AltaCanada Energy Corp. releases third quarter results

TSX-V SYMBOL: ANG

CALGARY, Nov. 27 /CNW/ - AltaCanada Energy Corp. ("ANG") is pleased to provide the financial results for the quarter ending September 30, 2009. Attached is a summary page of key financial, production and drilling metrics. A complete report is available on SEDAR or on our website www.altacanada.com or from the Corporation.

Operations

AltaCanada continues to be challenged by the extended period of low natural gas prices. Over the past several years AltaCanada has focused upon the acquisition of land and the development of infrastructure associated with the Corporation's shallow gas play in Northern Montana. At the same time we have positioned the Corporation through land acquisitions, seismic and geological work to pursue drilling targets on the Corporation's Montana lands on trend with Shaunavon oil activity being conducted immediately north in Canada. Unfortunately, with declining levels of natural gas prices and a high general level of indebtedness there has been substantial erosion in the current equity value of the Corporation coupled with limited funds to pursue the attractive oil prospects on the Corporation's lands.

Management of AltaCanada has pursued a range of possible transactions to preserve value for AltaCanada's shareholders. This has been very challenging in the capital constrained environment associated with the international financial crisis. Regulatory hurdles and other issues have created unanticipated impediments to the implementation of several potential transactions pursued by AltaCanada over the past six months. The prospects nonetheless remain solid and there is considerable option value in the Corporation's natural gas properties when prices recover to levels that will support new development. AltaCanada is a low cost producer but is currently encumbered with a high level of debt. Management is focused on addressing that issue. Gas prices continue to be very volatile. At today's low prices some of our properties have poor economics, in response we shut in our ten Fort Belknap producing wells (55% ANG), representing 275 mcf/d (150 mcf/net). When gas prices recover, these wells will be returned to production.

No drilling for natural gas is planned in the short term. Subject to our ability to implement an effective recapitalization plan, our efforts will be directed to 4 oil opportunities for 3 Jurassic Shaunavon oil targets (100%) and a Bakken exploration well (50%).

Our large Montana block, (400,000 gross acres and 270,000 net acres) has few expiries. Many leases are held by the existing production.

Refinancing

AltaCanada has been exploring various refinancing structures in cooperation with its bank. The Corporation now proposes to pursue a refinancing plan where two existing large shareholders of the Corporation will assume some of the Corporation's current bank indebtedness on a subordinated basis and provide the Corporation with some short term working capital in exchange for the Bank providing the Corporation with some flexibility and some time to pursue its value enhancement program through drilling of oil targets.

On November 26, 2009 we agreed with our bank to arrange for payment of $2.75 million on the non-revolving portion of our bank loan before December 31, 2009. This reduces the amount of this loan to $1.25 million on the facility expiring on July 31, 2010. The other revolving loan facility of $8.25 million will continue at an interest rate of prime plus 2%. Finalization of these terms is subject to final review by the bank's credit committee expected by December 3, 2009. A second bridging facility from two of our shareholders of $3.0 million will be made available in January 2010, This further facility will have provisions enabling the conversion to equity. All of this activity is a prelude to the equity financing that will likely be conducted in February.

Reorganization Proposal

As announced on October 27, 2009 AltaCanada intends to recommend to shareholders that the shares of the Corporation be consolidated on a 1 for 10 basis and that the Corporation be renamed, Montana Exploration Corporation to more accurately reflect the Corporation's business. Additional funds will be required for drilling activities. The details are presently being negotiated but will likely involve an appropriately priced rights issue that may have some form of a backstop. Some of the proceeds of the rights issue will be used to pay or redeem outstanding debentures. A shareholder meeting will be called in the near future to approve these matters. A previously announced intention to proceed with a share issue at $0.08 has been cancelled.

Overhead Reductions

While some exceptional costs were included in Q3, that related to evaluation of two uncompleted deals, AltaCanada continues to reduce overhead as part of the Corporation's refinancing plan. Since June 30, 2009 we have reduced our staff by 3, to 8 full time employees, reduced the hours our consultants work, reduced the cash costs of 4 salaried employees by issuing shares in lieu of payment, and sublet our office space with effect on December 1, 2009. Early in December we will move to a smaller office at a considerably reduced lease rate located at 1300, 140-4th Ave SW. Our phone number will remain unchanged. The combined effect, going forward, of these changes is an important cost reduction of $50,000 per month.

Write-down

The Corporation recorded a write-down of $5,200,000 during the period. Our independent engineering evaluator updated the December 31, 2008 reserves appraisal using lower natural gas prices and AltaCanada's reduced capital program. The evaluation was performed using a 5% discount factor, a standard adopted by many other issuers. To reflect the reduced capital program AltaCanada's undeveloped reserves were risked at 50%. The evaluation gives no value for the Corporation's undrilled Jurassic and Bakken targets. This study yielded a reduced reserve value $21.8 million. It was therefore determined that it was appropriate to reduce the book value of our reserves.

Full financials, notes and the Annual Report are available on SEDAR or our website www.altacanada.com.

    
    THE TSX VENTURE EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE. BOEs MAY BE
    MISLEADING, PARTICULARLY IF USED IN ISOLATION. A BOE CONVERSION RATIO OF
    6 MCF: 1 BBL IS BASED UPON AN ENERGY EQUIVALENCY CONVERSION METHOD
    PRIMARILY APPLICABLE AT THE BURNER TIP AND DOES NOT REPRESENT A VALUE
    EQUIVALENCY AT THE WELLHEAD.
    

The corporate information contained in this news release may contain forward-looking forecast information. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonably accurate by AltaCanada Energy Corp. at the time of preparation, may prove to be incorrect. The actual results achieved during the forecast period will vary from the information provided herein and the variations may be material. Consequently there is no representation by AltaCanada Energy Corp. that actual results achieved during the forecast period will be the same in whole or in part as that forecast.

    
    * Reserve value calculation used the proved and probable reserve value
        from the GLJ report, PV(10)


                                 HIGHLIGHTS

    Period Ended September 30         Three Months             Nine Months
     (unaudited)                    2009        2008        2009        2008
    -------------------------------------------------------------------------
    FINANCIAL

    Total Revenue ($)            424,713   1,866,259   2,700,047   6,549,220
    Cash Flow (Deficit) from
     Operations ($)             (258,154)   (180,048)   (979,470)    574,695
    Per Common Share ($)
     - Basic/Diluted               (0.00)       0.00       (0.01)       0.01
    Net Loss and
     Comprehensive Loss ($)   (6,673,774)    779,784  (8,622,003) (1,769,276)
    Per Common Share ($)
     - Basic/Diluted               (0.09)       0.01       (0.12)      (0.03)
    Capital Expenditures ($)     323,762   1,816,391   2,207,829   5,077,266
    Net Debt at
     September 30 ($)                                 16,853,608  11,588,140
    Shareholders' Equity at
     September 30 ($)                                 16,195,132  26,038,551
    Total Assets at
     September 30 ($)                                 35,244,195  41,169,087
    Common Shares - (weighted
     average for the period)
      Basic                   74,381,538              74,381,538  70,114,750
      Diluted                 74,381,538              74,381,538  70,114,750
    Common Shares -
     (outstanding
      September 30)                                   74,381,538  74,381,538
    -------------------------------------------------------------------------
    OPERATIONS

    Average Daily Sales:
      Natural Gas (Mcf/d)          1,918       2,516       1,986       2,720
      Oil and NGL (Bbls/d)             9           4           5           5
      Total (BOE/d)                  329         424         336         459
      % Gas/Oil Ratio               97/3        99/1        99/1        99/1
    Average Prices:
      Natural Gas ($/Mcf)           3.02        7.91        3.84        8.66
      Oil and NGL ($/Bbl)          26.75       92.36       41.12       65.39
      Total ($/BOE)                18.36       47.88       23.28       52.12
    -------------------------------------------------------------------------
    WELLS DRILLED

      Gross                            -           5           5           6
      Net                              -         2.5         2.7        2.75
    -------------------------------------------------------------------------
    

SOURCE ALTACANADA ENERGY CORP.

For further information: For further information: Donald Foulkes, President & CEO, Telephone: (403) 265-9091 (ext 248), Fax: (403) 265-9021, Email: info@altacanada.com; Donald Jackson, Executive VP & COO, (403) 265-9091 (ext 234), (403) 265-9021

Organization Profile

ALTACANADA ENERGY CORP.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890