CALGARY, March 21, 2012 /CNW/ - Winstar Resources Ltd. ("Winstar" or the "Company") (TSX: WIX) is pleased to announce its operating and financial results for the fourth quarter and year ended December 31, 2011, plus an operational update.
During 2011, the Company preserved its strong balance sheet, generating record oil and gas revenue, record funds flow and record net income. The Company completed an ambitious $42.6 million capital program, which resulted in the drilling and completion of a new deep exploration well, two medium depth development wells and several recompletions in Southern Tunisia. The 2011 capital program replaced production plus offset certain revisions, leaving Winstar's year-end oil and gas reserves, reserve value and net asset value slightly up over 2010.
- Oil and Gas Revenue: $US 61.2 million up 19% year over year
- Funds from Continuing Operations: $US 36.2 million up 22% year over year
- Net Income from Continuing Operations: $US 7.3 million up 93% year over year
- After ( all cash) Tax Operating Netback: $71.96 per boe up 30% year over year
- Proved and Probable Reserves (2P): 11.7 million boe up 1% year over year
- 2P Net Asset Value After Tax at Discount 10%: $US 6.27 per fully diluted share, up 1% year over year
- Finding and Development Cost: $US $22.67/boe Proved (1P), and $US25.53boe Proved and Probable (2P)
- Reserve Replacement Ratio: 168% for Proved, 117% for Proved and Probable
- Recycle Ratio: 3.2 based upon Proved Reserves and 2.8 based upon Proved and Probable Reserves
$ US thousands (except per share and per boe)
|Continuing Operations||December 2011*||Year 2011||Year 2010**||Q4 2011||Q4 2010**|
|Oil and gas revenue||$7,800||$61,248||$51,302||$18,757||$17,363|
|Funds from operations||$5,300||$36,236||$29,666||$11,084||$10,012|
|Per Share - basic and diluted||$0.15||$1.02||$0.85||$0.31||$0.28|
| Average Daily Production
( boepd)( 1 boe = 6 mcf)
|Realized price (per boe )||$101.13||$102.18||$78.08||$103.41||$82.14|
|Per share - basic and diluted||N/A||$0.21||$0.11||$0.06||$0.03|
* Approximated based on monthly allocations. ** Restated for IFRS and US dollar reporting currency
Investor Conference Call
A conference call to discuss the results will be held on Thursday March 22, 2012,
|Time:||8:00 a.m. Mountain daylight time (10:00 a.m. Eastern daylight time)|
|Dial-in:||North American participants (toll free)||1-866-544-4631|
|Participants outside North America||1-416-849-5571|
Shortly after the conclusion of the call, a replay will be available by dialing 1-866-245-6755 or 1-416-915-1035. The pass code is 398791. The replay will be available until May 6, 2012. Thereafter, a copy of the call can be accessed through a link on Winstar's website at www.winstar.ca
2011 Operational and Financial Highlights from Continuing Operations
During Q4 2011, and for the 12 months of 2011, the Company generated the following operational and financial results:
- Oil and gas production during Q4 2011 was 1,995 boepd (sales of 1,972 boepd), which was 21% higher than the average for the 12 months of 2011 of 1,650 boepd (sales 1,642 boepd) and 3% better than the Q4 2010 of 1,938 boepd (sales 2,298 boepd), reflecting the mid November 2011 production startup of gas and condensate from the well Chouech Essaida Silurian #1 (CS Sil #1) .
- Funds from operations during Q4 2011 were $US 11.1 million ($0.31 per share), a 11% increase over Q4 2010, reflecting higher 2011 production and higher commodity prices;
- Funds from operations during 2011 were $US 36.2 million ($US 1.02 per share) compared with $US 29.7 million during 2010;
- Net income from operations was $US 2.3 million during the fourth quarter of 2011 and $US 7.3 million for the year of 2011, compared to a net income from continuing operations of $US 1.0 million for the fourth quarter of 2010 and $US 3.8 million for year ended December 31, 2010.
- After tax operating netback was $71.93/boe for the fourth quarter of 2011 which is 23% higher than $58.38/boe recorded in fourth quarter 2010, and $71.96/boe for the year 2011 which is 30% higher than $55.51/boe recorded last year
|Three months ended December 31,||Years ended December 31,|
|2011||2010||% change||2011||2010||% change|
|Sales and Prices|
|Oil and liquid sales (bopd)||1,494||1,912||(22)||1,208||1,579||(23)|
|Natural gas sales (mcf/d)||2,865||2,311||24||2,610||1,326||97|
|Average daily boe sales 6:1 (boepd)||1,972||2,298||(14)||1,642||1,800||(9)|
|Average oil and liquid price ($/bbl)||108.17||85.64||26||110.96||80.25||38|
|Average natural gas price ($/mcf)||14.75||10.79||37||12.97||10.43||24|
|Financial ($ thousands except for unit amounts)|
|Oil and gas revenue||18,757||17,363||8||61,248||51,302||19|
|Funds from continuing operations||11,084||10,012||11||36,236||29,666||22|
|Per share- basic & diluted||0.31||0.28||11||1.02||0.85||20|
|Net earnings from continuing operations||2,286||1,016||120||7,337||3,781||94|
|Per share- basic & diluted||0.06||0.03||100||0.21||0.11||91|
|Field operating netback after tax ($/boe)||71.93||58.38||23||71.96||55.51||30|
|Working capital at period end||(761)||3,354||(123)||(761)||3,354||(123)|
|Common Shares (thousands)|
|Weighted average during period - basic||35,754||35,143||2||35,614||34,646||3|
|Outstanding at period end||35,767||35,280||1||35,767||35,280||1|
Production versus Sale
In Tunisia, oil sales are recognized when oil is loaded onto tankers. As a result, the Company's sales and production volumes may not be equal. During Q4 2011 and for the year ended December 31, 2011 sales volumes were less than production volumes and as a result the Company has a closing crude inventory balance of approximately 3,000 bbls. During Q4 2010, Winstar sold 33,100 bbls of inventoried crude oil produced in Q3 2010.
|Three months ended December 31,||Years ended December 31,|
|2011||2010||% Change||2011||2010||% Change|
Average production for the year was 1,650 barrels of oil equivalent per day (boepd), which comprised of approximately 435 boepd of natural gas, or 2,610 mcf per day, and approximately 1,215 barrels of liquid hydrocarbons per day (crude oil and condensate).
Production during 2011 was below expectations. Production was negatively impacted for several months due to several Triassic producing wells temporary shut in and unstable natural gas sales, as our purchaser coped with mechanical difficulties impeding the natural gas transportation system associated with Chouech Essaida sales. After struggling with mechanical issues during the second and third quarter of 2011, Winstar stabilized and increased its production base in the fourth quarter. In mid-November 2011 the Company placed a high deliverability condensate rich Silurian reservoir on stream, which added initially 800 to 1,000 boepd of production.
December 2011 was Winstar's first full month with unimpeded Silurian production. During that month the Company produced 2,486 boepd.
|Tunisian Production||Year 2011||Year 2010||Q4 2011||Q4 2010|
|Average daily production (6:1 boepd)||1,650||1,780||1,995||1,938|
|Natural gas (mcf)||952,629||484,720||263,588||212,628|
|Oil and NGL (bbls)||443,550||568,856||139,611||142,841|
Year over year the commodity mix of Winstar production has shifted towards natural gas. In 2011, Winstar's commodity mix was 26% natural gas and 74% crude oil compared to 2010 when natural gas represented 12% of production. Winstar's exit 2011 production was 34% natural gas and 66% crude oil.
Tunisian natural gas sold for $14.75 per mcf or $88.50 per boe during Q4 2011. Winstar is indeed fortunate to have increased natural gas sales at a time when Tunisian natural gas prices are five to six times more lucrative than North American natural gas prices.
Reserves, Reserve Value and Net Asset Value
Winstar's 2011 reserves, reserve value and net asset value are slightly up over 2010. At year end, RPS Energy of Calgary ("RPS"), Winstar's independent engineers, estimated the Company's Proved and Probable Reserves (2P) at 11.7 million boe or up 1% as compared to 11.6 million boe the previous year. The value of the Proved and Probable Reserves, using RPS's forecast of prices, inflation and exchange rate, after tax, discounted at 10% is $225 million or up 8% as compared to $208 million in 2010.
It is of note that testing/drilling operations from three wells spanned into 2012. These three wells, Chouech Essaida Silurian #10 (100% working interest), Moftinu 1000 (60% working interest) and Madaras 109 (60% working interest) were not included the 2011 reserves evaluation, but will be assessed for the year 2012.
|2011 Tunisian Reserves||2010 Tunisian Reserves(1)|
|Proved||Proved plus Probable||Proved||Proved plus Probable|
|(1)||Net present value originally reported in Canadian Dollars, these values were converted to US dollars at ratio of one Canadian dollar is equal to 0.98 US dollars|
|(2)||Net present value, after tax, discounted at 10% reported in US dollars.|
Net Asset Value discounted at 10% (NAV10) After Tax
Net Asset Value discounted at 10% (NAV10) after tax grew by 12% on a (1P) Proved Reserves basis from $85.2 million at year end 2010 to $95.2 million as of this year. After tax NAV10 based upon (2P) Proved and Probable Reserves appreciated by 4%, from $215.2 million in 2010 to $224.0 million this year.
|2011 Reserves||2010 Reserves(1)|
|Proved||Proved plus Probable||Proved||Proved plus Probable|
|Net Asset Value||$95.2||$224.0||$85.2||$215.2|
(diluted) $US/share (3)
- Net present value originally reported in Canadian Dollars, these values were converted to US dollars at ratio of one Canadian dollar is equal to 0.98 US dollars
- Net present value, after tax, discounted at 10% reported in US dollars.
- Fully Diluted: 35.7 million ( 2011) and 34.8 million ( 2010)
RPS for the first time, estimated Winstar's 2011 Proved & Probable & Possible (3P) reserves. RPS estimates Winstar has 23.5 million boe of 3P reserves at year end 2011. The present value attributed to 3P reserves is $357.5 million after tax discounted at 10% and there is no 2010 comparative. The 3P estimate is an indication of the Company's upside. Management's ambition is to move 3P reserves into 2P reserves economically.
|2P and 3P Reserves and Present Value||Year 2011||Year 2010|
|Proved plus Probable (2P) Reserves (boe)||11,745,000||11,641,000|
|After Tax 2P Reserve Value discounted at 10%||$US 224,800,000||$US 208,000,000**|
|Proved plus Probable plus Possible (3P)Reserves (boe)||23,535,000||Not calculated|
|After Tax 3P Reserve Value discounted at 10%||$US 357,500,000||Not calculated|
** Winstar's financial results for 2010 were reported in Canadian dollars. Comparative 2010 values have been converted using a $0.98 Canadian dollar.
Finding and Development Costs (F&D) Reserve Replacement Ratio Reserve Life Index (RLI) and Recycle Ratio
|2011||Proved Reserves||Proved and Probable Reserves|
|Finding and Development Costs or F&D ($US/boe)(1)||$22.67||$25.53|
|Reserve Life Index (years ) (2)||6.6||19.5|
|After (all cash) Tax Operating Netback ($US/boe)||$71.96||$71.96|
|Recycle Ratio ( After Tax Operating Netback/F&D)||3.2||2.8|
- Includes the change in future costs, but does not include the costs of CS Sil #10 or Madaras 109 or Moftinu 1000
- Based upon 2011 reported production of 602,000 boes
Due to the fact Company recorded negative reserve growth in 2010 and 2009 there are no comparatives.
Business Environment: Tunisia
Street protests that began in Tunis in December 2010 over lack of political freedom, high unemployment, corruption, widespread poverty and high food prices, culminated on January 14, 2011, when the former President fled the country. By late January 2011, a "national unity government" had been formed. In late October 2011, elections for a Constituent Assembly were successfully held. The Constituent Assembly is charged with drafting a new constitution, preparing for legislative and presidential elections and appointing a new interim government. Accordingly a second government was effectively appointed. To the credit of the Tunisian people and the two succeeding governments mentioned above, the year 2011 began tumultuously but ended with relative stability and renewed hope.
Winstar's Tunisian field operations are managed 100% by Winstar's Tunisian colleagues. The Company has increased its Tunisian staff from about 80 to nearly 100 by year end 2011, to facilitate Winstar's continued growth, which in turn has played its part in reducing Tunisia's high unemployment rate. Winstar is very proud of its corporate record in Tunisia. We appreciate our Tunisian employees for their professionalism and dedication during difficult times.
Tunisia is an excellent place for a midsized company like Winstar to invest. The fiscal regime is attractive, the service industry is expanding and the geology is brimming with oil and gas opportunity.
Winstar exited 2011 generating funds flow of $US4 to $US5 million per month. Production in January 2012 averaged 2,500 to 2,600 boepd. February 2012 was negatively impacted by a scheduled plant turnaround by our natural gas purchaser. That plant turnaround resulted in substantially reduced daily gas sales with the effect that February production is closer to 2,000 boepd. During the first half of March 2012 with return of larger gas nominations, Winstar produced 2,300 to 2,500 boepd.
In February 2012, the Company sold 80,000 barrels representing its January and February 2012 crude oil production, net of royalties, at about $US 124 per barrel, generating over $US 10 million of oil revenue.
If production remains stable and commodity prices remain constant, Winstar will generate record funds flow in 2012. With no debt, limited work commitments and the prospect of significant funds flow, Winstar begins 2012 financially stronger than ever before.
During the months of February and March 2012, Winstar production tested, on behalf of itself and its 40% working interest partner Rompetrol Group N.V., two recently drilled exploration wells located within the Satu Mare Concession of north-west Romanian. As reported on February 2, 2012 (News Release: Winstar Provides February Update) the two wells of Moftinu 1000 (60% working interest) and Madaras 109 (60% working interest) both had positive hydrocarbon indications while drilling and as per open hole log interpretations. The subsequent production test results are positive for the Moftinu 1000 well but disappointing for the Madaras 109 well.
At Moftinu 1000 a total of 12 meters of hydrocarbon zone were perforated. The combined test rates from those perforations was natural gas at a test rate equal to 50,600 cubic meters per day ( m3/d) or 1,795 thousand cubic feet per day (mcf/d), on a 16/64 to 20/64 inch choke with 228 pounds per square inch (psi) to 838 psi flowing pressure. The size and value of this resource will be reviewed by Rompetrol Group N.V, the Romanian Government and Winstar's independent engineers.
At Madaras 109 a total of 11 meters of potential hydrocarbon bearing zones were perforated. The zones were in part acid washed and subject to nitrogen lift, but unfortunately yielded no hydrocarbons.
The Company and its partner will be evaluating these results in the coming months and decide what action should be taken. The Moftinu and Madaras wells were drilled by Winstar as the 'operator' of the Satu Mare Concession. Winstar paid 100% of the cost of these wells, estimated to be $US4.2 million, to potentially earn up to a 60% working interest in the in the gross 728,960 acre Satu Mare Concession under a farmin agreement with Rompetrol Group N.V.
In Southern Tunisia, the Company is designing re-completion programs for one pre-existing well within the Ech Chouech Concession, namely Ech Chouech #4 (100% working interest), and for the new Chouech Essaida Silurian #10 (100% working interest). The re-completion programs are designed to evaluate the Triassic and Silurian at Chouech Essaida Sil #10 well and the Devonian at Ech Chouech #4 well. Further to contracting a rig these two workovers are hoped to be completed in late Q2 or early Q3 2012.
In Central Tunisia at the Sabria Concession, Winstar and its partner ETAP (the Tunisian State Oil Company) are concluding plans to drill a new Ordovician well (45% working interest). Once the drilling program has received final approval, both the drilling rig and service company work will be tendered. The Company expects drilling at Sabria to begin in Q3 2012.
Winstar's 2011 Special and General Annual Meeting
Shareholders are cordially invited to attend Winstar's Special and General Annual Meeting on May 10, 2012, at 3 PM (MDT), which will be held in the Cardium Room of the Calgary Petroleum Club, located at 319 - 5th Ave SW, Calgary, Alberta, Canada.
References herein to boe mean barrels of oil equivalent derived by converting gas to oil in the ratio of 6,000 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 necessarily represent a value equivalency at the wellhead.
Funds from operations are a non-GAAP measure, defined by the Company as cash flow from operating activities excluding:
- The change in non-cash working capital related to continuing and discontinued operations, which is eliminated to show the net cash effect on income;
- Geological and geophysical expenses from continuing and discontinued operations, which are costs incurred for the purpose of generating future investment opportunities and are therefore not indicative of operational performance; and
- Expenditures on asset retirement obligations and reclamation, which are also not indicative of operational performance.
The Company also presents:
- Funds from operations per share, whereby amounts per share are calculated using weighted average common shares outstanding.
Management uses funds from operations to analyze performance and considers it to be a key measure as they demonstrate the Company's ability to generate the cash necessary to fund future capital investments. 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.
Field operating netback is a non-GAAP measure defined by the Company as revenue, plus international royalty income less royalty, operating expense and current income tax. 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.
This press release contains certain forward-looking statements. These statements relate to future events or future performance of the Company. 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 a number of risks, uncertainties and assumptions. Many factors could cause Winstar'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 other public disclosures made by the Company or 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 the Company 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 fields and 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 Kyoto Protocol. Furthermore, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be produced profitably in the future. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary declaration. These statements speak only as of the date of this press release. The Company does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.
Winstar Resources Ltd. is a Calgary-based junior oil and gas Company, which explores for, develops, produces, and sells crude oil, natural gas liquids and natural gas in Tunisia and Romania. Winstar's common shares trade on The Toronto Stock Exchange under the symbol WIX.
Winstar's audited financial statements and management discussion and analysis for the three and 12 month periods ended December 31, 2011 can be obtained at www.winstar.ca
For further information:
Mr. Charles de Mestral
Chief Executive Officer
Phone: +41 22 361 14 45
E-mail: [email protected]
(Note: Mr. de Mestral is based in Europe, in a time zone which on March 22 is seven hours ahead of Calgary time)
Mr. David Monachello
Phone: +1 403 513 4200
E-mail : [email protected]
Mr. Jerrad Blanchard
Chief Financial Officer
Phone : +1 403 513 4204
E-mail : [email protected]