/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE
UNITED STATES/
CALGARY, Nov. 14 /CNW/ - Bow Valley Energy Ltd. (Bow Valley or the
Company) announces that it has released its financial statements, and
management discussion and analysis ("MD&A") for the nine months ended
September 30, 2008. The financial statements and MD&A are available for
viewing on our website at www.bvenergy.com or on SEDAR at www.sedar.com.
- Field production volumes averaged 3,314 boe/d in the third quarter of
2008, an increase of 42% from the third quarter of 2007. Field
production volumes averaged 3,554 boe/d in the first nine months of
2008, an increase of 170% from the first nine months of 2007
- The Chestnut field reached first oil on September 20, 2008. The field
is currently producing at rates of approximately 10,000 (1,500 net to
Bow Valley) bopd.
- Funds flow in the third quarter of 2008 was $24.2 million ($0.28 per
share), which represents a significant increase from funds flow of
$9.4 million ($0.11 per share) in the third quarter of 2007. Funds
flow in the first nine months of 2008 was $79.6 million ($0.92 per
share), representing an increase from funds flow of $12.8 million
($0.16 per share) in the first nine months of 2007.
- The Company recorded a loss of $2.4 million in the third quarter of
2008 (loss of $0.03 per share), a decrease over earnings of $6.7
million in the third quarter of 2007 (income of $0.08 per share). On
a year-to-date basis, the Company has recorded earnings of $4.2
million (income of $0.04 per share), a decrease over earnings of
$11.5 million (income of $0.14 per share) in the first nine months of
2007.
- The third quarter and year-to-date earnings were negatively affected
by an unrealized foreign exchange loss of $11.4 million (2007: $7.9
million gain) and $17.4 million (2007: $15.7 million gain),
respectively, due to the weakening of the Canadian dollar and the
British pound relative to the U.S. dollar. Additionally, year to date
earnings were negatively impacted by an unrealized fair value
impairment of $8.2 million (2007: $2.4 million) recorded in respect
of the Company's Asset Back Commercial Paper ("ABCP") holdings.
- Third quarter 2008 U.K. operating netbacks, averaged $94.41 per boe,
an increase of 50% from the operating netbacks in the third quarter
of 2007. Operating and transportation costs averaged $6.28 per boe in
the third quarter of 2008.
- The Company's capital spending was $61.6 million in the third quarter
of 2008 and $139.4 million in the first nine months of 2008.
- The Company's lending bank group has waived the repayment of a
(pnds stlg)17.5 million term debt facility until December 31, 2008
and have entered into discussions to restructure and extend the
Company's debt facilities. Bow Valley will need to complete this
restructuring or seek alternative sources of financing.
FINANCIAL AND OPERATING SUMMARY TABLE
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Three Months Ended Nine Months Ended
September 30, September 30,
% %
2008 2007 Change 2008 2007 Change
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Financial ($000s
except as noted)
Gross oil and gas
revenue 29,408 12,120 143 99,462 21,295 367
Funds flow 24,218 9,411 157 79,590 12,845 520
Basic and
diluted per
share ($/share) 0.28 0.11 155 0.92 0.16 475
Earnings (Loss) (2,369) 6,749 (135) 4,225 11,481 63
Basic and diluted
per share
($/share) (0.03) 0.08 (134) 0.04 0.14 71
Debt and working
capital
(deficiency) (188,438)(130,316) (45)(188,438)(130,316) (45)
Capital
expenditures
Alaska 418 1,625 (74) 11,926 14,164 (16)
United Kingdom 61,210 21,097 190 127,505 156,603 (19)
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Total 61,628 22,722 171 139,431 170,767 (18)
Shares outstanding
(000s)
Basic 86,677 86,087 1 86,677 86,087 1
Weighted average
(000s)
Basic 86,612 85,872 1 86,292 79,934 8
Diluted 86,980 86,921 0 86,865 81,633 6
Operating
Sales
Natural gas
(mcf/d) 2,804 2,074 35 2,711 1,732 57
Oil and NGL
(bbl/d) 2,665 1,515 76 3,230 870 271
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Oil equivalent
(boe/d) (6:1) 3,132 1,861 68 3,681 1,159 218
Prices
Natural gas
($/mcf) 3.54 7.27 (51) 3.56 7.56 (53)
Oil and NGL
($bbl/d) 116.22 76.98 51 102.13 74.58 37
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Oil equivalent
($/boe) (6:1) 102.05 70.80 44 98.62 67.32 46
Drilling activity
(gross)
Suspended 1 1 - 5 3 67
Oil - - - - - -
Natural gas - - 100 -(1) - 100
Service - - 100 1(2) 1 -
Abandoned 2 - - 3 - 100
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Total drilling
activity (gross) 3 1 200 9 4 125
Drilling activity
(net)
Suspended 0.12 0.12 (4) 1.02(1) 0.44 131
Oil - - - - - -
Natural gas - - 100 - - 100
Service 0.13 - 100 0.13 0.20 (38)
Abandoned 1.20 - - 1.90(2) - 100
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Total drilling
activity (net) 1.44 0.12 1,100 3.04 0.64 375
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(1) Ettrick E3 development well, 9/28/b-19a exploration well, the
Blackbird exploration well, Tofkat No.1 exploration well and Tofkat
No.1A sidetrack well
(2) 16/27a-8 shallow, 22/11b-13 and the MacDonald 14/25 4a-6a exploration
wellsThe Company is continuing to manage a balanced capital expenditure
program between its producing assets, pre-production field developments,
pre-sanction field developments, acquisitions and exploration. During the
third quarter 2008, the Company advanced several of these initiatives. The
producing assets at Kyle, Blane and Enoch continue to perform above forecasts
and the Company's funds flow per share is up 520%, year over year. Average
daily production volumes were influenced by scheduled downtime for platform
maintenance, while on an operating day basis field performance remains steady
and reliable.
Additional production growth was achieved with the completion of the
Chestnut field development in September 2008. The Chestnut field represents
Bow Valley's fourth producing field and broadens our production base over a
more diversified portfolio. The increased production from Chestnut commencing
late in September at approximately 10,000 (1,500 net to Bow Valley) bopd
representing an approximate 42% increase in daily production volumes. The
Company was also successful in extending the field boundaries by drilling a
step out appraisal well at 22/2a-16y. This appraisal well encountered 64 feet
of oil bearing reservoir with no observed water contact. The well tested oil
through restricted surface facilities at maximum rates of up to 9,000 (1,360
net) boe/d. Pressure measurements taken during testing confirmed that the well
is connected to the main body of the field and can therefore be pressure
supported by the field water injection well. As this well has now established
a larger mapped area to the Chestnut field, it is expected to significantly
increase field production rates, recoverable reserves and overall Chestnut
field life.
The Company estimates its fourth quarter 2008 production volumes to be
4,500 boe/d. Fourth quarter sales are expected to be approximately 5,400 boe/d
due to timing of lifting schedules.
The Ettrick field development is nearing completion. The Aoka Miso FPSO
is expected to be delivered from the Sembewang shipyard in Singapore before
year end. This field development has experienced time delays over the past
year which have been frustrating, however first production is scheduled in the
first quarter 2009. When the Ettrick field commences production it is expected
to add approximately 20,000 (2,400 net to Bow Valley) boe/d representing
another significant increase to the Company's production profile.
Pre-sanction work continues on the Company's Peik asset as a field
development plan is nearing completion. Partners have agreed to terms of
unitization between the UK and Norwegian interests and a commercial decision
to select host platform facilities is well advanced.
The Company's exploration program also saw increased activity during the
third quarter with three wells being drilled on Block 20/2a (Blackbird
Prospect), Block 22/11b (Fulmar "L" Prospect) and Block 13/23a (MacDonald
Prospect). A significant discovery was announced at Blackbird after the
discovery well encountered 111 feet of net pay in Jurassic aged sandstone
reservoir. The well was tested at an average restricted rate of 3,800 (456
net) bopd through a 34/64 inch choke. The close proximity of the Blackbird
discovery to the Ettrick field development combined with the common ownership
between the two fields should provide for a timely and cost effective
development option to sub-sea tie back the Blackbird discovery to the
floating, production and offloading facilities at Ettrick. A development plan
for the Blackbird discovery is currently being evaluated.
The exploration well on Block 22/11b encountered a ten foot hydrocarbon
filled reservoir which sampled 38.8 API oil with a GOR of 1363 scf/stb. The
discovery will require further seismic interpretation and appraisal drilling
to properly understand. Meanwhile, the MacDonald well has been plugged and
abandoned.
The Company was also active in mapping new exploration prospects in an
attempt to high grade and build a broader prospect inventory to support a
multi well, multi-year exploration program. In this effort, Bow Valley
participated in the 25th offshore licensing round and was the successful
bidder on four new exploration blocks:Block 13/23a, Bow Valley 45% interest and operator
Block 16/13b, Bow Valley 100% interest and operator
Block 21/13a (split interest), Bow Valley 100% interest and operator
Block 20/3f, Bow Valley 12% interest, (Nexen operated)Each of the Blocks are Traditional Licenses which carry a term of four
years in which to complete a specified work program. Blocks 13/23a and 21/13a
both have drillable exploration prospects, each with a drilling commitment.
Block 16/13b, which directly offsets the producing Enoch field, carries a
seismic commitment and Block 20/3f directly offsets Bow Valley's recently
announced Blackbird discovery and will be evaluated by appraisal drilling of
this discovery. We are pleased with the license awards as they represent Bow
Valley's highest priority bids and our prospect inventory continues to expand.
The four year term to the license awards will provide Bow Valley the time to
schedule the work commitments.
Production additions have recently been achieved with the announced
start-up of the Chestnut field and development drilling appears to have
significantly improved the outlook for this field. Further production
additions are scheduled in early 2009 with first oil expected from the Ettrick
field development. The pre-development asset at Peik is quickly advancing
toward a final Field Development Plan and the recent Blackbird discovery
should also mature into a defined field development. Year-to-date, the Company
has participated in previously announced discoveries at Tofkat, Alaska and at
Blackbird, UK North Sea.
The Company has made significant gains during the year not withstanding
the unprecedented liquidity crisis in the financial markets and a precipitous
drop in the price of crude oil which is reducing discretionary cash flows. Bow
Valley has a (pnds stlg)17.5 million term debt loan due to mature on November
15th, 2008. The Company has received a waiver of this repayment until December
31st, 2008 and we are in discussions with our bank group to restructure and
extend the Company's debt. The global credit crisis has created uncertainty
and volatility in financial planning. During this time of uncertainty, Bow
Valley intends to pay down the Company's debt and manage discretionary capital
spending until there is greater clarity in the financial and commodity
markets.
Management continues to believe in a balanced approach to our business
initiatives. Organic growth through exploitation, development drilling,
appraisal and exploration is one of our balanced initiatives. It is with great
pleasure that we announce the recent appointment of Mr. Mark Attree,
Exploration Director, in our UK office. Mr. Attree has a long and successful
career in the North Sea and in other exploration basins throughout the world
having recently served as exploration manager at Amerada Hess Corporation. We
look forward to Mark's contributions to building a successful and growing
enterprise.
Bow Valley Energy Ltd. is an international oil and natural gas
exploration, development and production company with operations in the U.K.
sector of the North Sea and Alaska. The common shares of the Company trade on
the Toronto Stock Exchange under the symbol BVX.
Legal Notice - Forward Looking Information
Certain statements included or incorporated by reference in this news
release constitute forward-looking statements or forward-looking information
under applicable securities legislation. Such forward-looking statements or
information are provided for the purpose of providing information about
management's current expectations and plans relating to the future. Readers
are cautioned that reliance on such information may not be appropriate for
other purposes, such as making investment decisions. Forward-looking
statements or information typically contain statements with words such as
"anticipate", "believe", "expect", "plan", "intend", "estimate", "propose",
"project", "seek", "continue", "forecast", "may", "will", "potential",
"could", "should" or similar words suggesting future outcomes or statements
regarding an outlook. Forward-looking statements or information in this news
release include, but are not limited to, statements or information with
respect to: business strategy and objectives; development plans; exploration
plans; acquisition and disposition plans and the timing thereof; reserve
quantities and the discounted present value of future net cash flows from such
reserves; future production levels; capital expenditures; net revenue;
operating and other costs; royalty rates and taxes.
Forward-looking statements or information are based on a number of
factors and assumptions that have been used to develop such statements and
information but which may prove to be incorrect. Although the Company believes
that the expectations reflected in such forward-looking statements or
information are reasonable, undue reliance should not be placed on
forward-looking statements because the Company can give no assurance that such
expectations will prove to be correct. In addition to other factors and
assumptions which may be identified in this news release, assumptions have
been made regarding, among other things: the effects of increasing
competition; the general stability of the economic and political environment
in which the Company operates; the timely receipt of any required regulatory
approvals; the ability of the Company to obtain qualified staff, equipment and
services in a timely and cost-efficient manner; the ability of the operator of
the projects which the Company has an interest in to operate the field in a
safe, efficient and effective manner; the ability of the Company to obtain
financing on acceptable terms; field production rates and decline rates; the
ability to replace and expand oil and natural gas reserves through
acquisition, development or exploration; the timing and costs of pipeline,
storage and facility construction and expansion and the ability of the Company
to secure adequate product transportation; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in the countries in which the
Company operates; and the ability of the Company to successfully market its
oil and natural gas products. Readers are cautioned that the foregoing list is
not exhaustive of all factors and assumptions which may have been used.
Forward-looking statements or information are based on current
expectations, estimates and projections that involve a number of risks and
uncertainties which could cause actual results to differ materially from those
anticipated by the Company and described in the forward-looking statements or
information. These risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements or information include,
among other things: the ability of management to execute its business plan;
general economic and business conditions; the risk of war or instability
affecting countries in which the Company operates; the risks of the oil and
natural gas industry, such as operational risks in exploring for, developing
and producing crude oil and natural gas; market demand; the possibility that
government policies or laws may change or governmental approvals may be
delayed or withheld; risks and uncertainties involving geology of oil and
natural gas deposits; the uncertainty of reserves estimates and reserves life;
the ability of the Company to add production and reserves through acquisition,
development and exploration activities; the Company's ability to enter into or
renew leases; potential delays or changes in plans with respect to exploration
or development projects or capital expenditures; the uncertainty of estimates
and projections relating to production (including decline rates), costs and
expenses; fluctuations in oil and natural gas prices, foreign currency,
exchange, and interest rates; risks inherent in the Company's marketing
operations, including credit risk; uncertainty in amounts and timing of
royalty payments; health, safety and environmental risks; risks associated
with existing and potential future law suits and regulatory actions against
the Company; uncertainties as to the availability and cost of financing; and
financial risks affecting the value of the Company's investments. Readers are
cautioned that the foregoing list is not exhaustive of all possible risks and
uncertainties. Additional risk factors affecting the Company and its business
are contained in the Company's Annual Information Form filed on SEDAR at
www.sedar.com.
The forward-looking statements or information contained in this news
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 required by applicable securities laws. The forward-looking
statements or information contained in this news release are expressly
qualified by this cautionary statement.
Where amounts are expressed on a barrel of oil equivalent (boe) basis,
natural gas volumes have been converted to barrels of oil equivalent at six
thousand cubic feet to one barrel of oil equivalent (6 mcf = 1 boe). This
conversion ratio is the conversion used in the oil and natural gas industry
and is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.
The use of boe's may be misleading, particularly if used in isolation.
%SEDAR: 00008379E
For further information: Bow Valley Energy Ltd., Robert G. Moffat,
President and Chief Executive Officer, or C.W. Leigh Cassidy, Vice President,
Chief Financial Officer, Phone (403) 232-0292, www.bvenergy.com
