CALGARY, April 26, 2012 /CNW/ - Ironhorse Oil & Gas Inc. ("Ironhorse" or the "Company") (TSXV: IOG) announces its 2011 financial and operating results, year-end reserves information and the recent sale of its Jedney asset.
The Company's year-end reserves evaluation with the effective date of December 31, 2011 was prepared by GLJ Petroleum Consultants Ltd. and Sproule Associates Limited in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and NI 51-101 "Standards of Disclosure for Oil & Gas Activities". Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interest) unless otherwise noted.
On April 20, 2012, the Company disposed of its Jedney gas property for net proceeds of $5.3 million with funds used to further reduce bank debt.
Highlights of 2011:
- Completed the sale of the Shackleton natural gas property in October 2011 for net proceeds of $9.4 million. The funds were used to repay bank debt.
- Funds from operations for the year was $1.9 million ($0.07 per diluted share) compared to $3.9 million ($0.15 per diluted share) in 2010 as a result of the disposition of the Shackleton properties.
- Net debt at December 31, 2011 was $7.8 million within credit facilities of $10.2 million compared to net debt at December 31, 2010 of $15.4 million within credit facilities of $17.0 million. After the sale of Jedney, current debt is approximately $3 million.
- The Company's reserves were 40% oil weighted with a proved to probable ratio of 27 to 73. Subsequent to the disposition of Jedney on April 20, 2012, the Company's reserves are 83% oil weighted with a proved to probable ratio of 71 to 29. The shift in the proved to probable ratio is due to the disposition of the Jedney asset.
- Annual production decreased by 35% to 599 boe per day from 922 boe per day in 2010 due to the disposition of the Shackleton natural gas properties at the end of October 2011. Current production of 70 boe per day remained unchanged subsequent to the disposition of Jedney in 2012.
- Current production is now 97% oil on a daily boe basis.
- Finding and development costs per proved plus probable reserves were $15.51 for 2011.
- Net asset value per share was $1.52 at December 31, 2011 ($1.46 at December 31, 2010), calculated as the net present value of future cash flows from proved and probable reserves before tax discounted at 10% less net debt of $7.8 million. Subsequent to the disposition of Jedney, the Company's net asset value per share is $1.45.
- The Company incurred capital expenditures of $4.6 million in 2011. Of this, $2.3 million was spent fulfilling the Company's cumulative exploration expense ("CEE") obligations on the flow-through shares issued in 2010. CEE expenditures consisted of a three-dimensional seismic program at Leon Lake which allowed the booking of two new horizontal locations, participation in a new gas discovery at Balsam and participation in a three-dimensional seismic program at Fenn-Big Valley.
Activities in 2012 will focus on the following:
- Continuing with plans to place its Pembina, Alberta Nisku oil wells on production.
- Farm-out of the Leon Lake oil play or potential sale of the Leon Lake assets.
|SELECTED INFORMATION|| Three months ended
| Year ended
|($ thousands except per share & unit amounts)||2011||2010(1)||2011||2010(1)|
|Petroleum and natural gas revenues (2)||862||2,788||7,827||10,936|
|Funds from operations (3)||233||542||1,873||3,880|
|Per share - basic and diluted||0.01||0.02||0.07||0.15|
|Net income (loss)||1,399||(74)||217||(3,165)|
|Per share - basic and diluted||0.05||0.00||0.01||(0.12)|
|Capital expenditures (4)||3,338||140||4,566||13,561|
|Petroleum and natural gas revenues ($/boe)||38.23||34.41||35.79||32.52|
|Operating expenses ($/boe)||13.69||8.38||8.00||5.68|
|Operating netback ($/boe)||13.73||17.59||16.58||19.99|
|(1)||Beginning January 1, 2011, all Canadian public accountable enterprises are required to prepare their financial statements using International Financial Reporting Standards ("IFRS"). Amounts have been restated to comply with IFRS. See Note 18 in the audited financial statements for the years ended December 31, 2011 and 2010 for information on Ironhorse's transition to IFRS.|
|(2)||Petroleum and natural gas revenues are before royalty expense.|
|(3)||Funds from operations and net debt are non-GAAP measures as defined in the Advisory section of the MD&A.|
|(4)||Capital expenditures are before acquisitions and dispositions.|
|Reserves Summary - Oil Equivalent (Mboe)|
|Total Proved||Total Probable|| Proved plus
|Net Present Value Summary|
|($ thousands)|| Proved
|Total Proved||Total Probable|| Total
|Reserves and Net Present Value(2) - Subsequent to the sale of Jedney asset|
|10%(1) ($ thousands)||2,195||19,845||11,058||33,098||9,776||42,874|
(1) Had the Jedney asset been disposed on December 31, 2011.
(2) Net present value discounted at 10%.
|Reserves Reconciliation - Oil Equivalent (Mboe)|
|December 31, 2010||2,715||1,037||3,752|
|Discoveries and Extensions||72||2,112||2,184|
|December 31, 2011||1,032||2,729||3,761|
|December 31, 2011(1)||1,032||430||1,462|
(1) Had the Jedney asset been disposed on December 31, 2011.
|Net Asset Value ("NAV") before income tax - Discounted at 10%|
|($ thousands except share and per share data)|| December 31,
| December 31,
|Net present value-proved and probables||50,107||55,973|
|Net asset value||42,299||40,596|
|Common shares outstanding||27,860,824||27,875,824|
|NAV per share, December 31||1.52||1.46|
(1) Beginning January 1, 2011, all Canadian public accountable enterprises are required to prepare their financial statements using International Financial Reporting Standards ("IFRS"). Amounts have been restated to comply with IFRS. See Note 18 in the audited financial statements for the years ended December 31, 2011 and 2010 for information on Ironhorse's transition to IFRS.
|GLJ Price Forecasts as of December 31, 2011 (1)|
|Year|| Edmonton Par Price
| AECO Gas
(1) This summary table identifies benchmark reference pricing schedules that might apply to a reporting issuer.
Ironhorse's complete results for the year ended December 31, 2011, including audited financial statements and the management's discussion and analysis, statement of reserves data and other oil and gas information are available on SEDAR or the Company's web site at www.ihorse.ca.
Ironhorse Oil & Gas Inc. is a Calgary-based junior oil and natural gas production company trading on the TSX Venture Exchange under the symbol "IOG."
Statements throughout this release that are not historical facts may be considered to be "forward looking statements." These forward looking statements sometimes include words to the effect that management believes or expects a stated condition or result. All estimates and statements that describe the Company's objectives, goals, or future plans, including management's assessment of future plans and operations, drilling plans and timing thereof, expected production rates and additions and the expected levels of activities may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to complete and/or realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and changes in the regulatory and taxation environment. As a consequence, the Company's actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. 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. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the ability of the Company to obtain equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manor; and field production rates and decline rates. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included elsewhere herein and in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Furthermore, the forward-looking statements contained in this release are made as at the date of this release.
Boe Conversion - Certain natural gas volumes have been converted to barrels of oil equivalent ("boe") whereby six thousand cubic feet (mcf) of natural gas is equal to one barrel (bbl) of oil. This conversion ratio is based on an energy equivalency conversion applicable at the burner tip and does not represent a value equivalency at the wellhead.
"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
For further information:
Larry J. Parks
President & Chief Executive Officer