CALGARY, May 11 /CNW/ - Insignia Energy Ltd. ("Insignia" or the "Company") (TSX: ISN) is pleased to announce its financial and operating results for the first quarter ended March 31, 2011 and its second half 2011 capital budget.
FINANCIAL AND OPERATING HIGHLIGHTS
- First quarter production averaged 3,577 boe/d; consisting of
16,515 mcf/d of natural gas and 824 bbls/d of crude oil and NGL's.
This is up 31% from the same quarter in 2010 and up 9% from the
previous quarter, on a per share basis and on an absolute basis.
- Funds from operations for the first quarter were $5.1 million,
$0.17 per basic and fully diluted share, up 46% from the same quarter
a year ago.
- During the quarter, the Company's focus was on the drilling of four
(2.4 net) cardium horizontal wells and the completion of two
(1.5 net) cardium horizontal wells on its Pembina property with 100%
- Below are the Financial and Operating Statistics for the first
quarter of 2011:
Three months ended
Mar 31, Dec 31, Mar 31,
2011 2010 2010
($ thousands, except per share amounts)
Oil and natural gas sales 11,643 10,845 9,788
Funds from operations(1) 5,149 5,059 3,517
Per share - Basic and diluted(1) 0.17 0.17 0.11
Net loss (1,492) (920) (0.01)
Per share - Basic and diluted (0.05) (0.03) (171)
Net debt(1) 37,903 35,775 22,124
Total assets 166,232 166,687 155,631
Weighted average common shares
Basic and diluted 30,660 30,660 30,660
(boe conversion - 6:1 basis)
Average daily production
Natural gas (mcf/d) 16,515 14,512 13,155
Oil and NGL (bbls/d) 824 870 541
Total (boe/d) 3,577 3,289 2,733
Natural gas ($/mcf) 4.01 3.82 5.31
Oil and NGL ($/bbl) 76.63 71.74 71.93
Total ($/boe) 36.17 35.84 39.79
Operating netback ($/boe)(1) 20.25 20.48 17.82
(1) Funds from operations, funds from operations per share and operating
netback are not defined by IFRS in Canada and are referred to as non-
IFRS measures. Funds from operations is cash provided by operating
activities before changes in non-cash working capital and before
abandonment and reclamation costs. Funds from operations per share is
calculated by dividing funds from operations by the weighted average
number of shares outstanding, consistent with the calculation of net
loss per share. Operating netback per boe is calculated as total oil
and natural gas revenue less royalties, operating costs,
transportation costs and net of any realized income on financial
derivative contracts, calculated on a boe basis. Net debt is the sum
of bank indebtedness and working capital but excludes financial
(2) The average selling prices reported are before realized derivatives
and transportation charges.
Additional First Quarter 2011 Results
- Insignia exited the quarter with net debt of $37.9 million on its
credit facility of $50 million. The facility was renewed subsequent
to the quarter with our next review date expected in August 2011.
- Capital expenditures for the quarter were $7.0 million. The majority
of this capital, $6.6 million, was related to drilling and completion
expenditures. The Board of Directors of Insignia had previously
approved a first half 2011 capital budget of $10 million based on
expenditures to date in 2011, Insignia expects its capital
expenditures to be in line.
- Q1 2011 drilling activity:
- Drilled, completed and tied in one (0.5 net) horizontal well
located at 03-03-049-06W5 on its Pembina property for crude oil
from the Cardium formation. The well has averaged 90 boe/d
(gross) over its first 30 days of production and 75 boe/d (gross)
over its first 60 days of production;
- Drilled and completed one (1.0 net) horizontal well located at
04-30-048-05W5 on its Pembina property for crude oil from the
Cardium formation. The well was brought on stream subsequent to
the quarter and has an average initial production for the first
30 days of 280 boe/d;
- Drilled two (0.9 net) horizontal wells on its Pembina property
for crude oil from the Cardium formation. It is anticipated that
both wells will be completed following spring break up and, with
success, placed on production late in the second quarter or early
in the third quarter of 2011;
Second Half 2011 ("H2/11") Capital Budget
Contingent on commodity prices, the Board of Directors have approved a second half 2011 capital budget of $15 to $17 million which, when combined with the previously approved first half capital budget, would result in a $25 to $27 million capital budget for 2011. For the second half, the Company plans to allocate in excess of 90% of this capital toward drilling, completions and facilities which are anticipated to include the drilling of approximately 5 (4 net) wells and when combined with the first half program would total 12 (7.4 net) wells drilled or planned to be drilled in 2011. Given today's low natural gas prices, the Company plans to continue its focus toward oil and liquids rich natural gas opportunities on its current asset base. Specifically, over the course of 2011, the Company plans to drill 8 (4.7 net) oil prospective horizontal wells which will equate to approximately 50% of the drilling, completion and facility expenditures planned. The balance of the planned drilling in 2011 will include 4 (2.7 net) liquids rich natural gas wells.
Insignia continues to be pleased with its financial and operational performance as evidenced by its first quarter 2011 average production of 3,577 boe/d which is the highest quarterly production in the Company's history. Since the inception of the Company in the summer of 2008, Insignia has focused its activities on building high quality assets within the Deep Basin area and on advancing the Company with a focus on per share growth in reserves, production and cash flow. Although the Company's debt position has modestly increased, the Company has not issued any new equity since inception and this has resulted in material per share growth in both production and reserves. Cash flow, on the other hand, is highly influenced by commodity prices and with a leverage to natural gas, the Company's corresponding cash flow has been impacted with persistently low natural gas prices in the past few years.
On the future of natural gas, we continue to be of the belief that, over time, prices will rise from their current levels driven by a number of factors including the increased demand for this clean burning source of fuel. In the meantime, and as indicated above, our immediate focus will be the development of our oil and liquids rich natural gas prospects which are generating the best returns for our shareholders.
The discussion of our oil and natural gas production and related performance measures is presented on a working-interest, before royalties basis. For the purpose of calculating unit information, natural gas is converted to a barrel of oil equivalent ("boe") using six thousand cubic feet of natural gas equal to one barrel of oil. Readers are cautioned that boe's may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this press release: boe/d means boe per day; mcf/d means thousand cubic feet per day, bbl means barrel, mbbl means thousand barrels, mmcf means million cubic feet and mboe means thousand boe's.
Investors are further cautioned that the preparation of financial statements in accordance with International Accounting Standards Board most current International Financial Reporting Standards ("IFRS") and International Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of our assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and our revenues and expenses during the reporting period. Our management reviews these estimates, including those related to accruals, environmental and decommissioning liabilities, income taxes, and the determination of proved reserves on an ongoing basis. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.
Certain financial measures referenced to in this news release are not prescribed by IFRS. These non-IFRS financial measures do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. We include these measures because management utilizes them to analyze operating and financial performance. The additional information should not be considered in isolation or as a substitute for measures of performance prepared in accordance with the IFRS. We use funds from operations which is cash provided by operating activities before changes in non-cash working capital and before abandonment and reclamation costs. Funds from operations per share is calculated by dividing funds from operations by the weighted average number of shares outstanding, consistent with the calculation of net loss per share. Funds from operations netback per boe is calculated as funds from operations divided by our total boe produced. Operating netback per boe is calculated as total oil and natural gas revenue less royalties, operating costs, transportation costs and net of any realized financial instrument income calculated on a boe basis. Net debt is the sum of bank indebtedness and working capital but excludes financial derivative contracts.
Forward Looking Statements
Statements throughout this News Release that are not historical facts may be considered to be "forward looking statements". These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including, without limitation, management's assessment of future plans and operations, anticipated commodity prices and their impact, anticipated demand for commodity prices, timing of expenditures, budgeted capital expenditures and the nature of those expenditures and the method of funding thereof, drilling plans and the timing of drilling and wells to be brought on production, completion and tie-in of wells and the timing thereof, expected royalty rates, operating costs and general and administrative expense, the expected levels of production and allocation of capital, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which 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 document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; 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 manor; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through development of exploration; future oil and natural gas prices; interest rates; the regulatory framework regarding royalties, and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at the Company's website (www.insigniaenergy.ca). Furthermore, the forward-looking statements contained in this Press Release are made as at the date of this Press Release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.
Insignia is a publicly listed junior oil and gas exploration and development company based in Calgary, Alberta. Insignia's shares trade on the TSX under the symbol "ISN".
Copies of the Financial Statements and Management's Discussion and Analysis for the period ended March 31, 2011 will be filed with Canadian securities regulators and on SEDAR on May 11, 2011 and accessible at www.sedar.com or by visiting Insignia's website at www.insigniaenergy.ca.
SOURCE Insignia Energy Ltd.
For further information: Jeff Newcommon, President & CEO, (403) 536-8138, firstname.lastname@example.org