CALGARY, March 5 /CNW/ - Bow Valley Energy Ltd. (TSX - BVX) announces its
2006 year-end financial summary results. Copies of the financial statements
and notes and related management discussion and analysis may be obtained on
SEDAR at www.sedar.com, the Company website at www.bvenergy.com or by
contacting the Company directly.
- 2006 funds flow was $20.4 million, down 34% from 2005. Funds flow per
share (basic) was $0.29 ($0.28 per share fully diluted), down 41%
year-over-year (fully diluted down 40%). The majority of the decrease
in funds flow is attributable to the Canadian operations due to lower
production and lower natural gas prices.
- Fourth quarter, 2006 funds flow was $2.0 million, down 82% over
fourth quarter, 2005. Fourth quarter funds flow per share (basic) was
$0.03, down 81%. In addition to lower Canadian funds flow, fourth
quarter funds flow was also negatively effected by a non-operating
realized foreign exchange loss of $1.5 million.
- Loss per share was $0.04, down 140% compared to 2005.
- Sales volumes averaged 2,443 boe/d in 2006, down 24% compared to
2005. Fourth quarter sales volumes averaged 2,107 boe/d, down 24%
compared to the fourth quarter of 2005.
- Net debt and working capital deficiency was $91.4 million at year-
end, including bank debt of $76.4 million.
- Funds flow was $10.5 million, up 5% over 2005. Fourth quarter funds
flow was $0.5 million, down 73% year-over-year. Funds flow was
negatively effected by a realized non-operating foreign exchange loss
of $1.5 million in the fourth quarter of 2006.
- The Company spent $88.8 million in the U.K. in 2006, with the
majority of expenditures related to the development of the Company's
non-producing properties. First production from the Enoch and Blane
fields is expected in the second quarter of 2007, from the Chestnut
field in the third quarter of 2007 and from the Ettrick field in the
second quarter of 2008.
- The Company agreed to a US$150 million debt facility with the Bank of
Scotland. This increased debt facility is expected to fund the
development of all of the Company's U.K. fields, including the
Ettrick field which received Field Development Plan approval in 2006.
- The Company has significantly improved its cost structure in the U.K.
as a result of redirecting Kyle production from the Maersk Curlew to
the Ramform Banff. Operating costs averaged $7.41 per boe in 2006, an
improvement of 65% compared to the 2005 full year average of
$21.29 per boe. As a result, the Company's operating netback
increased 102% year-over-year to $58.67 per boe.
- The net present value (NPVBT(10)) of U.K. proved plus probable
reserves increased 60% to $351.3 million.
- Sales volumes averaged 647 boe/d, down 46% year-over-year due largely
to lower production owing to capacity constraints at the Ramform
Banff. Fourth quarter sales volumes averaged 517 boe/d, down 8% year-
- Bow Valley entered a Joint Venture Agreement to participate in an
exploration program on the North Slope of Alaska.
- The first well of this exploration program was spud February 8th,
2007 and is expected to take approximately thirty to forty days to
drill. A second exploration well is expected to be drilled
immediately following, if time and conditions permit.
- Funds flow was $11.4 million, down 46% over 2005. Fourth quarter
funds flow was $1.5 million, down 81% year-over-year.
- Sales volumes averaged 1,796 boe/d, down 12% year-over-year. Fourth
quarter sales volumes averaged 1,590 boe/d, down 29% year-over-year.
- On February 20, 2007, Bow Valley announced that it had engaged
Tristone Capital to assist in evaluating strategic alternatives for
its Canadian assets and operations.
Although sales volumes in the U.K. were 46% lower year-over-year, funds
flow from operations was up 5%, as significant operating cost improvements
year-over-year, combined with higher commodity prices, led to a 102%
improvement in the operating netback per boe.
The operating cost improvements occurred due to the tie-back of the Kyle
production from the Maersk Curlew to the Ramform Banff in 2005. The effect of
redirecting the production was to reduce operating costs at the field by 65%
year-over-year to $7.41 per boe, which has improved profitability and extended
field life. The Ramform Banff is a smaller vessel, therefore Kyle production
is now capacity constrained, contributing to the lower year-over-year
In 2006, Bow Valley spent significant capital to advance the Enoch, Blane
and Chestnut fields to first production. The first two of these fields (Enoch
and Blane) are expected to commence production in the second quarter of 2007,
with the third field (Chestnut) coming on stream in the third quarter of 2007.
A fourth field (Ettrick) received U.K. government Field Development Plan
approval in 2006, and is expected to be on production in the second quarter of
2008. Based on the total proved plus probable reserves in the GLJ Report, the
Company's U.K. production is expected to average 7,594 boe/d in 2008.
U.K total proved plus probable reserves increased 3% to 13.3 mmboe as
reported in the Company's February 20, 2007 press release. The net present
value of those reserves increased 60% to $351.3 million (NPVBT(10) @ forecast
pricing) due to the increased volume of reserves, incurred capital outlays and
increased commodity prices.
The Company continues to build its U.K. exploration portfolio in
preparation for increased exploration activity late in 2007. The Company added
to its working interest in the 16/27a North block, taking its total working
interest to 100%. The company also added a 100% working interest in Block
22/11b, awarded in the 24th Offshore Oil and Gas Licensing Round. The Company
now owns a 100% working interest in five U.K. North Sea exploration blocks,
containing five exploration prospects. The Company is planning to drill as
operator its first U.K. exploration well in the fourth quarter of 2007.
Late in 2006, the Company entered into a Joint Venture Agreement to
explore on the North Slope of Alaska. The first well of this exploration
program was spud in early February and is expected to take thirty to forty
days to drill. A second exploration well could be drilled before break-up if
time and conditions permit.
Canadian production was down year-over-year 12%, averaging 1,796 boe/d.
Fourth quarter volumes averaged 1,590 boe/d, down 29% year-over-year. The
Company has engaged Tristone Capital to assist in evaluating strategic
alternatives for its Canadian assets and operations.
The Company's net debt plus working capital increased year-over-year to
$91.4 million, mainly due to the increased spending related to the U.K.
development projects. This debt is financed via the Company's US$150 million
senior and mezzanine debt facilities with the Bank of Scotland and the
C$22.5 million senior and C$7.5 million term facilities with the National
Bank. The Company expects to be able to service the debt with significantly
increased cash flows as a result of the field developments coming on
production throughout 2007 and into 2008.
Robert G. Moffat, President and Chief Executive Officer stated: "The 2006
financial results are down year-over-year by most measures, but I do not
believe these results represent the direction that the Company is headed. The
Company is incurring significant capital spending ahead of production from the
U.K. development projects and production growth is imminent. The exciting
exploration programs in Alaska and the North Sea have begun with 3-4 wells
scheduled to be drilled in 2007. The decision to evaluate strategic
alternatives for the western Canadian assets is consistent with our goal of
directing capital to areas that provide the most growth at the best economic
return. Bow Valley is quickly evolving into a full-cycle exploration company
with a strong and diversified production base. Looking ahead to the next two
years, I am extremely optimistic. Bow Valley's production, revenue and cash
flow growth should be significant. We are well positioned to enjoy exploration
success from a broad and diversified prospect inventory. In the U.K., the
Company is making the bold move by becoming an operator of exploration and
with success, will subsequently become the operator of development and
production. The move into the North Slope of Alaska is an example of our
ability to recognize opportunity outside of our established areas. Overall, I
believe Bow Valley will emerge as a well funded, balanced, diversified,
international oil and gas company."
The Company's statement of reserves data and other oil and gas
information on Form 51-101F1 has been included in the Company's annual
information form for the year ended December 31, 2006 which has been filed on
SEDAR at www.sedar.com. The report on reserves data by independent qualified
reserves evaluator or auditor on Form 51-101F2 and the report of management
and directors on oil and gas disclosure on Form 51-101F3 has also been filed
on SEDAR at www.sedar.com
Bow Valley Energy Ltd. is an international oil and natural gas
exploration, development and production company with operations in western
Canada, the U.K. sector of the North Sea and Alaska. The common shares of the
Company trade on the Toronto Stock Exchange under the symbol BVX.
Some of the information contained herein summarizes certain information
contained in the GLJ Petroleum Consultants Ltd. reserves report dated
December 31, 2006. Bow Valley will provide additional information in its
Annual Information Form and other filings. It should not be assumed that the
estimates of future net revenues presented in the tables herein ("NPVBT(10)")
represent the fair market value of the reserves. There is no assurance that
the price and cost assumptions will be attained and variances could be
material. The Bow Valley crude oil, natural gas liquids and natural gas
reserves volumes provided herein are estimates only and there is no guarantee
that the estimated reserves will be recovered. The actual crude oil, natural
gas liquids and natural gas volumes eventually recovered may be greater than
or less than the reserves estimates provided herein. Where amounts are
expressed on a barrel of oil equivalent (boe) basis, natural gas volumes have
been converted to barrels of oil equivalent at six thousand cubic feet to one
barrel of oil equivalent (6 mcf = 1 boe). This conversion ratio is the
conversion used in the oil and natural gas industry and is based on an energy
equivalency conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. The use of boe's may be
misleading, particularly if used in isolation.
Certain statements included or incorporated by reference in this news
release constitute forward-looking statements or forward-looking information
under applicable securities legislation. Forward-looking statements or
information typically contain statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "propose", or similar words
suggesting future outcomes or statements regarding an outlook. 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. Forward-looking statements or
information are based on current expectations, estimates and projections that
involve a number of risks and uncertainties which could cause actual results
to differ materially from those anticipated by the Company and described in
the forward-looking statements or information. The forward-looking statements
or information contained in this news release are made as of the date hereof
and the Company undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws. The forward looking statements or information contained in
this news release are expressly qualified by this cautionary statement.
For further information:
For further information: Bow Valley Energy Ltd., Robert G. Moffat,
President and Chief Executive Officer, Matthew L. Janisch, Vice President
Finance & Chief Financial Officer, Phone (403) 232-0292, website: