RMP Energy Inc. ("RMP" or the "Company") (TSX:RMP) today announced its financial
and operating results for the three months ended September 30, 2012, which
reflect the Company's successful execution of its profitable oil production
growth strategy. For the third quarter, RMP reported funds from operations of
$0.12 per fully-diluted share or an aggregate $11.8 million, representing a 143%
increase from the same quarter in 2011, on revenue of $19.5 million and average
daily production of 4,967 barrels of oil equivalent weighted 40% light oil and
natural gas liquids. Financial and operating highlights are as follows:
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Financial Highlights Three Months Ended Sept. 30,
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(thousands except share and
per boe data) (6:1 oil
equivalent conversion) 2012 2011 % Change
----------------------------================================================
Petroleum and natural gas
revenue (1) 19,511 12,233 59
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Funds from operations (2) 11,789 4,847 143
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Per share - basic and
diluted 0.12 0.06 100
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Net income (loss) (1,164) (4,111) (72)
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Per share - basic and
diluted (0.01) (0.05) (80)
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E&D capital expenditures 25,809 36,006 (28)
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Total capital expenditures 25,805 36,212 (29)
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Net debt (3) - period end 64,069 37,822 69
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Weighted average basic
shares 100,225,439 84,287,173 19
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Weighted average diluted
shares 100,225,439 84,287,173 19
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Issued and outstanding
shares (4) 104,281,424 86,882,547 20
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Financial Highlights Nine Months Ended Sept. 30,
----------------------------================================================
(thousands except share and
per boe data) (6:1 oil
equivalent conversion) 2012 2011 % Change
----------------------------================================================
Petroleum and natural gas
revenue (1) 55,656 31,037 79
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Funds from operations (2) 31,749 12,848 147
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Per share - basic and
diluted 0.32 0.17 88
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Net income (loss) 4,076 (3,994) -
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Per share - basic and
diluted 0.04 (0.05) -
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E&D capital expenditures 63,033 57,807 9
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Total capital expenditures 62,473 92,209 (32)
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Net debt (3) - period end 64,069 37,822 69
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Weighted average basic
shares 97,915,535 75,475,060 30
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Weighted average diluted
shares 97,915,535 75,475,060 30
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Issued and outstanding
shares (4) 104,281,424 86,882,547 20
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Operating Highlights
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Average daily production:
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Natural gas (Mcf/d) 17,874 15,236 17
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Liquids (Oil and NGLs)
(bbls/d) 1,988 861 131
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Oil equivalent (boe/d) 4,967 3,400 46
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Average sales price(1) :
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Natural gas ($/Mcf) 2.47 4.04 (39)
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Liquids (Oil and NGLs)
($/bbl) 84.52 82.87 2
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Oil equivalent ($/boe) 42.70 39.10 9
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Operating expenses ($/boe) 9.04 10.46 (14)
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Operating netback (5)
($/boe) 29.55 19.37 53
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Wells drilled: gross (net) 4 (3.4) 5 (4.4) (20)
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Operating Highlights
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Average daily production:
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Natural gas (Mcf/d) 17,638 14,297 23
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Liquids (Oil and NGLs)
(bbls/d) 1,979 668 196
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Oil equivalent (boe/d) 4,919 3,051 61
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Average sales price(1) :
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Natural gas ($/Mcf) 2.30 4.06 (43)
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Liquids (Oil and NGLs)
($/bbl) 82.12 83.28 (1)
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Oil equivalent ($/boe) 41.29 37.26 11
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Operating expenses ($/boe) 8.29 10.26 (19)
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Operating netback (5)
($/boe) 27.57 19.65 40
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Wells drilled: gross (net) 11 (9.8) 11 (9.2) -
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Notes:
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(1) Petroleum and natural gas revenue and pricing includes realized gains or
losses from commodity contract settlements.
(2) Funds from operations does not have any standardized meaning prescribed
by International Financial Reporting Standards ("IFRS"). Please refer to
the Reader Advisories within.
(3) Net debt is not a recognized measure under IFRS. Please refer to the
Reader Advisories within.
(4) As of November 12, 2012, common shares outstanding were 104.28 million.
(5) Operating netback is not a recognized measure under IFRS. Please refer
to the Reader Advisories within.
Third Quarter 2012 Operating and Financial Highlights
-- Third quarter production averaged 4,967 boe/d, with a light oil and NGLs
composition of 40%, as compared to third quarter 2011 production of
3,400 boe/d (weighted 25% oil and NGLs). New well tie-ins and down-hole
pump workovers were delayed in the third quarter of this year due to
unseasonable, prolonged wet surface lease conditions at Waskahigan in
West Central Alberta.
-- In the third quarter, the Company incurred exploration and development
expenditures of $25.8 million. For the nine months ended September 30,
2012, RMP incurred $62.1 million in exploration and development
expenditures, net of transacted dispositions, and currently expects to
incur approximately $90 million of exploration and development
expenditures for fiscal 2012 (net of transacted dispositions).
-- Petroleum and natural gas revenue for the third quarter amounted to
$19.5 million (including a realized oil hedging gain of $483 thousand),
of which 79% was derived from crude oil and NGL sales. The Company's
discount differential to the Canadian-dollar denominated WTI price
during the third quarter averaged $6.41/bbl, as compared to $15.58/bbl
in the second quarter of 2012 and $15.35/bbl in the first quarter of
2012.
-- In the third quarter, RMP commenced a pump replacement program, of which
three pumps were replaced on the Company's older Waskahigan wells,
resulting in approximately $1.00/boe of additional operating costs,
RMP's field operating expenses on a boe basis decreased 14% to $9.04/boe
in the third quarter, as compared to $10.46/boe in the third quarter of
2011. Corporately, normalized per unit operating costs prior to pump
replacement activity, are estimated between $7.50/boe to $8.00/boe.
-- RMP reported funds from operations of $11.8 million ($0.12 per share)
for the three months ended September 30, 2012, an increase of 143% (100%
per share) from the funds from operations for the third quarter of 2011.
Field operating netbacks for the quarter were $29.55/boe, as compared to
the $19.37/boe in the third quarter of 2011, reflecting the Company's
ongoing successful transition to a low cost, light oil-weighted
producer.
-- Net debt as of September 30, 2012 was $64.1 million, representing a
leverage ratio of 1.36 times annualized third quarter funds from
operations. On September 28, 2012, the Company closed a $3.9 million
flow-through common share private placement in respect of Canadian
development expenses ("CDE"), pursuant to which 1.65 million shares were
issued at $2.37 per share.
Bank Credit Facility Increase
RMP is very pleased to report that based on the semi-annual review of the
borrowing base associated with the Company's committed, extendible revolving
bank credit facility, the lending syndicate (the "Lenders") has increased RMP's
credit facility by 22% to $110 million from $90 million. The credit facility
represents the maximum amount that can be borrowed and is primarily based on the
Lenders assessment and analysis of the Company's proved oil and gas reserves,
results of operations, and the Lenders forecasted commodity prices. The next
borrowing base re-determination is scheduled to occur on or about May 31, 2013.
As of November 9, 2012, RMP had approximately $61 million of bank debt drawn.
Drilling and Operations Update
Ante Creek, West Central Alberta
The production from RMP's first Ante Creek Montney horizontal oil well
(4-35-66-24W5) continues to exceed internal expectations. After 84 days of
production, this 100% working interest oil well is presently flowing, without
artificial lift, approximately 1,000 bbls/d of light gravity sweet crude oil (37
degree API) and 0.9 mmcf/d of associated natural gas with no measureable
formation water, for an oil equivalent rate of approximately 1,150 boe/d. The
Company is very encouraged by the production profile of this oil well. As of
November 10, 2012, the 4-35 well has produced an estimated 87,000 bbls of oil
and approximately 62 mmcf of natural gas, for a combined cumulative production
of 97,000 boe.
The Company recently completed and is currently undertaking flow test operations
on its third Montney horizontal oil well located at 1-36-66-24W5 (100% working
interest), which was drilled to the east side of RMP's acreage in order to
delineate the Montney formation. Prior to snubbing out the frac string to put
in-place production tubing, the 1-36 well recovered all of its frac fluid during
the first 40 hours of flow back and over the next 37 hours of a new oil
production flow test through the frac string, the 1-36 well flowed back an
average of approximately 2,287 bbls/d of 36 degree API crude oil and 3.8 mmcf/d
of associated solution gas for a total of approximately 2,920 boe/d at an
average flowing tubing wellhead pressure of 490 psi.
The Company also recently announced the test results of its second Montney
horizontal oil well located at 13-26-66-24W5 (100% working interest) in its news
release dated November 7, 2012. Please refer to important Reader Advisories at
the end of this news release. Both of these wells (13-26 and 1-36) will qualify
for the Alberta Government's Horizontal Oil New Well royalty rate cap of 5% on
the first 80,000 boe produced.
At Ante Creek, the Company is currently facility limited for processing of
associated solution gas. The associated Montney solution gas is conserved and
processed at an area operator's gas plant, which currently has allocated
approximately 1.5 mmcf/d of capacity to RMP. Oil production from RMP's Ante
Creek area is presently being trucked into the Company's Waskahigan oil battery.
The Company is presently evaluating numerous gas take-away alternatives in order
to alleviate these capacity limitations for 2013.
To the south of the Company's Ante Creek land block, RMP plans to test the
horizontal Montney potential on its five-section, South Ante Creek acreage by
the end of this year by drilling the wholly-owned 4-14-65-23W5 location.
RMP is very encouraged with the early stage drilling delineation of its Montney
oil asset base at Ante Creek, which is expected to complement its extensive
Waskahigan Montney oil and Kaybob Montney gas development drilling inventory
portfolio. At Ante Creek, the Company has identified an additional 21 drilling
locations at 100% working interest, and conditional upon success with its South
Ante Creek exploration location, RMP's drilling inventory in the area could
potentially double in size.
Waskahigan, West Central Alberta
In the third quarter, RMP drilled three 100% working interest horizontal oil
wells and successfully completed these wells in addition to a second-quarter
drilled horizontal well (1.0 net). During the nine months ended September 30,
2012, the Company drilled a total of nine (9.0 net) horizontal wells at
Waskahigan. Subsequent to the end of the third quarter, RMP drilled two
additional Montney horizontal oil wells (2.0 net) and successfully completed one
of the two wells with the completion scheduled for the second well by the end of
November 2012.
Since the corporate re-structuring in May 2011, RMP has successfully drilled a
total of twenty (20.0 net) Montney horizontal oil wells. In total, the Company
has twenty-six (26.0 net) horizontal oil wells drilled into the Montney light
oil pool at Waskahigan.
During the third quarter, the Company continued with the expansion of its
Waskahigan oil battery to approximately 6,000 bbls/d from the current capacity
of 2,500 bbls/d. The expanded oil battery will provide for the: i) future
handling of the Company's expanded production base, ii) processing of RMP's
trucked-in Ante Creek oil production, and iii) the accommodation of third-party
volumes from area operators. Full battery expansion is anticipated to be
completed in early 2013.
Updated 2012 Market Guidance
For 2012, RMP is currently expecting to incur approximately $90 million in
exploration and development expenditures, net of transacted dispositions. The
Company's 2012 capital expenditures have increased primarily as a result of the:
Waskahigan oil battery expansion, initial Ante Creek battery construction and
expansion plus related solution gas gathering line connection into a third-party
system, and exploration drilling on RMP's five section acreage position at South
Ante Creek.
The Company's production for the month of October 2012 averaged approximately
5,600 boe/d, weighted 48% light oil and NGLs, as based on field estimates.
Current production is approximately 6,000 boe/d (based on field estimates),
weighted approximately 50% light oil and NGLs. RMP's year-end 2012 net debt is
estimated at approximately $75 million, with significant un-utilized credit
capacity of approximately $35 million heading into 2013.
The Company anticipates releasing its 2013 Capital Budget and Business Plan on
or about December 12, 2012.
RMP has updated its corporate presentation and is available on the Company's
website at www.rmpenergyinc.com.
The Company's interim condensed consolidated financial statements and associated
Management's Discussion and Analysis ("MD&A") for the three and nine months
ended September 30, 2012 is available on RMP's website at www.rmpenergyinc.com
within "Investors" under "Financials". Additionally, these documents will be
filed by the close of business today, on the Company's profile on the System for
Electronic Document Analysis and Retrieval ("SEDAR"). These documents can be
retrieved electronically from the SEDAR system by accessing RMP's public filings
under "Search for Public Company Documents" within the "Search Database" module
at www.sedar.com.
Abbreviations
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bbl barrel Mcf/d thousand cubic feet per day
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Mbbl thousand barrels MMcf/d million cubic feet per day
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bbls/d barrels per day Bcf billion cubic feet
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boe barrels of oil equivalent psi pounds per square inch
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Mboe thousand barrels of oil kPa kilopascals
equivalent
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boe/d barrels of oil equivalent per WTI West Texas Intermediate
day
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NGLs natural gas liquids C$ Canadian dollars
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Reader Advisories
Any references in this news release to initial and/or final raw test or
production rates and/or "flush" production rates are useful in confirming the
presence of hydrocarbons, however, such rates are not determinative of the rates
at which such wells will commence production and decline thereafter. These test
results are not necessarily indicative of long-term performance or ultimate
recovery. While encouraging, readers are cautioned not to place reliance on such
rates in calculating the aggregate production for the Company.
The information in this news release contains certain forward-looking
statements. These statements relate to future events or our future performance.
All statements other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "budget", "plan", "continue",
"estimate", "approximate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should", "believe",
"would" and similar expressions. More particularly and without limitation, this
new release contains forward looking information relating to: Ante Creek area
drilling inventory, timing of on-stream date of Ante Creek 13-26 well, current
associated solution gas processing limitations at Ante Creek, current and
cumulative production from the Ante Creek 4-35 well, current corporate
production levels and estimated corporate production for the month of October
2012, estimated 2012 capital expenditures net of transacted dispositions,
estimated year-end 2012 net debt, go-forward future corporate per unit operating
expenses, forward market pricing discount for the Company's Waskahigan crude oil
grade, the timing of the Company's Waskahigan oil battery expansion, and
drilling plans for the Company's South Ante Creek area and at Waskahigan. These
statements involve substantial known and unknown risks and uncertainties,
certain of which are beyond the Company's control, including: the impact of
general economic conditions; industry conditions; changes in laws and
regulations including the adoption of new environmental laws and regulations and
changes in how they are interpreted and enforced; fluctuations in commodity
prices and foreign exchange and interest rates; stock market volatility and
market valuations; volatility in market prices for oil and natural gas;
liabilities inherent in oil and natural gas operations; changes in income tax
laws or changes in tax laws and incentive programs relating to the oil and gas
industry ; geological, technical, drilling and processing problems and other
difficulties in producing petroleum reserves; and obtaining required approvals
of regulatory authorities. The Company's actual results, performance or
achievement could differ materially from those expressed in, or implied by, such
forward-looking statements and, accordingly, 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, what benefits that the Company will derive from
them. The Company's forward-looking statements are expressly qualified in their
entirety by this cautionary statement. Except as required by law, the Company
undertakes no obligation to publicly update or revise any forward-looking
statements.
In this news release RMP has adopted a standard for converting thousands of
cubic feet ("mcf") of natural gas to barrels of oil equivalent ("boe") of 6
mcf:1 boe. Use of boes may be misleading, particularly if used in isolation. The
boe rate is based on an energy equivalent 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 than the energy equivalency of the 6:1
conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an
indication of value.
As an indicator of the Company's performance, the term funds from operations
contained within this news release should not be considered as an alternative
to, or more meaningful than, cash flow from operating, financing or investing
activities, as determined in accordance with International Financial Reporting
Standards ("IFRS"). This term is not a recognized measure, does not have a
standardized meaning nor is it a financial measure under IFRS. Funds from
operations is widely accepted as a financial indicator of an exploration and
production company's ability to generate cash which is used to internally fund
exploration and development activities and to service debt. This measure is
widely used by shareholders and investors in the valuation, comparison and
investment recommendations of companies within the natural gas and crude oil
exploration and production industry. Funds from operations, as disclosed within
this news release, represents cash flow from operating activities before:
expensed corporate acquisition-related costs, decommissioning obligation cash
expenditures and changes in non-cash working capital from operating activities.
The Company presents funds from operations per share whereby per share amounts
are calculated consistent with the calculation of earnings per share.
Net debt refers to outstanding bank debt plus working capital deficit or less
any working capital surplus (excludes current unrealized amounts pertaining to
risk management commodity contracts). Net debt is not a recognized measure under
IFRS and does not have a standardized meaning.
Operating netbacks refers to realized wellhead revenue less royalties, operating
expenses and transportation costs per barrel of oil equivalent ("boe").
Operating netback is not a recognized measure under IFRS and does not have a
standardized meaning.
FOR FURTHER INFORMATION PLEASE CONTACT:
RMP Energy Inc.
John Ferguson
President and Chief Executive Officer
(403) 930-6303
john.ferguson@rmpenergyinc.com
RMP Energy Inc.
Dean Bernhard
Vice President, Finance and Chief Financial Officer
(403) 930-6304
dean.bernhard@rmpenergyinc.com
www.rmpenergyinc.com
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