Renegade Petroleum Ltd. Announces First Quarter 2013 Results

Marketwired

CALGARY, ALBERTA--(Marketwired - May 10, 2013) - Renegade Petroleum Ltd. ("Renegade" or the "Company") (TSX VENTURE:RPL), a light oil focused development and production company with assets located in Saskatchewan, Alberta, Manitoba and North Dakota, is pleased to announce it has filed its condensed interim consolidated financial statements ("Financial Statements") and related management's discussion and analysis ("MD&A") for the three month period ended March 31, 2013 on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with the Financial Statements and related MD&A which are available for review at www.renegadepetroleum.com or www.sedar.com.

FIRST QUARTER 2013 RESULTS

  • Achieved average production of 7,816 boe per day for the three months ended March 31, 2013, up 114 percent from the comparable quarter of 2012. Production consisted of 95 percent light oil and 5 percent natural gas and natural gas liquids;

  • Increased funds flow from operations by 90 percent to $27.4 million in the first quarter of 2013 from $14.4 million in the first quarter of 2012;

  • Paid cash dividends of $11.7 million or $0.01917 per Renegade share per month ($0.23 annualized) in the first quarter of 2013;

  • Disposed of non-core petroleum and natural gas properties for net proceeds of approximately $12.8 million;

  • Brought 22 gross (22.0 net) Viking wells on stream in west central Saskatchewan with a 100 percent success rate. Of the 22 net wells brought on stream, the average 30 day initial production rate of 17 gross (17.0 net) wells was 55 bbl/d which exceeded the Company type curve by 12 percent. In addition, the Company has 5 gross (5.0 net) wells which are scheduled to have optimization operations post break-up; and

  • Drilled 4 gross (2.0 net) wells in southeast Saskatchewan in the first quarter with a 75 percent success rate. Of the wells drilled, 1.0 gross (0.5 net) well had a 30 day initial production rate of 130 bbl/d and an 60 day initial production rate of 127 bbl/d and continues to be optimized; 2.0 gross (1.0 net) wells are awaiting further stimulation post-break-up; and 1.0 gross (0.5 net) well is expected to be abandoned.

FINANCIAL HIGHLIGHTS

Three months ended March 31,
2013 2012 % change
Financial (000's except per share amounts)
Petroleum and natural gas sales 56,864 27,687 105
Funds flow from operations(1) 27,357 14,366 90
Per share - basic 0.13 0.19 (32 )
Per share - diluted 0.13 0.18 (28 )
Net income (loss) (5,377 ) 236 (2,378 )
Per share - basic (0.03 ) 0.00 n/a
Per share - diluted(2) (0.03 ) 0.00 n/a
Dividends declared 11,681 - n/a
Per share 0.06 - n/a
Development capital expenditures 34,844 43,538 (20 )
Acquisitions (corporate and property) 282 16,217 (98 )
Property dispositions (12,804 ) - n/a
Net debt(3) 296,963 74,559 298
Three months ended March 31,
2013 2012 % change
Weighted average shares outstanding(2)
Basic 203,098 77,653 162
Diluted 203,098 80,610 152
Shares outstanding, end of period
Basic 203,147 89,635 127
Diluted 211,886 98,809 114
Operating
Average daily production
Crude oil (bbls/d) 7,409 3,495 112
Natural gas (Mcf/d) 1,611 657 145
Natural gas liquids (bbls/d) 138 39 254
Total (boe/d)(4) 7,816 3,644 114
Average realized price
Crude oil and natural gas liquids ($/bbl) 83.15 85.80 (3 )
Natural gas ($/mcf) 2.66 1.56 71
Total ($/boe) 80.84 83.51 (3 )
Netback ($/boe)(4)
Oil and gas sales 80.84 83.51 (3 )
Royalties (12.57 ) (12.37 ) 2
Operating expenses (17.08 ) (13.80 ) 24
Transportation (1.76 ) (2.95 ) (40 )
Operating netback prior to realized derivative contracts 49.43 54.39 (9 )
Realized loss on derivative contracts (1.11 ) (1.00 ) 11
Operating netback(4) 48.32 53.39 (9 )
(1) "Funds flow from operations" should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with IFRS as an indicator of Renegade's performance. "Funds flow from operations" represents cash flow from operating activities prior to changes in non-cash working capital, transaction costs and decommissioning expenditures incurred. Renegade also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share.
(2) Due to the anti-dilutive effect of Renegade's net loss for the three months ended March 31, 2013, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts.
(3) Amount drawn on Renegade's credit facility as at March 31, 2013 was $275.3 million (March 31, 2012 - $49.8 million).
(4) A conversion ratio of 1 barrel of oil equivalent ("boe"): 6 Mcf has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Boe's may be misleading, particularly if used in isolation. Please see the Reader Advisories at the end of this news release.

OUTLOOK

The drilling results in the first quarter of 2013 demonstrated the Company's ability to successfully delineate and develop its high quality, light oil focused asset base. The southeast Saskatchewan assets acquired in late 2012 have performed as anticipated to date as the Company exited the quarter at approximately 7,900 boe/d (net of the disclosed disposition referred to above). The Company, with full technical evaluations on over 90 locations, is well positioned to commence its drilling program on the acquired southeast Saskatchewan assets with a stable inventory of low risk locations. The drilling on such assets will commence post break-up. Despite the successful results to date, after reviewing the effect of the previously disclosed reduced production from the Redvers area and combined with the potential of an extended spring break-up, 2013 annual production is expected to average between 7,400 to 7,700 boe/d. The company expects to provide further updates and information to the market as the strategic review, referred to below, progresses. While weather conditions in Saskatchewan have improved considerably over the past two weeks, it is too early to determine whether break-up conditions will return to historical norms.

The Company has proactively attempted to minimize the potential effects of spring break-up by strategically placing service rigs throughout the field in southeast Saskatchewan to ensure repair and maintenance delays are minimized. In addition, the majority of the facilities and infrastructure associated with the assets acquired in late 2012 are tied into sales pipelines, which should also mitigate production down time. In addition, the Company has the flexibility to adjust its drilling program coming out of break-up through its two core areas of southeast Saskatchewan and the Viking.

The Board of Directors of the Company has constituted a special committee to assist with its strategic review of the Company's business plan to identify appropriate actions for the Company. Pursuant to the strategic review, the special committee is examining and considering the alternatives available to the Company with a view to enhance shareholder value.

CORPORATE INFORMATION

Renegade's common shares trade on the TSX Venture Exchange under the symbol "RPL". Renegade currently has approximately 203.1 million common shares outstanding and 212.1 million fully-diluted common shares.

READER ADVISORIES

Forward-Looking Statements

Statements in this document may contain forward-looking information including management's assessment of future plans and operations including capital expenditures, drilling results, locations and plans, future cash flow and production levels, expectations with respect to decline rates and type curves, expected timing of disclosure, matters related to the strategic plans of the Company, differentials and the length of spring break-up and its impact on the Company. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company.

These risks include, but are not limited to: the risks associated with the oil and gas industry; commodity prices and exchange rate changes. Industry related risks, which could include, but are not limited to: operational risks in exploration; proposed dispositions not being completed or if completed, not providing the benefits expected; development and production; delays or changes in plans; risks associated to the uncertainty of reserve estimates; health and safety risks, and; the uncertainty of estimates and projections of production, costs and expenses. The recovery and reserve estimates of Renegade's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect.
Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the timing of operations; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing lists of factors and assumptions are not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at the Company's website (www.renegadepetroleum.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Certain Oil & Gas Matters

Any references in this news release to IP rates, 30 day initial production rates or 60 day initial production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter are not necessarily indicative of long term performance or ultimately recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Renegade.

Conversion

The term "boe" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one boe (6 mcf/bbl.) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Contact:
Renegade Petroleum Ltd.
Michael Erickson
President & CEO
(403) 355-8922
Renegade Petroleum Ltd.
Alex Wylie
Vice-President, Finance & CFO
(403) 410-3376
www.renegadepetroleum.com

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