CALGARY, May 24, 2012 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company") (TSXV: TOL) is pleased to announce that it has filed its interim financial statements and related Management's Discussion and Analysis ("MD&A") for the three month period ended March 31, 2012. Selected financial and operational information is outlined below and should be read in conjunction with TriOil's unaudited interim financial statements and related MD&A which are available for review at www.trioilresources.com and www.sedar.com.
Financial and Operational Highlights
- Increased average production volumes to 1,602 boe/d, up 25% from 1,286 boe/d from the same period in the prior year and up 14% from 1,408 boe/d in the fourth quarter of 2011.
- Current production exceeds 2,300 boe/d (75% oil and NGLs) based on field estimates with an additional 3 (1.7 net) wells drilled, completed and scheduled to be on production during the second quarter of 2012 and 3 (1.3 net) wells drilled and waiting on completion. TriOil confirms its 2012 exit guidance of 3,300-3,500 boe/d with average annual production estimated at 2,400-2,600 boe/d.
- Increased oil and NGL weighting to 70% in the first quarter of 2012 from 47% in the same period of 2011 and from 60% in the fourth quarter of 2011.
- Funds from operations increased 174% to $4.2 million in the first quarter of 2012 compared to $1.5 million in the first quarter of 2011. On a diluted per share basis, funds from operations increased 86% to $0.09 per share in the first quarter of 2012 from $0.05 per share in the first quarter of 2011.
- Increased field netback (before hedges) by 84% to $38.85 per boe in the first quarter of 2012 compared to $21.16 per boe in the same period in 2011. Field netbacks (before hedges) averaged $61.12 per boe at Kaybob and $57.20 per boe at Lochend in the first quarter of 2012. Corporate field netbacks are expected to increase steadily throughout the year with 100% of TriOil's 2012 drilling program focused on our Kaybob and Lochend light oil resource plays.
- Reduced operating expenses by 19% to $14.91 per boe in the first quarter of 2012 compared to $18.34 per boe in the first quarter of 2011.
- Executed a very successful $32 million capital program, drilling 9 (5.5 net) horizontal light oil wells with a 100% success rate.
- On March 15, 2012, the Company closed a bought-deal equity financing of 10 million common shares at a price of $3.55 per share for gross proceeds of $35.5 million.
- Maintained a strong balance sheet with positive working capital of $15.6 million and undrawn bank lines of $50 million at the end of the first quarter.
|Financial and Operating Results|
|Three months ended March 31,|
|($000s, except per share numbers)|
|Total petroleum and natural gas sales||9,587||5,839||64|
|Funds from operations (1)||4,219||1,539||174|
|Per share - diluted||0.09||0.05||86|
|Per share - basic and diluted||(0.01)||(0.09)||(92)|
|Working capital (2)||15,637||1,567||898|
|Weighted average shares outstanding|
|Average daily production|
|Crude oil and NGLs (bbls/d)||1,114||600||86|
|Natural gas (mcf/d)||2,926||4,115||(29)|
|Average sales prices|
|Crude oil and NGLs ($/bbl)||88.45||79.80||11|
|Natural gas ($/mcf)||2.32||4.14||(44)|
|Wells drilled - gross (net)||9(5.5)||5(2.6)||-|
|Drilling success rate (%)||100||80||-|
|Operating netback ($/boe)|
|Oil and natural gas sales||65.76||50.47||30|
|Operating netback before hedging||38.85||21.16||84|
|Realized gain (loss) on derivative contracts||(3.88)||0.13||-|
|(1)||Funds from (used in) operations is a non-GAAP measure and is calculated as cash flow from operating activities before the change in non-cash working capital, abandonment expenditures and transaction costs.|
|(2)||Working capital is a non-GAAP measure and excludes unrealized gains and losses from financial derivative contracts and flow through share liability.|
|(3)||Capital expenditures include property acquisitions and are presented net of proceeds of disposals, but exclude corporate acquisitions.|
Three Impactful Light Oil Results
TriOil is very pleased to announce strong test results from 3 (1.95 net) horizontal light oil wells completed in the second quarter of 2012 at Kaybob and Lochend.
Two (1.6 net) of these wells are located in the Company's Dunvegan light oil resource play at Kaybob. The first Kaybob well (TriOil 100%, operated) tested at an average rate of 1,284 boe/d (93% oil) over a 4 day production test period and was brought on production in May 2012. The second Kaybob well (TriOil 61.5%, operated) tested at an average rate of 706 boe/d (93% oil) over a 4 day production test period and is scheduled to commence production in June 2012.
The third well is located in the Company's core Cardium light oil resource project at Lochend. This well (TriOil 34%, non-operated) tested at an average rate of 877 boe/d (92% oil) over a 4 day production test period and is scheduled to commence production prior to the end of May.
TriOil executed an active drilling program during the first quarter of 2012, drilling 9 (5.5 net) horizontal, multi-stage frac wells in its core light oil resource plays at Kaybob and Lochend. Of the 9 (5.5 net) wells drilled during the first quarter of 2012, 5 (3.1 net) wells were completed and brought on production during the first quarter, with the remaining 4 (2.4 net) wells scheduled to be on production during the second quarter of 2012.
During the first quarter of 2012, TriOil drilled 5 (3.2 net) horizontal Dunvegan light oil wells at Kaybob, 2 (1.2 net) of which were completed and brought on stream in the first quarter. At Lochend, early road bans and wet field conditions limited our operated Cardium drilling program to 4 (2.4 net) horizontal wells and delayed 3 (1.8 net) planned horizontal wells (one operated and two non-operated). Of the 4 (2.4 net) wells drilled at Lochend during the first quarter of 2012, 3 (1.9 net) wells were completed and brought on production in the first quarter of 2012.
Subsequent to the first quarter, TriOil was able to take advantage of favorable field conditions at Kaybob and our Dunvegan horizontal drilling program is currently ahead of schedule. To date in the second quarter, TriOil drilled 4 (2.6 net) horizontal wells and completed 3 (2.2 net) wells, with an additional 1 (0.5 net) well scheduled for completion in late May. Of the 4 (2.6 net) recently completed wells, 2 (1.5 net) wells were brought on production in May and the remaining 2 (1.1 net) wells are scheduled to be on production in June. TriOil expects to resume its operated drilling program in June and plans to drill continuously at Kaybob for the balance of the year.
At Lochend, despite the delays from an early spring breakup, operations are moving ahead in the second quarter on 3 (1.1 net) non-operated wells. To date in the second quarter, 1 (0.34 net) non-operated horizontal well has already been drilled and completed and 1 (0.34 net) non-operated horizontal well is currently drilling. TriOil expects to resume its operated drilling program in June and plans to drill continuously at Lochend for the remainder of the year.
Outlook and Confirmation of 2012 Guidance
TriOil is very well positioned to deliver strong per share growth in production and reserves in 2012 and beyond. The Company has captured significant land positions in two high-netback, light oil resource plays at Lochend and Kaybob, both of which provide TriOil with multi-year drilling inventories and a solid platform to deliver material growth.
At year end 2011, the Company had an identified drilling inventory in excess of 65 net Cardium horizontal wells at Lochend and 45 net Dunvegan horizontal wells at Kaybob. The Company's 2011 year-end independent reserve report included proven undeveloped assignments for 9.5 net locations at Lochend and 0.3 net locations at Kaybob. Year to date, TriOil has drilled 6 (3.05 net) light oil wells at Lochend, all of which were included in the Company's 2011 reserve report and 9 (6.0 net) light oil wells at Kaybob, none of which were included in the Company's 2011 reserve report.
Field netbacks (before hedges) during the first quarter of 2012 averaged $61.12 per boe at Kaybob and $57.20 per boe at Lochend. With 100% of the Company's current 2012 drilling program focused on light oil opportunities at Kaybob and Lochend, TriOil's average field netbacks are expected to increase steadily throughout the year.
The Company's balance sheet is very healthy, with $15.6 million positive working capital at the end of the first quarter of 2012 and $50 million in undrawn bank lines.
Current production exceeds 2,300 boe/d (75% oil and NGLs) based on field estimates, with additional behind pipe volumes from 3 (1.7 net) recently completed wells scheduled to commence production in the second quarter and an additional 3 (1.3 net) wells that are drilled and waiting on completion.
TriOil re-affirms the previously announced capital program of $100 million and 2012 guidance for average production of 2,300-2,500 boe/d and exit production of 3,400-3,600 boe/d. The Company's 2012 capital budget utilizes commodity pricing assumptions of $85 Edmonton Par Cdn/bbl, $95 WTI US/bbl and $2.00/gj AECO. Net debt at year end is estimated at $33-35 million on current bank lines of $50 million, with annualized fourth quarter 2012 cash flow estimated at $43 million, resulting in year-end net debt of approximately 0.8 times annualized fourth quarter cash flow.
Pricing for Canadian crude has experienced significant volatility in recent months. Edmonton light crude has gone from trading at a premium to West Texas intermediate ("WTI") in the fourth quarter of 2011 to a discount in the first quarter of 2012. The volatility can be partially explained by seasonal refinery turnarounds, however, pipeline takeaway capacity and turnaround schedules in the light oil refining market have also impacted short term pricing on Canadian crude. During the first quarter of 2012, WTI pricing averaged US$102.86 per barrel and differentials on Edmonton light crude averaged $10.23 per barrel. TriOil realized an oil price of Cdn$88.53 per barrel during the first quarter, above the Cdn$85.00 pricing assumptions utilized in our 2012 capital budget. The differential has since narrowed significantly, closer to historic norms, however TriOil sees the potential for volatility in Edmonton light crude pricing over the next 12 to 18 months. The Company will continue to monitor commodity prices in order to retain the flexibility to adjust our capital program as necessary to ensure that acceptable debt levels are maintained.
Spring breakup is drawing to a close with field conditions at Lochend and Kaybob looking positive for TriOil to recommence drilling operations in both areas in June. TriOil has an active operated capital program planned for the balance of the year, entirely focused on light oil opportunities, and we look forward to updating shareholders on our progress and results throughout the year.
Annual General Meeting
The annual general and special meeting of the holders of class A shares of the Company will be held at the Bow Valley Club 370, 250 - 6th Avenue S.W. Calgary, Alberta, on Wednesday, June 6, 2012, at 2:30pm (MST).
TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of May 24, 2012, there were approximately 53.2 million shares issued and outstanding (58.3 million diluted). TriOil executes a well-defined resource capture growth strategy focused on large light oil accumulations with high netback production, long-term growth potential and the ability to increase recoveries by utilizing horizontal drilling and multi-stage fracture stimulations.
Forward Looking Statements
This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "believe", "plans", "intends", "confident", "may", "objective", "ongoing", "will", "should", "project", and similar expressions are intended to identify forward-looking information. More particularly, this document contains forward looking statements which include, but are not limited to, expected future drilling and completion plans, expected economics of future projects, expected future operating costs, expected future commodity prices, expected production and reserves growth, expected year end debt/working capital levels and the future operations of TriOil.
The forward-looking statements contained in this document are based on certain key expectations and assumptions made by TriOil, including with respect to the anticipated exploration and development opportunities and the outlook for the fiscal year ending December 31, 2012, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells, prevailing commodity prices and the availability of additional capital if and when required by the Corporation.
Any references in this news release to test rates, initial and/or final test or production rates and/or "flush" production rates or 30, 60 and 90 day production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and such rates are not necessarily indicative of long-term performance or ultimate recovery. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.
Although TriOil believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriOil can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy the conditions to closing the transaction, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in TriOil's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com and TriOil's other public disclosure documents which have been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and TriOil 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.
Meaning of BOE
The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
NEITHER THE 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:
Russell J. Tripp, President & CEO, TriOil Resources Ltd.; Cheryne Lowe, VP Finance & CFO, TriOil Resources Ltd.; Andrew Wiacek, VP Exploration, TriOil Resources Ltd.; Corporate Phone: (403) 265-4115