TSX: TVE
CALGARY, Aug. 9, 2018 /CNW/ - Tamarack Valley Energy
Ltd. ("Tamarack" or the "Company") is pleased to
announce its financial and operating results for the three and six
months ended June 30, 2018. Selected
financial and operational information is outlined below and should
be read in conjunction with Tamarack's unaudited condensed
consolidated interim financial statements ("Financial Statements")
for the three and six months ended June 30,
2018 and related management's discussion and analysis
("MD&A") which are available on SEDAR at www.sedar.com and on
Tamarack's website at www.tamarackvalley.ca.
Tamarack posted another strong quarter in Q2 2018 marked by
record production, strong capital efficiencies and free cash flow
generation. To date, the Company is tracking ahead of 2018
forecasts, and as a direct result of this outperformance has
increased its 2018 annual production guidance to the range of
23,500 to 24,000 boe/d (64 to 66% liquids) from 22,500 to 23,500
boe/d. In addition, the Company's strong operational
execution provides flexibility to allocate capital to projects such
as the Veteran waterflood in the latter half of 2018 that will
benefit Tamarack into 2019 and 2020 through lower production
decline rates without impacting the current year's volumes.
As such, the Company has elected to accelerate approximately
$28 million of capital into late 2018
from its preliminary $250 million
capital budget for 2019.
The current 2018 capital program, accelerated 2019 capital and
current normal course issuer bid ("NCIB") program is expected to be
fully funded within projected adjusted operating field netbacks
(previously referred to as "adjusted funds flow"; see Non-IFRS
Measures) at current strip prices, staying consistent with
strategy. Tamarack's unwavering commitment to value creation on a
per share basis is clearly demonstrated by maintaining
sustainability while executing ongoing share repurchases in the
open market. Tamarack continues to purchase and cancel shares under
its NCIB and purchase shares to be held in trust and used to settle
share-based compensation awards. Taking this disciplined, per
share approach to managing the business further aligns Tamarack
with its shareholders.
Q2 2018 Financial and Operating Highlights
- Achieved record corporate production in Q2/18 of 23,853 boe/d,
an increase of 1% over Q1/18 volumes of 23,532 boe/d and an
increase of 23% from Q2/17 volumes of 19,336 boe/d.
- Oil and natural gas liquids ("NGL") weighting was 63% in Q2/18
compared to 59% in the same period of 2017, an increase of 7%,
which contributed positively to the Company's higher netbacks
year-over-year.
- Total adjusted operating field netbacks increased 81% to
$61.0 million in Q2/18 ($0.27 per share basic and $0.26 per share diluted), from $33.7 million in Q2/17 ($0.15 per share basic and diluted).
- Operating netbacks (excluding the effects of hedging) in Q2/18
were $34.15/boe, an increase of 11%
over $30.70/boe in Q1/18 and were 55%
higher than $22.09/boe in Q2/17. The
operating netback increase in Q2/18 relative to Q2/17 is primarily
due to a 12% decrease in net production and transportation costs, a
7% increase in oil and NGL weighting and a 40% increase in the
combined average realized prices for oil and NGL.
- Net production and transportation expenses in Q2/18 were 12%
lower at $10.48/boe compared to
$11.85/boe in Q2/17.
- Maintained healthy net debt to annualized Q2/18 adjusted
operating field netback ratio of 0.7 times at the end of Q2/18,
compared to 1.1 times at the end of Q2/17, and was drawn
$157 million on the Company's
$290 million revolving credit
facility (the "Facility").
- Invested $52.7 million in total
capital expenditures or $47.7 million
net of dispositions. Capital activities included drilling,
completing and equipping one (1.0 net) Cardium oil well, eight (6.5
net) Viking oil wells and one (1.0 net) Penny oil well. The Company
also completed and brought on production eight (8.0 net) Viking oil
wells that were drilled in late Q1/18 and drilled six (6.0 net)
Cardium oil wells, 18 (17.8 net) Viking oil wells and one (1.0 net)
Penny oil well that will be brought on production in the third
quarter of 2018.
- Reduced share dilution by purchasing and cancelling 1,081,000
outstanding common shares at a total cost of $4,421,000 under the NCIB helping offset the
impact of option issuances on share capital. In addition, Tamarack
spent $4,000,000 to purchase 970,000
outstanding common shares that are held in trust and used to settle
restricted share units ("RSU's") upon exercise.
Financial & Operating Results
|
|
|
|
|
|
|
|
Three months
ended
|
Six months
ended
|
June 30,
|
June 30,
|
|
2018
|
2017
|
%
change
|
2018
|
2017
|
%
change
|
($ thousands,
except per share)
|
|
|
|
|
|
|
Total
Revenue
|
107,859
|
66,715
|
62
|
206,595
|
129,585
|
59
|
Adjusted operating
field netback 1
|
61,005
|
33,670
|
81
|
119,550
|
66,026
|
81
|
|
Per share – basic
1
|
$
0.27
|
$ 0.15
|
80
|
$
0.52
|
$ 0.30
|
73
|
|
Per share – diluted
1
|
$
0.26
|
$ 0.15
|
73
|
$
0.51
|
$ 0.29
|
76
|
Net income
|
3,060
|
3,053
|
–
|
6,354
|
5,343
|
19
|
|
Per share –
basic
|
$
0.01
|
$ 0.01
|
–
|
$
0.03
|
$ 0.02
|
50
|
|
Per share –
diluted
|
$
0.01
|
$ 0.01
|
–
|
$
0.03
|
$ 0.02
|
50
|
Net debt
1
|
(181,341)
|
(152,354)
|
19
|
(181,341)
|
(152,354)
|
19
|
Capital Expenditures
2
|
52,674
|
19,002
|
177
|
122,304
|
82,723
|
48
|
Weighted average
shares outstanding (thousands)
|
|
|
|
|
|
|
|
Basic
|
228,040
|
227,672
|
–
|
228,329
|
222,691
|
3
|
|
Diluted
|
232,310
|
229,066
|
1
|
232,255
|
224,419
|
3
|
Share Trading
(thousands, except share price)
|
|
|
|
|
|
|
High
|
$
4.66
|
$ 3.16
|
47
|
$
4.66
|
$ 3.59
|
30
|
Low
|
$
2.61
|
$ 1.96
|
33
|
$
2.31
|
$ 1.96
|
18
|
Trading volume
(thousands)
|
88,082
|
55,440
|
59
|
119,027
|
136,308
|
(13)
|
Average daily
production
|
|
|
|
|
|
|
|
Light oil
(bbls/d)
|
13,242
|
9,481
|
40
|
13,240
|
8,691
|
52
|
|
Heavy oil
(bbls/d)
|
527
|
453
|
16
|
414
|
469
|
(12)
|
|
NGL
(bbls/d)
|
1,355
|
1,453
|
(7)
|
1,351
|
1,615
|
(16)
|
|
Natural gas
(mcf/d)
|
52,376
|
47,696
|
10
|
52,129
|
46,779
|
11
|
|
Total
(boe/d)
|
23,853
|
19,336
|
23
|
23,693
|
18,572
|
28
|
Average sale
prices
|
|
|
|
|
|
|
|
Light oil
($/bbl)
|
75.29
|
55.58
|
35
|
71.98
|
58.94
|
22
|
|
Heavy oil
($/bbl)
|
70.17
|
43.80
|
60
|
61.20
|
44.23
|
38
|
|
NGL
($/bbl)
|
45.90
|
29.39
|
56
|
45.53
|
27.79
|
64
|
|
Natural gas
($/mcf)
|
1.65
|
3.01
|
(45)
|
1.95
|
2.95
|
(34)
|
|
Total
($/boe)
|
49.69
|
37.91
|
31
|
48.17
|
38.55
|
25
|
Operating netback
($/Boe) 1
|
|
|
|
|
|
|
|
Average realized
sales
|
49.69
|
37.91
|
31
|
48.17
|
38.55
|
25
|
|
Royalty
expenses
|
(5.06)
|
(3.97)
|
27
|
(5.11)
|
(4.05)
|
26
|
|
Production
expenses
|
(10.48)
|
(11.85)
|
(12)
|
(10.61)
|
(11.65)
|
(9)
|
Operating field
netback ($/Boe) 1
|
34.15
|
22.09
|
55
|
32.45
|
22.85
|
42
|
|
Realized commodity
hedging gain (loss)
|
(3.36)
|
(0.19)
|
1,668
|
(1.99)
|
(0.47)
|
323
|
|
Operating
netback
|
30.79
|
21.90
|
41
|
30.46
|
22.38
|
36
|
Adjusted operating
field netback ($/Boe) 1
|
28.10
|
19.14
|
47
|
27.88
|
19.64
|
42
|
|
Notes:
|
(1)
|
Adjusted operating
field netback, net debt, operating netback and operating field
netback do not have any standardized meaning prescribed by IFRS and
therefore may not be comparable with the calculation of similar
measures for other issuers. See "Oil and Gas Metrics" and
"Non-IFRS Measures".
|
(2)
|
Capital expenditures
include exploration and development expenditures, but excludes
asset acquisitions and dispositions.
|
Operational Execution Drives Free Cash Flow
Generation
The second quarter of 2018 represents another period of
exceptional operational execution and financial performance for
Tamarack. With its high-quality, light oil-weighted asset
base and strong capital efficiencies, Tamarack offers shareholders
exposure to a disciplined company that successfully generates free
cash flow balanced with growth. Consistent with its track
record, Tamarack intends to continue reinvesting free cash flow
back into the Company through accretive tuck-in acquisitions within
its core operating areas, by continuing to buy-back stock through
its NCIB or to offset stock-based compensation, and/or by
strengthening the balance sheet through ongoing debt reduction.
Tamarack will consistently target 10 to 15% debt-adjusted
production per share growth year-over-year while increasing its
liquids weighting, which is forecast to average 64 to 67% in 2018.
The Company has successfully achieved a net debt to
annualized total adjusted field operating netback ratio of less
than one times, demonstrated by the Q2/18 ratio of 0.7 times,
providing significant financial flexibility and capital allocation
optionality to optimize value for shareholders.
Fully Funded Q2 Capital Program and Q3 Capital
Acceleration
Tamarack allocated $52.7 million
to drilling, completion and tie-in activities and property
acquisitions ($47.7 million net of
dispositions) during Q2/18, funded entirely by the $61.0 million of adjusted operating field netback
generated during the period. Favorable spring break-up
conditions led Tamarack to accelerate approximately $22 million of capital from its third quarter
drilling program into the second quarter. As a result, the
Company spent slightly more capital during the first half of 2018
than its previously disclosed target of 50% of its $195 to $205
million capital budget.
During Q2/18, the Company successfully drilled, completed and
equipped one (1.0 net) Cardium oil well, eight (6.5 net) Viking oil
wells and one (1.0 net) Penny oil well. The Company also completed
and brought on production eight (8.0 net) Viking oil wells that
were drilled in late Q1/18. The full impact of the Company's
Q2/18 activity was not realized during the quarter as nine (8.85
net) of the wells drilled and completed in the period did not come
on production until late June, having little to no impact on
volumes in the second quarter but will benefit production in
Q3/18. In addition, the Company drilled six (6.0 net) Cardium
oil wells, 18 (17.8 net) Viking oil wells and one (1.0 net) Penny
oil well in Q2/18, all 25 of which will also be brought on
production in Q3/18, positively contributing to volumes through the
latter half of the year. Late in the second quarter, Tamarack
also completed the Veteran gas plant recommissioning, which
successfully addressed volume constraints and contributed to
reduced operating costs as solution gas is now being processed by
Tamarack rather than third parties.
Record Q2/18 Production Leads to Increased 2018
Guidance
Tamarack achieved record production volumes in Q2/18 of 23,853
boe/d, exceeding the upper end of the Company's first half guidance
range of 22,750 to 23,250 boe/d, with an oil and NGL production
weighting of 63%.
Revenue for the quarter increased 62% from Q2/17 and 9% from
Q1/18, primarily due to higher production volumes combined with
stronger realized oil and NGL prices. Tamarack's Q2/18
operating netback excluding the effect of hedges was $34.15/boe or 55% higher than Q2/17, which can be
attributed to the increased production volumes and higher oil and
NGL weighting year-over-year, as well as lower production and
transportation expenses. In Q2/18, production and
transportation expenses averaged $10.48/boe, a 3% decline from Q1/18 and a 12%
decline from Q2/17, driven by higher production, reduced trucking
costs and elimination of third party gas handling fees in the
Veteran area.
The Company has realized significant benefit from strengthening
WTI crude oil prices through H1/18, as 95% of Tamarack's oil
production is high-value light oil that commands premium
pricing. The Company's realized light oil price was
$75.29/bbl in Q2/18, an increase of
11% from $67.92/bbl in Q1/18, which
was aided by the narrowing of Edmonton Par / WTI differentials
during the period to US$5.46/bbl from
US$5.85/bbl. Current light oil
differentials are trading at US$7.00/bbl for September, 2018. Realized
natural gas prices decreased 27% to $1.65/mcf in the second quarter of 2018 compared
to $2.25/mcf in the first quarter.
The AECO daily benchmark price decreased 43% quarter-over-quarter,
reflecting continued weakness in Alberta's local gas market and reinforcing
Tamarack's decision to reduce its exposure to this market.
Effective April 1, 2018,
approximately 40% of Tamarack's natural gas production receives
pricing from various markets that have historically outperformed
AECO, including Malin (16%), Chicago (8%), Dawn (8%) and Mich Con
(8%). Tamarack expects to continue supporting its operating
netbacks by proactively mitigating exposure to natural gas pricing
markets with weaker pricing, such as AECO, coupled with maintaining
a focus on targeting drilling opportunities in areas where the oil
and NGL weighting is higher.
In response to first half 2018 production and adjusted operating
field netbacks coming in higher than originally expected, Tamarack
has increased 2018 annual average production guidance to the range
of 23,500 to 24,000 boe/d (64 to 66% liquids) from 22,500 to 23,500
boe/d. Although $28.4 million
of capital is being accelerated into 2018, increasing the
expenditure range to $223 to
$233 million, none of this
incremental capital will contribute to annual volumes but instead
impact operations and decline rates in future years. The
original capital expenditure budget of $205
million, the $28.4 million
capital acceleration program and the shares purchased under the
NCIB program are initiatives that are fully funded within current
projected adjusted operating field netbacks at current strip
prices.
The Company's 2018
guidance is summarized in the following table:
|
|
2018
Guidance
|
Average annual
production (boe/d)
|
23,500 -
24,000
|
|
Liquids weighting
(%)
|
~64 - 66
|
Exit production
(boe/d)
|
24,000 -
24,500
|
|
Liquids weighting
(%)
|
~65 - 67
|
2018 Capital
expenditure range ($millions)
2019 Capital
expenditure accelerated into 2018 ($millions)
|
$195 to
$205
$28
|
|
|
Year end 2018 net
debt(1) to Q4 annualized adjusted operating field
netback(2)
|
|
|
ratio (including
hedges)
|
<1.0
times
|
Liquidity on existing
credit facilities ($millions)
|
~$100
|
|
|
Original 2018 price
assumptions:
|
|
|
WTI
($US/bbl)
|
$56.75
|
|
Edmonton Par
($CDN/bbl)
|
$64.60
|
|
AECO
($CDN/GJ)
|
$1.65
|
|
Canadian/US dollar
exchange rate
|
$0.79
|
|
|
(1)
|
Refer to definition
of net debt under "Non-IFRS Measures"
|
(2)
|
Refer to definition
of adjusted operating field netback under "Non-IFRS
Measures"
|
Investment in Longer-Term Projects and 2019 Preliminary
Budget
Supported by the Company's exceptional operational execution to
date in 2018, Tamarack commenced allocating capital to longer-term
projects in Q2/18, including the Veteran waterflood which is
designed to shallow the overall corporate decline curve and enhance
sustainability. During the quarter, the Company converted two
Veteran wells to injectors and began injection late in June,
2018.
In order to position the Company to avoid the higher costs and
service interruptions that typically impact capital efficiencies in
the first quarter, Tamarack has elected to accelerate $28.4 million of capital into the latter half of
2018 from its preliminary 2019 capital budget of $250 million. This decision was made even
though this accelerated capital will be allocated to projects that
do not contribute to 2018 volumes.
Approximately half of the $28
million of accelerated capital will be directed to the
Veteran waterflood, with plans to drill seven to nine new injector
wells and to install the associated pipe and facilities to ensure
water injection can commence by early 2019. In keeping with
Tamarack's capital allocation strategy, all of the planned Veteran
waterflood projects achieve a 1.5 year payout based on current
strip prices. The other half of the accelerated capital will
be directed to initiate the Company's Q1/19 drilling program in the
fourth quarter, which includes de-risking lands located east of
Veteran that had originally been targeted for delineation in early
2019. Since Tamarack's operational performance to date has
exceeded internal expectations, the Company is able to maintain a
fully-funded program and able to allocate capital to initiatives
that do not immediately add to production, but instead provide
long-term value that can be realized through 2019 and
beyond.
Due to the Company's long runway of drilling opportunities,
approximately 77% of the $250 million
preliminary 2019 budget will be weighted towards drilling and
completions operations with 7% weighted towards waterflood
projects; the majority of the waterflood budget will be spent in
late 2018. The Company's preliminary 2019 capital expenditure
budget of $250 million contemplates
spending approximately 95% of its anticipated adjusted operating
field netback assuming commodities average US$60/bbl WTI, $1.65/GJ AECO and a $0.78 Canadian dollar. Tamarack intends to
release a more fulsome, formalized 2019 budget later in 2018 or
early 2019.
The Company's
preliminary 2019 budget is summarized in the following
table:
|
|
2019 Preliminary
Budget
|
Average annual
production (boe/d)
|
25,000 -
26,000
|
|
Liquids weighting
(%)
|
~65 - 67
|
Exit production
(boe/d)
|
27,500 -
28,000
|
|
Liquids weighting
(%)
|
~66 – 68
|
2019 Capital
expenditures accelerated into 2018 ($millions)
|
$28
|
2019 Capital
expenditures ($millions)
|
$222
|
|
|
2019 price
assumptions:
|
|
|
WTI
($US/bbl)
|
$60.00
|
|
Edmonton Par
($CDN/bbl)
|
$68.50
|
|
AECO
($CDN/GJ)
|
$1.65
|
|
Canadian/US dollar
exchange rate
|
$0.78
|
Preservation of Per Share Value
Tamarack remains committed to creating value for all
shareholders on a per share basis. In the first half of 2018, the
Company spent $4.4 million to
purchase and cancel 1.1 million outstanding common shares in the
open market under the NCIB. The NCIB provides management a
tool that can be employed when there is a perceived misalignment
between the Company's prevailing share price and the underlying
current and future potential value of its assets. In addition
to supporting the Company's per share value focus, the NCIB also
helps to offset the potential for dilutive impact that may be
associated with the exercise and settlement of options issued under
Tamarack's stock-based compensation program.
In addition to the NCIB, the Company purchased 970,000
outstanding common shares in the open market in the first six
months of 2018 for a total cost of $4,000,000. These shares are held in trust
by Tamarack's trustee and used to settle RSUs upon future exercise
by plan participants. As needed, the Company can 'draw down'
from the remaining balance of purchased common shares held in trust
to settle future RSU exercises. At June 30, 2018, the balance of the remaining
common shares held in trust totaled 570,000. This practice
mitigates dilution by eliminating the need to issue new shares from
treasury for the settlement of RSUs while supporting Tamarack's
commitment to maintain steady debt-adjusted per share growth which
is anticipated to be in the range of 10% to 15% in 2018 as compared
to 2017.
Outlook
Since acquiring Spur Resources in January
2017, Tamarack has demonstrated that consistent execution
drives per share growth and shareholder returns. Throughout a
period of sustained weakness in the global commodity markets, the
Company maintained its disciplined approach to capital allocation
and balance sheet flexibility, successfully acquired assets with
considerable drilling upside, continued to enhance well design to
improve profitability, streamlined internal processes to optimize
its corporate growth and effectively controlled costs.
Tamarack remains uniquely positioned to continue building on the
success achieved during the first half of 2018. With its
strong drilling results, higher production volumes than expected
and lower operating costs coupled with favorable commodity prices,
Tamarack has continued to outperform through Q2/18. The
efficiencies realized in the first half of 2018 have set the stage
for allocating excess capital to additional projects, including the
implementation of a waterflood at Veteran, given the Company's
results are ahead of its guidance. Further, should oil prices
remain robust, the Company expects to continue generating free cash
flow that can be utilized to optimize returns for shareholders –
whether through accretive tuck-in acquisitions in core areas,
ongoing share buy-backs or debt repayment. Tamarack remains
unique among its publicly traded Canadian energy peers, offering
exposure to a light oil-weighted, growth-oriented intermediate
producer with a proven track record of delivering disciplined
results. The Company remains committed to executing its
conservative and long-term strategy to maximize value for all
stakeholders.
Mr. Brian Schmidt, Tamarack's
President and CEO, was formally inducted as an honorary Chief by
the Blood Tribe (Kainai First Nation) at a ceremony on August 6, 2018 in Standoff, AB. The
celebration marks the 100th year of the naming ritual which
recognizes those who have contributed outstanding achievement in
their work for the Kainai people. Tamarack's community involvement
with the First Nations people is one of many corporate social
responsibility initiatives that the Company is actively involved in
to preserve and sustain the environment, the local communities and
their members.
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company
committed to long-term growth and the identification, evaluation
and operation of resource plays in the Western Canadian Sedimentary
Basin. Tamarack's strategic direction is focused on two key
principles – targeting repeatable and relatively predictable plays
that provide long-life reserves, and using a rigorous, proven
modeling process to carefully manage risk and identify
opportunities. The Company has an extensive inventory of low-risk,
oil development drilling locations focused primarily in the Cardium
and Viking fairways in Alberta
that are economic over a range of oil and natural gas prices. With
this type of portfolio and an experienced and committed management
team, Tamarack intends to continue delivering on its strategy to
maximize shareholder returns while managing its balance sheet.
Abbreviations
bbls
|
barrels
|
bbls/d
|
barrels per
day
|
boe
|
barrels of oil
equivalent
|
boe/d
|
barrels of oil
equivalent per day
|
Mboe
|
thousand barrels of
oil equivalent
|
mcf
|
thousand cubic
feet
|
GJ
|
gigajoule
|
MMcf
|
million cubic
feet
|
Mbbls
|
thousand
barrels
|
mcf/d
|
thousand cubic feet
per day
|
WTI
|
West Texas
Intermediate, the reference price paid in U.S. dollars at Cushing,
Oklahoma for the crude oil standard grade
|
AECO
|
the natural gas
storage facility located at Suffield, Alberta connected to
TransCanada's Alberta System
|
IFRS
|
International
Financial Reporting Standards as issued by the International
Accounting Standards Board
|
Oil and Gas Advisories
Unit Cost Calculation. For the purpose of
calculating unit costs, natural gas volumes have been converted to
a barrel of oil equivalent using six thousand cubic feet equal to
one barrel unless otherwise stated. A boe conversion ratio of 6:1
is based upon an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. This conversion conforms with Canadian
Securities Administrators' National Instrument 51–101 Standards
of Disclosure for Oil and Gas Activities. Boe may be
misleading, particularly if used in isolation.
Oil and Gas Metrics. This press release contains metrics
commonly used in the oil and natural gas industry, such as
operating field netback and operating netback.
"Operating field netback"
equals total petroleum and natural gas sales less royalties and
operating costs calculated on a boe basis.
"Operating netback" is the
operating field netback with realized gains and losses on commodity
derivative contracts on a boe basis.
These terms have been calculated by management and do not have a
standardized meaning and may not be comparable to similar measures
presented by other companies, and therefore should not be used to
make such comparisons. Management uses these oil and gas metrics
for its own performance measurements and to provide shareholders
with measures to compare Tamarack's operations over time. Readers
are cautioned that the information provided by these metrics, or
that can be derived from the metrics presented in this press
release, should not be relied upon for investment or other
purposes.
Forward-Looking Information
This press release contains certain forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities
laws. Forward-looking statements are often, but not always,
identified by the use of words such as "target", "plan",
"continue", "intend", "ongoing", "estimate", "expect", "may",
"should", "will" or similar words suggesting future
outcomes. More particularly, this press release contains
statements concerning: Tamarack's business strategy, objectives,
strength and focus; the ability of the Company to achieve drilling
success consistent with management's expectations; drilling
plans including the timing of drilling; share buy-backs for
cancellation under the NCIB and RSU settlements; debt repayment;
allocating capital to the Veteran waterflood and the Company's
Q1/19 drilling program and the plans, timing and production of
these projects; continuing to support operating netbacks by
mitigating exposure to weaker gas prices and focusing on drilling
opportunities where the oil and NGL weighting is higher; Tamarack's
intent to generate and reinvest free cash flow back through tuck-in
acquisitions; forecast 2018 annual production range and liquid
weighting percentage; release of the 2019 budget and the timing
thereof; tuck-in acquisitions in Tamarack's core areas; oil and
natural gas production levels; the availability, terms, use and
renewal of the Facility; timing and level of 2018 capital
expenditures; 2018 exit debt; 2018 production guidance; 2018
drilling program; and shareholder returns. The forward-looking
statements contained in this document are based on certain key
expectations and assumptions made by Tamarack relating to
prevailing commodity prices, the availability of drilling rigs and
other oilfield services, the cost of such oilfield services, the
timing of past operations and activities in the planned areas of
focus, the drilling, completion and tie-in of wells being completed
as planned, the performance of new and existing wells, the
application of existing drilling and fracturing techniques, the
continued availability of capital and skilled personnel, the
ability to maintain or grow the banking facilities and the accuracy
of Tamarack's geological interpretation of its drilling and land
opportunities. Although management considers these assumptions to
be reasonable based on information currently available to it, undue
reliance should not be placed on the forward-looking statements
because Tamarack can give no assurances that they may prove to be
correct.
By their very nature, forward-looking statements are subject to
certain risks and uncertainties (both general and specific) that
could cause actual events or outcomes to differ materially from
those anticipated or implied by such forward-looking statements.
These risks and uncertainties include, but are not limited to:
risks associated with the oil and gas industry (e.g. operational
risks in development, exploration and production; delays or changes
in plans with respect to exploration or development projects or
capital expenditures); commodity prices; the uncertainty of
estimates and projections relating to production, cash generation,
costs and expenses; health, safety, litigation and environmental
risks; and access to capital. Due to the nature of the oil and
natural gas industry, drilling plans and operational activities may
be delayed or modified to react to market conditions, results of
past operations, regulatory approvals or availability of services
causing results to be delayed. Please refer to Tamarack's annual
information form for the year ended December
31, 2017 (the "AIF") for additional risk factors relating to
Tamarack. The AIF can be accessed either on Tamarack's website at
www.tamarackvalley.ca under the Company's profile on
www.sedar.com.
The forward-looking statements contained in this press release
are made as of the date hereof and the Company does not undertake
any obligation to update publicly or to revise any of the included
forward-looking statements, except as required by applicable law.
The forward-looking statements contained herein are expressly
qualified by this cautionary statement.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about Tamarack's prospective results of operations,
production, net debt, debt adjusted production per share, net debt
to adjusted operating field netback ratio, adjusted operating field
netback, operating netbacks, operating costs, capital expenditures
and components thereof, all of which are subject to the same
assumptions, risk factors, limitations and qualifications as set
forth in the above paragraphs and the assumption outlined in the
Non-IFRS Measures section below. FOFI contained in this press
release was made as of the date of this press release and was
provided for the purpose of providing further information about
Tamarack's anticipated future business operations. Tamarack
disclaims any intention or obligation to update or revise any FOFI
contained in this press release, whether as a result of new
information, future events or otherwise, unless required pursuant
to applicable law. Readers are cautioned that the FOFI contained in
this press release should not be used for purposes other than for
which it is disclosed herein.
Non-IFRS Measures
Certain financial measures referred to in this press release,
such as net debt, adjusted funds flow, net debt to annualized
adjusted operating field netback, cash flow, adjusted operating
field netbacks and net debt to adjusted operating field netback
ratio are not prescribed by IFRS. Tamarack uses these measures to
help evaluate its financial and operating performance as well as
its liquidity and leverage. These non-IFRS financial measures do
not have any standardized meaning prescribed by IFRS and therefore
may not be comparable to similar measures presented by other
issuers.
"Net debt" is calculated as
long-term debt plus working capital surplus or deficit adjusted for
risk management contracts.
"Total adjusted operating field
netback" is calculated as net income or loss before taxes and
adding back items including: transaction costs; and deducting
non-cash items including: stock-based compensation; accretion
expense on decommissioning obligations; depletion, depreciation and
amortization; impairment; unrealized gain or loss on financial
instruments; and gain or loss on dispositions.
"Net debt to annualized adjusted
operating field netback ratio" is calculated as net debt divided by
annualized adjusted operating field netback for the most recent
quarter.
"Debt-adjusted production per
share" represents the Tamarack's production per share after
adjusting for debt.
"Cash flow" is determined as gross
oil, natural gas and natural gas liquids revenues including
realized gains on commodity risk management contracts, less the
following: royalties, operating costs, transportation costs,
general and administrative costs and interest expense.
Please refer to the MD&A for additional information relating
to Non-IFRS measures. The MD&A can be accessed either on
Tamarack's website at www.tamarackvalley.ca or under the Company's
profile on www.sedar.com.
SOURCE Tamarack Valley Energy