TSX Venture Exchange: PRY
CALGARY,
May 13, 2013 /CNW/ - Pinecrest Energy
Inc. ("Pinecrest" or the "Company") is pleased to announce that it
has filed on SEDAR its unaudited financial statements and related
Management's Discussion and Analysis ("MD&A") for the three
month period ending March 31,
2013. The statements will be available for review at
www.sedar.com or www.pinecrestenergy.com.
First Quarter 2013 Achievements
Pinecrest is pleased to provide the following
update on our achievements during the three months ended
March 31, 2013:
- Achieved record average production of 4,315 boe per day
(99% light oil) an increase of 28% from 3,358 boe per day for the
three months ended March 31,
2012. Average production for the first quarter 2013
increased by 23% compared to Q4 2012 (3,510 boe per day);
- Achieved 100% drilling success, with a total of 12 (11.3
net) oil wells drilled compared to 9 (8.8 net) oil wells drilled
during the quarter ended March 31,
2012;
- Increased funds from operations by 6% to $21.5 million ($0.10 per basic and $0.09 per diluted shares outstanding) compared to
$20.3 million ($0.10 per basic and $0.09 per diluted shares outstanding) for the
quarter ended March 31, 2012.
Funds from operations increased by 4% compared to $20.7 million ($0.10 per basic and $0.09 per diluted weighted average shares
outstanding) during Q4 2012;
- Continued to generate a top decile operating netback of
$60.60 per boe for the quarter ended
March 31, 2013. Increased
production costs consisting of increased emulsion hauling from
wells not yet tied in, advanced expenditures on propane and
chemical supplies and a number of non-recurring well workovers
resulted in a lower netback compared to $69.51 per boe for the quarter ended March 31, 2012 and compared to $65.71 per boe for Q4 2012;
- Completed conversion of its third (Loon Project #1)
waterflood project and started injecting water in the latter
part of March 2013;
- Increased bank line to $155
million during the quarter. Subsequent to the end
of the quarter, the Company's credit line has been increased to
$165 million.
FINANCIAL AND OPERATIONAL
HIGHLIGHTS
March 31 |
Three
months ended |
|
2013 |
|
2012 |
|
% Change |
FINANCIAL |
|
|
|
|
|
Petroleum and natural gas sales |
33,829 |
|
28,191 |
|
20 |
Funds flow from operations |
21,461 |
|
20,275 |
|
6 |
|
Per share - basic |
$0.10 |
|
$0.10 |
|
- |
|
Per share - diluted |
$0.09 |
|
$0.09 |
|
- |
Net income |
3,716 |
|
5,947 |
|
(38) |
|
Per share - basic |
$0.02 |
|
$0.03 |
|
(33) |
|
Per share - diluted |
$0.02 |
|
$0.03 |
|
(33) |
Capital expenditures |
53,545 |
|
66,025 |
|
(19) |
Net debt and working capital deficit
(1) |
(135,783) |
|
(18,563) |
|
631 |
Common Shares Outstanding |
|
|
|
|
|
|
Weighted average - basic |
214,311 |
|
199,086 |
|
8 |
|
Weighted average - diluted |
233,947 |
|
231,203 |
|
1 |
OPERATING |
|
|
|
|
|
Number of days |
90 |
|
91 |
|
|
Production |
|
|
|
|
|
|
Crude oil (bbls/d) |
4,246 |
|
3,346 |
|
27 |
|
Natural gas (mcf/d) |
274 |
|
36 |
|
661 |
|
NGL (bbls/d) |
23 |
|
6 |
|
283 |
|
Barrels of oil equivalent (boe/d - 6:1) |
4,315 |
|
3,358 |
|
28 |
Average realized price |
|
|
|
|
|
|
Crude oil ($/bbl) |
88.12 |
|
92.42 |
|
(5) |
|
Natural gas ($/mcf) |
2.52 |
|
2.05 |
|
23 |
|
NGL ($/bbl) |
44.40 |
|
78.60 |
|
(44) |
|
Barrels of oil equivalent ($/boe - 6:1) |
87.12 |
|
92.26 |
|
(6) |
Netback per boe ($) |
|
|
|
|
|
|
Petroleum and natural gas sales |
87.12 |
|
92.26 |
|
(6) |
|
Realized loss on derivative financial
instruments |
(1.44) |
|
(2.09) |
|
(31) |
|
Royalties |
(6.20) |
|
(6.84) |
|
(9) |
|
Transportation and production expenses |
(18.88) |
|
(13.82) |
|
37 |
|
Operating netback |
60.60 |
|
69.51 |
|
(13) |
Wells drilled |
|
|
|
|
|
|
Gross |
12 |
|
9 |
|
33 |
|
Net |
11.3 |
|
8.8 |
|
29 |
|
Success rate (%) |
100 |
|
100 |
|
- |
(1) |
Includes $4.2 million (2012 - $2.6 million) unrealized loss on
derivative financial instruments. |
OPERATIONS UPDATE
Pinecrest completed its first quarter capital
program in mid-March, having drilled and completed 12 wells (11.3
net ). Subsequent to the quarter end, the Company was
successful in bringing on stream all of the wells drilled in the
first quarter. Pinecrest continues to refine its well design
and as a result has seen its most recent well costs decrease to
below $3.8 million, representing a
savings of over $1.2 million (24%)
per well as compared to the same period in 2012.
The continued drilling success in the Red Earth
area of Alberta has seen
Pinecrest's first quarter production increase by approximately 23%
compared to the quarter ended December 31,
2012. Currently, there is no capital spending
occurring on Company lands. The Company anticipates resuming
its post break-up drilling capital program in July.
The focus of the Company is firmly fixed on the
implementation of its seven operated 2013 waterflood schemes.
Results to date from the Company's first two waterflood projects
have been positive with offset wells experiencing an increase in
oil rates and reservoir pressures. To be prudent during the
evaluation phase of the waterfloods, Pinecrest has chosen to truck
the injection water to each new scheme. Consequently, these
additional water hauling costs have contributed to higher operating
costs during the first quarter. The responses experienced to
date are similar to other analogous waterfloods in the greater Red
Earth area and provides additional support for the upside potential
associated with waterflooding.
In late March, the Company began injection on
its third waterflood project. The results of this project will be
provided in the following quarterly reporting periods.
Temporary increased regulatory approval times have caused minor
delays in the implementation of the remaining projects. Two
additional projects are now ready to be implemented, and injection
on these two schemes will begin in the third quarter. Water
injection on the final three projects located in the Evi field is
scheduled to commence during the fourth quarter of 2013.
Current production levels have been affected by
normal seasonal access limitations to wellsites as a result of
spring break-up. This affects wells where produced fluids are
trucked and also wells that require repairs and maintenance.
Consequently, we have experienced a seasonably-normal 10-12%
production down time.
OUTLOOK - GREATER RED EARTH AREA, ALBERTA
Since inception, Pinecrest has established
itself as one of the dominant interest holders in the high quality
Slave Point light oil resource play in the greater Red Earth
area. The Company has over 400 net risked drilling locations
on its lands which contain an estimated 580 million barrels of
Discovered Oil Initially In Place (1)(2) as of
January 31, 2012 with very low
recovery to date. Sproule & Associates Ltd. conducted an
assessment effective as of January 31,
2012 (the "Assessment") of Pinecrest's Contingent Slave
Point Oil Resources(3) and has assigned the Company a
contingent resource Best Estimate(4) of 67.5 million
barrels using, a 13% recovery factor and based on a drilling
density of 4 wells per section. The Company believes that
significant upside potential, over and above the contingent
resource assignment, can be achieved through further infill
drilling and water flooding. The Assessment was prepared in
accordance with definitions, standards and procedures contained in
the Canadian Oil and Gas Evaluation Handbook and NI
51-101(5).
This resource capture is consistent with the
Company's stated strategy of focusing its capital and resources on
large light oil accumulations with high netback production, long
term upside and the ability to increase recovery factors through
the application of horizontal infill wells, multi-stage fracture
stimulations and implementing waterflood recovery schemes.
Analogous Slave Point waterfloods in the immediate area have proven
to be very effective and have been assigned incremental recovery
factors ranging between 50 and 100 percent over primary
recovery.
For the balance of 2013, Pinecrest will execute
an integrated capital program that will include drilling wells for
primary production (5 wells per section) and initial injection on
an additional 5 operated waterflood schemes.
Notes |
(1) |
"Discovered Oil Initially In Place" or "DOIIP" means
that quantity of petroleum that is estimated, as of a given date,
to be contained in known accumulations prior to production.
The recoverable portion of discovered petroleum initially in place
includes production, reserves and contingent resources. There
is no certainty that it will be commercially viable to produce any
portion of these resources. |
(2) |
All DOIIP other than cumulative production, reserves and
contingent resources have been categorized as unrecoverable.
Pursuant to the Assessment, as at January 31, 2012, 9.1 mmbbl of
oil was classified as cumulative production and proved plus
probable reserves. |
(3) |
"Contingent Oil Resources" are those quantities of
petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations using established technology
or technology under development, but which are not currently
considered to be commercially recoverable due to one or more
contingencies. Contingencies may include factors such as
distance from existing production, economic, legal, environmental,
political, and regulatory matters or a lack of markets. It is also
appropriate to classify as contingent resources the estimated
discovered recoverable quantities associated with a project in the
early evaluation stage. |
(4) |
"Best Estimate" is considered to be the best estimate of
the quantity that will actually be recovered. It is equally likely
that the actual remaining quantities recovered will be greater or
less than the best estimate. If probabilistic methods are used,
there should be at least a 50 percent probability (P50) that the
quantities actually recovered will equal or exceed the best
estimate. |
(5) |
Please refer to the Company's March 22, 2012 press release for
additional details in respect of the Assessment. |
ANNUAL GENERAL AND SPECIAL MEETING
Pinecrest's Annual General and Special Meeting
is scheduled for 10:00 am on
June 5, 2013 at the Bow Valley
Conference Center, Angus/Northcote Room, located at 300, 205 - 5th
Avenue S.W., Calgary. Alberta, T2P
2V7.
Advisory
The information in this press 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",
"plan", "continue", "estimate", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"should", "believe", "would" and similar expressions. In
particular, forward looking statements in this press release
includes, but is not limited to: Pinecrest's capital program and
2013 business objectives, Pinecrest's 2013 budget, oil recovery
rates, the effects of waterfloods on recovery factors, decline
rates and type curves for wells, production rates, exit rates for
production and bank debt, downspacing opportunities, the quantity
of reserves, and projections of market prices and costs. These
statements involve substantial known and unknown risks and
uncertainties, certain of which are beyond Pinecrest's control,
including: the impact of general economic conditions; industry
conditions; regulatory approvals and permits; 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; uncertainties associated with
estimating oil and natural gas reserves; competition for, among
other things, capital, acquisitions, of reserves, undeveloped lands
and skilled personnel; incorrect assessments of the value of
acquisitions; 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. Pinecrest'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 Pinecrest will
derive from them. Except as required by law, Pinecrest undertakes
no obligation to publicly update or revise any forward-looking
statements.
Statements relating to "reserves" or
"resources" are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the resources or reserves described can be
profitably produced in the future.
The Corporation uses the following terms for
measurement within this press release that do not have a
standardized prescribed meaning under GAAP and these measurements
may differ from other companies and accordingly may not be
comparable to measures used by other companies. The terms "funds
from operations" and "operating netback" are not recognized
measures under the applicable GAAP. Management of the Corporation
believes that these terms are useful, in addition to profit and
loss and cash flow from operating activities as defined by GAAP,
for evaluating the Corporation's operating performance and
leverage. Funds from operations is expressed as cash flow from
operating activities before changes in non-cash working capital and
asset retirement expenditures. Operating netback is a measure of
operating margin used in capital allocation decisions. Pinecrest
defines operating netback as average realized price per BOE, less
royalties per BOE, less operating and transportation expenses per
BOE, plus any realized gain or loss per BOE on financial
instruments.
Certain information provided in this press
release in relation to the results of waterflooding Slave Point
reservoirs on lands in close proximity to the land in which the
Company has an interest, is considered analogous information under
National Instrument 51-101 - Standards of Disclosure for Oil
and Gas Activities. Such information is based on publicly
available information from governmental agencies and other industry
producers and has been provided to give an indication of possible
incremental recovery factors in the specified area. Other
than comparing such information to the Company's own limited
results in the specified area, the Company has not independently
confirmed the accuracy of this information. There is no
certainty that such incremental recovery factors will be obtained
of even if so obtained, whether such factors can be achieved on an
economic basis.
Barrels of Oil Equivalent ("boe") may be
misleading, particularly if used in isolation. A boe conversion
ratio of 6MCF:1bbl 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.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE Pinecrest Energy Inc.