with horizontal multi-stage wells.
A second exploratory target licensed by Point Loma is a Lower Mannville target with similar character to the Paddle River A Ostracod pool. This well could initiate significant future development upon success.
At the Corporation’s Paddle River A pool, plans are to drill an offset to the most prolific horizontal well in the pool that has cumulative production to date of 120 thousand standard barrels of oil and 0.3 billion cubic feet of natural gas. The offset well produced at an initial production 90 day rate of 250 bbl/d of oil and 500 mcf/d of natural gas.
Point Loma is anticipating an increase in oil volumes from this program that will continue our solid liquids growth. In addition, the Corporation anticipates the resumption of approximately 1,200 mcf/d (200 boe/d) of natural gas production that was shut in for summer months due to poor economics of natural gas for the period.
NGL production gains are expected as Point Loma completes work to reroute existing production volumes and reactivate previously suspended volumes to a deep cut facility in the Paddle River area. The initial component of the project is now set for reactivation pending the facility operator’s work schedule. A potential increase of approximately 40 bbl/d of NGLs with additional new volumes restarting later in the year with accompanying NGLs production.
Duvernay activity continues near Point Loma lands with an offset exploratory well averaging approximately 150 bbl/d of oil for the first two full months of production. The Corporations land base totals approximately 12,500 net acres in the region.
Point Loma continues to work on rationalizing non-core properties to further reduce the working capital deficit and anticipates to see a significant reduction by the end of the third quarter through this effort and application of positive cash flows in the remainder of 2018. In addition, Point Loma has also continued to reduce general and administrative costs on a gross and per boe basis.
Point Loma has filed its second quarter financial statements and Management’s Discussion and Analysis for the quarter ended June 30, 2018 with Canadian securities regulators. These filings, and additional information including the Corporation’s corporate presentation can be found at Point Loma’s website at www.pointloma.ca or at Point Loma’s profile on the System for Electronic Document Analysis and Retrieval website at www.sedar.com.
About Point Loma
Point Loma is a public oil and gas development and exploration company focused on horizontally exploiting conventional oil and gas reservoirs in west central Alberta. Point Loma’s business plan is to utilize its experience to drill, develop and acquire accretive assets with potential for implementation of horizontal multi-stage frac technology and exploit opportunities for secondary recovery.