PetroBakken Announces April Production of Approximately 48,000 Boepd and First Quarter Funds Flow from Operations of $177 Million
CALGARY, ALBERTA--(Marketwired - May 1, 2013) - PetroBakken Energy Ltd. (the "Company" or "PetroBakken") (PBN.TO) is pleased to provide an operations update and to announce our first quarter financial and operating results.
FIRST QUARTER FINANCIAL & OPERATING HIGHLIGHTS
First quarter production averaged 49,078 barrels of oil equivalent per day ("boepd") (82% light oil and liquids), a 4% increase over the fourth quarter of 2012.
Our operating netback for the first quarter was $49.79/boe, a 5% increase from the fourth quarter of 2012.
Funds flow from operations was $177 million ($0.92 per basic share) for the quarter, a 5% increase over the fourth quarter of 2012 due to higher average production and increased netback, and a 5% decrease from the first quarter of 2012 due to realized pricing.
Capital expenditures before acquisitions and dispositions totalled $302 million in the first quarter, resulting in 53 net wells drilled.
Net income was $2 million ($0.01 per basic share) for the first quarter.
The maturity date on our $1.4 billion credit facility was again extended by one year to June 2016.
Summary of Results
Three months ended March 31, | ||||
2013 | 2012 | |||
Oil and natural gas sales | 315,533 | 330,361 | ||
Funds flow from operations (1) | 176,986 | 185,327 | ||
Per share - basic ($)(1)(2) | 0.92 | 0.99 | ||
Adjusted Net income(1) | 1,556 | 102,609 | ||
Per share - basic ($)(1) (2) | 0.01 | 0.55 | ||
Net Capital Expenditures(1) | 308,420 | (410,086 | ) | |
Total debt (1) | 2,246,867 | 1,610,790 | ||
Dividends per share ($)(2) (3) | 0.24 | 0.24 | ||
Cash dividends per share ($)(2) (3) | 0.17 | 0.14 | ||
Common Shares, end of period (000) (4) | 194,423 | 187,895 | ||
Operating netback ($/boe) (1) (5) (6) | 49.79 | 52.83 | ||
Average daily production (boe) (5) | 49,078 | 46,772 | ||
(1) | Non-GAAP measure. See "Non-GAAP Measures" section. |
(2) | 2012 balance calculated using shares outstanding of PetroBakken prior to the reorganization with Petrobank Energy and Resources Ltd. in December 2012. |
(3) | 2012 balance represents dividends paid by PetroBakken prior to the reorganization in December 2012. |
(4) | Denotes basic common shares outstanding. |
(5) | Six Mcf (thousand cubic feet) of natural gas is equivalent to one barrel of oil equivalent ("boe"). |
(6) | Net of transportation expenses. |
OPERATING RESULTS
Our first quarter average production of 49,078 boepd was comprised of 19,029 boepd from the Bakken business unit and 20,614 boepd from the Cardium business unit, with the remainder from the Saskatchewan Conventional and AB/BC business units. Production growth quarter over quarter can be primarily attributed to the successful execution of our drilling program in the Cardium, as well as optimization activities on existing wells in Saskatchewan which continue to mitigate production declines. The liquids weighting of our production has slightly decreased to 82% as a result of growth in our Cardium production, which has a higher gas/oil ratio compared to our Saskatchewan production, as well as temporary facility restrictions in the Cardium business unit having a proportionately larger impact on our light oil production.
Average Daily Production
Three months ended March 31, 2013 | ||||
Business Unit | Oil &NGL (bbl/d) | Gas (Mcf/d) | Total (boe/d) | |
Bakken | 18,103 | 5,557 | 19,029 | |
Conventional (SE SK) | 5,830 | 1,456 | 6,073 | |
Cardium (central AB) | 14,862 | 34,513 | 20,614 | |
Alberta/BC | 1,595 | 10,602 | 3,362 | |
40,390 | 52,128 | 49,078 | ||
During the first quarter of 2013, we drilled 53 wells and brought 41 wells on production, which is down from the 79 wells drilled and 99 wells brought on production in the fourth quarter of 2012 but up from the 47 wells drilled and 36 wells brought on production in the first quarter of 2012. At March 31, 2013, there were 30 wells waiting to be completed and/or brought on production. A delayed spring break-up has allowed us to remain active and we anticipate approximately half of the wells in inventory will be brought on production by the end of the second quarter.
Q1 2013 Drilling Activity
Drilled | Completed | On Production | Inventory(1) | ||||||
Business Unit | Gross | Net | Gross | Net | Gross | Net | Gross | Net | |
Bakken | 21 | 15 | 23 | 17 | 20 | 14 | 5 | 2 | |
Conventional (SE SK) | 11 | 7 | 14 | 9 | 14 | 8 | 3 | 2 | |
Cardium (central AB) | 29 | 23 | 27 | 23 | 21 | 17 | 26 | 22 | |
Alberta/BC | 9 | 8 | 6 | 5 | 2 | 2 | 5 | 4 | |
Total | 70 | 53 | 70 | 54 | 57 | 41 | 39 | 30 | |
(1) | Inventory refers to wells pending completion and/or tie-in. |
Bakken Business Unit
Production in the Bakken business unit averaged 19,029 during the first quarter. A maturing production profile combined with drilling and well optimization activity has kept production within 4% of the fourth quarter rate of 19,741 boepd. Our activity has allowed us to replace about half of the production we sold in our non-core disposition near the end of the first quarter of 2012, when production averaged 20,735 boepd. Through future drilling and the optimization of our extensive inventory of existing wells, we expect to continue to mitigate production declines and generate significant free cash flow from this business unit.
Cardium Business Unit
The Cardium business unit remains our most active region as we continue to grow this asset. Production averaged 20,614 boepd in the first quarter, representing an 8% increase over the fourth quarter of 2012 and a 24% increase over the first quarter of 2012. For the balance of the year, we expect growth to continue as we spend approximately half of our remaining capital program in the Cardium, with the majority of the activity occurring in the West Pembina area of the business unit.
AB/BC Business Unit
Production in our Alberta/BC business unit averaged 3,362 boepd in the quarter, with the growth driven by our new Swan Hills resource play, where we drilled 5 wells and brought 2 wells on production in the quarter. Consistent with this light oil-focused activity, the liquids weighting in this business unit has increased from 40% in the fourth quarter of 2012 to 47% in the first quarter of 2013. We have compiled an inventory of over 294 net sections of land prospective for light oil resource potential in one or more of the Nordegg, Montney, Duvernay and Swan Hills zones. We continue to pursue other opportunities in this business unit to increase the depth and prospectivity of our inventory.
Saskatchewan Conventional Business Unit
Our southeast Saskatchewan Conventional business unit continues to provide a low decline, light oil production base. We drilled 7 wells in the business unit in the first quarter and generated average production of 6,073 boepd.
FINANCIAL RESULTS
Our production of 49,078 boepd and operating netback of $49.79/boe resulted in funds flow from operations of $177 million ($0.92 per basic share) for the first quarter, a 5% increase over the preceding quarter. As compared to the first quarter of 2012, our growth in production did not offset lower light oil benchmark prices and higher differentials experienced in the first quarter of 2013, resulting in a 5 percent decrease in funds flow from operations. Our adjusted net income for the first quarter was $1.6 million ($0.01 per basic share). This represents a material change from first quarter 2012 adjusted net income of approximately $103 million, which included gains on dispositions of $129 million. Capital expenditures before acquisitions and dispositions in the first quarter were $302 million, representing an 18% decrease from the fourth quarter of 2012 and a 46% increase from the first quarter of 2012. This reflects our plan to execute a more balanced program between the first and second half of 2013, which requires the highest capital spending levels in the first quarter as expenditures typically decrease in the second quarter with reduced activity during spring break-up. Conversely, in 2012 our capital program was more heavily weighted to the back half of the year as we actively reinvested a portion of our proceeds from asset dispositions following the completion of spring break-up.
Our monthly dividend of $0.08 per share has remained constant since the Company's inception. During the first quarter, total dividends of $47 million were declared, representing 27% of funds flow from operations. However, with approximately 30% of shareholders participating in our dividend reinvestment and share dividend plans, cash dividends were $33 million, or 19% of quarterly funds flow from operations.
As at March 31, 2013, PetroBakken had $1.1 billion of debt drawn on our $1.4 billion credit facility. Effective April 2013, the credit facility was amended to extend the maturity by an additional year to June 2016. All other terms of the facility remain the same, including the tiered covenants and the $100 million accordion feature potentially allowing us to increase the facility size to $1.5 billion.
CURRENT OPERATIONS UPDATE
Average production in April was approximately 48,000 boepd, based on field estimates. In the Cardium business unit, the 600 boe/d of production previously restricted at Lochend is being restored with the recent start-up of a third-party facility expansion. We continue to have about 1,000 boepd of production in the Brazeau region restricted due to high line pressures at third-party gas processing facilities, which is anticipated to be restored in the third quarter with the completion of planned infrastructure improvements. Consistent with previous years, second quarter production is expected to decrease from current levels as we experience restricted activity due to spring break-up conditions. However, we expect the impact of spring break-up to be reduced from previous years due to our maturing production base and a greater number of wells being tied-in to infrastructure.
OUTLOOK AND GUIDANCE
As planned, the first quarter was very active and results are in line with our forecasts. We spent 45% of our $675 million capital program in the quarter by drilling 41% of our projected 129 wells. Cooler spring weather has, to-date, mitigated the impacts of spring break-up and production in April has been ahead of our forecasts, putting us on track to deliver an average annual daily production rate of 46,000 to 48,000 boepd. We look forward to executing our capital program for the remainder of the year, which is expected to generate a 2013 production exit rate of 49,000 to 52,000 boepd and year-over-year average production growth of 8% to 12%.
($000s, except where noted and per share amounts) | 2013 Guidance | Q1 2013 Actual | |||
Production (annual average) | |||||
Oil and NGL (bbl/d) | 39,000 - 41,000 | 40,390 | |||
Natural Gas (Mmcf/d) | 41 - 43 | 52 | |||
Total (boe/d) | 46,000 - 48,000 | 49,078 | |||
Exit Production (boe/d) | 49,000 - 52,000 | - | |||
Funds Flow from Operations(1)(4)(5) | $ | 645,000 - $680,000 | $ | 176,986 | |
Funds Flow per share(2)(4)(5) | $ | 3.30 - $3.50 | $ | 0.92 | |
Declared Dividends per share | $ | 0.96 | $ | 0.24 | |
Capital Expenditures(3)(4)(5) | $ | 675,000 | $ | 301,985 | |
(1) | Commodity price assumptions include WTI US$90.00/bbl, AECO CDN$3.50/mcf, foreign exchange rate of US$/CDN$1.00, and corporate oil differential of 10%. |
(2) | Funds flow per share calculation based on 194 million shares outstanding for 2013. |
(3) | Projected capital expenditures exclude acquisitions and divestitures, which are evaluated separately. Comparatives for Q1 2013 shown prior to acquisition and disposition activity of $6.4 million. |
(4) | Forecasted funds flow from operations, funds flow per share and capital expenditures are shown prior to the impact of reclassifying decommissioning liabilities from capital to funds flow. Decommissioning liability costs are forecasted in capital expenditures for 2013 annual guidance purposes. |
(5) | Non-GAAP measure. See "Non-GAAP Measures" section within this document. |
DIVIDEND REINVESTMENT PROGRAM AND SHARE DIVIDEND PLAN
PetroBakken has a dividend reinvestment program ("DRIP") in place that is available only to Canadian PetroBakken shareholders. Our share dividend plan ("SDP") is now available to Canadian shareholders and most non-Canadian shareholders. The DRIP and the SDP allow shareholders to effectively receive their monthly PetroBakken dividends as PetroBakken shares at a 5% discount to the market price at the date of the dividend payment.
For further information regarding our SDP and DRIP, please visit PetroBakken's website at www.petrobakken.com or contact Olympia Trust Company at 403-668-8887, toll free at 1-800-727-4493 or via email at corporateactions@olympiatrust.com.
FIRST QUARTER FINANCIAL & OPERATING TABLES
Three months ended March 31, | |||||||
2013 | 2012 | % Change | |||||
Financial ($000s, except where noted) | |||||||
Oil and natural gas sales | 315,533 | 330,361 | (4 | ) | |||
Funds flow from operations (1) | 176,986 | 185,327 | (5 | ) | |||
Per share - basic ($)(1) (2) | 0.92 | 0.99 | (7 | ) | |||
- diluted ($)(1) (2) (3) | 0.91 | 0.95 | (4 | ) | |||
Adjusted Net Income(1) | 1,556 | 102,609 | (98 | ) | |||
Per share - basic ($)(1) (2) | 0.01 | 0.55 | (98 | ) | |||
- diluted ($)(1) (2) | 0.01 | 0.54 | (98 | ) | |||
Dividends(1) (4) | 47,027 | 45,556 | 3 | ||||
Per share ($)(1) | 0.24 | 0.24 | - | ||||
Payout ratio(1) | 27 | % | 25 | % | - | ||
Cash dividends(1) (4) | 32,884 | 25,723 | 28 | ||||
Cash dividend payout ratio(1) | 19 | % | 14 | % | - | ||
Net capital expenditures(1) | 308,420 | (410,086 | ) | - | |||
Total debt(1) | 2,246,867 | 1,610,790 | 39 | ||||
Basic common shares, end of period (000) | 194,423 | 187,895 | 3 | ||||
Operations | |||||||
Operating netback($/boe except where noted) (1)(5) | |||||||
Oil, NGL and natural gas revenue (6) | 71.09 | 77.36 | (8 | ) | |||
Royalties | 8.70 | 11.92 | (27 | ) | |||
Production expenses | 12.60 | 12.61 | - | ||||
Operating netback | 49.79 | 52.83 | (6 | ) | |||
Average daily production | |||||||
Oil and NGL (bbls) | 40,390 | 40,336 | - | ||||
Natural gas (mcf) | 52,128 | 38,320 | 36 | ||||
Total (boe) (5) | 49,078 | 46,772 | 5 | ||||
(1) | Non-GAAP measure. See "Non-GAAP Measures" section within this document. |
(2) | 2012 balance calculated using shares outstanding by PetroBakken prior to the reorganization in December 2012. |
(3) | Consists of common shares, stock options, deferred common shares, incentive shares and convertible debentures as at the period end date. |
(4) | 2012 balance represents dividends paid out by PetroBakken prior to the reorganization in December 2012. Petrobank Energy and Resources Ltd., which amalgamated with PetroBakken Energy Ltd. pursuant to the reorganization, did not payout out any dividends in the year ending December 31, 2012. |
(5) | Six Mcf of natural gas is equivalent to one barrel of oil equivalent ("boe"). |
(6) | Net of transportation expenses. |
INVESTOR CONFERENCE CALL
Management of PetroBakken will be holding a conference call for investors, financial analysts, media and any interested persons on Thursday, May 2, 2013 at 9:00 a.m. (MST) (11:00 a.m. EST) to discuss PetroBakken's first quarter financial and operating results.
The investor conference call details are as follows:
Live call dial-in numbers: 1-416-340-2216/1-866-226-1792
Replay dial-in numbers: 1-905-694-9451 / 1-800-408-3053
Passcode: 2866206
http://events.digitalmedia.telus.com/petrobakken/050213/index.php
PetroBakken Energy Ltd. is an oil and gas exploration and production company combining light oil Bakken and Cardium resource plays with conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. PetroBakken is applying leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with a significant inventory of opportunities in the Horn River and Montney gas resource plays in northeast BC. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.
Non-GAAP Measures. This press release contains financial terms that are not considered measures under IFRS, such as funds flow from operations, adjusted net income, funds flow per share, adjusted net income per share, payout ratio, total debt, operating netback and net capital expenditures. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders. Specifically, funds flow from operations reflects cash generated from operating activities before changes in non-cash working capital. Adjusted net income is determined by adding back any losses or deducting any gains on the derivative liabilities, adding back any losses or deducting any gains on settlement of convertible debentures, and adding back impairments. Payout ratio is determined as dividends paid as a percentage of funds flow from operations. Management considers funds flow from operations, funds flow per share, adjusted net income, adjusted net income per share, and payout ratio important as it helps evaluate performance and demonstrate the ability to generate sufficient cash to fund future growth opportunities, pay dividends and repay debt. Total debt includes bank debt outstanding plus accounts payable less accounts receivable and prepaid expenses plus the full value outstanding on the senior unsecured notes and convertible debentures converted to Canadian dollars at the exchange rate on the period end date. Total debt is used to evaluate PetroBakken's financial leverage. Profitability relative to commodity prices per unit of production is demonstrated by an operating netback. Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period. Net capital expenditures represent capital expenditures, including exploration and evaluation expenditures, less proceeds from asset dispositions. Funds flow from operations, funds flow per share, adjusted net income, adjusted net income per share, payout ratio, total debt, operating netbacks, and net capital expenditures may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations or other measures of financial performance calculated in accordance with IFRS. Further information in respect of these non-GAAP measures is set forth in our MD&A.
Well Counts. All references to well counts are on a net basis.
Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to financial results, results from operations, future production rates, proposed exploration and development activities (including the number of wells to be drilled, completed and put on production), our drilling prospect inventory, projected capital expenditures, the timing of certain projects and future dividend payments. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the success of future drilling, completion, recompletion and development activities, the performance of new and existing wells, prevailing commodity prices and economic conditions, the availability and cost of labour and services, timing of pipeline and facilities construction, access to third party facilities and weather and access to drilling locations. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and exchange rate fluctuations and general economic conditions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. Except as may be required by applicable securities laws, PetroBakken assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.
