Connacher Announces Q1 2014 Results

CALGARY, May 14, 2014 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX; "Connacher" or the "Company") announces its financial and operating results for the quarter-ended March 31, 2014 ("Q1 2014") as outlined below (all amounts are in Canadian dollars unless otherwise noted).

Q1 2014 Highlights:

  • Connacher's production for Q1 2014 increased by 8% to 13,433 bbl/d (Q1 2013 - 12,406 bbl/d). Production increases were attributable to the Company's four new well pairs at Pad 104 and four infill wells at Pod One

  • Revenue, net of royalties, increased 4% to $105.0 million in Q1 2014 (Q1 2013 - $101.3 million)

  • Net realized bitumen sales price increased in Q1 2014 to $54.28/bbl (Q1 2013 - $38.31/bbl) due to higher dilbit sales prices, decreased diluent usage and lower transportation and handling costs

  • Adjusted EBITDA increased 2% to $10.9 million in Q1 2014 (Q1 2013 - $10.7 million) due to higher bitumen netbacks, offset by higher realized risk management losses

  • Operating costs increased 42% to $31.6 million in Q1 2014 (Q1 2013 - $22.4 million) due to higher natural gas prices, temporary treating costs arising from the start-up of new SAGD well pairs at Pod One and the costs to repair a natural gas line leak at Algar

  • In order to mitigate volatility in natural gas costs, Connacher is now hedging 60% of anticipated natural gas consumption for the remainder of 2014 and 30% for 2015

  • Connacher closed Q1 2014 with a cash balance of $19.6 million (Q4 2013 - $55.6 million) and available credit facilities of $56.9 million (Q4 2013 - $76.7 million), net of cash drawings of $10 million (Q4 2013 - $nil) and outstanding letters of credit of $28.1 million (Q4 2013 - $18.3 million)

  • Q1 2014 capital expenditures totaled $18.1 million (Q1 2013 - $20.3 million). Q1 2014 expenditures were focused primarily on the drilling of six of nine planned new infill wells at Pod One. As of May 11, all nine wells have been drilled and will begin to impact production in the second half of 2014

Q1 2014 Financial and Operational Summary

             
FINANCIAL ($000 except per share amounts)   Q1 2014   Q1 2013   % Change
Revenue, net of royalties   $104,952   $101,320   4
Adjusted EBITDA (1)   10,948   10,682   2
Net earnings (loss)   (62,613)   (46,566)   34
Funds flow (used) (1)   (10,185)   (9,111)   12
Per share, basic and diluted (total)   (0.14)   (0.10)   40
Capital expenditures   18,085   20,251   (11)
Cash on hand   19,631   81,714   (76)
Working capital surplus (deficiency)   (13,726)   76,957   (118)
Long-term debt   913,764   861,828   6
Shareholders' equity   159,529   296,746   (46)

(1) Adjusted EBITDA and funds flow (used) are non-GAAP measures, which are defined in the Advisory section of the Company's management's discussion and analysis for the period ending March 31, 2014

             
OPERATIONAL   Q1 2014   Q1 2013   % Change
Daily bitumen production (bbl/d)   13,433   12,406   8
Daily bitumen sales (bbl/d)   12,364   12,679   (2)
Pricing ($/bbl) (net of diluent and transportation)   54.28   38.31   42

First Lien Financing

As previously announced, Connacher has engaged Credit Suisse to act as sole lead arranger and bookrunner in the arrangement of a first lien term loan facility in an aggregate principal amount of US dollar equivalent of C$140 million (the "Term Loan Facility"). The Company's intention is to concurrently amend and reduce the existing $95 million amended and restated senior secured revolving credit facility (the "Credit Facility") to $30 million.

Connacher received unanimous consent from the lenders under the Credit Facility on May 2, 2014 to extend the maturity date from May 31, 2014 to July 31, 2014 and to waive the consolidated total debt to total capitalization ratio covenant under the Credit Facility at March 31, 2014 and June 30, 2014.

Q1 2014 Conference Call Details

Connacher will host its quarterly conference call on May 15, 2014 at 8AM MDT. Interested participants can call in to (888) 231-8191. Please use the Conference ID# 27180361. Participants are encouraged to call in 5 minutes prior to commencement of the call.

About Connacher

Connacher is a Calgary-based in-situ oil sands developer, producer and marketer of bitumen. The Company holds a 100 per cent interest in approximately 450 million barrels of proved and probable bitumen reserves and operates two steam assisted gravity drainage facilities located on the Company's Great Divide oil sands leases near Fort McMurray, Alberta.

Forward Looking Information

This press release contains forward looking information, including but not limited to, the expectations relating to the arrangement of the Term Loan Facility and the amendment and reduction of the existing Credit Facility and the timing thereof .

Forward looking information is based on management's expectations regarding the Company's future financial position, the Company's future growth, results of operations and production, future commodity prices and foreign exchange rates, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities and future economic conditions. Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to:  that the Company may not be successful in the syndication of the Term Loan Facility, that the Term Loan Facility may not provide adequate funds to fund the Company's growth capital program, the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates, the uncertainty of geological interpretations, the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), risk of commodity price and foreign exchange rate fluctuations, risks associated with the impact of general economic conditions, risks and uncertainties associated with maintaining the necessary regulatory approvals and securing the financing to proceed with the operation and continued expansion of the Great Divide oil sands project.

In addition, reported average production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this press release due to, among other factors, difficulties or interruptions encountered during the production of bitumen.

Additional risks and uncertainties affecting Connacher and its business and affairs are described in further detail in Connacher's Annual Information Form for the year ended December 31, 2013. Although Connacher believes that the expectations in such forward looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. The forward looking information included in this press release is expressly qualified in its entirety by this cautionary statement. The forward looking information included herein is made as of the date of this press release and Connacher assumes no obligation to update or revise any forward looking information to reflect new events or circumstances, except as required by law.

 

SOURCE Connacher Oil and Gas Limited

For further information:

Chris Bloomer        
Chief Executive Officer
      
Greg Pollard
Chief Financial Officer

Connacher Oil and Gas Limited
Phone:  (403) 538-6201
Fax:  (403) 538-6225
Suite 900, 332 - 6th Avenue SW
Calgary, Alberta T2P 0B2
inquiries@connacheroil.com
www.connacheroil.com