Wilmington Announces 2013 Third Quarter Results

Marketwired

TORONTO, ONTARIO--(Marketwired - Nov 12, 2013) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported net income attributable to shareholders for the three months ended September 30, 2013 of $358,000 or $0.04 per share compared to a net loss of $123,000 or $(0.01) per share for the same period in 2012. For the nine months ended September 30, 2013, the Corporation generated a net income attributable to shareholders of $260,000 or $0.03 per share compared to a net loss of $586,000 or $(0.07) per share for the same period last year.

To view a full copy of the Corporation's unaudited condensed financial results for the period ended September 30, 2013 including the Corporation's unaudited condensed interim consolidated financial statements and accompanying MD&A, please refer to the SEDAR website www.sedar.com.

THIRD QUARTER 2013 HIGHLIGHTS

During the third quarter, the Corporation took further steps to solidify and build upon the foundation of its three operating platforms - self storage facilities, private equity funds and natural gas assets.

In July 2013, Wilmington invested $2.2 million to acquire a 36.5% ownership interest in Northpoint Resources Ltd. ("Northpoint"), a privately held natural gas producer with assets in the Altares region of Northeastern British Columbia. Northpoint produced 7,050 mcf/d (1,175 boe/d) during the third quarter and has proven plus probable reserves of 7,605 Mboe (45,630 Mmcfe).

In addition, the Corporation completed the divesture of its non-core assets with the sale of its commercial land in San Francisco, California, for cash proceeds of USD $983,000, the transfer of the USD $19 million secured debt and the settlement of certain loans payable.

As at September 30, 2013, Wilmington had assets under management in its operating platforms of approximately $138 million ($55 million representing Wilmington's share).

OPERATIONS REVIEW

Wilmington continues to execute it principal objectives of making investments capable of generating appreciation in value as opposed to current income and to maximize shareholder returns by investing its own capital alongside partners and co-investors in hard assets and private equity funds. These assets are managed through the Corporation's operating platforms where Wilmington can add scale and improve valuations.

Storage Facilities

Real Storage Private Trust ("Trust")

The Trust (44.78% owned) owns 20 self-storage facilities comprising 787,000 square feet of rentable area and one development property. The Trust recorded significant improvements in 2013 as the facilities in Western Canada, which were for the most part in the initial lease up stage, achieved stabilized occupancy levels. During the third quarter of 2013, same store occupancy levels averaged 85%, compared to 81% in 2012; same store operating margins for Q3 2013 of 60% compared to Q3 2012 margins of 56%.

During the third quarter, the Trust commenced quarterly distributions to its unitholders equivalent to 3% per annum on invested capital. The distribution for the third quarter was $168,000 (Corporation's share - $75,000).

Private Equity

Network Capital Management Inc. ("NCI") and Network 2012 Fund

NCI (50% owned) has funds under management now totaling approximately $37 million and the majority of Network's available capital has been successfully deployed in a strong mix of junior oil and gas and service companies. Wilmington invested $8 million of capital in the Network 2012 Fund.

Natural Gas Assets

Shackleton 2011 Limited Partnership (the "Shackleton Partnership")

The natural gas assets owned through the Shackleton Partnership (59% owned) have proven to be of high quality and present good opportunities for growth and future development once we reach a more favorable natural gas pricing environment. The weighted average price realized during the three months ended September 30, 2013 was $2.84 per mcf and operating netbacks averaged $1.41 per mcf (realized price of $2.28 per mcf and netbacks of $1.03 per mcf for the comparable period in 2012). Natural gas production volumes for the 100% interest in the Shackleton field amounted to 4,139 mcf/d (690 boe/d). Of its 2013 production, approximately 50% has been hedged under fixed price contracts with an average price of $3.35 per mcf.

Northpoint Resources Ltd. ("Northpoint")

On July 30, 2013, the Corporation grew its natural gas platform by investing in Northpoint, a privately held oil and gas producer with assets in the Altares region of northeastern British Columbia. Northpoint's production during Q3 2013 was 1,175 boe/d and has total proved plus probable reserves totaling approximately 45,630 Mmcfe (7,605 Mboe). The Corporation acquired a 36.5% ownership interest in Northpoint for total cash consideration of $2.2 million. In addition and as part of an overall recapitalization plan, Wilmington acquired $0.8 million of a 10%, $5 million debenture issue in Northpoint which matures on August 1, 2017. Northpoint is professionally managed by an experienced executive team. As part of the transaction, the Corporation is entitled to nominate three of the seven directors to the Northpoint board.

Discontinued Operations

On July 31, 2013, the Corporation completed the sale of its interests in commercial land in San Francisco, California. The Corporation received total proceeds of USD $20.0 million comprised of cash proceeds of USD $983,000 and the transfer of the secured debt of USD $19.0 million to the purchaser. Cash proceeds from the sale were used to settle certain loans payable. The sale was part of the steps in rationalizing the Corporation's core business.

Outlook

2012 and 2013 have been formative years and the Corporation believes that the foundation for achieving future growth through its three operating platforms - self storage, private equity and oil and natural gas - is now in place. In the years ahead, the Corporation expects to add scale to these operating platforms, improve valuations and earn attractive cash flow and total returns for shareholders.

FINANCIAL RESULTS
CONSOLIDATED INTERIM STATEMENTS OF INCOME (LOSS)
Unaudited Three months ended September 30, Nine months ended September 30,
(CDN $ Thousands, except per share amounts) 2013 2012 2013 2012
Income
Natural gas sales 1,083 1,031 3,640 3,095
Royalties (163 ) (191 ) (581 ) (553 )
Natural gas revenue 920 840 3,059 2,542
Investment and other income 25 76 214 193
Foreign exchange gain 18 36 --- 42
963 952 3,273 2,777
Expenses
Petroleum operations 385 393 1,077 1,371
General and administrative 344 190 999 776
Depletion, depreciation and amortization 378 368 1,123 1,209
Stock based compensation 33 57 125 139
Foreign exchange loss --- --- 99 ---
1,140 1,008 3,423 3,495
Operating loss (177 ) (56 ) (150 ) (718 )
Finance costs 71 88 238 250
Loss before share of equity accounted investments, investment revaluation and income taxes (248 ) (144 ) (388 ) (968 )
Share of net income from Real Storage Private Trust 201 91 268 138
Share of net loss from Network Capital Management Inc. (5 ) (12 ) (59 ) (16 )
Loss on revaluation of investment Network Capital Management Inc. (1,584 ) --- (1,584 ) ---
Share of net loss from Network 2012 Fund (37 ) (5 ) (114 ) (108 )
Share of net loss from Northpoint Resources (240 ) --- (240 ) ---
Loss before income taxes from continuing operations (1,913 ) (70 ) (2,117 ) (954 )
Income tax benefit 119 45 89 277
Net loss from continuing operations (1,794 ) (25 ) (2,028 ) (677 )
Income from discontinued operations, net of tax 2,355 14 2,579 6
Net income (loss) 561 (11 ) 551 (671 )
Net income (loss) attributable to:
Owners of the Corporation 358 (123 ) 260 (586 )
Non-controlling interest 203 112 291 (85 )
561 (11 ) 551 (671 )
Net loss per share from continuing operations
Basic (0.23 ) (0.02 ) (0.27 ) (0.07 )
Diluted (0.23 ) (0.02 ) (0.27 ) (0.07 )
Net income (loss) per share
Basic 0.04 (0.01 ) 0.03 (0.07 )
Diluted 0.04 (0.01 ) 0.03 (0.07 )

CONSOLIDATED INTERIM BALANCE SHEET

Unaudited
(CDN $ Thousands)
September 30,
2013
December 31,
2012
Assets
Non-current assets
Investment in Real Storage Private Trust 9,999 7,271
Investment in Network Capital Management Inc. 69 1,712
Investment in Network 2012 Fund 7,876 7,554
Investment in Northpoint Resources Ltd. 1,940 ---
Northpoint Debenture 798 ---
Natural gas property, plant and equipment 16,972 17,840
Deferred income taxes 287 ---
37,941 34,377
Current assets
Income taxes --- 435
Receivables and other assets 622 885
Cash and cash equivalents 1,448 6,601
2,070 7,921
Assets held for sale --- 18,541
2,070 26,462
Total assets 40,011 60,839
Liabilities
Non-current liabilities
Asset retirement obligations 784 750
Deferred tax liabilities 285 259
1,069 1,009
Current liabilities
Accounts payable and accrued liabilities 1,117 1,024
Revolving loan facility 5,300 6,700
Income taxes payable 821 ---
7,238 7,724
Liabilities held for sale --- 21,432
7,238 29,156
Total liabilities 8,307 30,165
Equity
Shareholders' equity 27,599 26,860
Non-controlling interest 4,105 3,814
Total equity 31,704 30,674
Total liabilities and equity 40,011 60,839

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Unaudited Three months ended September 30, Nine months ended September 30,
(CDN $ Thousands) 2013 2012 2013 2012
Net income (loss) 561 (11 ) 551 (671 )
Items that may subsequently be reclassified to net income or loss
Share of other comprehensive income (loss) from Network 2012 Fund 257 (99 ) 435 (380 )
Deferred income taxes (benefit) on above items (44 ) 48 (67 ) 48
Other comprehensive income (loss) from continuing operations 213 (51 ) 368 (332 )
Items that may subsequently be reclassified to net income or loss
Other comprehensive loss from discontinued operations, net of tax (50 ) (24 ) (14 ) (29 )
Total other comprehensive income (loss) 163 (75 ) 354 (361 )
Comprehensive income (loss) 724 (86 ) 905 (1,032 )
Comprehensive income (loss) attributable to:
Owners of the Corporation 521 (198 ) 614 (947 )
Non-controlling interest 203 112 291 (85 )
724 (86 ) 905 (1,032 )

Executive Officers of the Corporation will be available at 403-800-0869 to answer any questions on the Corporation's financial results.

This news release contains forward-looking statements concerning the Corporation's business and operations. The Corporation cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Corporation's actual results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Information Form for a description of the major risk factors.

Contact:
Wilmington Capital Management Inc.
Executive Officers
(403) 800-0869

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