Wilmington Announces 2014 First Quarter Results

Marketwired

TORONTO, ONTARIO--(Marketwired - May 13, 2014) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported a net loss attributable to shareholders for the three months ended March 31, 2014 of $191,000 or ($0.02) per share compared to a net loss of $57,000 or ($0.01) per share for the same period in 2013.

To view a full copy of the Corporation's unaudited condensed interim financial results for the period ended March 31, 2014 including the Corporation's unaudited condensed interim consolidated financial statements and accompanying Management Discussion and Analysis ("MD&A"), please refer to SEDAR's website at www.sedar.com.

FIRST QUARTER 2014 FINANCIAL HIGHLIGHTS

During the first quarter 2014, the Corporation completed strategic plans for each of its three operating platforms - self-storage facilities, private equity funds and natural gas assets and the focus is centered on building upon the foundation in and adding scale to each of the operating platforms. The Corporation achieved the following during the three months ended March 31, 2014:

  • Generated $583,000 in cash flow from operations;
  • Recorded an unrealized gain of $405,000 on investments of Network 2012 Fund;
  • Received a distribution of $75,000 from Real Storage Private Trust representing the Corporation's share of a 3% per annum distribution on invested capital which is paid quarterly;
  • Generated an operating netback of $2.22 per mcf from the Shackleton Partnership 2011 LP; and
  • Brought on stream Northpoint Resources Ltd.'s first horizontal well with production levels of approximately 2,300 mcf per day.

As at March 31, 2014, Wilmington had assets under management in its operating platforms of approximately $148.0 million ($56.0 million representing Wilmington's share).

STRATEGIC PLAN

Wilmington continues to advance its 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.

OPERATIONS REVIEW

Storage Facilities

Real Storage Private Trust ("Trust")

The Trust (42.13% owned) owns 20 self-storage facilities comprising 787,000 square feet of rentable area and one development property. The Trust recorded significant period over period improvements in 2014 as the facilities in Western Canada, which were for the most part in the initial lease up stage, achieved stabilized occupancy levels. During the first quarter of 2014, same store occupancy levels averaged 82%, compared to 78% in 2013; same store operating margins improved to 52% in the first quarter of 2014 from 51% in the comparable quarter of 2013.

During the third quarter 2013, the Trust commenced quarterly distributions to its unit holders equivalent to 3% per annum on invested capital. For the three months ended March 31, 2014, the Trust declared a distribution of $178,000 (Corporation's share - $75,000). During 2014, the Trust plans on increasing the net rentable area of its property portfolio to over 1.0 million square feet.

Private Equity

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

NCI (50% owned) has funds under management now totaling approximately $41.5 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. The Corporation invested $8.0 million of capital in the Network 2012 Fund and has received cumulative distributions of $716,000 to date. Plans are in place for NCI to raise an additional fund in 2014, which would represent the 16th fund raised by NCI since inception.

Natural Gas Assets

Shackleton 2011 Limited Partnership (the "Shackleton Partnership" or the "Partnership")

The Shackleton Partnership (59% owned) owns a 100% interest in natural gas wells in Southwestern Saskatchewan. The Shackleton Partnership's natural gas production volumes amounted to 595 boe per day for the first quarter of 2014. The weighted average price realized during the first quarter of 2014 was $4.30 per mcf and operating netbacks averaged $2.22 per mcf (realized price of $3.18 per mcf and netbacks of $1.90 per mcf for the comparable period in 2013). Of its 2014 production, approximately 50% has been hedged under fixed price contracts with an average price of $3.61 per GJ.

Given the improved natural gas pricing environment, the Partnership is focused on production optimization through well workovers and introducing new technology.

Northpoint Resources Ltd. ("Northpoint")

On July 30, 2013, the Corporation added to 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. 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, the Corporation acquired $798,000 of a 10%, $5.0 million debenture issue by Northpoint which matures on August 1, 2017. Northpoint's achieved oil and natural gas sales volumes of 1,283 boe per day for the first quarter of 2014 compared to 1,286 boe per day during Q1 2013. During December 2013, Northpoint drilled its first horizontal well which is producing approximately 2,300 mcf per day (383 boe per day). Although the production fell short of original expectations, no significant rates of decline in production are being experienced. Plans call for drilling a second well in Q3 or Q4 of 2014.

The weighted average price realized during the first quarter of 2014 was $4.65 per mcf and operating netbacks averaged $1.66 per mcf (realized price of $3.52 per mcf and netbacks of $1.59 per mcf for the comparable period in 2013).

Outlook

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 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

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS

(unaudited)
For the three months ended March 31,
(CDN $ Thousands, except per share amounts) 2014 2013
Revenue
Natural gas sales 1,383 1,275
Royalties (340 ) (177 )
Natural gas revenue 1,043 1,098
Investment and other income 49 38
1,092 1,136
Expenses
Petroleum operations 328 334
General and administrative 300 340
Depletion, depreciation and amortization 342 388
Stock-based compensation 28 46
Foreign exchange (gain) loss (2 ) 28
Finance costs 67 78
1,063 1,214
Income (loss) before share of equity accounted investments and income taxes 29 (78 )
Share of net income from Real Storage Private Trust 85 23
Share of net income (loss) from Network Capital Management Inc. 5 (22 )
Share of net loss from Network 2012 Fund (43 ) (38 )
Share of net loss from Northpoint Resources Ltd. (325 ) ---
Loss before income taxes from continuing operations (249 ) (115 )
Income tax benefit (148 ) (16 )
Net loss from continuing operations (101 ) (99 )
Income from discontinued operations, net of tax --- 95
Net loss (101 ) (4 )
Net loss attributable to:
Owners of the Corporation (191 ) (57 )
Non-controlling interest 90 53
(101 ) (4 )
Net loss per share from continuing operations
Basic (0.02 ) (0.02 )
Diluted (0.02 ) (0.02 )
Net loss per share
Basic (0.02 ) (0.01 )
Diluted (0.02 ) (0.01 )

CONDENSED INTERIM CONSOLIDATED BALANCE SHEET

(unaudited) (audited)
As at March 31, December 31,
(CDN $ Thousands) 2014 2013
Assets
Non-current assets
Investment in Real Storage Private Trust 10,089 10,079
Investment in Network Capital Management Inc. 72 67
Investment in Network 2012 Fund 8,703 8,341
Investment in Northpoint Resources Ltd. 1,494 1,819
Northpoint Debenture 798 798
Natural gas property, plant and equipment 16,348 16,597
37,504 37,701
Current assets
Loan to Network Capital Management Inc. 25 25
Income tax receivable 483 299
Receivables and other assets 984 1,451
Cash and cash equivalents 1,150 730
2,642 2,505
Total assets 40,146 40,206
Liabilities
Non-current liabilities
Decommissioning liabilities 806 792
Deferred tax liabilities 140 65
946 857
Current liabilities
Accounts payable and accrued liabilities 962 991
Revolving Loan Facility 4,800 5,200
5,762 6,191
Total liabilities 6,708 7,048
Equity
Shareholders' equity 29,243 29,053
Non-controlling interest 4,195 4,105
Total equity 33,438 33,158
Total liabilities and equity 40,146 40,206

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited)
For the three months ended March 31,
(CDN $ Thousands) 2014 2013
Net loss (101 ) (4 )
Items that may subsequently be reclassified to net loss
Share of other comprehensive income from Network 2012 Fund 405 261
Deferred income taxes on above items 52 34
Other comprehensive income from continuing operations 353 227
Items that may subsequently be reclassified to net loss
Other comprehensive income from discontinued operations, net of tax --- 15
Total other comprehensive income 353 242
Comprehensive income 252 238
Comprehensive income attributable to:
Owners of the Corporation 162 185
Non-controlling interest 90 53
252 238

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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