CALGARY, Alberta, Nov. 09, 2018 (GLOBE NEWSWIRE) — Toscana Energy Income Corporation (“Toscana” or the “Corporation”) (TSX: TEI) announces financial and operating results for the third quarter ended September 30, 2018.
Financial and operating results:
This news release summarizes information contained in the Condensed Consolidated Interim Financial Statements (unaudited) and Management’s Discussion and Analysis (“MD&A”) for the three and nine month period ended September 30, 2018. This news release should not be considered a substitute for reading the full disclosure documents, which are available under the Corporation’s profile on SEDAR at www.sedar.com and on the Corporation’s website at www.toscanaenergy.ca.
- Q3 exit production at approximately 1,700 boe/d with 53% being light oil and liquids. Current estimated field production of approx. 1,900 boe/d (46% oil and liquids).
- Completed the previously announced Cortona acquisition and consolidated its Barons light oil pool in Southern Alberta. As a result of the Cortona acquisition, Toscana reported incremental average oil production from August 29, 2018 to September 30, 2018 of approximately 270 bbl/d.
- Doubled its light oil production at Clair, Alberta as the re-start of its water flood injection scheme has increased overall production volumes.
- Seasonal shut-in gas being brought on stream to take advantage of higher natural gas prices during winter months.
The current pricing environment remains challenging as take-away capacity on both the oil and natural gas have hit significant bottlenecks creating unprecedented wide product differentials putting pressure on revenues and operating margins. This structural issue facing all producers is significant and may take some time to resolve. In the interim, capital allocation will continue to be stringent, focusing on strategies that will improve financial flexibility through this period. Looking forward, revenue and cash flow streams in 2019 are anticipated to be stronger given the expiry of the current hedging program coupled with improving crude oil differentials.
|Three months ended||Nine months ended|
|September 30||September 30|
|Average daily production (boe/d)||1,462||2,197||(33||%)||1,618||2,222||(27||%)|
|Average prices received ($/boe)||34.28||20.53||67||%||30.40||25.88||17||%|
|Petroleum and natural gas revenue, net of royalty expense ($) (1)||3,802,446||3,906,220||(3||%)||11,883,849||15,015,525||(21||%)|
|Netback ($) (2)||594,483||1,483,978||(60||%)||2,338,854||5,410,401||(57||%)|
|Netback per boe ($/boe) (2)||4.42||7.34||(40||%)||5.29||8.92||(41||%)|
|Funds flow from (used-in) operations ($) (2,3]||(766,563||)||589,528||(230||%)||(1,396,819||)||1,892,084||(174||%)|
(1) Includes royalty revenue
(2) Non-IFRS measures
(3) Net of $425,000 of one-time transaction costs relating to the Cortona acquisition
Management uses “netback”, “funds flow from operations”, to analyze operating performance and to determine the Corporation’s ability to fund future capital investment. These terms, as presented, do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable with the calculation of similar measures for other entities. Readers are cautioned regarding the reliability of such measures.
Operating netback typically equals (a) petroleum and natural gas revenue (including royalty revenues), net of royalty expense (b) realized gains and losses on risk management contracts and (c) less operating costs, net of processing income and is generally calculated on a per boe basis. As a non-IFRS measure, operating netback is an indicator of the financial performance of the Corporation. The Corporation uses such term as an indicator of financial performance because such term is commonly utilized by investors to evaluate companies in the energy sector. The Management of the Corporation believes that operating netback is a useful supplemental measure as it provides investors with information on operating margins per barrel of oil equivalent for such periods.
Management calculates funds flow from operations as net earnings (loss) plus the addition of non-cash items (depletion, depreciation, accretion, share-based compensation, gains or losses on the sale of property and equipment and unrealized gains or losses on risk management contracts, gain on dentures amendments, etc.) and settlement of decommissioning liabilities.
As a non-IFRS measure, these measures are an indicator of the financial performance as it demonstrates the Corporation’s ability to generate the cash necessary to fund future capital investments and to repay debt. The Corporation uses such term as an indicator of financial performance because such term is commonly utilized by investors to evaluate companies in the energy sector. The Corporation believes that these measures are a useful supplemental measure as it provides investors with information of what cash is available in such periods.