Bowood Energy Inc. Announces 2011 Financial and Operational Results and Provides an Operational Update
CALGARY, ALBERTA--(Marketwire - April 24, 2012) -
THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS.
Bowood Energy Inc. (TSX VENTURE:BWD) ("Bowood" or the "Company") is pleased to announce its financial and operational results for the year ended December 31, 2011, and provides an operational update on the Kipp well production in southern Alberta, and on its strategic review process.
2011 Highlights
-
Added an additional 25,521 gross (13,081 net) acres to its significant land position in the emerging Alberta Bakken Petroleum System fairway ("Alberta Bakken"), bringing total land holdings in the fairway to approximately 140,000 gross (105,000 net) acres.
-
Progressed the Alberta Bakken play with the geological and well test data from the first two wells and booked its first oil reserves on the play.
-
With new additions in both the Armada field and in southern Alberta the Company increased oil weighting on production to approximately 20% and on year end reserves to approximately 22%.
-
Drilled two (1.25 net) wells in Armada resulting in one (0.9 net) gas well that produced at an average choked back rate in excess of 1 MMCF/d (900 mcf/d net) from late August 2011 to December 31, 2011, and one (0.35 net) standing potential gas well.
2012 Southern Alberta Operational Update
The Company's Kipp well, located at 8- 30-8-23 W4 on the Blood First Nation Reserve came on production late in December 2011. The Company has a 40% working interest in the Kipp well which has now produced over 12,000 bbls of light oil according to field estimates.
Following cleanup, the well has been on production for three full months and has averaged approximately 100 bbls per day of oil during the three months. Water cut has decreased from 60% in January to 25% in March and the well has now recovered over 70% of the injected load water from the fracture stimulation.
The Company is encouraged with the production results from the Kipp well to date and with offsetting industry results which have been publically released in 2012. As more wells are drilled into the Alberta Bakken fairway, initial production rates attained by industry continue to increase. Modifications and improvements in well trajectory and frac design are expected to continue to improve productivity in follow up wells in the play.
Strategic Review Process
On February 27, 2012, Bowood announced a review of strategic alternatives. Strategic alternatives may include, among other alternatives: a sale of the shares of the Company, either in one transaction or in a combination of transactions; a merger, recapitalization, arrangement, amalgamation or any combination thereof; or a sale of a material portion of the assets of the Company.
The process is currently ongoing; however, Bowood does not intend to make any further announcements regarding the review of strategic alternatives unless and until the Board of Directors has approved a specific transaction or otherwise determines that disclosure of developments is required or appropriate.
Financial Highlights
Certain selected financial and operational information for the three months and year ended December 31, 2011 are set out below and should be read in conjunction with Bowood's Financial Statements and Management Discussion and Analysis ("MD & A").
The Company has filed its audited consolidated Financial Statements and related MD & A for the year ended December 31, 2011 with the Canadian securities regulatory authorities on SEDAR. In addition, Bowood has also filed its Annual Information Form, which includes Bowood's statement of reserves data and other oil and gas information for the year ended December 31, 2011 as mandated by NI 51-101 Standards of Disclosure for Oil and Gas Activities of the Canadian Securities Administrators. An electronic copy of these materials are available under Bowood's issuer profile on SEDAR at www.sedar.com and will also be available on the Company's website at www.bowoodenergy.ca.
|
Three Months Ended
December 31, 2011
|
|
Year Ended
December 31, 2011
|
|
|
(all amounts in Cdn $ except common share data)
|
|
|
|
|
|
Petroleum and natural gas revenue
|
1,855,677
|
|
6,349,800
|
|
|
Per share - basic
|
0.007
|
|
0.023
|
|
|
|
- diluted
|
0.007
|
|
0.023
|
|
|
Funds flow from operations
|
294,684
|
|
1,002,970
|
|
|
Per share - basic
|
0.001
|
|
0.004
|
|
|
|
- diluted
|
0.001
|
|
0.004
|
|
|
Net loss
|
12,276,690
|
|
13,916,145
|
|
|
Per share - basic
|
(0.045
|
)
|
(0.051
|
)
|
|
|
- diluted
|
(0.045
|
)
|
(0.051
|
)
|
|
Capital expenditures (net of dispositions)
|
2,430,252
|
|
11,036,441
|
|
|
Net debt (surplus) (excluding fixed commodity contracts)
|
4,280,792
|
|
4,280,792
|
|
|
Shareholders' equity
|
36,803,225
|
|
36,803,225
|
|
|
Total assets
|
45,126,885
|
|
45,126,885
|
|
|
Common share data:
|
|
|
|
|
|
Weighted average basic
|
274,933,373
|
|
274,829,811
|
|
|
Weighted average diluted
|
274,933,373
|
|
274,829,811
|
|
|
Issued and outstanding
|
274,933,373
|
|
274,933,373
|
|
|
|
|
|
|
|
|
Operating Highlights(6:1 boe conversion)
|
Three Months Ended
December 31, 2011
|
Year Ended
December 31, 2010
|
|
|
Average daily production
|
|
|
|
|
Natural gas (mcf/d)
|
2,905
|
2,554
|
|
|
Liquids (Oil & NGLs) (bbls/d)
|
115
|
92
|
|
|
Oil equivalent (boe/d)
|
600
|
517
|
|
|
Production (boe/d) per million shares
|
2
|
2
|
|
|
Average sales price (including fixed commodity contracts):
|
|
|
|
|
Natural gas ($/mcf)
|
3.33
|
3.76
|
|
|
Liquids (Oil & NGLs) ($/bbl)
|
90.88
|
85.00
|
|
|
Oil equivalent ($/boe)
|
33.64
|
33.63
|
|
|
Operating cost ($/boe)
|
12.63
|
13.24
|
|
|
Operating netback ($/boe) (including fixed commodity contracts)
|
18.06
|
17.37
|
|
|
Wells drilled - gross (net):
|
|
|
|
|
Gas
|
--
|
1 (1.00
|
)
|
|
Oil
|
--
|
3 (0.71
|
)
|
|
Suspended
|
--
|
--
|
|
|
D & A
|
--
|
--
|
|
|
Total
|
--
|
4 (1.71
|
)
|
For the year ended December 31, 2011, Bowood incurred a net loss of $13,916,145. This was primarily from an impairment write down of $13,798,516 on Bowood's property and equipment. The majority of this write down (approximately 73%) was in Bowood's shallow gas Cash Generating Units (CGUs) and was due to the weakening in natural gas prices. The remaining 23% of the write down was in Bowood's southern Alberta area. The high capital costs associated with drilling the first exploratory wells in the resource play coupled with conservative initial reserves led to the impairment.
Reserves
Bowood's reserves were evaluated at December 31, 2011 by GLJ Petroleum Consultants ("GLJ"), an independent engineering firm. GLJ's evaluation was conducted in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook and is compliant with NI 51-101. All reserve numbers are Company gross* before royalties.
|
Bowood Energy
|
|
|
|
|
|
|
2011 Reserves (before royalties) (forecast prices)
|
Gas
mmcf
|
Light and
Medium Oil
mbbls
|
Heavy
Oil
mbbls
|
NGLs
mbbls
|
Total
mboe
|
|
December 31, 2011
|
|
|
|
|
|
|
Proved producing
|
4,328
|
108
|
4.5
|
21
|
855
|
|
Proved developed non-producing
|
551
|
44
|
0
|
2
|
138
|
|
Proved undeveloped
|
640
|
62
|
0
|
2
|
171
|
|
Total Proved
|
5,519
|
214
|
4.5
|
25
|
1,164
|
|
Probable
|
2,667
|
125
|
1.5
|
14
|
585
|
|
Total Proved plus Probable
|
8,187
|
339
|
6
|
39
|
1,749
|
|
|
|
|
|
|
Note: Columns may not add due to rounding
*"Gross" reserves means the Company's working interest (operating and non-operating) share before deduction of royalties payable to others and without including any royalty interest of the Company
Reserve Reconciliation
The following tables provides a reconciliation of the Company's gross reserves of oil, natural gas, and natural gas liquids for the year ended December 31, 2011 versus the year ended December 31 2010.
|
Light and
Medium Crude Oil
|
|
Heavy Oil
|
|
Natural Gas
|
|
Natural Gas Liquids
|
|
BOE
|
|
|
(Mbbl
|
)
|
Mbbl
|
|
(MMcf
|
)
|
(Mbbl
|
)
|
(Mboe
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Dec. 31, 2010
|
182
|
|
4
|
|
5,694
|
|
24
|
|
1,159
|
|
|
Extensions and Improved Recovery
|
46
|
|
-
|
|
876
|
|
2
|
|
194
|
|
|
Technical Revisions
|
9
|
|
1
|
|
50
|
|
3
|
|
21
|
|
|
Discoveries
|
4
|
|
-
|
|
0
|
|
6
|
|
4
|
|
|
Acquisitions
|
1
|
|
-
|
|
2
|
|
-
|
|
2
|
|
|
Dispositions
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Economic Factors
|
-
|
|
-
|
|
(171
|
)
|
-
|
|
(28
|
)
|
|
Production
|
(28
|
)
|
(1
|
)
|
(932
|
)
|
(4
|
)
|
(189
|
)
|
|
Balance at Dec. 31, 2011
|
214
|
|
5
|
|
5,519
|
|
25
|
|
1,164
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved plus Probable
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Dec. 31, 2010
|
269
|
|
6
|
|
8,391
|
|
39
|
|
1,711
|
|
|
Extensions and Improved Recovery
|
74
|
|
-
|
|
1,056
|
|
2
|
|
252
|
|
|
Technical Revisions
|
19
|
|
1
|
|
(37
|
)
|
2
|
|
(16
|
)
|
|
Discoveries
|
5
|
|
-
|
|
-
|
|
0
|
|
5
|
|
|
Acquisitions
|
1
|
|
-
|
|
3
|
|
-
|
|
2
|
|
|
Dispositions
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Economic Factors
|
-
|
|
-
|
|
(294
|
)
|
-
|
|
(49
|
)
|
|
Production
|
(28
|
)
|
(1
|
)
|
(932
|
)
|
(4
|
)
|
(189
|
)
|
|
Balance at Dec. 31, 2011
|
339
|
|
6
|
|
8,187
|
|
39
|
|
1,749
|
|
Note: Columns and rows may not add due to rounding
NET PRESENT VALUES OF FUTURE NET REVENUE AS OF DECEMBER 31, 2011
(Forecast Prices and Costs)
|
Before Income Tax (
00s)
|
After Income Tax (
00s)
|
|
Discounted at
|
Discounted at
|
|
Reserve Category
|
0%
|
5%
|
10%
|
15%
|
20%
|
0%
|
5%
|
10%
|
15%
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved
|
|
|
|
|
|
|
|
|
|
|
|
Developed Producing
|
14,564
|
12,076
|
10,348
|
9,084
|
8,124
|
14,564
|
12,076
|
10,348
|
9,084
|
8,124
|
|
Developed Non-Producing
|
2,401
|
2,130
|
1,903
|
1,713
|
1,551
|
2,401
|
2,130
|
1,903
|
1,713
|
1,551
|
|
Proved Undeveloped
|
3,967
|
3,332
|
2,839
|
2,451
|
2,139
|
3,967
|
3,332
|
2,839
|
2,451
|
2,139
|
|
Total Proved
|
20,932
|
17,537
|
15,090
|
13,247
|
11,814
|
20,932
|
17,537
|
15,090
|
13,247
|
11,814
|
|
|
|
|
|
|
|
|
|
|
|
|
Probable
|
13,512
|
9,508
|
7,211
|
5,738
|
4,724
|
13,512
|
9,508
|
7,211
|
5,738
|
4,724
|
|
Total Proved & Probable
|
34,443
|
27,045
|
22,302
|
18,986
|
16,537
|
34,443
|
27,045
|
22,302
|
18,986
|
16,537
|
|
|
|
|
|
|
|
|
|
|
|
Note: Columns may not add due to rounding
It should not be assumed that the undiscounted and discounted future net revenues estimated by GLJ which are set forth above represent fair market value.
GLJ's reserves evaluation is based upon the following price forecast (effective January 1, 2012)
|
Medium and Light Crude Oil
|
Natural Gas
|
NGL
|
|
|
Year
|
WTI
Cushing
Oklahoma
40° API
(US$/bbl)
|
Edmonton
Par Price
40° API
($/bbl)
|
Cromer
Medium
29º API
($/bbl)
|
Alberta Gas Reference Price
Plantgate
($/MMBtu)
|
AECO - C Spot
($/MMBtu)
|
Pentanes
Plus
($/bbl)
|
Exchange
Rate
($US/$Cdn)
|
|
2012
|
97.00
|
97.96
|
90.12
|
3.23
|
3.29
|
107.76
|
0.98
|
|
2013
|
100.00
|
101.02
|
92.94
|
3.85
|
3.93
|
108.09
|
0.98
|
|
2014
|
100.00
|
101.02
|
91.93
|
4.30
|
4.39
|
105.06
|
0.98
|
|
2015
|
100.00
|
101.02
|
91.93
|
4.74
|
4.84
|
105.06
|
0.98
|
|
2016
|
100.00
|
101.02
|
91.93
|
5.19
|
5.30
|
105.06
|
0.98
|
|
2017
|
100.00
|
101.02
|
91.93
|
5.64
|
5.75
|
105.06
|
0.98
|
|
2018
|
101.35
|
102.40
|
93.18
|
5.87
|
5.99
|
106.49
|
0.98
|
|
2019
|
103.38
|
104.47
|
95.07
|
5.98
|
6.11
|
108.65
|
0.98
|
|
2020
|
105.45
|
106.58
|
96.99
|
6.11
|
6.23
|
110.84
|
0.98
|
|
2021
|
107.56
|
108.73
|
98.85
|
6.23
|
6.36
|
113.08
|
0.98
|
|
Escalated at 2.0% per year thereafter.
|
|
|
|
|
|
|
|
|
Credit Facility Update
Bowood renewed its bank facility with Canadian Western Bank in March 2012. Oil reserve additions at Armada and Kipp helped to offset low natural gas prices, resulting in a lending facility of $5.7 million.
About Bowood Energy Inc.
With operations based in Calgary, Alberta, Bowood Energy Inc. is a TSX-V Tier 2 corporation. Through its wholly owned subsidiary, Bowood Energy Ltd., the Company is engaged in the acquisition, exploration, development, and production of oil and gas resources. Current projects are in the Province of Alberta.
Reader Advisories
Forward-Looking Statements: This news release contains certain forward-looking statements, including but not limited to, management's assessment of future plans and operations, the anticipated spudding dates of various wells, capital expenditures and the timing thereof and expected timing and results from operations, that involve substantial known and unknown risks, uncertainties and assumptions, certain of which are beyond the Company's control. Such risks, uncertainties and assumptions include, without limitation, those associated with oil and gas exploration, development, exploitation, production, marketing, processing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities.
The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these 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 so, what benefits that the Company will derive there from. Forward-looking information in this press release may also include, but is not limited to, information with respect to the strategic alternative review process, the potential transaction(s) which may result from such process and the anticipated benefits of enhanced shareholder value that may result from such potential transaction(s). Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports, including the Company's annual information form for the financial year ended December 31, 2011, on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
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.
For more information on (TSX VENTURE:BWD) and to see the updated corporate presentation please visit our website at: https://www.bowoodenergy.ca.
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 news release.