Legacy Oil + Gas Inc. Announces Record Cash Flow From Operations, Year-End Results and Files Annual Information Form
CALGARY, March 25, 2014 /CNW/ - Legacy Oil + Gas Inc. ("Legacy" or the "Company") (TSX:LEG) is pleased to announce it has filed on SEDAR its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2013 as well as its annual information form ("AIF") for the year ended December 31, 2013. Selected financial and operational information is outlined below and should be read in conjunction with Legacy's audited financial statements, the related MD&A and the AIF which are available for review at www.legacyoilandgas.com or www.sedar.com.
FINANCIAL + OPERATIONAL HIGHLIGHTS OF LEGACY OIL + GAS INC. EXCLUDING LGX OIL + GAS INC. (1)
|Three Months Ended||Year Ended|
|Decmeber 31||Decmeber 31|
|(Cdn $000's, except per share amounts)||2013||2012||% change||2013||2012||% change|
|Petroleum and natural gas sales, net of royalties||116,804||97,093||20||464,912||363,211||28|
|Funds generated by operations (2)||63,745||59,261||8||277,108||222,942||24|
|Per share basic||0.41||0.41||-||1.81||1.56||16|
|Per share diluted (3)||0.40||0.41||(2)||1.78||1.53||16|
|Net income (loss)||(7,531)||1,985||(479)||(12,070)||528||(2,386)|
|Per share basic||(0.05)||0.01||(600)||(0.08)||-||n/a|
|Per share diluted (3)||(0.05)||0.01||(600)||(0.08)||-||n/a|
|Capital expenditures - Exploration and development||52,647||68,416||(23)||321,182||312,168||3|
|Capital expenditures - Acquisitions and dispositions (5)||53||7,285||(99)||83,632||12,381||575|
|Net debt and working capital surplus (deficit) (2)||(680,106)||(485,613)||40||(680,106)||(485,613)||40|
|Crude oil (Bbls per day)||16,180||13,891||16||15,108||12,591||20|
|Heavy oil (Bbls per day)||84||141||(40)||107||171||(37)|
|Natural gas (Mcf per day)||15,625||12,551||24||12,610||13,053||(3)|
|Natural gas liquids (Bbls per day)||2,037||1,315||55||1,696||1,364||24|
|Barrels of oil equivalent (Boe per day) (4)||20,905||17,439||20||19,013||16,301||17|
|Average realized price|
|Crude oil ($ per Bbl)||84.72||81.61||4||91.80||84.46||9|
|Heavy oil ($ per Bbl)||57.97||62.67||(7)||66.52||67.97||(2)|
|Natural gas ($ per Mcf)||3.68||3.52||5||3.37||2.81||20|
|Natural gas liquids ($ per Bbl)||48.02||54.51||(12)||48.74||53.99||(10)|
|Barrels of oil equivalent ($ per Boe) (4)||73.24||72.16||1||79.90||72.72||10|
|Netback ($ per Boe) (2)|
|Petroleum and natural gas sales||73.24||72.16||1||79.90||72.72||10|
|Operating Netback ($ per Boe) (2)||42.85||43.64||(2)||49.86||43.46||15|
|Undeveloped land holdings (gross acres)||502,282||473,010||6||502,282||473,010||6|
|Common Shares (000's)|
|Common shares outstanding, end of period||157,241||143,338||10||157,241||143,338||10|
|Weighted average common shares (basic)||157,241||143,338||10||153,219||143,338||7|
|Weighted average common shares (diluted) (3)||160,291||145,622||10||155,805||145,514||7|
|(1)||Financial and operating highlights for Legacy Oil + Gas Inc. ("Legacy" or the "Company") excluding LGX Oil + Gas Inc. ("LGX")|
|(2)||Management uses funds generated by operations, net debt and working capital surplus (deficit) and operating netback to analyze operating performance and leverage. These terms, as presented, do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore they may not be comparable with the calculation of similar measures for other entities.|
|(3)||In calculating the net income (loss) per share diluted, Legacy excludes the effect of outstanding stock options, stock incentives and share warrants and uses the weighted average common shares (basic) where the Company has a net loss for the period. In calculating funds generated by operations per share diluted, the Company includes the effect of outstanding stock options, stock incentives and share warrants using the treasury stock method.|
|(4)||Boe means barrel of oil equivalent. All Boe conversions in this report are derived by converting natural gas to oil equivalent at a ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent. Boe may be misleading, particularly if used in isolation. A Boe conversion rate of 1 Boe: 6 Mcf 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 of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 Boe : 6 Mcf, utilizing a conversion ratio of 1 Boe : 6 Mcf may be misleading as an indication of value.|
|(5)||The Company uses "Capital expenditures - Acquisitions and dispositions" to present the consideration paid and debt and working capital acquired for the acquisition of property, plant and equipment and exploration and evaluation assets acquired net of cash consideration received for the divestitures of property, plant and equipment as well as exploration and evaluation assets. For the three months ended December 31, 2013, the Company paid $0.09 million cash consideration on acquisitions (2012 - $7.6 million), issued no common shares and acquired no debt and working capital for these acquisitions (2012 - Nil) and received $0.4 million cash consideration on the disposition of non-core properties (2012 - $0.3 million). For the year ended December 31, 2013, the Company paid $125.3 million cash consideration on acquisitions (2012 - $19.7 million), issued 13.9 million common shares valued at $73.1 million as part consideration for the acquisition of Villanova Oil Corp. and assumed $30.3 million debt and working capital deficit (2012 - Nil) and received $41.7 million cash consideration on the disposition of non-core properties (2012 - $7.3 million).|
- Demonstrated strong year over year per share growth: reserves per share: 13 percent increase; production per share: 9 percent increase; and cash flow per share: 16 percent increase
- Increased average production from 16,301 Boe per day in 2012 to 19,013 Boe per day in 2013 (17 percent increase); increased average production from 17,439 Boe per day in the fourth quarter of 2012 to 20,905 Boe per day in the fourth quarter of 2013 (20 percent increase)
- Increased funds generated from operations from $222.9 million in 2012 to a record $277.1 million in 2013 (24 percent increase); increased funds generated from operations from $1.56 per share in 2012 to $1.81 per share in 2013 (16 percent increase)
- Reduced operating expenses from $14.36 per Boe in 2012 to $14.27 per Boe in 2013 (1 percent decrease)
- Generated record annual operating netback in 2013 of $49.86 per Boe, a 15 percent increase over 2012 results
- Reduced general and administrative ("G&A") costs from $2.90 per Boe in 2012 to $2.44 per Boe in 2013 (16 percent decrease)
- Drilled 139 gross (114.2 net) oil wells with a 99 percent success rate in 2013. Drilled 22 gross (17.8 net) oil wells in the fourth quarter of 2013, with a 100 percent success rate
- Total capital expenditures on organic opportunities for 2013 were $316.4 million (not including capitalized G&A, corporate fixed assets or net acquisitions and divestitures)
- Increased gross proved plus probable reserves from 94.2 MMBoe at December 31, 2012 to 117.2 MMBoe at December 31, 2013 (24 percent increase); proved plus probable reserve additions replaced 434 percent of production in the year
- Generated solid 2013 total proved plus probable finding and development ("F&D") costs of $20.20 per Boe (including future development costs ("FDC") representing a top decile 2.5 times recycle ratio based on $49.86 per Boe operating netbacks
- Increased available line of credit with a syndicated banking facility to $660 million, taking debt capacity to $860 million with the term notes. Year-end net debt was $680.1 million, representing approximately 1.8 times estimated forward cash flow (using strip pricing) and 79 percent of the debt capacity of $860 million
- Completed several strategic acquisitions in the Company's core areas in southeast Saskatchewan for aggregate consideration consisting of $125 million in cash and 13,851,674 Common Shares and a disposition of non-core assets for proceeds of $42 million in cash
The Company drilled 139 gross (114.2 net) oil wells in 2013, with a 99 percent success rate. In the fourth quarter of 2013, the Company drilled 22 gross (17.8 net) oil wells, with a 100 percent success rate. In the fourth quarter of 2013, Legacy significantly underspent its funds flow from operations for the quarter while commencing a number of key infrastructure projects that are forecast to be completed in the first quarter of 2014.
The Company met its 2013 production guidance, averaging 19,013 Boe per day, an increase of 17 percent over 2012 average production of 16,301 Boe per day. Total capital expenditures on organic opportunities for 2013 were $316.4 million (not including capitalized G&A, corporate fixed assets or net acquisitions and divestitures).
Legacy drilled 33 (28.8 net) Midale wells in 2013 including a number of step-out and delineation wells over a wide area. Success was achieved in extending existing pools at Steelman, Pinto and Alameda and new Midale pool discoveries at Taylorton, Pinto East, Openshaw and Alameda South. The wells have an average 30 day initial rate of 225 Boe per day per well. The Company has proven up a high impact inventory of more than 335 Midale locations. Based on recent pricing, Legacy expects payouts of less than 8 months and internal rates of return in excess of 100 percent on these wells.
The Company drilled 44 (34.8 net) Spearfish wells in 2013. A modified frac fluid was used on the last two wells in Pierson with encouraging results. The wells have average 30 day initial rates of 160 Boe per day per well and average water cuts of 25 percent, both significant improvements over historical results.
The Company drilled 22 (16.2 net) wells in the Bakken Formation in 2013, 18 at Star Valley, 3 at Heward and one at Taylorton. The wells have an average 30 day initial rate of 210 Boe per day per well.
The Company drilled 5 (4.2 net) wells at Turner Valley in 2013 and performance continues to outperform historical results. Average cumulative production from these wells after six months is 122 percent higher than the wells drilled by the previous operator, improving the area internal rates of return, payouts and net present values.
CONVENTIONAL PLAYS / TORQUAY
The Company drilled 29 (24.8 net) Conventional wells in southeast Saskatchewan in the Tilston, Souris, Alida and Frobisher zones and drilled 6 (5.4 net) wells at Frys/Antler in the Torquay Formation.
Since its inception in July 2009, Legacy has remained committed to cost effective per share growth through the build-out of high quality, light oil assets comprised of large accumulations of hydrocarbon in-place and resource plays. As a leader in light oil resource play development, the Company has leveraged this expertise into a series of accretive acquisitions and has demonstrated strong organic growth. We believe these are complementary strategies and have led to both near-term and longer term value creation potential through our enviable inventory of work‐overs, infill drilling, step‐out drilling, secondary recovery projects and emerging light oil resource play development. The extensive light oil opportunities are underpinned by a significant internally generated cash flow which is sufficient to fund capital expenditures that result in solid double-digit per share growth, while maintaining a strong balance sheet with surplus debt capacity.
The Company has added significant value to its existing assets through diligent application of rigorous technical evaluation and efficient execution of its capital program. Positive results have been demonstrated across all the assets acquired over the past four years by continuously improving and innovating drilling, completion and production techniques. Legacy's success in the Midale in SE Saskatchewan is the most recent examples of this innovation. Legacy continues to work on improving results from its existing play inventory and originating and extending new play concepts from both its resource and conventional assets.
Operational momentum that has been demonstrated for 10 quarters has consistently met performance objectives while achieving strong 2013 finding and development and acquisition costs of $20.20 per Boe and a top decile recycle ratio of 2.5 times.
As a light oil weighted (89 percent oil and NGL's) company, Legacy's 2013 performance positions the Company for continued solid production growth with strong capital efficiencies in 2014 from its extensive inventory of more than 2,000 net light oil development locations and waterflood assets. Leverage ratios continue to improve as debt to estimated forward cash flow is 1.8 times on current strip pricing and the Company is evaluating a number of options to accelerate balance sheet enhancement while preserving its excellent long term value creation opportunities.
Legacy embarks on 2014 positioned with high quality light oil assets, an excellent balance sheet, significant opportunity inventory and dedicated people for continued aggressive and disciplined growth.
ANNUAL GENERAL MEETING
Legacy's Annual General Meeting, is scheduled for 3:00 pm on May 28, 2014 at The Petroleum Club, McMurray Room, located at 319 - 5th Avenue SW, Calgary, AB.
To view Legacy's audited financial statements, the related MD&A and the AIF for the years ended December 31, 2013, December 31, 2012 and December 31, 2011 please visit our web site at www.legacyoilandgas.com or www.sedar.com. To the extent investors do not have access to the internet, copies of the audited financials the related MD&A and the AIF can be obtained on request without charge by contacting Legacy at 403.441.2300 or at 4400, 525-8th Avenue SW, Calgary, Alberta, T2P 1G1.
CONFERENCE CALL DETAILS
Management will be holding a conference call for investors, financial analysts, media and any interested persons on Wednesday, March 26, 2014 at 9:00 a.m. (MDT) (11:00 a.m. EDT) to discuss the 2013 year end results.
The investor conference call details are as follows:
Participant Dial-In Number(s):
- Operator Assisted Toll-Free Dial-In Number: (888) 231-8191
- Local Dial-In Number: (403) 451-9838
- Conference ID: 7724676
Note: In order to join this conference call, you will be required to provide the Conference ID Number listed above.
Forward Looking Statements
Forward-Looking Information - This press release contains forward-looking statements. More particularly, it contains forward-looking statements concerning: (i) the anticipated debt to forward cash flow ratio, (ii) anticipated rates of return and payout times for Midale wells, (iii) the potential number of drilling locations and (iv) the sufficiency of internally generated cash flow to fund capital expenditures that result in solid double-digit per share growth, while maintaining a strong balance sheet with surplus debt capacity.
The forward-looking statements contained in this press release are based on certain key expectations and assumptions made by Legacy, including expectations and assumptions concerning the success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the viability of waterflood projects, the availability and performance of facilities and pipelines, the geological characteristics of Legacy's properties, the successful application of drilling, completion and seismic technology, prevailing weather and break-up conditions, commodity prices, royalty regimes and exchange rates, the application of regulatory and licensing requirements and the availability of capital, labour and services.
Although Legacy believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Legacy can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), constraint in the availability of services, commodity price and exchange rate fluctuations, adverse weather or break-up conditions and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects, waterflood projects or capital expenditures. These and other risks are set out in more detail in Legacy's Annual Information Form for the year ended December 31, 2013 dated March 25, 2014.
The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Meaning of Boe - Boe means barrel of oil equivalent. All Boe conversions in this report are derived by converting natural gas to oil equivalent at a ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent. Boe may be misleading, particularly if used in isolation. A Boe conversion rate of 1 Boe: 6 Mcf 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 of oil compared to natural gas based on currently prevailing prices is significantly different than the energy equivalency ratio of 1 Boe : 6 Mcf, utilizing a conversion ratio of 1 Boe : 6 Mcf may be misleading as an indication of value.
SOURCE Legacy Oil + Gas Inc.For further information:
Trent J. Yanko, P.Eng.
President + CEO
Legacy Oil + Gas Inc.
4400 Eighth Avenue Place
525 - 8th Avenue SW
Calgary, AB T2P 1G1
Matt Janisch, P.Eng.
Vice-President, Finance + CFO
Legacy Oil + Gas Inc.
4400 Eighth Avenue Place
525 - 8th Avenue SW
Calgary, AB T2P 1G1