CALGARY, Alberta, April 09, 2019 (GLOBE NEWSWIRE) — Traverse Energy Ltd. (“Traverse” or “the Company”) (TSX Venture: TVL) presents financial and operating results for the three months and years ended December 31, 2018 and 2017 and provides 2018 year end reserves information evaluated by Sproule Associates Limited (“Sproule”).
| Three Months Ended December 31 (unaudited) |
Year Ended December 31 | |||||||
| Highlights | 2018 | 2017 | 2018 | 2017 | ||||
| Financial ($ thousands, except per share amounts) | ||||||||
| Petroleum and natural gas revenue | 1,191 | 2,209 | 6,717 | 10,023 | ||||
| Cash from (used in) operating activities | (46 | ) | (153 | ) | 2,216 | 3,420 | ||
| Adjusted funds flow (1) | (158 | ) | 881 | 1,442 | 4,238 | |||
| Per share – basic and diluted | (0.00 | ) | 0.01 | 0.01 | 0.05 | |||
| Net loss | (8,944 | ) | (2,967 | ) | (17,705 | ) | (5,006 | ) |
| Per share – basic and diluted | (0.09 | ) | (0.03 | ) | (0.17 | ) | (0.05 | ) |
| Capital expenditures | 409 | 10,590 | 2,954 | 17,706 | ||||
| Total assets | 28,694 | 51,510 | 28,694 | 51,510 | ||||
| Working capital (deficiency) | (6,673 | ) | (4,894 | ) | (6,673 | ) | (4,894 | ) |
| Common shares | ||||||||
| Outstanding (millions) | 103.5 | 103.5 | 103.5 | 103.5 | ||||
| Weighted average (millions) | 103.5 | 100.3 | 103.5 | 92.0 | ||||
| Operations (Units as noted) | ||||||||
| Average production | ||||||||
| Natural gas (Mcf per day) | 2,037 | 2,418 | 1,774 | 2,358 | ||||
| Oil and NGL (bbls per day) | 254 | 305 | 264 | 375 | ||||
| Total (BOE per day) | 594 | 708 | 559 | 768 | ||||
| Average sales price | ||||||||
| Natural gas ($/Mcf) | 1.93 | 2.29 | 1.83 | 2.66 | ||||
| Oil and NGL ($/bbl) | 35.45 | 60.65 | 57.43 | 56.48 | ||||
| Netback ($/BOE) | ||||||||
| Petroleum and natural gas revenue | 21.80 | 33.93 | 32.90 | 35.74 | ||||
| Royalties | (0.80 | ) | (0.67 | ) | (1.57 | ) | (1.17 | ) |
| Operating and transportation expenses | (17.45 | ) | (17.02 | ) | (17.79 | ) | (16.05 | ) |
| Operating netback (2) | 3.55 | 16.24 | 13.54 | 18.52 | ||||
| General and administrative | (4.84 | ) | (2.67 | ) | (5.07 | ) | (3.28 | ) |
| Net finance expense (3) | (1.60 | ) | (0.05 | ) | (1.40 | ) | (0.13 | ) |
| Corporate netback (4) | (2.89 | ) | 13.52 | 7.07 | 15.11 | |||
(1) Adjusted funds flow represents cash from (used in) operating activities prior to changes in non-cash working capital and settlement of decommissioning obligations. See Non-IFRS measures.
(2) Operating netback represents revenue less royalties, operating and transportation expenses. Operating netback per BOE is the operating netback divided by barrels of oil equivalent production for the applicable period. See Non-IFRS measures.
(3) Excludes non-cash accretion.
(4) Corporate netback represents operating netback less general and administrative costs and finance income and costs before accretion. Corporate netback per BOE is the corporate netback divided by barrels of oil equivalent production for the applicable period. See Non-IFRS measures.
Operations review
Traverse’s production averaged 594 BOE per day (43% oil and NGL) during the fourth quarter of 2018, an increase of 31% from the third quarter of 2018. Production increased in the fourth quarter as previously suspended wells were returned to production; however, the sharp decline in Canadian oil prices resulted in negative adjusted funds flow for the quarter. Canadian oil prices decreased in the fourth quarter due to significantly high crude oil differentials caused by lack of take away capacity and pipeline constraints. In 2019 the province of Alberta mandated temporary production curtailments which have contributed to reducing differentials and improving oil prices received by the Company.
Production for 2018 averaged 559 BOE per day, a decrease of 27% from 2017. Production declined in 2018 as no new production was added. Traverse did not drill any wells in 2018 due to capital constraints. Capital expenditures in 2018 related to land acquisition and production testing at Chigwell which included facility expenditures required to continue producing the Duvernay well. In 2018 Traverse acquired approximately 47,000 net acres of land in the Greater Coyote Area and the Duvernay shale oil basin. The full carrying value of the Chigwell Duvernay well was impaired in 2018 as commercial viability was not established and no economic reserves have been assigned.
At December 31, 2018 Traverse had a working capital deficiency of $6.7 million. Traverse’s current revolving operating loan facility of $9 million is subject to the annual review of the borrowing base on or before May 31, 2019. The Company’s ability to continue as a going concern is dependent upon the ability to renew the current loan facility and generate positive cash flow from operations, equity financing, disposing of assets or other arrangements to fund future development capital.
Undeveloped land holdings in Alberta at December 31, 2018 totalled 203,400 gross (202,800 net) acres including 100,000 net acres in the Duvernay shale oil basin. In March 2019 Traverse retained an advisor to pursue alternatives for development or disposition of its Duvernay lands.
2018 Reserves report
Traverse’s independent reserve report, dated February 15, 2019, was prepared by Sproule in accordance with National Instrument 51-101 effective December 31, 2018.
Summary of oil and gas reserves as of December 31, 2018
The following tables are a summary of Traverse’s petroleum and natural gas reserves, as evaluated by Sproule, effective December 31, 2018, using Sproule’s forecast prices and costs. It should not be assumed that the estimates of future net revenue presented in the tables below represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of the Company’s crude oil, natural gas liquids, and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater or less than the estimates provided herein. Reserves information may not add due to rounding.
Summary of oil and gas reserves as of December 31, 2018
| Light and Medium Crude Oil |
Conventional Natural Gas |
Natural Gas Liquids |
Oil Equivalent | |||||
| Gross(1) | Net(2) | Gross(1) | Net(2) | Gross(1) | Net(2) | Gross(1) | Net(2) | |
| Reserves Category | Mbbl | Mbbl | MMcf | MMcf | Mbbl | Mbbl | MBOE | MBOE |
| Proved Developed Producing | 382.6 | 367.9 | 2,393 | 2,188 | 28.0 | 19.6 | 809.4 | 752.2 |
| Proved Developed Non-producing | 7.4 | 7.4 | – | – | – | – | 7.4 | 7.4 |
| Proved Undeveloped | 397.6 | 350.5 | 1,233 | 1,168 | 11.9 | 10.5 | 614.9 | 555.6 |
| Total Proved | 787.6 | 725.8 | 3,626 | 3,355 | 39.8 | 30.1 | 1,431.7 | 1,315.2 |
| Probable | 226.3 | 196.3 | 1,098 | 1,000 | 12.0 | 9.4 | 421.3 | 372.3 |
| Total Proved Plus Probable | 1,014.0 | 922.1 | 4,724 | 4,355 | 51.9 | 39.5 | 1,853.1 | 1,687.5 |
Notes:
1. Gross reserves are Traverse’s working interest reserves before deduction of any royalties and before consideration of Traverse’s royalty interests.
2. Net reserves are Traverse’s working interest reserves after deduction of royalties, plus Traverse’s royalty interests.
Net present value of future net revenue as of December 31, 2018
| Value Before Income Taxes Discounted at (%/Year) (1) | Unit Value Before Income Taxes (2) |
|||||
| Reserves Category | 0 M$ |
5 M$ |
10 M$ |
15 M$ |
20 M$ |
10% $/BOE |
| Proved Developed Producing | 14,712 | 13,323 | 11,980 | 10,821 | 9,850 | 15.93 |
| Proved Developed Non-producing | 22 | 46 | 55 | 56 | 53 | 7.44 |
| Proved Undeveloped | 14,923 | 11,399 | 8,871 | 7,029 | 5,651 | 15.97 |
| Total Proved | 29,657 | 24,768 | 20,906 | 17,906 | 15,554 | 15.90 |
| Probable | 12,284 | 8,923 | 6,753 | 5,320 | 4,333 | 18.14 |
| Total Proved Plus Probable | 41,941 | 33,691 | 27,659 | 23,225 | 19,887 | 16.39 |
Notes:
1. Includes future development capital of $8.2 million (undiscounted).
2. Unit values based on net reserves volumes.