CALGARY, April 9, 2012 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company" -TSXV:TOL) is pleased to announce that it has filed its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2011 on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with TriOil's audited financial statements and related MD&A, available for review at www.trioilresources.com and www.sedar.com.
2011 Year end Press Release - Highlights
- Operating netbacks increased throughout the year to $40.13 per BOE in the fourth quarter of 2011 and approximately $45.00 in December 2011 compared to $30.67 for the year and $19.72 in the fourth quarter of 2010. Increasing production volumes from the Company's Cardium and Dunvegan light oil projects, where the average netback was approximately $55.00 per BOE in the fourth quarter of 2011, contributed to the increase through 2011;
- Corporate production reached 1,950 BOE/d in mid-December 2011, weighted 70% to oil and natural gas liquids. Average production and oil weighting increased to 1,408 BOE/d (60% oil and natural gas liquids "NGLs") in the fourth quarter of 2011 from 1,242 (44% oil and NGLs) in the third quarter. 2011 average production and oil weighting increased to 1,287 BOE/d (52% oil and NGLs) from 1,230 BOE/d in 2010 (43% oil and NGLs), despite the Company's non-core dispositions of 385 BOE/d during the year;
- Cardium proved plus probable ("P+P") reserves increased by 41% to 3.6 million BOE, representing 35% of total P+P reserves volumes and 50% of total P+P reserves value on a pre-tax 10% net present value ("NPV 10") basis;
- Replaced 418% of 2011 production at a P+P finding and development ("F&D") cost of $21.37, including future development capital and excluding technical revisions and replaced 203% of 2011 production at a Total Proved ("TP") F&D cost of $33.09, including future development capital and excluding technical revisions;
- The Company's recycle ratio is 2.65 times based on fourth quarter 2011 operating netback for Cardium and Dunvegan light oil production and P+P F&D cost;
- Decreased operating costs to $12.72 per BOE in the fourth quarter of 2011 from $17.51 in the prior year period;
- Increased funds from operations by 117% to $3,572,401 ($0.10 per share) in the fourth quarter of 2011 from $1,646,288 ($0.06 per share) in the fourth quarter of 2010. Increased annual funds from operations by 175% to $9,897,144 ($0.30 per share) in 2011 from $3,595,016 ($0.18 per share) in 2010;
- The Company's net asset value is $4.31 at year end 2011. To date in 2012, TriOil has already drilled and completed 6 (3.16 net) wells at Lochend and Kaybob, with 4 (2.1 net) additional wells waiting on completion and 2 (0.99 net) wells currently drilling;
- Strengthened the Company's balance sheet and ended the year with a working capital surplus of $10.1 million and undrawn $50 million credit facilities. Subsequent to year end, the Company closed a $35 million financing in March 2012 that provides even greater financial flexibility;
- Current production is approximately 2,100 BOE per day based on field estimates with 4 (2.1 net) wells waiting on completion and 2 (0.99 net) wells currently drilling.
|Financial and Operating Results (1)|
|Three months ended December 31,||Year ended December 31,|
|2011||2010||% Change||2011||2010||% Change|
|($, except share numbers)|
|Total petroleum and natural gas sales||8,333,371||6,429,093||30||26,579,764||19,533,974||36|
|Funds from operations (2)||3,572,401||1,646,288||117||9,897,144||3,595,016||175|
|Per share - diluted||0.10||0.06||67||0.31||0.18||73|
|Per share - basic and diluted||(0.37)||(1.38)||(73)||(0.48)||(1.96)||(76)|
|Working capital (3)||10,108,952||6,432,635||57||10,108,952||6,432,635||57|
|Weighted average shares outstanding (5)|
|Average daily production|
|Crude oil and NGLs (bbls/d)||850||687||24||663||534||24|
|Natural gas (mcf/d)||3,346||5,192||(36)||3,745||4,176||(10)|
|Average sales prices|
|Crude oil and NGLs ($/bbl)||92.75||72.25||28||87.51||68.53||28|
|Natural gas ($/mcf)||3.50||3.90||(10)||3.95||4.06||(3)|
|Wells drilled - gross (net)|
|Drilling success rate (%)||100||83||-||92||72||-|
|Operating netback ($/boe)|
|Oil and natural gas sales||64.33||45.02||43||56.57||43.52||30|
|Realized gain (loss) on derivative contracts||(2.10)||-||-||0.26||-||-|
|(1)||2010 financial results have been restated to conform with International Financial Reporting Standards.|
|(2)||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. See the Company's MD&A for more information on non-GAAP measures.|
|(3)||Working capital excludes unrealized gains and losses from financial derivative contracts and flow through share liability.|
|(4)||Capital expenditures include property acquisitions and are presented net of proceeds of disposals, but exclude corporate acquisitions.|
|(5)||On April 7, 2010, TriOil Resources Ltd. consolidated its outstanding class A common shares on a 20 to 1 basis as approved by shareholders. Comparative figures have been presented as if this share consolidation occurred on January 1, 2010.|
Corporate Reserves Summary
Sproule Associated Limited ("Sproule") and AJM Deloitte were engaged to prepare evaluations of the Company's reserves as of December 31, 2011. The evaluations of petroleum and natural gas reserves were conducted pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas activities ("NI-51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH") and were based on Sproule's forecast price assumptions as at December 31, 2011.
As at December 31, 2011, TriOil's P+P reserves were evaluated at 10,249 mBOE and TP reserves were evaluated at 5,819 mBOE. Oil and NGLs accounted for 53% of the P+P reserve base compared to 43% as of December 31, 2010 and 52% of the TP reserve base compared to 46% as of December 31, 2010. On a BOE basis, TriOil replaced 418% of production with P+P reserve additions in 2011 and 203% of production with TP reserve additions. The Company's reserve life indices are 16.4 years based on P+P reserves and 10.9 years based on TP reserves based on estimated 2012 production in the reserves evaluation.
|December 31, 2011 Summary Reserves (Gross)|
|| Total Oil
| Net Present
|Proved Developed Producing||1,151.4||4,827.0||71.3||2,027.2||48,256.0|
|Proved Developed Non Producing||90.1||1,552.0||15.1||363.9||3,659.0|
|Total Proved Developed||1,241.5||6,379.0||86.4||2,391.1||51,915.0|
|Total Proved + Probable||4,850.3||28,936.0||576.0||10,249.0||137,010.0|
F&D costs in 2011, including future development capital, but excluding technical revisions, were $21.37 per BOE P+P and $33.09 per BOE TP reserves. With the Company's average 2011 Cardium/Dunvegan operating netback of approximately $38.00 per BOE, a P+P F&D cost of $21.37 per BOE provides a recycle ratio of 1.8 times. Using the Company's average Q4 2011 Cardium/Dunvegan operating netback of approximately $55.00 per BOE, the P+P F&D cost of $21.37 per BOE provides a recycle ratio of 2.65 times.
P+P reserves from the Company's Cardium light oil drilling program are 3.58 mmBOE at December 31, 2011, representing an increase of 41% from 2.54 mmBOE at December 31, 2010. Reserve additions from the Company's 2011 drilling program effectively replaced all of the 2011 reserve dispositions, technical revisions and production. Cardium reserves now represent 50% of P+P reserves and 52% of TP reserves value on a pre-tax NPV 10 basis.
Year-end reserve bookings at our Kaybob Dunvegan play were limited to 1 (0.31 net) well on a proved developed producing basis and 1 (0.31 net) well on a proved undeveloped basis. The Company's 2012 Kaybob horizontal program has been very active, with 6 (3.15 net) wells already drilled and 2 (0.99 net) wells currently drilling.
The Company experienced technical revisions of 669 mBOE TP and 825 mBOE P+P primarily due to well performance of the Company's Sweeney Nordegg oil pool. Minimal capital was spent at Sweeney in 2011 and the pace of pressure maintenance/waterflood development was delayed in order to maximize capital expenditures in the Company's Cardium and Dunvegan light oil projects. We believe increased recovery of reserves at Sweeney is a function of the pace of development and future activity will help to re-identify this potential. The Company does not believe that including these technical revisions in a 2011 F&D calculation is representative of capital efficiencies of the Company's 2011 Cardium and Dunvegan light oil programs. However, F&D costs in 2011, inclusive of technical revisions and future development capital, were $36.86 per BOE P+P reserves and $111.00 per BOE TP reserves. In 2010, F&D costs, inclusive of technical revisions and future development capital, were $31.14 of P+P reserves and $43.67 per BOE of TP reserves.
|Corporate Working Interest Reserves Reconciliation (Forecast Prices and Costs)|
|Oil Equivalent (Mboe)||Total Proved|| Total Proved +
|Net Asset Value ("NAV") (1)|
|As at December 31, 2011|
|P+P reserves (pretax 10% discount rate)||137,009,800|
|Undeveloped land (2)||41,018,191|
|Stock option proceeds (3)||2,264,080|
|Net asset value estimate, December 31, 2011||190,401,023|
|Net asset value estimate per diluted share, December 31, 2011 (4)||$||4.31|
|(1)|| The NAV calculation show what the Corporation's reserves would be produced at forecast future prices and costs.
The value is a snapshot in time and is based on various assumptions, including commodity prices and foerign exchange
rates that vary over time. It should not be assumed that the NAV represents the fair market value of TriOil shares.
|(2)|| Internal evaluation using a total net undeveloped acreage number of 109,062 at an average price of $376 per acre.
The Lochend portion of the total net undeveloped acreage number is based on Cardium 'A' status only.
|(3)||Proceeds from 2,264,080 in the money stock options based on a closing share price of $2.50 per share.|
|(4)||Based on 44,177,776 outstanding shares on a fully diluted share basis|
Lochend Cardium Operations
- The Lochend area continues to meet or exceed Management's budgeted expectations and the Company is pleased to announce that the third well (TOL 50%) in our 2012 program production tested at 606 BOE/d (75% oil) over a 3 day test and is now on production.
- TriOil has conducted an active drilling and completion program at Lochend in the first quarter of 2012, although slightly behind the budgeted activity. To date, the Company has operated the drilling of 3 (1.74 net) of a planned 4 (2.74 net) horizontal wells, with all three wells now on production. An early breakup precluded the spudding of our planned fourth (TOL 100%) well. The Company had also expected to participate in up to 4 (1.63 net) non-operated wells at Lochend in the first quarter of 2012. The first non-operated well (0.34 net) has been drilled and is waiting on completion, and we expect that 2 additional non-operated wells (0.84 net) that are not impacted by road bans should spud during April or May. The fourth non-operated well is expected to commence drilling after breakup.
- TriOil has a drilling rig contracted for its operated Lochend horizontal program and expects that after road bans are removed this rig will drill continuously for the balance of the year. The Company also plans to participate in a number of non-operated wells at Lochend in 2012.
- TriOil has assembled a significant land position on the Lochend Cardium light oil resource play (over 80 gross (55 net) sections) and has an identified development drilling inventory of approximately 122 gross (68 net) horizontal wells at Lochend, of which 21 (9.2 net) are currently booked.
Kaybob Dunvegan Operations
- From a standing start in this new Dunvegan light oil play in October, 2011, TriOil has now drilled 7 (3.46 net) horizontal wells and commenced drilling operations on 2 (0.99 net) additional wells at Kaybob. TriOil is the operator on 8 (4.15 net) of its initial 9 wells on the play and has recently licensed 3 (1.76 net) horizontal wells that we expect to drill as soon as access will allow. In addition, the Company will be participating in 2 (0.66 net) non-operated wells at Kaybob that should be drilled after breakup.
- As of the beginning of April, the Company has 4 (1.71 net) wells on production, 1 (0.5 net) well tested and expected on production in late-April, 2 (1.25 net) wells drilled and waiting on completion and 2 (0.99 net) wells currently drilling
- TriOil is pleased to report that the third well in our 2012 program at Kaybob (TOL 60%) is now on production, and has averaged over 400 BOE/d (80% oil) in its first week.
- The fifth (TOL 100%) and sixth (TOL 25%) wells in our 2012 Kaybob program have been drilled and are expected to be completed in April.
- The seventh (TOL 48.7%) and eighth (TOL 50%) wells in our 2012 program at Kaybob are currently drilling and are expected to be completed in May.
- Management has been extremely pleased with the results to date at Kaybob, which have exceeded expectations.
- TriOil has a strong land position on this rapidly developing light oil play. The Company owns, or has the right to earn, interests ranging from 20 to 100 percent in approximately 50 gross (31 net) sections of Dunvegan rights in the greater Kaybob area with a drilling inventory of approximately 87 (51.5 net) locations, assuming a spacing of 4 wells per section. Currently, only 1 (0.31 net) location is booked.
- The Company currently has one rig contracted for its Kaybob horizontal drilling program but expects to have 2 operated rigs drilling at Kaybob at various times during the year.
TriOil is pleased to announce that its Board of Directors has approved its 2012 capital program. In light of the current pricing differentials between WTI and Edmonton Par oil prices, the Company is forecasting $85 Cdn per barrel Edmonton Par and $95 US per barrel WTI in its 2012 budget. TriOil's initial 2012 capital program is approved at $100 million. The Company will continue to monitor oil prices throughout the year and will revisit its capital budget when the current price differential between WTI and Edmonton Par narrows.
The Company is encouraged by the continued drilling success and high netbacks being achieved in the Company's Lochend Cardium and Kaybob Dunvegan light oil projects. TriOil plans to drill a total of 37 (19.0 net) horizontal multi-frac wells in 2012, with 18 (9.9 net) wells at Lochend and 16 (8.5 net) wells at Kaybob.
The Company expects its 2012 capital program to yield average production of 2,300 - 2,500 BOE/d (82% oil and NGLs) and exit production of 3,400 - 3,600 BOE/d (88% oil and NGLs). Current production is approximately 2,100 BOE/d (75% oil and NGLs). Cash flow is forecast at $23 million to $25 million in 2012. Key budget assumptions include:
|Capital expenditures ($ millions)||$100 million|
|2012 annual average production (BOE/d)||2,300-2,500 BOE/d|
|2012 exit production (BOE/d)||3,400-3,600 BOE/d|
|2012 cash flow from operations||$23-25 million|
|2012 exit net debt||$33-35 million|
|Edmonton Par ($CDN/bbl)||$85|
|Operating expenses ($/BOE)||$12.00 - 14.00|
TriOil will finance its 2012 budget from existing cash on hand, internal cash flow and available bank lines. Net debt at year end is estimated at $33-$35 million on current bank lines of $50 million. Annualized fourth quarter 2012 cash flow is estimated at approximately $43 million. Forecast year end net debt is approximately 0.8 times annualized fourth quarter cash flow.
2011 was a year of transition for TriOil. The Company moved very quickly to adapt its completion techniques at Lochend from gelled oil to slick water, and the results have met or exceeded management's expectations. TriOil now has a substantial inventory of lower risk drilling locations in the Cardium at Lochend that will provide a platform for solid production and reserves growth in 2012 and beyond.
With the addition in 2011 of a second light oil focused core area in the Dunvegan at Kaybob, the Company has set itself apart as having two exciting light oil projects. The early results from the drilling program at Kaybob have exceeded management's expectations, and the Company is excited about the significant reserve and production growth expected in 2012 from Kaybob.
The Company's operating netbacks increased to $40.13 per BOE in the fourth quarter and to approximately $45.00 per BOE in December. The Company expects its operating netbacks will continue to improve in 2012 as its forecast production weighting to light oil continues to increase from the Company's Lochend and Kaybob light oil drilling programs.
The recently completed offering of 10 million Class A common shares at a price of $3.55 per share for gross proceeds of $35.5 million gives the Company significant financial flexibility moving forward in 2012, and allows the Company to execute a $100 million drilling program as well as potentially taking advantage of any strategic opportunities that present themselves. TriOil has executed on its plan to transition the Company into a high growth resource based oil weighted junior producer and we look forward to reporting continued success throughout 2012.
TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium and Dunvegan oil trends in Alberta. TriOil has successfully executed its business plan and has positioned the Company for solid growth in production, reserves and shareholder value.
TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of April 5, 2012, there were approximately 53.2 million shares issued and outstanding (58.4 million fully diluted).
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 capital expenditures, expected production and reserves growth, expected financial performance, expected future debt levels, expectations with respect to commodity prices, expectations of the effect of drilling and completion programs on productivity, recoveries and costs 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, 2011, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells and drilling and completion programs, prevailing commodity prices and the availability of additional capital if and when required by the Corporation.
Any references in this news release to initial and/or final raw 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. 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.
Finding and Development ("F&D") Costs
The aggregate of the exploration and development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total F&D costs related to reserve additions for that year. This press release does not include disclosure of the average F&D costs over the last three years because such three year period includes a period prior to the January 2010 recapitalization and change in management and is therefore not indicative of the current performance of TriOil.
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. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. All BOE conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.
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