Pinecrest Energy Inc. Announces its December 31, 2013 Year End Results and 2013 Year End Reserves

TSX Venture Exchange:  PRY

CALGARY, April 9, 2014 /CNW/ - Pinecrest Energy Inc. ("Pinecrest" or the "Company") announces it has filed on SEDAR its audited annual financial statements, related Management's Discussion and Analysis ("MD&A") and Annual Information Form for the year ended December 31, 2013.  The statements will be available for review at www.sedar.com or www.pinecrestenergy.com.

December 31 Three months ended Year ended
  2013 2012 2013 2012
FINANCIAL           
Petroleum and natural gas sales
Funds flow from operations (1)
   Per share - basic
   Per share - diluted
Net income (loss)
   Per share - basic
   Per share - diluted
Capital expenditures, net of dispositions
Net debt and working capital deficit (2)
Common Shares Outstanding
    Weighted average - basic
    Weighted average -  diluted
   19,549
7,824
   $0.04
   $0.04
   (178,115)
   $(0.82)
   $(0.82)
   1,730
(126,108)
    
   217,212
   222,151
26,581
20,663
$0.10
$0.09
12,527
$0.06
$0.05
80,320
(99,378)
 
214,311
238,543
108,872
55,160
$0.26
$0.25
(171,046)
$(0.79)
$(0.79)
81,491
(126,108)
 
216,104
217,773
98,204
71,779
$0.34
$0.30
32,129
$0.15
$0.13
212,800
(99,378)
 
210,482
238,373
OPERATING           
Number of days
Production
   Crude oil (bbls/d)
   Natural gas (mcf/d)
   NGL (bbls/d)
   Barrels of oil equivalent (boe/d-6:1)
Average realized price (3)
   Crude oil ($/bbl)
   Natural gas ($/mcf)
   NGL ($/bbl)
Netback per boe ($)(1)
   Petroleum and natural gas sales
   Royalties
   Production and transportation expenses
   Field netback
   Realized gain (loss) on derivative financial instruments 
   Operating netback
Wells drilled
   Gross
   Net
   Success rate (%)
   92
    
   2,479
   478
   61
   2,620
    
   84.04
   2.21
   50.95
    
   81.12
   (10.36)
   (23.66)
   47.10
   (5.94)
   41.16
    
   -
   -
   -
92
 
3,484
93
10
3,510
 
82.72
3.18
40.59
 
82.31
(6.02)
(15.22)
61.07
4.64
65.71
 
16
15.3
100
365
 
3,210
445
48
3,332
 
91.79
2.76
49.57
 
89.51
(8.29)
(22.92)
58.30
(5.89)
52.41
 
15
14.3
100
366
 
3,124
62
8
3,142
 
85.73
2.36
48.33
 
85.41
(6.49)
(14.92)
64.00
2.01
66.01
 
39
37.7
100

(1)     Non-GAAP measure
(2)     Net debt and working capital is defined as current assets minus current liabilities, plus outstanding debt, excluding derivative financial instruments
(3)     Before the effects of derivative financial instruments

Operations Update and Outlook
During the fourth quarter, the Company completed 1 (1.0 net) oil well and placed 3 (3.0 net) wells on production.  The Company also completed the conversion of 7 (7.0 net) horizontal wells in the Otter field to water injection along with the construction of associated injection facilities and pipelines.  Pinecrest continues to review the performance of its waterflood projects as well as the primary production profiles for all of its wells in order to optimize production rates as well as ultimate recovery.

During the first quarter of 2014, no new wells were drilled or completed and minimal capital was spent on production optimization and maintenance; this continues to be the plan through the first half of 2014.  An updated capital plan will be provided later this year and, until such time, Pinecrest will apply all of its free cash flow towards reducing its indebtedness.  In this regard, exit Q1 2014 net debt and working capital is estimated to be approximately $120 million.

The Company's credit facility remains at $165 million with its annual valuation expected to be completed in May by its syndication of Canadian chartered banks.

As previously disclosed, the Company entered 2014 producing 2,300 boed and current production, based on field estimates, is 2,250 boed with 50 boed shut in due to routine maintenance and field conditions.  Based on field estimates, Q1 2014 production was 2,130 boe per calendar day and 2,270 boe per producing day.  With minimal capital being spent on production optimization and maintenance during Q1 2014, Pinecrest has been able to maintain a relatively flat production profile throughout Q1 2014.  Looking forward to Q2, Pinecrest anticipates that overall production will be adversely affected by spring break-up in the Red Earth area with every effort being undertaken to mitigate the effects of additional downtime.

2013 Reserves  
The following tables summarize certain information contained in the independent reserves report prepared by Sproule Associates Ltd. ("Sproule") as at December 31, 2013.  The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101").  Additional reserves information as required under NI 51-101 will be included in the Company's Annual Information Form - a copy of which can be obtained under Pinecrest's profile at www.sedar.com or at www.pinecrestenergy.com.



Gross Company Reserves

December 31, 2013
Oil

(Mbbls)
Net Present
Values Before
Tax ($M)
@ 0% Discount
Factor
Net Present
Values Before
Tax ($M)
@ 10% Discount
Factor
Proved developed producing
Proved developed non-producing
Proved undeveloped
4,841.6
851.4
1,124.9
192,476
43,990
26,415
130,162
24,970
5,386
Total Proved
Probable
6,817.9
4,736.2
262,880
186,893
160,518
69,342
Total Proved plus Probable 11,554.1 449,773 229,860

At December 31, 2013, the Company has a reserve life index of 12.1 years for the Proved plus Probable reserves, based on the 2013 fourth quarter average production of 2,620 boe per day.

Decreases in the Company's reserves were attributable to: the divestiture of the Viewfield assets in southeast Saskatchewan, the election to remove certain undeveloped reserves and corresponding future development capital as they are not in the Company's near term capital plans and decreased performance in some of the Company's primary producing wells.

For further disclosure relative to the Company's reserves please refer to the Company's Management's Discussion and Analysis and the Annual Information Form for the year ended December 31, 2013.

Net Asset Value
The following table summarizes the corporate Net Asset Value as at December 31, 2013:

 
December 31, 2013
 
 
Present value of Proved plus Probable reserves, discounted at 10% before tax
Undeveloped land (1)
Bank debt and working capital
229,860
89,700
(126,108)
NAV 193,452
Common shares outstanding - basic (000's)
Common shares outstanding - diluted (000's)
217,212
222,033
NAV per common share - basic
NAV per common share - diulted
0.89
0.87

(1)     Undeveloped land value reflects an independent evaluation dated December 31, 2013 by Seaton-Jordon & Associates Ltd.

Annual General and Special Meeting
Pinecrest's Annual General and Special Meeting is scheduled for 10:00am on Tuesday, June 10, 2014 at the Bow Valley Conference Centre, 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 2014 business objectives, oil recovery rates, drilling plans for 2014, expected production, expected oil to gas ratios, the effects of waterfloods on recovery factors, anticipated receipt of AER approvals, decline rates and type curves for wells, success in drilling and waterflood activities, 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; 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. Forward-looking statements are made as of the date herein 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.

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.

For further information:

Pinecrest Energy Inc.
Suite 500, 255 - 5th Avenue S.W.
Calgary, Alberta  T2P 3G6

Wade Becker, President & CEO
or
Dan Toews, V.P. Finance & CFO

Tel: (403) 817-2550 or
Fax: (403) 817-2599