CALGARY, Dec. 21, 2014 /CNW/ - Journey Energy Inc. (JOY –
TSX) ("Journey" or the "Company") announces that its
Board of Directors has approved a reduction to the 2015 capital
program to $70 million from
$90 million and has amended its
dividend policy to reflect a monthly dividend of $0.025 per share (previously $0.06 per share) beginning with the dividend
payment for February 16, 2015.
Journey emerged from its IPO in June of 2014 with the strongest
balance sheet in their history and these measures have been
undertaken in order to preserve this financial flexibility in a
period of uncertain and volatile commodity prices.
Rationale for Amending Dividend Policy
Journey's stated business plan is to provide shareholders with a
total return comprised of the combination of dividends and growth.
The long term sustainability of the business is critical to
this plan. President Alex
Verge comments, "Journey's primary focus is on maintaining a
solid balance sheet that is reflective of a lower debt to cash flow
ratio than our peers. The adjustments to capital spending and
dividends are prudent decisions given the current commodity price
environment. We are committed to providing a meaningful
dividend, but the protection of our balance sheet is of paramount
importance." Journey's initial dividend was set at 20-25% of
forecasted 2015 cash flow. The recent collapse in crude oil
prices necessitates a recalibration of the 2015 cash flow forecast
and a corresponding adjustment to our dividend policy.
Journey has based our amended dividend level on current 2015 strip
pricing assumptions of US $58.50 per
barrel for WTI and CDN $3.25 per
gigajoule for natural gas. Journey will continue to review
its dividend policy and adjust for material deviations, positive or
negative, in these assumptions.
2015 Guidance
In response to the current and near term outlook for commodity
prices, Journey's 2015 exploration and development capital program
has been revised downward to approximately $70 million. For the first quarter of 2015,
capital spending will be adjusted from the previously guided
$32 million to $20-$25
million. Despite this reduction in capital
expenditures, Journey is currently forecasting maintaining
production at the current levels of 11,000-11,300 BOE/d. The
Company is also forecasting improved capital efficiency in its 2015
capital program resulting from higher capital allocations to
drilling and completions and reduced capital allocations to water
flood and facility expansion projects. The Company is also
anticipating cost reductions in drilling, completions and well
servicing due to reduced industry activity. This production
level represents an 8% increase over 2014 levels and a 5% increase
over pro forma post IPO production of 10,600 BOE/d.
Journey continues to provide our shareholders with the
opportunity to participate in both our Dividend Reinvestment
Program ("DRIP") and our stock dividend program. Journey
forecasts DRIP and stock dividend participation levels in excess of
25% for the near term.
Journey is in an enviable position as we operate over 90% of our
capital projects and since our efforts are concentrated in high
working interest pools delineated by producing vertical wells, we
have a low-risk portfolio of opportunities without significant
lease expiry issues. We control our pace of development, and
any projects removed from 2015 can be deferred to future years when
commodity prices have rebounded. It is also important to
highlight that Journey's 2015 guidance contains no component for
growth through acquisitions. However, 2015 may present unique
acquisition opportunities for companies with superior financial
flexibility such as Journey.
Normal Course Issuer Bid
Journey announces that it intends to implement a normal course
issuer bid ("NCIB") through the facilities of the Toronto Stock
Exchange ("TSX") pursuant to which Journey would be able to
purchase up to approximately 1.9 million of its 43.3 million common
shares outstanding for a one year period at prevailing market
prices. The NCIB is subject to approval of the TSX and if
approved would be subject to the rules and restrictions of the TSX
relating to normal course issuer bids. The Company believes
that, from time to time, the current trading price is not
reflective of the underlying value of the Company. Therefore, the
repurchase of shares for cancellation may be used by the Company as
a way to enhance shareholder value.
ABOUT THE COMPANY
Journey is a Canadian exploration and production company focused
on conventional, oil-weighted operations in western Canada. Journey's strategy is to provide
investors with growth plus a sustainable yield by focusing on
drilling its existing core lands, implementing water flood
projects, executing on accretive acquisitions and growing its
production base. Journey seeks to optimize its legacy oil pools
through the application of best practices in horizontal drilling
and, where feasible, with water floods.
ADVISORIES
Information in this press release that is not current or
historical factual information may constitute forward-looking
information within the meaning of securities laws, which involves
substantial known and unknown risks and uncertainties, most of
which are beyond the control of Journey, including, without
limitation, those listed under "Risk Factors" and "Forward Looking
Statements" in the final long form prospectus of Journey dated
June 12, 2014 (the
"Prospectus"). Forward-looking information may relate
to our future outlook and anticipated events or results and may
include statements regarding the business strategy and plans and
objectives. Particularly, forward-looking information in this press
release includes, but is not limited to, information concerning
Journey's drilling and other operational plans, production rates,
dividend policy, long-term objectives and the declaration and
payment of dividends. Journey cautions investors in
Journey's securities about important factors that could cause
Journey's actual results to differ materially from those projected
in any forward-looking statements included in this press release.
Information in this press release about Journey's prospective cash
flows and financial position is based on assumptions about future
events, including economic conditions and courses of action, based
on management's assessment of the relevant information currently
available. Readers are cautioned that information regarding
Journey's financial outlook should not be used for purposes other
than those disclosed herein. Forward-looking information contained
in this press release is based on our current estimates,
expectations and projections, which we believe are reasonable as of
the current date. No assurance can be given that the
expectations set out in the Prospectus or herein will prove to be
correct and accordingly, you should not place undue importance on
forward-looking information and should not rely upon this
information as of any other date. While we may elect to, we are
under no obligation and do not undertake to update this information
at any particular time except as required by applicable securities
law.
No securities regulatory authority has either approved or
disapproved of the contents of this press release.
Barrel of Oil Equivalents
Where amounts are expressed in a barrel of oil equivalent
("BOE"), or barrel of oil equivalent per day ("BOE/d"), natural gas
volumes have been converted to barrels of oil equivalent at six (6)
thousand cubic feet ("Mcf") to one (1) barrel. Use of the term BOE
may be misleading particularly if used in isolation. The BOE
conversion ratio of 6 Mcf to 1 barrel ("Bbl") of oil or natural gas
liquids is based on an energy equivalency conversion methodology
primarily applicable at the burner tip, and does not represent a
value equivalency at the wellhead. This conversion conforms to the
Canadian Securities Regulators' National Instrument 51-101 –
Standards of Disclosure for Oil and Gas Activities.
SOURCE Journey Energy Inc.