Winstar Reports Improved Results for Q3 2009 and Conversion into a Pure
International Exploration and Production Company
Winstar reports that Q3 2009 funds from operations are a significant improvement as compared to the previous quarter and the first half of 2009. During the three months ended
On
Notwithstanding that the disposed Canadian assets represented some 15% of Winstar's year-to-date production, they only accounted for 3% of the first nine months of funds from operations. As a result of the Canadian assets sale and increased funds from operations during Q3 2009, as at
The following table illustrates the difference between the third quarter over the second quarter of 2009 in production, revenue and expenses from continuing operations:
------------------------------------------------------------------------- Variance Q3 2009 Q2 2009 Q3/09 vs Q2/09 ------------------------------------------------------------------------- Production and sales (total) 2,000 boepd 1,553 boepd 447 boepd ------------------------------------------------------------------------- Production and sales (continuing operations) 1,790 boepd 1,265 boepd 525 boepd ------------------------------------------------------------------------- Average sales price $68.13/boe $63.10/boe $5.03/boe ------------------------------------------------------------------------- $ 000s Cdn $ 000s Cdn $ 000s Cdn ------------------------------------------------------------------------- Oil and gas revenue 11,222 7,265 3,957 ------------------------------------------------------------------------- Royalty (net of international royalty income) (1,263) (698) (565) ------------------------------------------------------------------------- Operating cost (1,909) (1,903) (6) ------------------------------------------------------------------------- General and administrative (excluding non-cash stock based compensation) (1,633) (1,170) (463) ------------------------------------------------------------------------- Cash income tax (329) (485) 156 ------------------------------------------------------------------------- Other 494 460 34 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Funds from continuing operations 6,782 3,471 3,311 ------------------------------------------------------------------------- Funds from discontinued operations 108 117 (9) ------------------------------------------------------------------------- Funds from Operations 6,689 3,588 3,301 ------------------------------------------------------------------------- During Q3 2009, the Company spent $1.2 million on capital expenditures (100% in Tunisia), as compared to $2.3 million (100% in Tunisia) during Q2 2009. With the improvement of the Company's internally generated funds from operations and the Company's much improved working capital position, Winstar is planning more significant capital expenditures beginning in Q4 2009 with a Tunisian well re-entry. Financial and Operating Summary: Financial and Operating Results from Continuing and Discontinued Operations ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ------- ------- % % 2009 2008 change 2009 2008 change ------------------------------------------------------------------------- Sales and Prices ------------------------------------------------------------------------- Oil and NGL sales (boepd) 1,522 1,425 7 1,301 1,373 (5) Natural gas sales (mcf/d) 2,867 2,082 38 2,470 2,560 (4) Average daily sales 6:1 (boepd) 2,000 1,772 13 1,713 1,799 (5) Average oil and NGL price ($/bbl) 72.40 106.49 (32) 64.34 109.16 (41) Average natural gas price ($/mcf) 6.72 10.30 (35) 7.32 9.68 (24) ------------------------------------------------------------------------- Financial from Continuing and Discontinued Operations ($ thousands, except per share amounts) ------------------------------------------------------------------------- Oil and gas revenue 11,908 15,929 (25) 27,790 47,841 (42) Funds from operations 6,689 10,452 (36) 12,857 29,572 (57) Per share - basic and diluted 0.20 0.31 (36) 0.38 0.87 (57) Net (loss)/income 791 (10,422) 108 (8,099) (9,834) 18 Per share - basic and diluted 0.02 (0.30) 108 (0.24) (0.29) 18 Capital expenditures 1,154 18,362 (94) 13,862 34,026 (59) Working capital at period end 7,596 14,218 (47) 7,596 14,218 (47) ------------------------------------------------------------------------- Common Shares (thousands) ------------------------------------------------------------------------- Weighted average during period basic 34,223 34,203 - 34,223 34,100 - diluted 34,223 34,663 (1) 34,223 34,679 (1) Outstanding at period end 34,223 34,223 - 34,223 34,223 - ------------------------------------------------------------------------- Financial and Operating Results - Continuing Operations (excludes Canadian Operations) ------------------------------------------------------------------------- Three months ended Nine months ended September 30, September 30, ------- ------- % % 2009 2008 change 2009 2008 change ------------------------------------------------------------------------- Sales and Prices Oil and NGL sales (boepd) 1,432 1,275 12 1,199 1,236 (3) Natural gas sales (mcf/d) 2,147 923 133 1,520 1,383 10 Average daily sales 6:1 (boepd) 1,790 1,429 25 1,452 1,466 (1) Average oil and NGL price ($/bbl) 73.29 106.89 (31) 65.31 110.09 (41) Average natural gas price ($/mcf) 7.92 11.42 (31) 9.22 9.52 (3) ------------------------------------------------------------------------- Financial from Continuing Operations ($ thousands, except per share amounts) ------------------------------------------------------------------------- Oil and gas revenue 11,222 13,506 (17) 25,175 40,891 (38) Funds from operations 6,582 9,158 (28) 12,412 26,297 (53) Per share - basic and diluted 0.19 0.27 (28) 0.36 0.77 (53) Net (loss)/income 694 (342) 303 (174) 637 (127) Per share - basic and diluted 0.02 (0.01) 303 (0.01) 0.02 (127) Capital expenditures 1,131 18,255 (94) 13,807 32,349 (57) ------------------------------------------------------------------------- Production ------------------------------------------------------------------------ Q3 2009 Q2 2009 ------------------------------------------------------------------------- Oil and Oil and liquid Gas Total liquid Gas Total (bbl/d) (mcf/d) (boepd) (bbl/d) (mcf/d) (boepd) ------------------------------------------------------------------------- Hungary - 294 49 ------------------------------------------------------------------------- Tunisia Chouech Essaida/ Ech Chouech 1,099 1,637 1,372 689 802 823 Sabria 223 510 308 237 411 306 Zinnia/Sanrhar 110 - 110 88 - 88 ------------------------------------------------------------------------- Tunisia Total 1,432 2,147 1,790 1,014 1,213 1,216 ------------------------------------------------------------------------- Production from Continuing Operations 1,432 2,147 1,790 1,014 1,507 1,265 ------------------------------------------------------------------------- Canada 90 720 210 113 1,050 288 ------------------------------------------------------------------------- Total Production 1,522 2,867 2,000 1,127 2,556 1,553 -------------------------------------------------------------------------
Production in
The sale of the Canadian assets was effective
There was no Hungarian production during Q3 2009 in the Torokkoppany gas field as it was shut in as of
Results, Plans and Perspectives for 2009 and Q1 2010 ----------------------------------------------------
During the first half of 2009, Winstar cancelled any discretionary spending to strengthen its balance sheet and re-establish a stronger working capital position. Capital expenditures during Q3 2009 of
The Company, subject to continued commodity price stability, may drill one or two new Triassic development wells in early 2010 on the Chouech Essaida concession. These new well locations are a result of the Company's acquired and interpreted 3D seismic which has the primary objective of identifying and evaluating the deeper Silurian potential. However, the new seismic indicates significant, potentially high impact, development drilling locations within the existing Triassic field which may yield significant untapped reserves.
The interpretation of the same 400 square kilometers of new, high quality 3D seismic acquired over Winstar's 100% working interest Chouech Essaida and Ech Chouech concessions continues to yield excitement and optimism in the Silurian Acacus formation. Winstar has identified over 12 leads and prospects. During Q3 2009, the Company embarked on a strategic direction to find partner(s) for the Ech Chouech concession to help fund the drilling campaign and prove up the potential targets identified by the seismic program. The process of this initiative, managed by CIBC World Markets, is ongoing. A number of companies have expressed interest, but as yet there is no resolution. The Company will continue to investigate the possibility of a joint venture partner, but if acceptable terms are not agreed upon, then Winstar may test the play independently, possibly by deepening an existing well.
With the sale of the Canadian assets, Winstar retains ownership in six gross sections of land in the Sturgeon Lake area of north central Alberta, with three wells capable of production. As a result, Winstar is a pure international production and exploration company.
In
There were no field operations in the Satu Mare Exploration Permit during Q3 2009. The Company is actively pursuing the accumulation and interpretation of available technical data with the intent to be ready for seismic and/or drilling operations in 2010.
BOE
References herein to boe mean barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet (mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based upon an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Non-GAAP Measures
The Company uses the terms "funds from operations," "funds from operations per share" and "field operating netbacks" which are not recognized measures under Canadian generally accepted accounting principles. The Company uses these measures to help evaluate its performance. Management considers field operating netbacks an important measure as they demonstrate the Company's profitability from field operations, before general and administrative costs, relative to current commodity prices. Field operating netbacks are calculated as revenue plus international royalty income net of royalties, operating and current tax expenses. Management uses funds from operations to analyze performance and considers it a key measure as it demonstrates the Company's ability to generate the cash necessary to fund future capital investments and to repay debt. Funds from operations have been defined by the Company as cash flow from operating activities excluding the change in non-cash working capital related to operating activities, geological and geophysical expenses and expenditures on asset retirement obligations and reclamation. The Company also presents funds from operations per share whereby amounts per share are calculated using weighted average common shares outstanding consistent with the calculation of earnings per share. Winstar's determination of funds from operations may not be comparable to that reported by other companies nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with Canadian GAAP.
Forward-looking Statements
This press release contains forward-looking statements. These statements relate to future events or future performance of Winstar. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "predict", "seek", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company's actual results, performance, or achievements to materially differ from those described in this press release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this press release as intended, planned, anticipated, believed, estimated, or expected. Specific forward-looking statements in this press release include, among others, statements pertaining to the following: factors upon which Winstar will decide whether or not to undertake a specific course of action; and estimated volumes and timing of future production; business plans for drilling, exploration and development; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. The risks to which Winstar is subject include those of the oil and gas industry in general, including operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; volatility in global market prices for oil and natural gas; general economic conditions; competition; liabilities and risks, including environmental liability and risks, inherent in oil and gas operations; uncertainties as to the availability and cost of financing and changes in capital markets; alternatives to and changing demand for petroleum products; and changes in legislation and the regulatory environment, including uncertainties with respect to the
Winstar Resources Ltd. is Calgary-based junior oil and gas company, which explores for, develops, produces, and sells crude oil, natural gas liquids and natural gas in
Winstar's third quarter management discussion and analysis and unaudited financial statements and notes can be obtained at www.winstar.ca.
For further information: Mr. David Monachello, President, Phone (403) 513-4200, Email [email protected] or Mr. Charles de Mestral, Chief Executive Officer, Phone: Toll-free (Canada and USA) 1-800-875-1217 (Note: Mr. de Mestral is based in Europe, in a time zone eight hours ahead of Calgary time), Email: [email protected] or Mr. Bradley Giblin, Chief Financial Officer, Phone (403) 513-4207, Email [email protected]
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