CALGARY, ALBERTA--(Marketwired - Jul 3, 2013) - Angle Energy Inc. ("Angle" or the "Company") (NGL.TO) today announced the initiation of a broad public process to identify and evaluate strategic alternatives to enhance shareholder value, and provided an update on its second quarter operations.
STRATEGIC ALTERNATIVES REVIEW
Since 2011, Angle has successfully executed an organic development strategy focusing on the light oil and liquids-rich natural gas assets in its portfolio to generate growth in cash flow per share and overall shareholder value. The Company operates a highly focused core of growth-oriented oil and liquids- weighted natural gas assets in the prolific Harmattan, Ferrier and Edson areas of Alberta. These assets offer the potential for significant future growth in light oil and liquids-rich natural gas reserves and production in the Cardium, Mannville and Viking formations. Angle's repeated success with its Harmattan and Ferrier Cardium programs provides further evidence of its inherent light oil potential. Angle also has a significant land position in the developing Duvernay gas play, providing additional upside in the medium to longer-term.
The Company has increased the weighting of its oil and liquids production from 39% to approximately 57% within the past 2 years, becoming a low-cost, high netback producer and allowing the Company to mitigate the impact of commodity price fluctuations. From early 2012 to March 31, 2013, the Company's cash flow per share and operating netbacks have grown by approximately 4% and 46% respectively.
Despite the success of Angle's strategy, a gap continues to exist between the trading price of Angle shares and the Company's intrinsic net asset value. Over the past several months, Angle's Board and Management, assisted by FirstEnergy Capital Corp. and Cormark Securities Inc. (the "Advisors") have considered solutions to close this value gap, with the goal of providing long-term value growth and managing the balance sheet. To address these objectives, the Board and Management have determined that a broad public review of strategic alternatives will provide the best opportunity to maximize value for Angle shareholders and have mandated the Advisors to commence a broad public process. Angle and the Advisors are currently compiling information for a corporate data room which will be available for review by interested parties upon execution of a confidentiality agreement in connection with the process.
Strategic alternatives may include, but are not limited to, the outright sale of the Company, a merger, or other business combination, a sale of all or a material portion of the Company's assets in one transaction or a series of transactions, a joint venture, or a recapitalization of the Company. Angle has established a Special Committee of independent directors, comprised of Scott Bratt, Edward Muchowski, Jacob Roorda and Keith Turnbull, to supervise this process.
There can be no assurance that a transaction will be undertaken. Angle does not intend to make any further announcements regarding the process unless and until the Board has approved a specific transaction or course of action or otherwise determines that disclosure is necessary.
Angle is scheduled to release its Q2 2013 financial and operating results in mid-August 2013. The Company continues to increase its oil and condensate weighting, with current weighting at 31%, up from 29% in the first quarter of 2013.
First-half 2013 average production is expected to be approximately 11,100 boe/d. Production levels in the second quarter were impacted by regulatory delays in tying in a Harmattan Mannville well, Ferrier pipeline constraints and a non-commercial Wabamun gas well.
Angle is in the process of constructing an eight inch line in the Ferrier area which will mitigate the pipeline constraint issues. In addition to alleviating this production bottleneck in Ferrier, the Company expects that delayed production of approximately 300 boe/d in the Harmattan area is expected to be tied in by the end of August.
Other operational highlights include:
- Total production for the second quarter is estimated to be 10,800 to 10,900 boe/d (approximately 31% light oil and condensate, 25% NGLs, and 44% natural gas).
- Cardium production for the month of June is estimated to be 4,300 boe/d, as compared to 4,000 boe/d average in the first quarter. Average Cardium production for the first half of 2013 is estimated to range between 4,200 - 4,300 boe/d of which approximately 70% is oil and NGLs.
- During the second quarter, Angle drilled and rig released three (2.6 net) horizontal wells, all of which targeted light oil in the Cardium. Two horizontal wells (2.0 net) are currently drilling for Cardium light oil, one each in Ferrier and Harmattan, and are expected to be rig released by the end of July.
- At Harmattan, five (4.2 net) wells in the Cardium light oil play have been completed and tested in Q2 2013. Two of these wells have produced for over 30 days and three wells were completed in late June. These wells have proven the southwestern extension of the play and demonstrate robust economics, with IP30 rates of approximately 275 boe/d (85% light oil and liquids).
- At Ferrier, the three (2.5 net) Cardium horizontal wells announced in the first quarter have produced with a combined average IP30 of approximately 800 boe/d (67% light oil), and a combined average IP120 of approximately 500 boe/d (52% light oil). Together, the three wells have now cumulatively produced in excess of 100,000 barrels of oil.
- Total debt at the end of the second quarter is estimated to be between $211 and $215 million, including $60 million of convertible debentures, which is expected to be in-line with our prior guidance.
The Company is currently reviewing its full-year capital investment program with a view to providing further capital, production and debt level guidance upon completion of its internal review.
Angle Energy Inc. is a public, Calgary-based oil and gas exploration and development company incorporated in 2004. Angle's objective is to build shareholder value through the profitable growth of its high quality asset base through a combination of drilling and strategic acquisitions. Angle's proven and dedicated team of industry specialists are focused on identifying and developing high quality assets in the Western Canadian Sedimentary Basin, with an emphasis in west central Alberta. Common shares of Angle are listed for trading on the Toronto Stock Exchange under the symbol "NGL."
Basis of 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 crude oil using a conversion factor of six thousand cubic feet of gas to one barrel of oil. This conversion ratio of 6:1 is based on an energy equivalent conversion for the individual products, primarily applicable at the burner tip, and does not represent a value equivalency at the wellhead. Such disclosure of boe may be misleading, particularly if used in isolation.
Information set forth in this press release contains estimates and forward-looking statements and are made as of July 3, 2013, including production test results, drilling results, drilling plans and exploring opportunities. These forward looking statements are based on assumptions as of that date. By their nature, estimated production results and operating netbacks, drilling plans and business opportunities are subject to numerous risks and uncertainties, some of which are beyond Angle's control, including the impact of reservoir quality, decline rates, volatility of commodity prices, drilling techniques, costs of third party services, general economic conditions, industry conditions, environmental risks, competition and interest from other industry participants, the lack of availability of qualified personnel or management, ability to access sufficient capital from internal and external sources, governmental and regulatory approvals and ability to identify and consummate business opportunities. Readers are cautioned that the assumptions and factors discussed in this press release are not exhaustive and that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise, and as such, undue reliance should not be placed on forward-looking statements. Angle's actual results, performance or achievement could differ materially from those expressed in, or implied by, these estimates and forward-looking statements, and accordingly, no assurance can be given that any of the events anticipated by the estimates and forward-looking statements will transpire or occur, or if any of them do so, what benefits that Angle or its shareholders will derive there from. Furthermore, while the production test results are useful in confirming the presence of hydrocarbons, they are not necessarily indicative of long-term performance or of ultimate recovery from a well and should not be used to calculate the aggregate production for Angle. Unless required by law, Angle disclaims any intention or obligation to update or revise any estimates and forward-looking statements, whether as a result of new information, future events or otherwise. The estimates and forward looking statements are expressly qualified by these cautionary statements.