Lightstream Announces Operational Update and Buy Back of US$44 Million of High Yield Unsecured Senior Notes
CALGARY, ALBERTA--(Marketwired - Jul 15, 2014) - Lightstream Resources Ltd. ("Lightstream" or the "Company") (LTS.TO), is pleased to provide an operational update following the end of the second quarter and announce the buy back of US$44 million principal amount of our outstanding high yield Senior Notes.
OPERATIONAL UPDATE
Production for the second quarter of 2014 averaged 42,500 boepd based on field estimates (80% light-oil and liquids weighting), in line with first quarter 2014 production, accounting for dispositions. This represents a 3% reduction from first quarter 2014 levels, significantly lower than the average seasonal drop of 11% we have experienced for the past three years. Production in the second quarter of 2014 benefitted from an active first quarter drilling program and the completion of our Swan Hills battery. For 2014 one of our goals is to maintain 2013 production levels with an attenuated capital program, prior to the impact of dispositions, and our second quarter production is on target for achieving this goal.
Activity during the second quarter of 2014 was reduced, as is typical due to the spring break-up period. Consequently, three wells were drilled during the second quarter while completion and facility construction activity resulted in 29 wells being brought on production through June 30, 2014.
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Drilled | Completed | On Production | Inventory(1) | ||||||||||||||
Business Unit | Gross | Net | Gross | Net | Gross | Net | Gross | Net | |||||||||
Bakken | - | - | 4 | 1 | 8 | 3 | 3 | 2 | |||||||||
Conventional (SE SK) | - | - | 1 | - | 2 | - | - | - | |||||||||
Cardium (central AB) | 2 | 1 | 14 | 9 | 25 | 19 | 1 | 1 | |||||||||
Alberta/BC | - | - | 7 | 7 | 7 | 7 | - | - | |||||||||
Total | 2 | 1 | 26 | 17 | 42 | 29 | 4 | 3 | |||||||||
(1) | Inventory refers to the number of wells pending completion and/or tie-in at June 30, 2014. |
As we enter the third quarter of 2014, activity levels are ramping up for the second half of the year. We have 45% of our 2014 drilling program left to execute and we will be completing two facility projects in the Cardium. For the remainder of the year we plan to drill 17 wells in southeast Saskatchewan, 17 wells in the Cardium and seven wells in AB/BC. Currently we have three drilling rigs operational in the Cardium.
After commissioning our 3,500 bopd oil battery in Swan Hills during the second quarter, we tied-in and brought on all seven wells that were drilled in the area during the past winter drilling season. These seven wells contributed 1,300 boepd of production during the month of June. Production rates continue to improve as the wells clean up after being initially tied-in. In addition, plans for enhanced oil recovery in the area are progressing and we anticipate having our first waterflood pilot pattern on injection by year end.
DIVESTITURE UPDATE
On July 7, we closed the previously announced $98 million asset disposition of a portion of our southeast Saskatchewan non-core assets which consisted of approximately 1,000 boepd of production (96% liquids weighted) and 3.9 MMboe of proved plus probable ("2P") reserves.
Although we received competitive bids for our east Pembina Cardium asset package, we have not yet been able to finalize a transaction. We will continue to operate these assets, which contribute $15 million of net operating income to Lightstream annually. Our sales process for conventional assets in southeast Saskatchewan is still ongoing with initial bids due later this month.
HIGH YIELD NOTE BUYBACK
On July 11, 2014, we repurchased approximately US$44 million principal amount of outstanding 8.625% Senior Notes due 2020 from a note holder for an aggregate purchase price of US$47.6 million, including accrued interest. The repurchased notes are being retired and a total of US$856 million aggregate principal amount of 8.625% Senior Notes remain outstanding. The repurchase was financed through our secured credit facility and results in incremental interest savings of approximately $2.5 million per annum.
SECOND QUARTER FINANCIAL REPORTING AND INVESTOR CONFERENCE CALL
We will be releasing our second quarter financials results on August 6, 2014. Management of Lightstream will be holding a conference call for investors, financial analysts, media and any interested persons on August 7th, 2014 at 9:00 a.m. (MST) (11:00 a.m. EST) to discuss our second quarter financial and operating results.
The investor conference call details are as follows:
Live call dial-in numbers: | 1-416-340-8530/ 1-800-766-6630 |
Replay dial-in numbers: | 1-905-694-9451 / 1-800-408-3053 |
Passcode: | 5694926 |
http://www.gowebcasting.com/5247
Lightstream Resources Ltd. is an oil and gas exploration and production company combining light oil Bakken and Cardium resource plays with conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. Lightstream applies leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with other emerging resource play opportunities. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.
Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to an asset disposition, expected facilities, expected future tie-in of future production to facilities, results from operations, future production rates, proposed exploration and development activities (including the number of wells to be drilled, completed and put on production), projected capital expenditures, the timing of certain projects, the anticipated completion of asset dispositions, and future dividend payments. The forward-looking statements are based on certain key expectations and assumptions, including closing of the asset disposition, expectations and assumptions concerning the success of future drilling, completion, recompletion and development activities, the performance of new and existing wells, prevailing commodity prices and economic conditions, the market for asset dispositions and the ability of counterparties to close on dispositions, the availability and cost of labour and services, timing of pipeline and facilities construction, access to third party facilities and weather and access to drilling locations. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, risks that asset dispositions cannot be completed, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and exchange rate fluctuations and general economic conditions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. Except as may be required by applicable securities laws, Lightstream assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
BOEs. Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.
Well Counts. All references to well counts are on a net basis.
