CALGARY, ALBERTA--(Marketwired - Aug 1, 2013) - Sonde Resources Corp. ("Sonde" or the "Company") (SOQ.TO) (NYSE MKT:SOQ) announced today the release of its financial and operating results for the second quarter ended June 30, 2013. The Management's Discussion and Analysis and Financial Statements for the quarter ended June 30, 2013 can be viewed on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com, and on the Securities and Exchange Commission's Electronic Document Gathering and Retrieval System (EDGAR) at www.sec.gov. Shareholders have the ability to receive a hard copy of the Company's complete second quarter financial statements free of charge upon request.
Sonde will be hosting a conference call on Friday, August 2, 2013 at 1:30 p.m. MDT to provide a report on the second quarter 2013 results. Mr. Kurt Nelson, Chief Financial Officer, will host the call. All interested parties may join the call by dialing 416-340-8018 or 866-223-7781. Please dial-in 15 minutes prior to the call to secure a line. The conference call will be archived for replay on the Sonde website within 48 hours of this conference call.
On December 27, 2012, the Company entered into a farm-out agreement with Viking Exploration and Production Tunisia Limited ("Viking") covering the Joint Oil Block. The farm-out agreement was executed by Sonde and Viking on July 31, 2013. Formal closing remains conditioned upon obtaining all of the necessary consents and approvals. The steps for consent and approval have already been discussed and the appropriate forms are being prepared which will assign the respective interests to Viking and Sonde. As the appropriate instruments are completed, Joint Oil will notify the parties and the parties will have twenty-one days to fund the US$50.995 bank guarantee. Expectations are that the formal closing will occur in mid to late September. Please see Sonde's July 31, 2013 news release for further information.
Toufic Nassif, President of Sonde North Africa, reiterated his earlier comments "The execution of the Viking farm-out is a milestone to the development of the Joint Oil Block and looks forward to working with Viking and Joint Oil to realize the full potential of the Block." Mr. Nassif further added, "Joint Oil has worked closely with Sonde on the process necessary to accept the Viking farm-out and such process is limited to the approval of the formal instruments. Joint Oil has assured Sonde that everything is in place to formalize the Viking farm-out once the bank guarantee is in place."
Mr. Kerry Brittain, Sonde's Chairman of the Board, stated "The execution of the Viking farm-out is a significant milestone to unlocking the unrealized potential of the North Africa assets for Joint Oil, Sonde and Viking. The farm-out shifts the three well exploratory obligation, or the US$45 million penalty, to Viking and takes Sonde one step closer to seeing the development of this significant resource. Perhaps of equal importance, the Viking farmout will provide management with the opportunity to focus on the Western Canada Strategic Alternatives process announced earlier. I and the Sonde Board want to personally thank Sonde's management and employees for their persistence and dedication in completing the Viking farm-out under difficult circumstances."
Western Canada Strategic Alternatives Process
On January 9, 2013, Sonde announced that it had initiated a process to explore and evaluate potential strategic alternatives to enhance shareholder value with regard to Sonde's Western Canadian production and exploratory acreage. A step in the strategic alternative process was the sale of Sonde's undeveloped Montney license (which included some Duvernay rights) which resulted in realizing approximately $65 per net acre with an average cost of approximately $23 per net acre. The loss Sonde recorded was related to the net book value of the recently drilled Montney well. By selling the non-producing well with the acreage the Company has exited this play. Current market conditions for cash transactions have remained soft but the cash sale was insurance in the event that the Viking farm-out was not executed.
Sonde retains undeveloped acreage in the Duvernay (54,648 acres net), Wabamun (50,736 acres net) and Detrital/Banff (46,677 acres net) plays. Of these lands, 85% have been purchased within the past 18 months, and as such, there are no land expiry issues. These land positions are typically large, consolidated and 100% working interest holdings with outstanding characteristics and growth potential.
2013 Western Canada Drilling Program
No wells were drilled during the three and six months ended June 30, 2013 due to the strategic alternatives process discussed above.
During the three and six months ended June 30, 2013, Sonde continued its well re-activation program. Sonde performed 13 and 27 net workovers and recompletions during the three and six months ended June 30, 2013.
Second Quarter Financial and Operational Review
|(CDN$ thousands, except where otherwise noted)||2013||2013||Change||2012||Change|
|Petroleum & natural gas sales(1)||6,071||6,607||(8||)||5,487||11|
|Net loss per share - basic and diluted||(0.08||)||(0.09||)||(11||)||(0.45||)||(82||)|
|Funds from (used for) operations (2)||593||(472||)||226||(1,267||)||(147||)|
|Funds from (used for) operations per share(2)||0.01||(0.01||)||200||(0.02||)||110|
|Working capital surplus||20,366||15,063||35||34,865||(42||)|
|Average shares outstanding||62,301||62,301||-||62,301||-|
|Natural gas (mcf/d)||7,423||7,934||(6||)||9,665||(23||)|
|Crude oil (bbl/d)||461||549||(16||)||554||(17||)|
|Natural gas liquids (bbl/d)||161||188||(14||)||191||(16||)|
|Natural gas ($/mcf)||3.90||3.30||18||2.10||86|
|Crude oil ($/bbl)||83.58||79.58||5||67.10||25|
|Natural gas liquids ($/bbl)||49.72||57.03||(13||)||61.07||(19||)|
|Average sales price ($/boe)||40.59||39.12||4||29.33||38|
(1) Petroleum and natural gas sales and realized losses on financial instruments net of royalties and transportation.
(2) Non-IFRS measure reconciled in our MD&A filed on www.sedar.com
For the three months ended June 30, 2013, funds from operations was $0.6 million compared to funds used for operations of $1.3 million for the same period in 2012. This was primarily the result of a 9% increase in petroleum and natural gas revenue, a 12% decrease in operating expense and an 84% decrease in well workover expense.
For the three months ended June 30, 2013, production averaged 1,858 boe/d, compared to 2,059 boe/d for the three months ended March 31, 2013 and 2,356 boe/d for the three months ended June 30, 2012. The decrease in production during the three months ended June 30, 2013 compared to the three months ended March 31, 2013 and June 30, 2012 is due to natural decline, significant third-party natural gas processing plant outages in Central Alberta, weather related access issues and constrained capex due to the Western Canada strategic alternatives process.
The success of the Company's ongoing operations are dependent upon a number of factors, including but not limited to, the price of energy commodity products, the Company's ability to manage price volatility, increasing production and related cash flows, controlling costs, availability of experienced service industry personnel and equipment, capital spending allocations, the ability to attract equity investment, the results of Sonde's Western Canada strategic alternatives process, hiring and retaining qualified personnel and managing political and government risk, particularly with respect to its interests in North Africa.
Non-IFRS Measures - This document contains references to funds from (used for) operations and funds from (used for) operations per share, which are not defined under IFRS as issued by the International Accounting Standards Board and are therefore non- IFRS financial measures that do not have any standardized meaning prescribed by IFRS and are, therefore, unlikely to be comparable to similar measures presented by other issuers.
Management of the Company believes funds from (used for) operations and funds from (used for) operations per share are relevant indicators of the Company's financial performance, and ability to fund future capital expenditures.
Funds from (used for) 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 the Company's performance. In our MD&A, a reconciliation has been prepared of funds from (used for) operations to cash (used in) provided by operating activities, the most comparable measure calculated in accordance with IFRS.
Boe Presentation - Production information is commonly reported in units of barrel of oil equivalent ("boe"). For purposes of computing such units, natural gas is converted to equivalent barrels of oil using a conversion factor of six thousand cubic feet to one barrel of oil. This conversion ratio of 6 mcf:1 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. Such disclosure of boe's may be misleading, particularly if used in isolation. Additionally, given 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 mcf:1 bbl, utilizing a conversion ratio of 6 mcf:1 bbl may be misleading as an indication of value. Readers should be aware that historical results are not necessarily indicative of future performance. Natural gas production is expressed in thousand cubic feet ("mcf"). Oil and natural gas liquids are expressed in barrels ("bbl").
Forward-Looking Information - This news release contains "forward-looking information" within the meaning of applicable Canadian securities laws and "forward looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include, among others, the timing of the closing of the Viking farm-out agreement, the potential outcomes of the Company's Western Canada strategic review process, proposed exploration and development activities and sources of liquidity. There can be no assurances that the Western Canada strategic review process will result in a transaction on terms and conditions acceptable to Sonde or at all.
Such forward-looking information or statements are based on a number of risks, uncertainties and assumptions which may cause actual results or other expectations to differ materially from those anticipated and which may prove to be incorrect. Assumptions have been made regarding, among other things, market and operating conditions, management's expectations regarding future growth, plans for and results of exploration and development activities, availability of capital, future commodity prices and differentials, and capital and other expenditures.
Actual results could differ materially due to a number of factors, including, without limitation, changes in market conditions, operational risks in development, exploration and production; commodity price volatility; the uncertainty of reserve estimates; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of estimates and projections in relation to production; volatility in the capital markets and changes in the availability of capital generally; risks in conducting foreign operations, including political and fiscal instability and the possibility of civil unrest or military action; changes in government policies or laws; risk that government approvals may be delayed or withheld; and commercial risks related to the Joint Oil Block. Additional assumptions and risks relating to the Company and its business and affairs, including assumptions and risks relating to the estimation of reserves, are set out in detail in the Company's AIF, available on SEDAR at www.sedar.com, and the Corporation's annual report on Form 40-F on file with the U.S. Securities and Exchange Commission.
Although management believes that the expectations reflected in the forward-looking information or forward-looking statements are reasonable, prospective investors should not place undue reliance on forward-looking information or forward-looking statements because Sonde can provide no assurance those expectations will prove to be correct. Sonde bases its forward-looking statements and forward-looking information on information currently available and do not assume any obligation to update them unless required by law.
Sonde Resources Corp. is a Calgary, Alberta, Canada based energy company engaged in the exploration and production of oil and natural gas. Its operations are located in Western Canada and offshore North Africa. See Sonde's website at www.sonderesources.com to review further detail on Sonde's operations.
- Commodity Markets
- Company Earnings
Kurt A. Nelson
Chief Financial Officer