CALGARY, March 31, 2016 /CNW/ – Toro Oil & Gas Ltd. (TSXV: TOO) (“Toro” or the “Company”) announces that it filed its financial and operating results for the fourth quarter and year ended December 31, 2015 with the Canadian Securities Administrators. The Company’s financial statements, Management’s Discussion & Analysis (“MD&A”) and Annual Information Form (“AIF”) can be found on the SEDAR website (www.sedar.com) or on the Company’s website (www.torooil.com). Included in the AIF is the annual oil and gas disclosure of the Company as at December 31, 2015 required under National Instrument 51-101. Reserves at December 31, 2015 were independently evaluated by Sproule Associates Limited (“Sproule”).
Fourth Quarter Financial and Operational Highlights
- Averaged 903 boe/d in production during Q4 2015, of which 63% represents oil and liquids compared to 165 boe/d of production in Q4 2014, a greater than five-fold increase over the comparable period. Production per share growth over the same comparable period equated to 289%;
- Successfully closed an opportunistic Viking light oil acquisition which added over 100 boe/d, net to Toro, 10.8 (8.9 net) sections of land and 146.4 thousand boe, net to Toro, of Proved plus Probable (“2P”) reserves to the Company’s Viking portfolio at a purchase price of approximately one million dollars. This implies a cost per flowing barrel metric of approximately $10,000 and $6.83 per boe on a 2P reserve basis;
- Completed a four (4.0 net) well second phase drilling and completion program on our Consort block accomplishing a number of objectives, including but not limited to, verification of the Consort acreage as a new development area and satisfaction of Toro’s flow-through share obligations. Consort acreage comprises 11% of Toro’s overall reserve value as independently evaluated by Sproule versus no booked reserves at December 31, 2014;
- Implemented a number of operating and corporate overhead cost cutting initiatives, including but not limited to, removal of rental equipment, incremental efficiencies in transportation arrangements, reductions in number of personnel and salary reductions. The goal of these various initiatives remains to be sustainable in a low commodity environment.
Financial Results
(CAD$ thousands unless otherwise specified) |
||||||||||
Three months ended December 31 |
Year ended December 31 |
|||||||||
2015 |
2014 |
% Change |
2015 |
2014 |
% Change |
|||||
Operational Performance |
||||||||||
Production Volumes |
||||||||||
Oil and NGLs (bbls/d) |
573 |
101 |
467 |
383 |
120 |
219 |
||||
Natural gas (mcf/d) |
1,981 |
386 |
413 |
1,831 |
455 |
302 |
||||
Oil equivalent (boe/d) |
903 |
165 |
447 |
688 |
196 |
251 |
||||
Financial Performance |
||||||||||
Production revenue (1) |
3,143 |
771 |
308 |
9,200 |
4,673 |
97 |
||||
Net comprehensive loss |
(4,084) |
(22,145) |
(82) |
(11,589) |
(23,467) |
(51) |
||||
Per share – basic and diluted |
(0.07) |
(0.64) |
(89) |
(0.21) |
(2.04) |
(90) |
||||
Cash flow used in operations (2) |
(478) |
(2,194) |
(78) |
(1,665) |
(1,370) |
22 |
||||
Per share – basic and diluted |
(0.01) |
(0.06) |
(83) |
(0.03) |
(0.12) |
(75) |
||||
Realized Sale Prices |
||||||||||
Oil and NGL’s ($/bbl) |
48.18 |
66.63 |
(28) |
51.63 |
89.26 |
(42) |
||||
Natural Gas ($/mcf) |
3.31 |
4.26 |
(22) |
2.97 |
4.59 |
(35) |
||||
Oil Equivalent ($/boe) |
37.83 |
50.72 |
(25) |
36.64 |
65.32 |
(44) |
||||
Netback ($/boe) |
||||||||||
Realized sales price |
37.83 |
50.72 |
(25) |
36.64 |
65.32 |
(44) |
||||
Royalties |
(6.01) |
(9.16) |
(34) |
(4.95) |
(13.21) |
(63) |
||||
Production expenses |
(25.68) |
(32.21) |
(20) |
(23.75) |
(21.72) |
9 |
||||
Transportation expenses |
(3.15) |
(1.98) |
59 |
(3.08) |
(2.12) |
45 |
||||
Operating netback ($/boe) (2) |
2.99 |
7.37 |
(59) |
4.86 |
28.27 |
(83) |
||||
General and administrative |
(9.53) |
(152.63) |
(94) |
(15.24) |
(53.51) |
(72) |
||||
Interest and other income |
0.59 |
1.31 |
(55) |
3.40 |
1.96 |
73 |
||||
Cash netback ($/boe) |
(5.95) |
(143.95) |
(96) |
(6.98) |
(23.28) |
(70) |
||||
Capital expenditures |
||||||||||
Capital expenditures |
6,870 |
2,712 |
153 |
21,115 |
3,278 |
544 |
||||
Net acquisitions (dispositions) (3) |
1,026 |
26,936 |
(96) |
(8,365) |
26,518 |
(132) |
||||
Total capital expenditures |
7,896 |
29,648 |
(73) |
12,750 |
29,796 |
(57) |
||||
Liquidity |
||||||||||
Net debt (surplus) (2) |
6,186 |
(5,133) |
(221) |
6,186 |
(5,133) |
(221) |
||||
Bank facility – undrawn portion |
24,200 |
25,000 |
(3) |
24,200 |
25,000 |
(3) |
||||
Weighted average shares outstanding |
||||||||||
Basic |
56,926,832 |
34,476,115 |
65 |
56,114,466 |
11,521,584 |
387 |
||||
Diluted |
56,926,832 |
34,476,115 |
65 |
56,114,466 |
11,521,584 |
387 |
||||
(1) Production revenue is presented gross of royalties. |
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(2) Cash flow used in operations, operating netback and net debt (surplus) are non-IFRS measures. See “Non-IFRS Measures”. |
||||||||||
(3) Represents the cash expenditure (proceeds) from the acquisition (sale) of assets, as applicable. |
Operational Update
During the fourth quarter of 2015, Toro completed its second phase drilling and completion program which concentrated efforts on its Consort property. In doing so, Toro achieved two key objectives of the program. First, early results substantiate Toro’s view that its Consort block may prove to be a new play warranting future development, and second, expenditures incurred on this phase together with expenditures incurred in other operations satisfied Toro’s December 2014 CEE flow-through share obligations. Although at a very early stage, Toro’s Consort value as evaluated by Sproule and contained in their report effective December 31, 2015, represents approximately 11% of the combined value of Toro reserves.
Toro also remained vigilant throughout the fourth quarter in sourcing opportunistic acquisitions to add to its already extensive Viking light oil portfolio evidenced by an acquisition of 100 boe/d for approximately one million dollars. Management believes the acquisition supports Toro’s strategy to augment the overall portfolio at transaction metrics which are very competitive with industry averages.
The fourth quarter experienced higher than average operating costs, however, many of these costs were planned and expected. As a result of initial drilling programs at Hamilton Lake and Consort, Toro rented several production equipment components until well performance was better understood. This resulted in an operating cost increase of approximately $5 per boe. Most of these components were replaced with permanent equipment towards the end of 2015 and into the first quarter of 2016. As a result, Toro anticipates material reductions in per unit operating costs going forward. Moreover, Toro implemented a number of other cost mitigation strategies towards the end of 2015 which are expected to further reduce operating and overhead costs.
Liquidity and Capital Resources
During 2015, Toro did not draw materially on its credit facility, however the Company accessed the credit line towards the end of the year and into the first quarter of 2016 as opposed to utilizing more expensive forms of capital to fund a number of items which progressed the business. These included, but were not limited to, completion of the second phase drilling and completion program at Consort, acquisition of right-sized and permanent production equipment and funding the aforementioned December 2015 tuck-in acquisition. At year-end, Toro had drawn on its credit facility in the amount of $800 thousand, however year-end net debt equated to approximately $6.2 million and largely reflects expenditures incurred for the above that were either not yet invoiced by the vendor or remained in payables at year-end. Toro’s credit facility is reviewed semi-annually by its lender and is largely determined by the future cash flows of Toro’s proved producing reserves. The lender commenced its semi-annual review early in March 2016 which is still ongoing.
Outlook and Capital Budget
As previously disclosed, Toro deferred its 2016 drilling program until it foresees a prolonged and sustained recovery of commodity prices. While Viking light oil well economics present some of the most attractive returns in the basin even at low oil prices, Toro believes maximization of shareholder return is best achieved by drilling in more robust markets, not simply at the margin of economic break even returns. Toro anticipates communicating updates to its operational plans as the circumstances and situation warrants.
About Toro Oil & Gas Ltd.
Toro is a junior oil and gas energy company listed on the TSX Venture Exchange. Toro is focused on acquiring, developing and exploiting large oil in place pools within the Alberta-Saskatchewan Viking light oil fairway. Toro intends to grow by way of organic development and strategic acquisitions while maintaining strict financial discipline to maximize shareholder return.
Abbreviations
bbls |
barrels |
bbls/d |
barrels per day |
boe |
barrels of oil equivalent |
boe/d |
barrels of oil equivalent per day |
mcf |
thousand cubic feet |
mcf/d |
thousand cubic feet per day |