Longview Announces Third Quarter 2011 Results

Strong Operational Results Drives Third Quarter Exit Production in excess of 6,400 boe/d

(TSX: LNV)

CALGARY, Nov. 10, 2011 /CNW/ - Longview Oil Corp. ("Longview" or the "Corporation") is pleased to announce the financial and operating results for the quarter ended September 30, 2011. As Longview's operations commenced on April 14, 2011, the three month period ended June 30, 2011 includes financial and operational results for only 78 days from April 14 to June 30, 2011.

    Three months ended
    September 30, 2011     June 30, 2011 (1)
               
Financial ($000, except as otherwise indicated)            
Sales including realized hedging  $ 37,109      $ 32,366
  per share (2)  $ 0.79      $ 0.82
  per boe  $ 66.44      $ 70.68
Funds from operations  $ 17,255      $ 15,434
  per share (2)  $ 0.37      $ 0.39
  per boe  $ 30.89      $ 33.70
Net income and comprehensive income  $ 7,148      $ 9,061
  per share (2)  $ 0.15      $ 0.23
Dividends declared  $ 7,013      $ 4,670
  per share (3)  $ 0.15      $ 0.10
Expenditures on property, plant and equipment  $ 21,589      $ 7,743
Working capital deficit (4)  $ 13,914      $ 10,899
Bank indebtedness  $ 84,692      $ 79,162
Shares outstanding at end of period (000)   46,750       46,700
Basic weighted average shares (000)   46,745       39,682
Operating            
Daily Production            
  Crude oil and NGLs (bbls/d)   4,554       4,341
  Natural gas (mcf/d)   9,103       9,174
  Total boe/d @ 6:1   6,071       5,870
Average prices (including hedging)            
  Crude oil and NGLs ($/bbl)  $ 80.76      $ 86.84
  Natural gas ($/mcf)  $ 3.91      $ 4.14
               
(1) The three months ended June 30, 2011 represents the financial and operational results for only 78 days from April 14 to June 30, 2011
(2) Based on basic weighted average shares outstanding
(3)  Based on shares outstanding at each dividend record date
(4)  Working capital deficit includes trade and other receivables, prepaid expenses and deposits, trade and other accrued liabilities and due to parent

 

Solid Operational Results Drives Production Growth

  • Funds from operations for the third quarter of 2011 was $17.3 million or $0.37 per share. Funds from operations were supported by strong crude oil prices with oil and liquids production contributing 91% of our total sales.
  • Production for the third quarter of 2011 averaged 6,071 boe/d, an increase of 3% from 5,870 boe/d realized in the second quarter of 2011. Longview exited the third quarter producing in excess of 6,400 boe/d and had an estimated 400 boe/d behind-pipe that will be brought on production in the fourth quarter of 2011 to offset normal declines.
  • Operating expense for the third quarter of 2011 was $18.47/boe, an increase from the $17.15/boe realized in the prior quarter. During the third quarter we conducted well workovers and reactivations that were previously delayed by approximately one quarter due to wet weather conditions throughout most of Western Canada. Although these activities resulted in higher operating costs for the quarter, it has been a contributor to our production growth, in combination with our capital program. With additional well maintenance and workover activity identified, we anticipate operating costs to be $16.00/boe to $17.00/boe during the fourth quarter of 2011.
  • Capital expenditures for the three months ended September 30, 2011 amounted to $21.6 million as we commenced our Alberta capital expenditure program in July and Saskatchewan program in September. We deployed two drilling rigs in Alberta and an additional rig targeting the Midale formation in southeast Saskatchewan. As of September 30, 2011, we have drilled 11.5 net (15 gross) oil wells (100% success rate) and have two drilling rigs active in the fourth quarter to complete our program. Production has been positively impacted as some of these new wells have been completed and tied-in late in the third quarter.
  • As at September 30, 2011, Longview's bank debt was $84.7 million on a credit facility of $200 million (42% drawn) resulting in an unutilized capacity of approximately $115.3 million. Our conservative financial structure has positioned Longview to execute a capital program that provides considerable 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 $11.7 million of dividends for the nine months ended September 30, 2011.

Commodity Hedging Program

  • Longview's hedging program includes 1,500 bbls/d of crude oil for 2011 hedged at an average price of Cdn$91.05 per bbl.
  • Additional details on our hedging program are available at our website at www.longviewoil.com.

Looking Forward

  • Longview's operations commenced on April 14, 2011 and have since demonstrated solid financial and operating results, strong funds from operations supported by high crude oil prices, and production growth as we execute our capital program. We are targeting regular monthly dividends to shareholders of $0.05 per share and continue to focus on operations and our capital program.
  • Longview's 2011 capital budget is $50 to $60 million, focused on oil or oil with liquids rich solution gas projects, and includes the drilling of 23.0 net (31 gross) wells. The remainder of our capital expenditures will be incurred during the fourth quarter of 2011 due to wet ground conditions that persisted this spring and summer. Success from our current activities has already begun to drive production growth.
  • We are looking forward to successfully executing our initial 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.

Interim Financial Statements and MD&A

  • Longview's unaudited interim financial statements for the three and nine months ended September 30, 2011 together with the notes thereto, and Management's Discussion and Analysis for the three and nine months ended September 30, 2011 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.

About Longview Oil Corp.

  • Longview 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 $545.9 million, comprised of 29,450,000 common shares of Longview representing a 63% equity ownership and $251.5 million in cash, subject to final adjustments per the purchase and sale agreement (the "Acquisition").
  • For further details of the Offering and Acquisition, please refer to the press release issued by Advantage on March 7, 2011 and 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 production behind-pipe; expected operating expenses for the fourth quarter end December 31, 2011; projected capital expenditures for the year ended December 31, 2011; focus of capital budget; the focus of and timing of capital expenditures; drilling plans; focus of the 2011 capital program; 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 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.

 

 

 

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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