Longview Announces First Quarter 2012 Results
Stable Production and Funds from Operations Supports Capital Program and Dividends
May 10, 2012
CALGARY, May 10, 2012 /CNW/ - Longview Oil Corp. ("Longview" or the "Corporation") is pleased to announce the financial and operating results for the quarter ended March 31, 2012.
|Three months ended|
|March 31, 2012||December 31, 2011|
|Financial ($000, except as otherwise indicated)|
|Sales including realized hedging||$||40,425||$||43,303|
|per share (1)||$||0.86||$||0.93|
|Funds from operations||$||19,572||$||21,047|
|per share (1)||$||0.42||$||0.45|
|Net income and comprehensive income||$||5,561||$||4,320|
|per share (1)||$||0.12||$||0.09|
|per share (2)||$||0.15||$||0.15|
|Expenditures on property, plant and equipment||$||18,596||$||25,625|
|Working capital deficit (3)||$||15,522||$||20,074|
|Shares outstanding at end of period (000)||46,774||46,750|
|Basic weighted average shares (000)||46,771||46,750|
|Crude oil and NGLs (bbls/d)||5,119||5,120|
|Natural gas (mcf/d)||9,713||10,215|
|Total boe/d @ 6:1||6,738||6,823|
|Average prices (including hedging)|
|Crude oil and NGLs ($/bbl)||$||82.44||$||85.01|
|Natural gas ($/mcf)||$||2.29||$||3.47|
|(1)||Based on basic weighted average shares outstanding.|
|(2)||Based on shares outstanding at each dividend record date.|
|(3)||Working capital deficit includes trade and other receivables, prepaid expenses and deposits, trade and other accrued liabilities and due to parent.|
Stable Production Supports Funds from Operations
- Funds from operations for the first quarter of 2012 was $19.6 million or $0.42 per share, comparable to the $21.0 million or $0.45 per share realized during the fourth quarter of 2011. Funds from operations were supported by stable crude oil and liquids production (that comprised 95% of total sales revenue) and continued strong crude oil prices.
- Production for the first quarter of 2012 averaged 6,738 boe/d with 76% from crude oil and liquids, comparable to the 6,823 boe/d realized during the fourth quarter of 2011. We began our 2012 capital expenditure program this quarter with the addition of producing wells that has maintained stable production levels.
- Operating expense for the first quarter of 2012 was $17.78/boe, a 3% decrease from $18.36/boe realized in the prior quarter. During the third and fourth quarters of 2011 we conducted a number of well workovers and reactivations primarily in SE Saskatchewan which resulted in higher than normal operating costs. We anticipate operating costs to decrease during 2012 as fewer well workovers and reactivations are planned.
- Capital expenditures for the three months ended March 31, 2012 amounted to $18.6 million. We drilled a total of 9.9 net oil wells (16 gross) at 100% success rate with 6.8 net oil wells to be brought on production after quarter end. Drilling was focused at our Nevis property and Saskatchewan.
- As at March 31, 2012, Longview's bank debt was $101.9 million on a credit facility of $200 million (51% drawn) resulting in an unutilized capacity of $98.1 million. Our strategy of maintaining a conservative financial structure has positioned Longview to execute a capital program that provides growth potential while paying a stable dividend to shareholders.
- Longview currently pays a monthly dividend of $0.05 per share and has declared and paid $7.0 million of dividends for the first quarter of 2012.
Commodity Hedging Program
- Longview's hedging program for calendar 2012 includes crude oil hedges of 1,000 bbls/d at $97.10/bbl and 1,000 bbls/d at a floor price of $90.00/bbl.
- Additional details on our hedging program are available at our website at www.longviewoil.com.
- Longview's operations commenced on April 14, 2011 and continues to demonstrate strong financial and operating results with funds from operations supported by high crude oil prices and stable production growth as we execute our capital programs. We are targeting regular monthly dividends to shareholders of $0.05 per share and continue to focus on operations and executing our capital program.
- Production will decrease during the second quarter of 2012 due to spring breakup conditions when road bans and lease access restrictions prevent regular well maintenance. In addition, production will be impacted by facilities maintenance at several locations including a scheduled third party facility turnaround outage of approximately three weeks at our Nevis property.
- Our 2012 capital budget is approximately $73 million including the drilling of 25.3 net (34 gross) wells. We have contracted three rigs, two of which will target Alberta prospects with the additional rig targeting the Midale formation in southeast Saskatchewan. The capital expenditure program also includes analysis of cores that were taken from the Duvernay and Nordegg shale formations on a well that was drilled at Sunset in the fourth quarter of 2011. Detailed core analysis is expected by summer of 2012.
- We are looking forward to successfully executing our 2012 capital program, focusing on operational and cost efficiencies to increase returns and produce stable cash flows with a conservative financial structure. Longview's business strategy is to provide shareholders with attractive long term returns that combine both growth and yield by exploiting our assets in a financially disciplined manner and by acquiring additional long-life oil and gas assets of a similar nature.
- Longview was incorporated on March 4, 2010 and completed its initial public offering (the "Offering") on April 14, 2011 at a price of $10 per common share issuing 17,250,000 shares and raising gross proceeds of $172.5 million (including full exercise of the over-allotment option on April 28, 2011).
- Concurrent with the closing of the Offering, Longview purchased certain oil-weighted assets from Advantage Oil & Gas Ltd. ("Advantage") for total consideration of $546.9 million, comprised of 29,450,000 common shares of Longview (representing a 63% equity ownership) and $252.4 million in cash (the "Acquisition"). The Acquisition had an effective date of January 1, 2011 and a closing date of April 14, 2011.
- On April 30, 2012, Advantage and Longview announced that Advantage entered into an agreement relating to the sale of 8,300,000 Longview common shares owned by Advantage to a syndicate of underwriters at a price of $9.00 per common share for gross proceeds of $74.7 million. Closing of the offering is anticipated to be on or about May 22, 2012. Longview will not receive any proceeds or incur any costs related to the sale of the common shares. Following closing, Advantage will own 21,150,010 common shares of Longview, representing an interest of approximately 45.2% in Longview.
Interim Financial Statements and MD&A
- Longview's unaudited interim financial statements for the three months ended March 31, 2012 together with the notes thereto, and Management's Discussion and Analysis for the three months ended March 31, 2012 have been prepared in accordance with International Financial Reporting Standards ("IFRS") and posted on our website at www.longviewoil.com and filed under our profile on SEDAR at www.sedar.com.
Certain information regarding Longview set forth in this press release, including management's assessment of the Corporation's future plans and operations, contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. Such statements represent Longview's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Longview believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Longview's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Longview.
In particular, forward-looking statements included in this press release include, but are not limited to, expected operating expenses for 2012; projected capital expenditures for 2012; the focus of and timing of capital expenditures; drilling plans; and crude oil and natural gas production levels.
These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond the Corporation's control, including the impact of general economic conditions; volatility in market prices for crude oil and natural gas; industry conditions; volatility of commodity prices; currency fluctuation; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition from other producers; the lack of availability of qualified personnel or management; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; stock market volatility; ability to access sufficient capital from internal and external sources and the other risks considered under "Risk Factors" in Longview's annual information form dated March 22, 2012, which is available on www.sedar.com and www.longviewoil.com.
With respect to forward-looking statements contained in this press release, Longview has made assumptions regarding: current commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil and natural gas; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; royalty rates and future operating costs.
Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide shareholders with a more complete perspective on Longview's future operations and such information may not be appropriate for other purposes. Longview's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Corporation will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and the Corporation disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
"boes" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) 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.
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