Bengal Energy Ltd. (TSX:BNG) ("Bengal" or the "Company") is pleased
to announce its financial and operating results for the first
fiscal 2014 quarter ended June 30, 2013.
FISCAL Q1 2014 HIGHLIGHTS:
During the first quarter of the Company's fiscal 2014 year,
Bengal continued its current strategy, resulting in further growth
in production and cash flow through the period. With the drilling
success realized to date in the Company's Cuisinier asset in the
Cooper Basin, Australia, understanding of the magnitude and lower
risk profile of this play has evolved, demonstrating that Cuisinier
represents a significant short and long term potential resource
play for Bengal.
Following are highlights of specific operational, financial and
corporate achievements that Bengal reached during the three months
ended June 30, 2013:
Financial Highlights:
-- Profitable Quarter + Higher Funds Flow from Operations -Bengal recorded
a profit in the quarter, with positive net income of $0.8 million,
compared to a loss of $0.2 million in Q1 of the prior year and a loss of
$0.6 million in the preceding quarter this year. Funds flow from
operations grew to $1.7 million, compared to a deficiency of $0.1
million in Q1 of the prior year and $1.1 million in the preceding
quarter this year.
-- Higher Revenue + Strong Netbacks - Bengal's realized revenue of $3.7
million was substantially higher than the $0.5 million realized in Q1 of
the prior year and 23% higher than the $3.0 million realized in the
preceding quarter this year, driven by higher production volumes and
very attractive realized pricing. Bengal's operating (field) netback in
Australia averaged $89.05 per barrel (bbl) (corporate average of
$79.82/bbl), reflecting the high quality of crude oil produced, which
was priced at a premium of almost $6.00 / bbl over the Brent benchmark.
-- Financing Activity Strengthens Balance Sheet - In April, Bengal raised
C$5.7 million through a brokered equity private placement, directing
proceeds to fund ongoing capital investments.
-- Increase in Cuisinier Working Interest- On June 26, Bengal announced
that it was exercising its pre-emptive right to purchase an additional
5.357% interest in the Cuisinier oil field and Authority to Prospect
("ATP") 752P in the Cooper Basin, which will bring the Company's total
ownership to 30.357%. Subsequent to quarter end, Bengal successfully
raised C$8 million through a private placement of non-convertible
unsecured notes to fund the acquisition of this additional interest,
which is expected to close in September 2013 and have an effective date
of March 15, 2013.
Operating Highlights:
-- Rising Production - Bengal's production averaged 356 boe/d for the
period, an increase of 300% over Q1 of the prior year and 10% over the
preceding quarter this year. This production level does not reflect the
incremental working interest to be acquired in Cuisinier, which would
have increased the quarterly oil production volumes by 21% or 67 b/d.
-- Continued 100% Drilling Success In Cuisinier - During the period ended
June 30, 2013, Bengal continued its 100% success rate in the Cuisinier
field, with five out of five wells drilled currently being completed as
oil producers and tied-in. This brings Bengal's total wells drilled in
Cuisinier to 13, with one additional well to be drilled in August.
Assuming this sixth well is a successful oil producer; production from
these wells is expected to be fully tied-in by early September, which
should positively impact volumes and cash flows for the balance of
calendar 2013 and into 2014. With the success to date in the Cuisinier
area it is now clear that the Company is participating in a significant,
seismically supported potential resource play.
-- Farmout and Joint Venture (JV) Agreement - On May 23, 2013, Bengal
entered into a binding letter of intent with Australia-based Beach
Energy Ltd for the exploration and development of Bengal's 100% owned
Tookoonooka Permit. Under the agreement terms, Beach will fund the
drilling of two new wells and acquire an additional 300 km2 of 3D
seismic, up to a maximum of AUD $11.5 million. One of the wells is
anticipated to be in the Caracal area near Bengal's existing oil
discovery, with the second well to be situated within the area covered
by the new 3D seismic. Subsequent to the end of the quarter, the JV
Agreement was finalized and the transaction closed.
-- Receipt of Petroleum License and Pipeline Commissioning - On April 8,
2013 the final approval of Petroleum Lease 303 ("PL303") for the
Cuisinier oil pool was granted, which allows all current and future
Cuisinier wells to produce for up to 21 years. Subsequently, on June 7,
the Cuisinier to Cook pipeline was commissioned allowing production from
all eight of Bengal's pre-2013 and subsequent wells to flow through the
pipeline, and eliminating capacity constraints from trucking for
transportation of the oil.
-- Onshore India Drilling Plan - In Bengal's onshore block in the Cauvery
Basin India, the Company intends to commence the drilling of its
exploration wells in the first quarter of calendar 2014. Continued
activity in onshore India for the balance of calendar 2014 and beyond
will depend on the results of the three wells drilled under the existing
work program.
"First quarter of fiscal 2014 was a successful period both
financially and operationally for Bengal," said Chayan Chakrabarty,
Bengal's President and CEO. "We continued to grow production and
generated very attractive netbacks, both of which contributed to a
profitable quarter. We reported 100% drilling success in Cuisinier
and announced an acquisition to increase our interest in that
field, meaning Bengal will realize a higher proportion of
production, reserves and cash flow from this important, potential
resource play going forward. Our JV agreement with Beach, which
closed after the quarter end, accelerates development at
Tookoonooka, and in concert with the financing activity undertaken
during the quarter, enables Bengal to preserve balance sheet
strength. I am very pleased with Bengal's progress and continuing
transition from exploration to development, and look forward to
updating our shareholders about ongoing developments."
For a discussion of the activities on each of the Company's
permits, refer to Bengal's management's discussion and analysis for
the first fiscal quarter 2014 ended June 30, 2013 filed on SEDAR at
www.sedar.com.
FINANCIAL & OPERATING HIGHLIGHTS
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$000s except per share, volumes and
netback amounts Three Months Ended
June 30, June 30, March 31,
2013 2012 2013
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Revenue
Oil $ 3,626 $ 433 $ 2,946
Natural gas 65 39 67
Natural gas liquids 31 26 -
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Total $ 3,722 $ 498 $ 3,013
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Royalties 204 45 271
% of revenue 5.5 9.0 9.0
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Operating & transportation 930 247 694
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Netback $ 2,588 $ 206 $ 2,048
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Cash from (used in) operations: 1,249 (759) 119
Per share ($) (basic & diluted) 0.02 (0.01) (0.00)
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Funds flow from (used in) operations 1,732 (62) 1,151
Per share ($) (basic & diluted) 0.03 (0.00) 0.02
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Net income (loss): 836 (211) (592)
Per share ($) (basic & diluted) 0.01 (0.00) (0.01)
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Capital expenditures $ 5,435 $ 7,326 $ 1,280
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Volumes
Oil (bbl/d) 313 47 287
Natural gas (mcf/d) 240 225 229
Natural gas liquids (boe/d) 3 4 -
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Total (boe/d @ 6:1) 356 89 325
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Netback ($/boe)
Revenue $ 114.83 $ 61.95 $ 102.88
Royalties 6.32 5.60 9.25
Operating & transportation 28.69 30.73 23.70
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Total $ 79.82 $ 25.62 $ 69.93
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Bengal has filed its consolidated financial statements and
management's discussion and analysis for the first fiscal 2014
quarter ended June 30, 2013 with Canadian securities regulators.
The documents are available on SEDAR at www.sedar.com or by
visiting Bengal's website at www.bengalenergy.ca.
About Bengal
Bengal Energy Ltd. is an international junior oil and gas
exploration and production company with assets in Australia and
India. The company is committed to growing shareholder value
through international exploration, production and acquisitions.
Bengal trades on the TSX under the symbol BNG.
Additional information is available at www.bengalenergy.ca
Forward-Looking Statements
This news release contains certain forward-looking statements or
information ("forward-looking statements") as defined by applicable
securities laws that involve substantial known and unknown risks
and uncertainties, many of which are beyond Bengal's control. These
statements relate to future events or our future performance. All
statements other than statements of historical fact may be forward
looking statements. The use of any of the words "plan", "expect",
"prospective", "project", "intend", "believe", "should",
"anticipate", "estimate", or other similar words or statements that
certain events "may" or "will" occur are intended to identify
forward-looking statements. The projections, estimates and beliefs
contained in such forward looking statements are based on
management's estimates, opinions, and assumptions at the time the
statements were made, including assumptions relating to: the impact
of economic conditions in North America, Australia, India and
globally; industry conditions; changes in laws and regulations
including, without limitation, the adoption of new environmental
laws and regulations and changes in how they are interpreted and
enforced; increased competition; the availability of qualified
operating or management personnel; fluctuations in commodity
prices, foreign exchange or interest rates; stock market volatility
and fluctuations in market valuations of companies with respect to
announced transactions and the final valuations thereof; results of
exploration and testing activities; and the ability to obtain
required approvals and extensions from regulatory authorities. We
believe the expectations reflected in those forward-looking
statements are reasonable but, no assurances can be given that any
of the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do so, what benefits that
Bengal will derive from them. As such, undue reliance should not be
placed on forward-looking statements. Forward-looking statements
contained herein include, but are not limited to, statements
regarding: the Tookoonooka joint venture; including without
limitation, the terms thereof and the location of the two wells;
the acquisition of the increased interest in ATP 752P and the
closing thereof; use of funds from the July 2013 private placement;
the timing and location of future wells; tie-in operations,
including, without limitation, the timing and benefit thereof; and
the commencement of drilling operations in India.
The forward looking statements contained herein are subject to
numerous known and unknown risks and uncertainties that may cause
Bengal's actual financial results, performance or achievement in
future periods to differ materially from those expressed in, or
implied by, these forward-looking statements, including but not
limited to, risks associated with: the failure to obtain required
regulatory approvals or extensions; failure to satisfy the
conditions under farm-in and joint venture agreements; failure to
secure required equipment and personnel; changes in general global
economic conditions including, without limitations, the economic
conditions in North America, Australia, India; increased
competition; the availability of qualified operating or management
personnel; fluctuations in commodity prices, foreign exchange or
interest rates; changes in laws and regulations including, without
limitation, the adoption of new environmental and tax laws and
regulations and changes in how they are interpreted and enforced;
the results of exploration and development drilling and related
activities; the ability to access sufficient capital from internal
and external sources; and stock market volatility. Readers are
encouraged to review the material risks discussed in Bengal's
Annual Information Form under the heading "Risk Factors" and in
Bengal's annual MD&A under the heading "Risk Factors". The
Company cautions that the foregoing list of assumptions, risks and
uncertainties is not exhaustive. The forward-looking statements
contained in this news release speak only as of the date hereof and
Bengal does not assume any obligation to publicly update or revise
them to reflect new events or circumstances, except as may be
require pursuant to applicable securities laws.
Barrels of Oil Equivalent
When converting natural gas to equivalent barrels of oil, Bengal
uses the widely recognized standard of 6 thousand cubic feet (mcf)
to one barrel of oil (boe). However, a boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 mcf:
1 bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Certain Defined Terms
boe - barrels of oil equivalent
boe/d - barrels of oil equivalent per day
bbl - barrel
bbl/d - barrels per day
mcf - thousand cubic feet
mcf/d - thousand cubic feet per day
Non-IFRS Measurements
Within this release references are made to terms commonly used
in the oil and gas industry. Funds from operations, funds from
operations per share and netbacks do not have any standardized
meaning under International Financial Reporting Standards (IFRS)
and previous generally accepted accounting principles (GAAP) and
are referred to as non-IFRS measures. Funds from operations per
share is calculated based on the weighted average number of common
shares outstanding consistent with the calculation of net income
(loss) per share. Netbacks equal total revenue less royalties and
operating and transportation expenses calculated on a boe basis.
Management utilizes these measures to analyze operating
performance. The Company's calculation of the non-IFRS measures
included herein may differ from the calculation of similar measures
by other issuers. Therefore, the Company's non-IFRS measures may
not be comparable to other similar measures used by other issuers.
Funds from operations is not intended to represent operating profit
for the period nor should it be viewed as an alternative to
operating profit, net income, cash flow from operations or other
measures of financial performance calculated in accordance with
IFRS. Non-IFRS measures should only be used in conjunction with the
Company's annual audited and interim financial statements. A
reconciliation of these measures can be found in the table on page
5 of Bengal's Q1 fiscal 2014 MD&A.
Contacts: Bengal Energy Ltd. Chayan Chakrabarty President &
Chief Executive Officer (403) 205-2526 Bengal Energy Ltd. Bryan
Goudie Chief Financial Officer (403)
205-2526investor.relations@bengalenergy.ca www.bengalenergy.ca
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