Longview Announces First Quarter 2011 Financial & Operational Information, 2011 Guidance and Dividend Update

(TSX: LNV)

CALGARY, May 24, 2011 /CNW/ - Longview Oil Corp. ("Longview" or the "Corporation") is pleased to announce the following financial and operational information for Q1 2011, guidance for the balance of 2011 and a dividend payment update.

Financial & Operational Update

  • Longview completed its initial public offering (the "Offering") on April 14, 2011 at a price of $10 per common share raising gross proceeds of $172.5 million (including an over-allotment option of 15%).
  • Concurrent with closing of the Offering, Longview purchased certain oil-weighted assets (the "Acquired Assets") from Advantage Oil & Gas Ltd. ("Advantage") with consideration comprised of $245.6 million and 29,450,000 common shares of Longview representing a 63% equity ownership.
  • The Acquired Assets were purchased with an effective date of January 1, 2011 and a closing date of April 14, 2011.  Operating income and capital expenditures for the period January 1 through April 14, 2011 will therefore be treated as an adjustment to the purchase price of the Acquired Assets in Longview's financial statements.
  • The following table summarizes the Offering and concurrent purchase of the Acquired Assets by Longview:
       
  $
(millions)
# of shares
(million)
%
ownership
Net Proceeds of the Offering $159.6 17.3 37%
Draw on Longview's $200 million credit facility 86.0    
Total cash proceeds $245.6    
Issue of Longview shares to Advantage 294.5 29.4 63%
Total Purchase Price $540.1 46.7 100%
       
  • Tax pools associated with the purchase price will be allocated as follows:
     
    $millions
     
Canadian Oil and Gas Property Expense         $388.9
Undepreciated Capital Cost         108.0
Non-capital losses         43.2
Total         $540.1
     
  • The following supplemental information summarizes production, operating income and capital expenditures on property, plant and equipment for the three months ended March 31, 2011 relating to the Acquired Assets purchased by Longview:
                       
                      Three months ended
March 31, 2011
Daily production                      
Crude oil (bbls/d)                           4,011
NGLs (bbls/d)                           588
Natural gas (mcf/d)                           8,823
Total boe/d                           6,070
Crude oil (%)                           66%
NGLs(%)                           10%
Natural gas (%)                           24%

  $000 $ per boe
Sales    
      Crude oil and NGLs $31,621  
      Natural gas 3,195  
Total sales 34,816 $63.73
Royalties (6,862) (12.56)
      Royalty % 19.7%  
Operating expense (8,779) (16.07)
Operating income $19,175 $35.10
Realized gain (loss) on derivatives (248) (0.45)
Cash netback $18,927 $34.65
Capital expenditures $10,392  
     
  • Production from the Acquired Assets averaged 6,070 boe/d in the first quarter of 2011 as compared to 6,220 boe/d in the fourth quarter of 2010 reflecting normal industry declines. During the first quarter of 2011, production optimization and workover expenditures were incurred which resulted in higher than normal operating costs.
  • Capital expenditures during the first quarter of 2011 related to the Acquired Assets amounted to $10.4 million including the drilling of 6.8 net wells at a 100% success rate. Drilling activity included 3 net wells at Eyehill, 2 net wells at Nevis, 0.6 net wells at Alameda and 1.2 net wells at Brazeau/Ferrier. All of these wells have been cased and will be brought on production in the second quarter of 2011.

Guidance

  • The following table summarizes guidance for Longview for the period April 14 to December 31, 2011:
                   
Production                 6,300 boe/d to 6,500 boe/d
Exit rate                 6,700 boe/d to 6,900 boe/d
Production growth %                 10.4% to 13.7%
Royalties                 17% to 19%
Operating expense                 $15.00/boe to $16.00/boe
Capital expenditures                 $50 million to $60 million
                   
  • Virtually 100% of the capital budget is focused on oil or oil with liquids rich solution gas projects.  We anticipate that the vast majority of capital expenditures will be incurred during the third and fourth quarters of 2011 due to wet ground conditions that are resulting in a protracted breakup period this spring.
  • The capital expenditure program consists of the following:
       
Area Target
Formation
Type of
Well
# of Wells
Gross Net
Nevis, AB Wabamun Hz 7 7.0
S.E. Saskatchewan Midale Hz 8 7.0
Ferrier, AB Cardium Hz 7 1.9
Westerose, AB Belly River Hz 3 3.0
Skaro, AB Ellerslie Hz 1 1.0
Lashburn, SK Waseca Hz 1 0.6
Sunset, AB Duvernay Vt 1 0.7
Other Various Vt 3 1.8
Total     31 23.0
         
  • The vertical well being drilled at Sunset will core and test the Duvernay shale formation.
  • We have contracted three rigs which will begin drilling subsequent to spring breakup. Two of the rigs will target Alberta prospects and the additional rig will target the Midale formation in southeast Saskatchewan.

Initial Dividend

  • The initial dividend payment of $0.05 per share designated as an eligible dividend will be made on June 15, 2011 to shareholders of record as of May 31, 2011.  The ex-dividend date for this payment will be May 27, 2011.
  • For further details, please refer to the final prospectus filed by Longview on April 6, 2011, which are available at www.sedar.com and Longview's website at www.longviewoil.com.

Forward-Looking Statements

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, statements with respect to targeted average production and 2011 exit production; expected operating expenses for the year ended December 31, 2011; future royalty rates; projected capital expenditures for the year ended December 31, 2011; focus of capital budget; the focus of and timing of capital expenditures; drilling plans; timing of drilling of rigs; and crude oil and natural gas production levels. In addition, 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 and reserves described can be profitably produced in the future.

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 final prospectus dated April 6, 2011, which is available on www.sedar.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.

 

SOURCE Longview Oil Corp.

For further information:

Investor Relations
Toll free: 1-855-813-0313

LONGVIEW OIL CORP.
700, 400 -3rd  Avenue SW
Calgary, Alberta
T2P 4H2
Phone:  (403) 718-8000
Fax:      (403) 718-8300
Web Site: www.longviewoil.com
E-mail:  ir@longviewoil.com

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Longview Oil Corp.

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