Bengal Energy Announces Third Quarter Fiscal 2014 Results
13 February 2014 - 8:01AM
Marketwired Canada
Bengal Energy Ltd. (TSX:BNG) ("Bengal" or the "Company") is pleased to announce
its financial and operating results for the third fiscal quarter of 2014 (period
ended December 31, 2013).
In the quarter, Bengal advanced several key developments which contributed to
the Company's continued growth strategy. Bengal recorded another profitable
quarter driven by stable Australian production volumes and high netbacks from
its ultra-light, large oil in place producing Cuisinier property. All 14 wells
drilled to date at Cuisinier are now producing, and exploration in the
Tookoonooka joint venture has continued with partner, Beach Energy Ltd. With
producing oil weighted assets in Australia and prospects in India, Bengal has a
portfolio of projects at various stages of development, from exploration through
to production and cash flow generation.
Following are operational, financial and corporate achievements through the
three months ended December 31, 2013:
Financial Highlights:
-- Materially Higher Funds Flow from Operations - Bengal generated Funds
Flow from Operations(1) of $2.9 million, an increase of 38% over the
$2.1 million in the prior quarter and $0.4 million in Q3 of the prior
year.
-- Another Profitable Quarter - Bengal reported its third consecutive
profitable quarter, with net income of $0.6 million, compared to a loss
of $0.1 million in Q3 of the prior year and net income of $0.5 million
in the preceding quarter this year. Profitability was maintained despite
the Company prudently electing to take a $1.0 million write-down on its
offshore India assets, which was done due to continued uncertainty
regarding the future work plan for those assets.
-- Realized Commodity Prices Contributed to Higher Revenue - Bengal's
revenue of $5.5 million was 4% higher than the $5.3 million realized in
the preceding quarter and substantially higher than the $0.5 million
realized in Q3 of the prior year. The strong revenue was driven by
higher production volumes during the second and third fiscal quarters of
2014 coupled with continued strong pricing for the high quality crude
oil produced. Bengal's operating (field) netback in Australia averaged
C$88.61 per barrel (corporate average of C$83.13/bbl). Sales prices
averaged USD $115.48/bbl, a USD $6.23/bbl premium over the Brent
benchmark during the quarter.
-- Enhanced Financial Flexibility - Bengal extended the maturity of $1.8
million of its outstanding privately placed notes which had an initial
expiry of January 24, 2014 for an additional one year period at existing
terms including a 10% coupon.
Operating Highlights:
-- Stable Production Volumes - Production averaged 496 boe/d for the
period, which is 144% higher than in the same period the prior year and
reflects a slight decrease of 4% compared to the previous quarter. These
volumes reflect a 25% working interest in Cuisinier for all but the last
13 days of the quarter, when the working interest increased to over 30%,
following closing of an acquisition. Taking into account the higher
working interest, the Company exited Q3 2014 with a production rate of
approximately 520 boepd.
-- Closed Acquisition of Additional Working Interest - Bengal's agreement
to acquire an incremental 5.357% working interest in Cuisinier closed on
December 18, 2013 for a purchase price of AUS $7.5 million / C$ 7.2
million, which remains subject to final closing adjustments. Following
the acquisition, the Company's total working interest in Cuisinier
increased to 30.357% which results in Bengal realizing a greater
proportion of production and reserves going forward.
-- Commencement of Tookoonooka Drilling and Seismic Work Plan - Bengal and
its joint interest partner, Beach Energy Ltd commenced activity under
their agreement, which will see Beach drill 2 wells in Tookoonooka and
acquire 300 km2 of new 3D seismic, fully carrying Bengal up to a maximum
of AUD$11.5MM. At the end of December, the first well, Tangalooma-1, was
drilled but it failed to define a commercial hydrocarbon accumulation.
Also through December and January, the additional 3D seismic was
acquired, which will be followed by processing and interpretation
through the first half of calendar 2014. A second location is expected
to be selected based on the 3D seismic, and drilled in the second half
of 2014.
-- Onshore India Drilling Plan - The Company continues to work with the
operator of Bengal's onshore block in India's Cauvery Basin to finalize
the necessary regulatory approvals for the drilling of three exploration
wells. Based on current dialogue with the partners and the regulatory
agencies, it is anticipated the drilling of the first well will commence
in the second quarter of calendar 2014. Continued activity in onshore
India for the balance of calendar 2014 and beyond will depend on the
results of this drilling.
(1) Funds flow from operations is an additional generally accepted account
principle ("GAAP measure"). The comparable International Financial Reporting
Standards ("IFRS") measure is cash from operations. A reconciliation of the two
measures can be found in the table on page 5 of Bengal's Q3 MD&A.
OPERATING HIGHLIGHTS
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$000s except per share, Three Months Ended Nine Months Ended
volumes and netback amounts
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December 31 September December 31
30
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2013 2012 2013 2013 2012
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Revenue
Oil $ 5,451 $ 1,901 $ 5,229 $ 14,306 $ 2,721
Natural gas 53 35 69 187 105
Natural gas liquids 12 1 14 57 46
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Total $ 5,516 $ 1,937 $ 5,312 $ 14,550 $ 2,872
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Royalties 365 172 358 927 255
% of revenue 6.6 8.9 6.7 6.4 8.9
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Operating & transportation 1,365 623 1,499 3,794 1,032
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Net operating income $ 3,786 $ 1,142 $ 3,455 $ 9,829 $ 1,585
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Cash from (used in)
operations: $ 2,170 $ (378) $ 2,066 5,485 $ (822)
Per share ($) (basic &
diluted) 0.02 (0.01) 0.03 0.07 (0.02)
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Funds flow from (used in)
operations:(1) $ 2,862 $ 481 $ 2,063 $ 6,659 $ (52)
Per share ($) (basic &
diluted) 0.05 0.01 0.03 0.11 0.00
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Net income (loss): 573 $ (151) $ 545 1,954 $ (1,207)
Per share ($) (basic &
diluted) 0.01 (0.00) 0.01 0.03 (0.02)
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Capital expenditures $ 6,462 $ 9,475 $ 2,702 $ 14,599 $ 27,100
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Volumes
Oil (bbl/d) 463 184 483 420 89
Natural gas (mcf/d) 184 110 200 208 165
NGL (bbl/d) 2 1 2 2 3
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Total (boe/d @ 6:1) 496 203 518 457 119
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Netback(2) ($/boe)
Revenue $ 121.11 $ 103.33 $ 111.48 $ 115.84 $ 87.84
Royalties 8.01 9.18 7.51 7.38 7.80
Operating & transportation 29.97 33.23 31.46 30.21 31.56
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Total $ 83.13 $ 60.92 $ 72.51 $ 78.25 $ 48.48
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(1) Funds from operations is a non-IFRS measure. The comparable IFRS measure is
cash from operations. A reconciliation of the two measures can be found in the
table on page 5 of Bengal's Q3 MD&A.
(2) Netback is a non-IFRS measure. Netback per boe is calculated by dividing the
revenue and costs in total for the Company by the total production of the
Company measured in boe.
Bengal has filed its consolidated financial statements and management's
discussion and analysis for the third fiscal 2014 quarter ended December 31,
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's common shares trade 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 timing of processing and interpreting seismic data and timing
for the selection and drilling of a second well; receipt of regulatory approvals
for the drilling of exploration wells in Cauvery Basin, India; and the timing
for drilling of the first well in the Cauvery Basin, 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 for the year ended March 31, 2013
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 IFRS and previous 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 Q3 MD&A.
FOR FURTHER INFORMATION PLEASE CONTACT:
Bengal Energy Ltd.
Chayan Chakrabarty
President & Chief Executive Officer
(403) 205-2526
Bengal Energy Ltd.
Jerrad Blanchard
Chief Financial Officer
(403) 205-2526
investor.relations@bengalenergy.ca
www.bengalenergy.ca
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