CALGARY, March 21, 2013 /CNW Telbec/ - Exall Energy Corporation ("Exall" or the "Company") (TSX:EE andTSX:EE.DB) is pleased to announce its financial and operating results for the three months and fiscal year ended December 31, 2012; and that it has filed its Annual Information Form which contains reserves data and other oil and gas information required by Section 2.1 of NI 51-101. Exall's annual filings can all be found at www.exall.com or www.sedar.com.
Exall's fourth quarter 2012 well optimization operational successes have resulted in a 18 percent increase in the first quarter 2013 production average to 1,310 boe per day from the fourth quarter 2012 production average of 1,106 boe per day with additional well optimization efforts scheduled for 2013.
Highlights of Fiscal 2012 include:
- A 12 percent increase in the fourth quarter 2012 production average to 1,106 boe per day from the third quarter 2012 production average of 991 boe per day,
- Spud 11 gross (7.61 net) wells with 6 gross (4.30 net) wells being placed on production, 4 gross (2.53 net) service wells being brought online and 2 gross (1.44 net) wells in various stages of completion,
- Completed and interpreted a 51 section 3D Seismic program identifying approximately 20 Tier I, 12 Tier II and 46 Tier III locations on nine Gilwood channel trends,
- Achieved additional 3D Seismic drilling success culminating in a fourth quarter 2012 production average of 609 boe per day from the north Gilwood seismic channel,
- Completed upgrades at the Marten Mountain pipeline and battery facility alleviating certain constraints and eliminating certain operational expenses, and
- Acquired 25,600 gross (20,851 net) acres of undeveloped land in Mitsue, Alberta.
|HIGHLIGHTS|| Three months ended
| Year ended
|In thousands of dollars||2012||2011|| %
|Funds from operations||3,918||6,175||(37)||15,625||18,553||(16)|
|Basic per share||0.06||0.10||(40)||0.25||0.30||(17)|
|Diluted per share||0.04||0.10||(60)||0.15||0.29||(48)|
|Net income (loss)||751||2,271||(67)||3,633||6,960||(48)|
|Basic per share||0.01||0.04||(75)||0.06||0.11||(45)|
|Diluted per share||0.01||0.04||(75)||0.05||0.11||(55)|
|Capital expenditures, net||8,180||14,913||(45)||44,697||50,057||(11)|
|HIGHLIGHTS|| Three months ended
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|Crude oil (bbl)||1,042||1,218||(14)||988||949||4|
|Natural gas liquids (bbl)||14||19||(26)||18||21||(14)|
|Natural gas (mmcf)||297||873||(66)||457||749||(39)|
|Total daily production (boe @ 6:1)||1,106||1,383||(20)||1,082||1,094||(1)|
|Netback per boe (6:1) ($)||51.22||53.85||(5)||52.65||52.14||1|
Exall is a light oil-weighted company with high operating margins. Starting from a modest production base of light oil and gas, the Company has historically, excluding the 2012 Reservoir conformance challenges in the south waterflood, shown itself capable of setting and achieving ambitious production and cash flow targets (as can be seen in the chart below reflecting production), production growth that currently translates to 42.1 percent compounded annually from 2007. Exall will continue to focus on organic growth through exploitation and expansion of its existing oil producing properties.
While reservoir conformance issues presented challenges in the South Waterflood during 2012; optimization efforts aimed at improving well performance and oil recovery appear to be having a positive effect. Polymer treatments were performed on two injection wells resulting in reduced water cuts in one adjacent well, along with an increase in oil production. Current production from the South Waterflood area is 428 boepd (310 boepd net), an increase of 87% from the 2012 fourth quarter average of 229 boepd (164 boepd net). With the stabilization of the south waterflood's production in the latter two months of 2012, Exall is once again poised to see production growth on an annual basis through 2013 and into 2014.
Exall's Capital Expenditure Program for 2013 is planned to continue to explore and develop the North Waterflood Gilwood channel extension of the Central Waterflood channel. Successful drilling on the Central Waterflood and North Waterflood channel extension in 2012 added 676 boepd net from the first quarter to the fourth quarter of 2012. Exall plans to drill up to 3 gross exploration wells (2.21 net) and up to 10 gross development wells (7.19 net) in 2013, subject to cash flow from operations. Continued drilling success on the North Waterflood channel extension will drive production growth on an annual basis through 2013 and into 2014.
With the Company's Marten Mountain oil production attracting a price based on the average of the daily settlement price of the NYMEX near month Light Sweet Crude Oil contract as it trades, excluding weekends / holidays, for the calendar month of production, plus the weighted average of the Net Energy Index and the NGX index for Light Sweet Crude Oil, plus the one month prior Enbridge Sweet WADF, the Company's oil price received averages approximately $1.22 less than the posted Edmonton Par price. Based on the $1.22 differential Exall expects its January 2013 price received was $86.52 per barrel, and its February 2013 price received was $87.40 per barrel. This pricing estimate is approximately $26.00 higher than the posted Western Canadian Select price being received by other entities during these periods.
With the Company's Marten Mountain oil production currently receiving an average price of approximately $87.00, Exall is currently generating an Operating Netback of approximately $58.00 and a Corporate Netback of approximately $45.00 after General and Administrative Expenses and Interest Expenses. At an average of 1,400 boepd over the entire year, the Company would generate a Cash Flow from Operations of approximately $23.0 million for 2013.
While the Exall debt level appears relatively significant, once broken down it becomes less of a concern. Exall's current debt level is approximately $59.0 million which includes $36.0 of revolving demand credit held under a facility with a Canadian chartered bank that bears interest at the lender's base prime rate plus 1.25 percent, and is reviewed periodically by the bank. The balance of the debt is a $23.0 million Convertible Debenture with a maturity date of March 2017 that pays an annual interest rate of 7.75%.
Exall's debt to cash flow at December 31, 2012, excluding the Convertible Debentures was 2.5 times. It is Exall's plan to exit 2013 with a fourth quarter annualized cash flow that would see the debt to cash flow at December 31, 2013, excluding the Convertible Debentures, being in the order of 1.0 times. Including the 2017 Convertible Debentures in the calculation would give Exall a debt to cash flow of approximately 1.6 times. Exall's target for 2014 is to exit the year with a fourth quarter annualized cash flow that would see the debt to cash flow at December 31, 2014, including the Convertible Debentures, being in the order of 1.0 times. This would then give Exall 27 months to establish a $23.0 million fund to pay out the Convertible Debentures in March of 2017, subject to the Debentures not being converted or repurchased.
Exall's average daily production for the fourth quarter of 2012 decreased 20 percent to 1,106 barrels of oil per day ("boe/d") from 1,383 boe/d in the fourth quarter of 2011. As at March 19, 2013 Exall's net production rate was as outlined below:
Exall's first quarter 2013 average daily production to March 15, 2013 is approximately 1,310 boepd, an increase of 32% over the Q3 2012 production average of 991 boepd and an increase of 18% over the 2012 fourth quarter production average of 1,106 boepd. This does not include production from the most recently drilled wells which will be brought on stream in the second half of 2013.
The Company groups the Waterflood Approvals in the Marten Mountain area into three project areas; the South WF, Central WF and North WF. The production issues faced in these three project areas are being successfully addressed, as described below.
Reservoir conformance issues presented challenges in the south waterflood during 2012. Optimization efforts aimed at improving well performance and oil recovery appear to be having a positive effect. Polymer treatments were performed on two injection wells resulting in reduced water cuts in one adjacent well, along with an increase in oil production. Current production from the South WF area is 428 boepd (310 boepd net), an increase of 26% from 340 boepd (243 boepd net) through November, 2012.
The Central WF continues to improve as the result of well optimization and the installation of an Electric Submersible Pump (ESP) into the newest producing well. The new oil well, which was producing 165 boepd, is now producing at 406 boepd (292 boepd net). The Central WF project is currently producing 783 boepd (546 boepd net), an increase of 144% over the Q3 2012 average.
A water source well was drilled, completed and equipped during Q4 2012 and injection of water has begun in the North WF Approval area. Optimization efforts in the North WF and the addition of two producing wells has increased production from 375 boepd (253 boepd net) in August 2012 to an average of 794 boepd (541 boepd net) over the last week, an increase of 112%.
Results of Operations
Oil and gas exploration and development expenditures were $8,180 for the fourth quarter of 2012 and $44,697 for the fiscal year ended December 31, 2012. During the fourth quarter of 2012 the Company participated in the drilling of 2.0 gross oil wells (1.44 net) in the Marten Mountain / Mitsue area, and 1.0 gross water source wells (0.72 net). During fiscal 2012 the Company spud 7.0 gross oil wells (5.02 net) in the Marten Mountain / Mitsue area and 4.0 gross service wells (2.53 net).
The Company has acquired 25,600 gross (20,851 net) acres of undeveloped land in the Mitsue area, during the fiscal year ended December 31, 2012. As at December 31, 2012, the Company had 194,400 acres (144,327 acres net) of undeveloped land in Alberta, Canada.
Production for 2012 of 1,082 boe per day represents a 1% decrease over 2011. Funds from operations for the year of $15.6 million or $0.25 per share were primarily the result of the flat production, decreased commodity prices received during the year (Exall's prices received were down 7% during 2012 averaging $79.52 per boe compared to $85.53 per boe in 2011), decreased royalty prices paid during the year (Exall's royalties paid were down 39% during 2012 averaging $13.99 per boe compared to $22.84 per boe in 2011), and increased operating costs paid during the year (Exall's operating costs were up 22% during 2012 averaging $12.88 per boe compared to $10.55 per boe in 2011).
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|Netback per boe (6:1) $||2012||2011|| %
|Operating netbacks ($/boe)||51.22||53.85||(5)||52.65||52.14||1|
Net income, as a result, for 2012 was $3,633 or $0.06 per share compared to a net income for 2011 of $6,960 or $0.11 per share.
Exall is a junior oil and gas company active in its business of oil and gas exploration, development and production from its properties in Alberta. Exall Energy is currently developing the new Mitsue area "Marten Mountain" discovery in north-central Alberta.
Exall Energy currently has 66,634,854 common shares outstanding. The Company's common shares are listed on the Toronto Stock Exchange under the trading symbol EE. The Company's convertible debentures are listed on the Toronto Stock Exchange under the trading symbol EE.DB.
This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including those relating to results of operations and financial condition, capital spending, financing sources, commodity prices and costs of production. By their nature, forward-looking statements are subject to numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, actual results may differ materially from those predicted. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating commodity prices, capital spending and costs of production, and other factors described in the Company's most recent Annual Information Form under the heading "Risk Factors" which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ("SEDAR") located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the Company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.
For the purposes of calculating unit costs, natural gas has been converted to a barrel of oil equivalent (boe) using 6,000 cubic feet equal to one barrel (6:1), unless otherwise stated. The boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method and does not represent a value equivalency; therefore boe may be misleading if used in isolation. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
SOURCE: EXALL ENERGY CORPORATION
For further information:
Exall Energy Corporation
Frank S. Rebeyka
Roger N. Dueck
President & CEO
Tel: 403-237-7820 x 223
Please visit Exall Energy's website at: www.exall.com