CALGARY, Alberta, May 10, 2012 /PRNewswire/ - Equal Energy Ltd.
("Equal", "the Company", "We" or "Our") (TSX: EQU) (NYSE:EQU) is
pleased to announce its financial and operating results for the
first quarter ended March 31,
2012.
Don Klapko,
President and Chief Executive Officer commented, "We are pleased to
deliver excellent results in the first quarter of 2012. It
has been a very busy start to the year and I want to highlight some
of the key achievements so far."
Strong Operating Results
Equal generated $1.8
million in net income in Q1 whilst facing the headwinds of
the lowest natural gas prices seen in ten years. Production
was up 20% year on year and averaged over 10,000 boe per day.
Funds from operations were up 12% year on year. Operating expenses,
G&A and interest expenses were all lower on a unit basis as a
result of a continued focus on our cost structure. Capital
spending was less than cash flow for the quarter.
Improved Balance Sheet
The Company successfully closed on $9.7 million in non-core property dispositions
undertaken to reduce overall debt. This has been part of an
ongoing balance sheet re-structuring and a strategy of improving of
our financial flexibility that have been key goals since early
2011. I am pleased to also announce that subsequent to the
end of Q1, our banking syndicate has confirmed the continuation of
our $200 million credit
facility. At this time our draw on this facility is only
US$103 million which includes
proceeds from the Mississippian oil venture and allows us
significant latitude.
Mississippian Oil Venture
We announced on April
4th the terms under which Equal sold 50% of its working
interest in Mississippian undeveloped lands in Oklahoma to Atlas Energy Partners LP.
This deal was closed on April
26th with proceeds to Equal of US$18 million. As part of this transaction
Equal has agreed with Atlas to jointly develop this acreage with
Atlas operating the drilling and completion phases and Equal
operating the production. The venture intends to drill a
minimum of six horizontal wells for the balance of 2012 starting in
late Q2 or early Q3. The immediate realization of these
proceeds and the securing of a quality joint venture partner
underpin strong future value growth for Equal.
Successful Drilling Programs
In Q1 Equal drilled six successful wells.
Four wells were put down in our northern Oklahoma Hunton
play. Two of these were on production at quarter end, and the
other two will be on in Q2. All four wells also preserved
substantial additional Mississippian acreage. Two wells were
drilled in our core Twin Cities Central Dolomite (TCCD) play also
in Oklahoma. One was on
production by the end of Q1 and the second was substantially
drilled and is awaiting tie-in. Subsequent to the quarter end
Equal was drilling its third TCCD well and had just finished
drilling its first Cardium oil well in Canada.
Strategic Review
On May
3rd, Equal's board of directors announced the
initiation of a strategic review process to be managed by a special
committee of independent board members with the assistance of
Scotiabank as strategic advisors. The board and management
are responding to a perceived significant gap between the value of
the Company's underlying assets, and the value being recognized in
the Company's stock price. The objective of the strategic
review is to explore ways to potentially close this gap and improve
the valuation of the Company.
The following table is a summary of selected
financial and operational information for the three months ended
March 31, 2012 with comparative 2011
figures.
|
|
|
|
Financial and Operations Summary
(in thousands except for volumes, percentages and
per share and boe amounts) |
Three months ended March 31 |
|
2012 |
2011 |
Change |
|
|
|
|
|
FINANCIAL |
|
|
|
Oil, NGL and natural
gas revenues including realized hedging |
33,062 |
35,078 |
(6%) |
Funds from
operations |
12,973 |
11,580 |
12% |
|
Per share - basic ($) |
0.37 |
0.42 |
(12%) |
|
Per share - diluted ($) |
0.36 |
0.42 |
(14%) |
Net income /
(loss) |
1,837 |
(3,382) |
|
|
Per share - basic and diluted
($) |
0.05 |
(0.12) |
|
Total assets |
441,503 |
386,376 |
|
Working capital
(deficit) including long-term debt |
(119,822) |
(72,791) |
|
Convertible
debentures |
41,534 |
80,336 |
|
Shareholders'
equity |
217,865 |
165,337 |
|
SHARES
OUTSTANDING |
|
|
|
Shares outstanding -
basic (000s) |
34,970 |
27,724 |
|
Shares outstanding -
diluted (000s) |
36,129 |
27,724 |
|
Shares outstanding at
period end (000s) |
34,992 |
27,733 |
|
OPERATIONS |
|
|
|
Average daily
production |
|
|
|
|
Oil (bbls per day) |
1,353 |
2,567 |
(47%) |
|
NGL (bbls per day) |
3,908 |
2,324 |
68% |
|
Gas (mcf per day) |
30,729 |
22,545 |
36% |
|
Total (boe per day) |
10,383 |
8,649 |
20% |
Average sales
price |
|
|
|
|
Oil ($ per bbl) |
88.76 |
75.40 |
18% |
|
NGL ($ per bbl) |
39.03 |
47.52 |
(18%) |
|
Gas ($ per mcf) |
2.95 |
3.80 |
(22%) |
Cash flow netback
($ per boe) |
|
|
|
|
Revenue |
34.99 |
45.06 |
(22%) |
|
Royalties |
6.53 |
9.33 |
(30%) |
|
Production expenses |
9.74 |
11.37 |
(14%) |
|
Transportation expenses |
0.31 |
0.56 |
(45%) |
|
Operating netback |
18.41 |
23.80 |
(23%) |
|
General and administrative |
2.60 |
5.46 |
(52%) |
|
Cash interest expense |
2.24 |
3.83 |
(42%) |
|
Other cash costs |
(0.16) |
(0.37) |
(57%) |
|
Cash flow netback |
13.73 |
14.88 |
(8%) |
|
|
|
|
|
Equal Energy Ltd.'s complete unaudited,
consolidated financial statements, accompanying notes and
Management's Discussion and Analysis for the quarter ended
March 31, 2012 will be available on
Equal's website at www.equalenergy.ca, on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov/degar.shtml.
About Equal Energy Ltd.
Equal is an exploration and production oil and
gas company based in Calgary, Alberta,
Canada with its United
States operations office located in Oklahoma City, Oklahoma. Equal's shares and
debentures are listed on the Toronto Stock Exchange under the
symbols (EQU, EQU.DB.B) and Equal's shares are listed on the New
York Stock Exchange under the symbol (EQU). The portfolio of oil
and gas properties is geographically diversified with producing
properties located in Alberta and
Oklahoma. Current production is
comprised of approximately 13% crude oil, 38% NGLs and 49 % natural
gas. Equal has compiled a multi-year drilling inventory for its
properties including its new oil play opportunities in the Cardium
and Viking in central Alberta in
addition to its extensive inventory of drilling locations in the
Hunton liquids-rich, natural gas play and the Mississippian light
oil play in Oklahoma.
Forward-Looking Statements
Certain information in this press release
constitutes forward-looking statements under applicable securities
law including ongoing drilling plans and cost of capital. Any
statements that are contained in this press release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified by
terms such as "may," "should," "anticipate," "expects," "seeks" and
similar expressions. Forward-looking statements necessarily involve
known and unknown risks, including the closing of the sale of
certain Mississippian interests, the commencement and continuation
of joint venture operations on the Mississippian play with Atlas,
the repayment of debt, the availability of funds under Equal's
credit facility and the use of Equal; risks associated with oil and
gas production; marketing and transportation; loss of markets;
volatility of commodity prices; currency and interest rate
fluctuations; imprecision of reserve estimates; environmental
risks; competition; incorrect assessment of the value of
acquisitions; failure to realize the anticipated benefits of
acquisitions or dispositions; inability to access sufficient
capital from internal and external sources; changes in legislation,
including but not limited to income tax, environmental laws and
regulatory matters. Readers are cautioned that the foregoing list
of factors is not exhaustive.
Readers are cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated
forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.
Natural gas volumes recorded in thousand
cubic feet ("mcf") are converted to barrels of oil equivalent
("boe") using the ratio of six (6) thousand cubic feet to one (1)
barrel of oil ("bbl"). Boe's may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based
on an energy equivalent conversion method primarily applicable at
the burner tip and does not represent a value equivalent at the
wellhead.
Additional information on these and other
factors that could affect Equal's operations or financial results
are included in Equal's reports on file with Canadian and U.S.
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), the SEC's website
(www.sec.gov), Equal's website (www.equalenergy.ca)
or by contacting Equal. Furthermore, the forward looking statements
contained in this news release are made as of the date of this news
release, and Equal does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by securities
law.
SOURCE Equal Energy Ltd.