Parallel Energy Trust Announces Third Quarter 2014 Financial Results and Provides an Operations and Financial Update
Nov 10, 2014, 08:00 ET
CALGARY, Nov. 10, 2014 /CNW/ - Parallel Energy Trust ("Parallel" or the "Trust") is pleased to announce its financial and operating results for the three months ended September 30, 2014. Parallel's unaudited third quarter financial statements and accompanying Management's Discussion and Analysis ("MD&A") will be filed shortly on the SEDAR website at www.sedar.com and on the Trust's website at www.parallelenergy.ca.
Summary of Third Quarter 2014 Financial and Operating Results
| ($000s, except where indicated) |
Quarter ended Sep. 30, 2014 |
Quarter ended Jun. 30, 2014 |
Quarter ended Sep. 30, 2013 |
|
| Production |
||||
| Natural gas (mcf/day) |
14,678 |
15,140 |
13,931 |
|
| Condensate (bbls/day) |
1,578 |
1,686 |
1,594 |
|
| Natural Gas Liquids (bbls/day) |
3,397 |
2,973 |
3,185 |
|
| Total (@6:1) (boe/day) |
7,422 |
7,183 |
7,100 |
|
| Average sales price (US$ per boe) |
43.42 |
46.33 |
44.30 |
|
| Revenue, net of royalties |
26,197 |
26,820 |
24,483 |
|
| Funds from operations(1) |
12,438 |
10,659 |
10,788 |
|
| Net income (loss) |
6,121 |
849 |
(2,120) |
|
| Distributions |
8,178 |
8,128 |
7,983 |
|
| Capital expenditures excluding acquisitions |
3,233 |
5,539 |
1,126 |
|
| Bank debt outstanding (US$) |
157,600 |
159,000 |
158,200 |
|
| Convertible debentures (CAD$) |
63,000 |
63,000 |
63,000 |
|
| Unitholder's equity |
292,487 |
276,085 |
272,042 |
|
| (1) Non-GAAP measure. Readers are referred to Advisories at the end of the press release for additional information.
|
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Third Quarter & Year-to-Date 2014 Financial and Operating Highlights
- Parallel recorded average daily production of 7,422 boe/day in the third quarter of 2014, marking the second highest quarterly average production level in the Trust's history. Parallel's third quarter production comprised 67 per cent natural gas liquids and condensate, and 33 per cent natural gas.
- Parallel generated funds from operations of $12.4 million ($0.23 per basic unit), a 15 per cent increase over funds from operations of $10.8 million in the third quarter of 2013.
- Parallel drilled and completed three wells in the Carson operating area in the third quarter of 2014. In total, Parallel drilled and completed 13 wells in the Carson operating area and one well in the Garfield County operating area in 2014. The average 30 day initial production ("IP30") rate for all of the wells drilled and completed in 2014 was 60 boe/day, 50 per cent higher than the Trust's expected IP30 rates of 35 to 40 boe/day. The Trust's drilling program also resulted in drilling efficiencies of approximately US$13,000 per flowing boe/day, 35 per cent better that the Trust's expected drilling efficiencies of US$20,000 per flowing boe/day.
- Parallel declared total distributions of $0.15 per unit during the quarter, representing $0.05 per unit per month for July, August and September.
- As at September 30, 2014, Parallel reported bank debt of US$157.6 million drawn against its borrowing base of US$190.0 million. This represents a decrease in the total bank debt by approximately US$1.4 million in the third quarter of 2014. Parallel expects to further reduce its bank debt in the fourth quarter of 2014.
- In October 2014, the Trust's lenders completed the semi-annual review of Parallel's credit facility and reaffirmed the Trust's borrowing base of US$190 million.
- Subsequent to the end of the third quarter, Parallel closed the acquisition of an average 23 per cent working interest in eight producing wells in Garfield County. The acquisition added approximately 100 boe/day of liquids-rich natural gas to Parallel's production base for a total cost of US$2.2 million, representing attractive metrics of US$22,000 per flowing boe/day.
Operations Update
Based on field data, Parallel's average daily production for October 2014 was approximately 7,350 boe/day. As a result, Parallel's average daily production for the 10 months ended October 31, 2014 was approximately 7,100 boe/day. With these results, Parallel is well positioned to meet its full year production guidance of 7,100 – 7,300 boe/day.
Parallel concluded its 2014 drilling program in the third quarter with the completion of its 14th well. As part of its ongoing workover program, Parallel plans to complete up to 25 cleanouts to its existing wells in the fourth quarter of 2014 at an average cost of US$20,000 to US$25,000 per cleanout. Parallel's workover program stimulates well production and maintains the Trust's industry leading decline rate of eight per cent.
Financial Update
Based on actual financial results for the nine months ended September 30, 2014, expected production levels for the balance of the year and current forward strip commodity prices for the balance of the year, Parallel is reiterating its cash flow estimate of $46 million for the full year 2014. This level of cash flow would result in Parallel achieving its original full year basic payout ratio estimate (defined as distributions divided by funds from operations) of approximately 70 per cent. Parallel's all-in payout ratio (defined as distributions and capital expenditures divided by funds from operations) is now expected to be between 105 to 110 per cent for the full year 2014 as compared to the original estimate of 100 per cent as a result of higher drilling costs and unscheduled overhauls during the year.
President's Message
"The completion of our 2014 drilling program marks the second consecutive year in which our drilling results have exceeded expectations. This achievement proves once again that we have the ideal team and assets to maintain our production profile over the long term. Furthermore, our excellent drilling results and the continued hard work of our operating team have positioned us to achieve our 2014 full year production guidance of 7,100 – 7,300 boe/day. In the fourth quarter of 2014 we plan to continue to execute our workover program to further optimize our production levels and, as always, we will continue to look for accretive acquisition opportunities."
ABOUT PARALLEL ENERGY TRUST
Established in March 2011, Parallel Energy Trust ("Parallel" or the "Trust") is a Calgary-based distribution-paying energy income trust. Parallel's assets and operations are located in the Mid-Continent Region of the United States and its portfolio consists of mature, liquids-rich natural gas assets. The Trust's business strategy is focused on acquiring and developing long-life, conventional oil and natural gas assets.
Parallel is considered to be a "mutual fund trust" under the Income Tax Act of Canada; however, the Trust is not subject to specified investment flow through ("SIFT") trust taxes as all of its properties are held outside of Canada. Parallel's common units are traded on the Toronto Stock Exchange ("TSX") under the symbol "PLT.UN" and the Trust's debentures are traded on the TSX under the symbol "PLT.DB".
Additional information about Parallel can be found on the Trust's website at www.parallelenergy.ca or in Parallel's annual information form, available on SEDAR at www.sedar.com.
ADVISORIES
Forward-Looking Information
This news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Parallel, including, without limitation, those listed under "Risk Factors" in Parallel's annual information form dated March 21, 2014 (collectively, "forward-looking information"). Forward-looking information in this news release includes, but is not limited to, Parallel's objectives and status as a mutual fund trust and not a SIFT trust and Parallel's expectations and estimates regarding current and future production rates and drilling results. Parallel cautions investors in Parallel's securities about important factors that could cause Parallel's actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that the expectations set out in Parallel's final prospectus or herein will prove to be correct and accordingly, prospective investors should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this press release and Parallel does not assume any obligation to update or revise them to reflect new events or circumstances.
In this news release, Parallel and its subsidiaries are referred to collectively as the "Trust" or "Parallel" for purposes of convenience.
Non-GAAP Measures
This press release contains the term "funds from operations". This term is not a recognized measure under Canadian generally accepted accounting principles (GAAP). Parallel believes that in addition to net income, funds from operations is a useful supplemental measurement. Funds from operations provides an indication of the funds generated by the Trust's principal business activities and is defined as "cash from operating activities" prior to workovers and "change in non-cash working capital related to operating activities" in the Statement of Cash Flows.
Oil and Gas Measures and Definitions
This press release contains disclosure expressed as "boe" and "boe/day". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily.
PDF available at: http://stream1.newswire.ca/media/2014/11/10/20141110_C3756_PDF_EN_7753.pdf
PDF available at: http://stream1.newswire.ca/media/2014/11/10/20141110_C3756_PDF_EN_7754.pdf
SOURCE: Parallel Energy Trust
For further information: Curtis Pelletier, Manager, Investor Relations, 403-781-7888 or Toll-Free: 1-855-781-7888, [email protected]