good q and future guidance
TriOil Announces Third Quarter Operational and Financial Results, Increased Bank Line and Reaffirms Exit Guidance
CALGARY, Nov. 22, 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 and nine months ended September 30, 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.
Current Highlights
- Current production is approximately 3,000 boe/d (75% oil) based on field estimates with a current estimated 400 boe/d of tested volumes expected to be on stream by year-end.
- To date in the fourth quarter, 3 (1.6 net) wells have been drilled, 4 (2.7 net) wells have been completed, 6 (3.8 net wells have been placed on production and 2 (1.6 net) wells are currently drilling. Prior to year-end, 6 (4.4 net) wells are expected to be brought on production.
- TriOil's credit facilities have been increased by 40% to $70 million from $50 million.
Financial and Operational Highlights
- Increased average production volumes by 60% to 1,992 boe/d from 1,242 boe/d in the third quarter of 2011. Third quarter production was impacted by non-core property dispositions of ~70 boe/d and a delay in new well tie-ins due to unseasonable, prolonged wet surface conditions at Kaybob.
- Funds from operations increased 102% to $5.2 million in the third quarter of 2012 compared to $2.6 million in the same period of 2011. On a diluted per share basis, funds from operations increased 25% to $0.10 per share in the third quarter of 2012 from $0.08 per share in the same period of 2011.
- Increased oil and NGL weighting to 71% in the third quarter of 2012 from 48% in the same period of 2011, reflecting the Company's ongoing successful transition to a high netback, light oil producer.
- Field netback (before hedging) increased by 24% to $33.95 per boe in the third quarter of 2012 from $27.33 in the third quarter of 2011. Field netbacks (before hedging) averaged $41.08 per boe at Kaybob and $45.06 per boe at Lochend in the third quarter of 2012.
- Reduced operating costs by 16% to $13.37 per boe from $15.83 per boe in the third quarter of 2011.
- Continued to execute a very successful capital program, drilling 11 (7.9 net) horizontal light oil wells with a 100% success rate.
Balance Sheet Strength
TriOil continues to focus on balance sheet strength and flexibility. During the quarter we disposed of non-core producing assets for $4.3 million.
Subsequent to the end of the third quarter we completed a $28.8 million bought deal financing with a syndicate of underwriters and issued 7,845,000 Class A common shares at a price of $2.55 per share and 2,917,288 flow-through Class A common shares at a price of $3.00 per share.
We are also pleased to report that the Company's credit facilities have been expanded subsequent to the end of the quarter by 40% to $70 million comprised of a $55 million revolving credit facility and a $15 million development facility.
Drilling and Operations Update
The Company's third quarter drilling and new well tie-in operations were delayed by unseasonably wet weather, particularly in the Kaybob area of west central Alberta. We drilled 11 (7.9 net) horizontal light oil wells during the quarter with a 100% success rate. Activity levels have remained high since mid-summer and we will execute our full 2012 capital program in both of our key light oil projects at Lochend and Kaybob.
Our Lochend Cardium light oil resource play continued to provide solid production growth as well as strong netbacks of $45.06 per boe during the third quarter 2012. We drilled and completed 4 (2.3 net) horizontal Cardium wells and brought 3 (1.2 net) wells on production during the quarter. Two (0.9 net) of these wells have now been on production for over a month. We are pleased to report that one well was drilled and completed with a hybrid frac on the Eastern Lochend trend and achieved an IP30 rate of 230 boe/d (95% oil), representing our best result in Eastern Lochend to date. The second well was drilled at the north end of the Central/Western Lochend trend and, although restricted by facilities, achieved an IP30 rate of 200 boe/d (50% oil). Our first long reach horizontal well in the Central/Western Lochend area has been producing from approximately one-third of its completed length for approximately 3 weeks. The well continues to clean up and we look forward to providing an update on this well. TriOil is currently planning to drill 2 (0.9 net) more long reach horizontal Cardium wells at Lochend in the first half of 2013.
Subsequent to the end of the quarter TriOil completed the expansion of its operated Lochend gas facilities (TriOil 51%) to 20 mmcf/d, increased our land position to 96 (70 net) sections and expanded our Lochend Cardium horizontal drilling inventory to 150 (97 net) locations. TriOil has built a significant operational position and multi-year growth platform in the Lochend Cardium light oil resource play. We continue to apply new technologies to enhance production and reserve capture, our capital efficiencies continue to improve and our expanded facilities will contribute to lower operating costs and improved netbacks on a go-forward basis.
At Kaybob we drilled 7 (5.6 net) wells, completed 5 (4.1 net) wells and brought 4 (2.1 net) wells on production. Three (2.1 net) wells drilled and completed in the third quarter have been on production for at least 30 days with 1 (1.0 net) well achieving an IP30 of 629 boe/d (88% oil), 1 (0.6 net) well achieving an IP30 of 113 boe/d (89% oil) and 1 (0.5 net) well achieving an IP30 of 110 boe/d (76% oil). Two (1.7 net) additional wells are on production at strong rates and we look forward to reporting IP30 results on these wells. Although results on the Dunvegan light oil play can be variable due to differences in reservoir quality and thickness across the Dunvegan delta sequence, the Company's first 13 wells on the play averaged IP30 rates of 310 boe/d (75% oil). TriOil has a strong operational position on this conventional light oil play with a current drilling inventory of approximately 30 net Dunvegan locations.
Outlook
We are very pleased with our recent results and progress in the field after a slow start to the third quarter due to wet field conditions. Our drilling, completion and tie-in operations are moving forward as planned and our production results to date are in line with expectations.
The Company's production for the month of October 2012 averaged approximately 2,625 boe/d, weighted 74% light oil and NGL's, based on field estimates. Current production is approximately 3,000 boe/d (75% oil) (based on field estimates) with a current estimated 400 boe/d of behind pipe volumes expected to be on production prior to year-end.
TriOil is on track to meet its forecast exit production of 3,400-3,600 boe/d. The Company has maintained a very strong balance sheet throughout the year and we are currently forecasting net debt of approximately $30 million at year end 2012 with significant un-utilized credit capacity of approximately $40 million as we move in to our 2013 capital program. The Company has hedged 900 bbls/d of crude oil with a fixed weighted average price of $97.94 Canadian per bbl for 2012, 800 bbls/d of crude oil with a fixed weighted average price of $101.93 Canadian per bbl for 2013 and 1,000 GJ/d at a fixed price of $3.41/gj for 2013. TriOil plans to release its 2012 Capital Budget in late January, 2013.
| Financial and Operating Results |
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
2012 |
2011 |
% Change |
|
2012 |
2011 |
% Change |
| (000s, except per share numbers) |
|
|
|
|
|
|
|
| Financial |
|
|
|
|
|
|
|
| Total petroleum and natural gas sales |
11,089 |
5,880 |
89 |
|
32,971 |
18,246 |
81 |
| Funds from operations (1) |
5,221 |
2,579 |
102 |
|
16,099 |
6,306 |
155 |
|
Per share - diluted |
0.10 |
0.08 |
25 |
|
0.32 |
0.20 |
59 |
| Net income (loss) |
(881) |
121 |
- |
|
5,796 |
(2,210) |
- |
|
Per share - basic and diluted |
(0.02) |
- |
- |
|
0.11 |
(0.07) |
- |
| Net debt (2) |
33,073 |
3,232 |
923 |
|
33,073 |
3,232 |
923 |
| Total assets |
236,254 |
142,406 |
66 |
|
236,254 |
142,406 |
66 |
| Capital expenditures(3) |
44,791 |
7,972 |
462 |
|
92,721 |
16,572 |
460 |
| Weighted average shares outstanding |
|
|
|
|
|
|
|
| Basic |
53,220 |
31,318 |
70 |
|
50,483 |
31,318 |
61 |
| Diluted |
53,220 |
31,318 |
70 |
|
50,565 |
31,318 |
61 |
| Operating |
|
|
|
|
|
|
|
| Average daily production |
|
|
|
|
|
|
|
|
Crude oil and NGLs (bbls/d) |
1,405 |
599 |
135 |
|
1,372 |
600 |
129 |
|
Natural gas (mcf/d) |
3,522 |
3,860 |
(9) |
|
3,144 |
3,879 |
(19) |
| Total (boe/d) |
1,992 |
1,242 |
60 |
|
1,896 |
1,247 |
52 |
| Average sales prices |
|
|
|
|
|
|
|
|
Crude oil and NGLs ($/bbl) |
79.62 |
81.38 |
(2) |
|
82.53 |
85.00 |
(3) |
|
Natural gas ($/mcf) |
2.45 |
3.94 |
(38) |
|
2.27 |
4.08 |
(44) |
| Total ($/boe) |
60.50 |
51.46 |
18 |
|
63.48 |
53.62 |
18 |
| Wells drilled - gross (net) |
11(7.9) |
2(1.5) |
- |
|
27(17.3) |
8(4.4) |
- |
| Drilling success rate (%) |
100 |
100 |
- |
|
100 |
88 |
- |
| Operating netback ($/boe) |
|
|
|
|
|
|
|
|
Oil and natural gas sales |
60.50 |
51.46 |
18 |
|
63.48 |
53.62 |
18 |
|
Royalties |
(11.99) |
(6.72) |
78 |
|
(11.05) |
(8.29) |
33 |
|
Operating costs |
(13.37) |
(15.83) |
(16) |
|
(13.79) |
(17.74) |
(22) |
|
Transportation |
(1.19) |
(1.58) |
(25) |
|
(1.26) |
(1.68) |
(25) |
| Operating netback before hedging |
33.95 |
27.33 |
24 |
|
37.38 |
25.91 |
44 |
|
Realized gain (loss) on financial derivative contracts |
0.90 |
1.62 |
(44) |
|
(0.84) |
0.37 |
(327) |
| Operating netback |
34.85 |
28.95 |
20 |
|
36.54 |
26.28 |
39 |
Notes:
| (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) |
Net debt excludes financial derivative contracts and flow through share liability. |
| (3) |
Capital expenditures include property acquisitions and are presented net of proceeds of disposals. |
TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of November 22, 2012, there were approximately 64.0 million shares issued and outstanding (70.1 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.