Solid Production & Low Costs Support Cash Flow, Additional Delineation of Liquids Rich Middle Montney to Proceed
CALGARY, May 10, 2012 /PRNewswire/ - Advantage Oil & Gas Ltd. ("Advantage" or the "Corporation") is pleased to announce their financial and operating results for the three months ended March 31, 2012. The following press release summarizes and discusses the unconsolidated financial and operating highlights for Advantage (excludes Longview Oil Corp).
|Three months ended||Three months ended|
|March 31, 2012||December 31, 2011|
|Financial ($000, except as otherwise indicated)||$000||per boe||$000||per boe|
|Petroleum and natural gas sales||$ 33,425||$ 15.89||$ 48,293||$ 23.24|
|Realized gain on derivatives||-||-||7,262||3.49|
|General and administrative (2)||(4,078)||(1.94)||(4,400)||(2.12)|
|Finance expense (3)||(2,707)||(1.28)||(2,984)||(1.44)|
|Funds from operations||12,419||$ 5.91||33,587||$ 16.15|
|Dividends from Longview||4,417||4,417|
|Total||$ 16,836||$ 38,004|
|per share (4)||$ 0.10||$ 0.23|
|Expenditures on property, plant and equipment||$ 63,327||$ 75,572|
|Working capital deficit (5)||$ 70,422||$ 70,564|
|Bank indebtedness||$ 189,488||$ 142,548|
|Convertible debentures (face value)||$ 86,250||$ 86,250|
|Shares outstanding at end of period (000)||166,573||166,304|
|Basic weighted average shares (000)||166,541||166,249|
|Natural gas (mcf/d)||129,951||127,265|
|Crude oil and NGLs (bbls/d)||1,463||1,378|
|Total boe/d @ 6:1||23,121||22,589|
|Average prices (including hedging)|
|Natural gas ($/mcf)||$ 2.00||$ 3.78|
|Crude oil and NGLs ($/bbl)||$ 73.31||$ 89.14|
(1) Non-consolidated financial and operating highlights for Advantage
(2) General and administrative expense excludes non-cash G&A.
(3) Finance expense excludes non-cash accretion expense.
(4) Based on basic weighted average shares outstanding.
(5) Working capital deficit includes trade and other receivables, prepaid expenses and deposits, trade and other accrued liabilities, and the other liability
Solid Production and Low Costs support Funds from Operations in Low Price Environment
Secondary Offering of Longview Shares to Fund Middle Montney Delineation
Looking Forward - Delineation of Liquids Rich Middle Montney Potential at Glacier to Proceed
|Production average||22,500 boe/d to 23,000 boe/d (95% natural gas)|
|Royalty rate||6% to 8%|
|Operating expense||$5.50/boe to $5.95/boe|
|Capital expenditures||$70 million to $80 million|
Interim Consolidated Financial Statements and MD&A
The information in this press release contains certain forward-looking statements, including within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future intentions or performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "demonstrate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions and include statements relating to, among the anticipated closing date of the offering by Advantage of common shares of Longview and the anticipated use of proceeds of such offering; effect of commodity prices on the Corporation's financial condition and performance and future plans; expected production from the Glacier area and for the Corporation as a whole; projected royalty rates; projected operating expense and capital expenditures; our future operating and financial results; supply and demand for crude oil and natural gas; projections of market prices and costs; the Corporation's drilling and completion plans; plans for development of the Middle Montney; the Corporation's business strategy and it plans for its assets; and the Corporation's expectations regarding its ability to protect Advantage's business in the current industry and economic environment. In addition, 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 profitably produced in the future.
Advantage's actual decisions, activities, results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that Advantage will derive from them.
These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond Advantage's control, including: the impact of general economic conditions;the failure to receive all regulatory approvals or any other conditions for the offering by Advantage of common shares of Longview; the intended use of the net proceeds of the offering of common shares of Longview might change if the board of directors of Advantage determines that it would be in the best interests of Advantage to deploy the proceeds for some other purpose; industry conditions; actions by governmental or regulatory authorities including increasing taxes, changes in investment or other regulations; changes in tax laws, royalty regimes and incentive programs relating to the oil and gas industry; Advantage's success at acquisition, exploitation and development of reserves; unexpected drilling results, changes in commodity prices, currency exchange rates, capital expenditures, reserves or reserves estimates and debt service requirements; the occurrence of unexpected events involved in the exploration for, and the operation and development of, oil and gas properties; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; changes or fluctuations in production levels; competition from other producers; credit risk; individual well productivity; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; obtaining required approvals of regulatory authorities and ability to access sufficient capital from internal and external sources. Many of these risks and uncertainties and additional risk factors are described in the Corporation's Annual Information Form which is available at www.sedar.com and www.advantageog.com. Readers are also referred to risk factors described in other documents Advantage files with Canadian securities authorities.
With respect to forward-looking statements contained in this press release, Advantage has made assumptions regarding: conditions in general economic and financial markets; effects of regulation by governmental agencies; current commodity prices and royalty regimes; future exchange rates; royalty rates; future operating costs; availability of skilled labor; availability of drilling and related equipment; timing and amount of capital expenditures; and the impact of increasing competition.
These forward-looking statements are made as of the date of this press release and Advantage disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
References in this press release to initial production test rates, initial "productivity", initial "flow" rates, "flush" production rates and "behind pipe production" are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Advantage. Further information with respect to the tests rates disclosed in this press release, including the length of the tests and the pressure experienced, can be found in Advantage's March 15, 2012 press release.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio has been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. A boe conversion ratio of 6 mcf:1 bbls 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.
The Corporation discloses several financial measures that do not have any standardized meaning prescribed under IFRS. These financial measures include funds from operations and cash netbacks. Management believes that these financial measures are useful supplemental information to analyze operating performance and provide an indication of the results generated by the Corporation's principal business activities. Investors should be cautioned that these measures should not be construed as an alternative to net income, cash provided by operating activities or other measures of financial performance as determined in accordance with IFRS. Advantage's method of calculating these measures may differ from other companies, and accordingly, they may not be comparable to similar measures used by other companies.
SOURCE Advantage Oil & Gas Ltd.