Traverse Energy Announces 2014 First Quarter Results
16 May 2014 - 6:06AM
Marketwired Canada
Traverse Energy Ltd. ("Traverse" or "the Company") (TSX VENTURE:TVL) presents
financial and operating results for the three months ended March 31, 2014.
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Three Months Ended
March 31, December 31, March 31,
Highlights (unaudited) 2014 2013 2013
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Financial ($ thousands, except per
share amounts)
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Petroleum and natural gas revenue 4,535 4,055 2,761
Cash flow from operating activities 2,088 2,723 2,160
Funds from operations (1) 2,596 1,958 2,037
Per share - basic and diluted 0.05 0.04 0.04
Net income 746 27 521
Per share - basic and diluted 0.01 0.00 0.01
Capital expenditures, net of
dispositions 6,964 5,482 2,761
Total assets 46,223 32,126 21,543
Working capital 8,641 2,430 2,359
Common shares
Outstanding (millions) 67.9 53.5 47.1
Weighted average (millions) 56.5 50.3 47.1
Operations (Units as noted)
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Average production
Natural gas (Mcf/day) 1,809 1,666 1,409
Oil and NGL (bbls/day) 455 509 331
Total (BOE/day) 756 787 566
Average sales price
Natural gas ($/Mcf) 5.49 3.50 3.48
Oil and NGL ($/bbl) 88.98 75.16 77.72
Operating netback ($/BOE) (2)
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Petroleum and natural gas revenue 66.65 56.04 54.15
Realized gain (loss) on financial
derivatives (1.15) 0.27 0.00
Royalties (9.30) (6.68) (2.22)
Operating costs (10.32) (9.22) (6.15)
Transportation costs (0.90) (0.90) (1.09)
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Operating netback 44.98 39.51 44.69
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(1) Funds from operations represents cash flow from operating activities
prior to changes in non-cash working capital and settlement of
decommissioning obligations. Funds from operations does not have a
standardized measure prescribed by IFRS and therefore may not be comparable
with the calculation of similar measures for other companies.
(2) Operating netback represents revenue and realized gain or loss on
financial derivatives, less royalties, operating and transportation
expenses and is calculated on a per unit basis. Operating netback does not
have a standardized measure prescribed by IFRS and therefore may not be
comparable with the calculation of similar measures by other companies.
Operations Review
In the first quarter of 2014 the Company (100%) drilled 5 wells. Two wells were
drilled at Turin resulting in 1 gas well and 1 oil well. The wells at Turin are
in the process of being tied in to the Company's facility. Traverse is also
planning to install gas compression at the Turin facility in the second quarter.
This compression will allow for additional natural gas production from several
shut in gas wells and allow for increased solution gas volumes. In the Coyote
area Traverse drilled 2 wells and re-entered an existing wellbore resulting in
one oil well, one gas well and one well that will be production tested in the
third quarter once access is improved. The oil well will be tied in to existing
facilities to conserve gas during the second quarter. The Company also drilled
an initial well in the Michichi area resulting in an oil well. The well is
scheduled for tie in to gas facilities during the third quarter to provide for
natural gas conservation.
On February 28, 2014 Traverse received a notice from the Alberta Energy
Regulator ("AER") to partially suspend production at a producing oil battery in
the Coyote area of East Central Alberta ("Coyote Battery") until the Company is
able to conserve the solution gas which the Company had been flaring. The Coyote
Battery currently processes production from three oil wells. The partial
suspension commenced March 4, 2014. The Company subsequently completed
modifications to the Coyote Battery to deliver solution gas to a nearby gas
plant and the battery resumed full production of oil and the associated solution
gas on May 1, 2014.
In the second quarter Traverse initiated an expansion of the Coyote Battery
which will allow for treatment of the Company's oil produced at Coyote and
Michichi. Facilities to be installed include a treater, a natural gas sweetening
unit, additional storage tanks and water disposal facilities. The expanded
facility is anticipated to be operational late in the third quarter. Additional
drilling in the Coyote area is scheduled to begin late in the second quarter. In
March, Traverse completed a 3D seismic program at Michichi to define additional
locations on its lands with additional drilling planned for the third quarter.
At March 31, 2014 undeveloped land holdings totalled 177,600 gross (173,700 net)
acres. In March 2014 the Company completed a bought deal financing for gross
proceeds of $11.5 million. The Board of Directors has approved an increase to
the exploration and development budget to $29.1 million. The program includes
the drilling of up to 15 wells on Company owned lands in the Coyote and Turin
areas and on other properties located in east central Alberta.
Non-IFRS measures
This news release makes reference to terms commonly used in the oil and gas
industry. Funds from operations, funds from operations per share, operating
netback per BOE and working capital are not defined by IFRS and therefore may
not be comparable to performance measures presented by others. Funds from
operations represents cash flow from operating activities prior to changes in
non-cash working capital and settlement of decommissioning obligations as
detailed under the heading "Funds from operations and net income" within the
Company's management's discussion and analysis for the three months ended March
31, 2014. Funds from operations per share is calculated based on the weighted
average number of common shares outstanding consistent with the calculation of
net income per share. Working capital is calculated as current assets (excluding
financial derivative assets) less current liabilities (excluding financial
derivative liabilities). Operating netback represents revenue and realized gain
or loss on financial derivatives, less royalties, operating and transportation
expenses and is calculated on a per unit basis. The calculation of Traverse's
operating netback is detailed under the heading "Operating netback" within the
Company's management's discussion and analysis for the three months ended March
31, 2014. Management believes that in addition to net income, the aforementioned
non-IFRS measures are useful supplemental measures as they assist in the
determination of the Company's operating performance, leverage and liquidity.
Investors should be cautioned however, that these measures should not be
construed as an alternative to both net income and net cash from operating
activities, which are determined in accordance with IFRS, as indicators of the
Company's performance.
BOE equivalent
Unless otherwise stated, the volume conversion of natural gas to barrel of oil
equivalent (BOE) is presented on the basis of 6 thousand cubic feet of natural
gas being equal to 1 barrel of oil. This conversion ratio is based upon an
energy equivalent conversion method primarily applicable at the burner tip and
does not represent value equivalence at the wellhead. BOE figures may be
misleading, particularly if used in isolation.
Forward-looking information
This news release contains forward-looking information which is not comprised of
historical fact. Forward-looking information involves risks, uncertainties and
other factors that could cause actual events, results, performance, prospects
and opportunities to differ materially from those expressed or implied by such
forward-looking information. Forward-looking information in this news release
includes the Company's statements with respect to installing gas compression at
its Turin facility in the second quarter; scheduled timing for oil wells tie
ins; expansion of the Coyote Battery commencing in the second quarter; planned
additional drilling at Coyote and Michichi and the number of wells to be drilled
in 2014. This forward looking information is subject to a variety of substantial
known and unknown risks and uncertainties and other factors that could cause
actual events or outcomes to differ materially from those anticipated or implied
by such forward looking information. The Company's Annual Information Form filed
on April 15, 2014 with securities regulatory authorities (accessible through the
SEDAR website www.sedar.com) describes the risks, material assumptions and other
factors that could influence actual results and which are incorporated herein by
reference.
Although the Company believes that the material assumptions and factors used in
preparing the forward-looking information in this news release are reasonable,
undue reliance should not be placed on such information, which only applies as
of the date of this news release, and no assurance can be given that such events
will occur. The Company disclaims any intention or obligation to update or
review any forward-looking information, whether as a result of new information,
future events or otherwise, other than as required by law.
Further details on the Company including the 2013 year end audited financial
statements, the related management's discussion and analysis and Annual
Information Form are available on the Company's website (www.traverseenergy.com)
and SEDAR.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accept
responsibility for the adequacy or accuracy of the content of this release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Traverse Energy Ltd.
Laurie Smith
President and CEO
403.264.9223
403.264.9558 (FAX)
www.traverseenergy.com
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