Third Quarter 2014 Financial Results Elkwater Resources Ltd. Provides Operational Update and Announces Third Quarter 2014 Financial Results
Friday, November 28, 2014
Elkwater Resources Ltd. Provides Operational Update and Announces Third Quarter 2014 Financial Results
07:30 EST Friday, November 28, 2014
CALGARY, ALBERTA--(Marketwired - Nov. 28, 2014) -
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Elkwater Resources Ltd. ("Elkwater" or the "Company") (TSX VENTURE:ELW) announces that it has filed on SEDAR its third quarter unaudited condensed interim financial statements and corresponding Management's Discussion and Analysis ("MD&A") for the three and nine month periods ended September 30, 2014. The financial statements and MD&A will be available on SEDAR at www.sedar.com and on Elkwater's website at www.strikerexp.com.
HIGHLIGHTS SUMMARY
During the quarter ended September 30, 2014, the Company positioned itself for future growth through the completion of a recapitalization transaction consisting of a change of management and board of directors, a $25.0 million private placement and a rights offering to existing Elkwater shareholders which resulted in an additional $440,000 in proceeds. The new management team's strategy is to acquire and develop light oil resource plays, predominately in Alberta. During the quarter, the team actively reviewed and evaluated numerous acquisition opportunities.
Subsequent to the end of the quarter, and through late November, Elkwater achieved the following milestones:
- In October 2014, estimated average daily production was approximately 2,600 boe/d, which consisted of 1,580 bbl/d of light oil and liquids, 5,985 mcf/d of natural gas and 22 boe/d of royalty production. These production levels are on a pro forma basis and include both acquisitions which closed on November 20, 2014 (discussed below) and the Company's legacy production;
- Secured a new credit facility with a syndicate of Canadian chartered banks consisting of a $40.0 million revolving term facility, plus a $15.0 million revolving operating facility, which collectively provide the Company with significant financial flexibility. Following closing of the two acquisitions, the Company's net debt totaled $4.0 million, and is anticipated to increase to $9.0 million by year end reflecting the execution of the fourth quarter capital program described below;
- After giving effect to the series of financings which closed in October and November, 2014, the exercise of rights pursuant to the rights offering and the exercise of certain warrants, Elkwater has 536,604,722 common shares issued and outstanding;
- Completed the acquisition by way of a plan of arrangement of Exoro Energy Inc. ("Exoro"), a private arm's length oil and gas company, on November 19, 2014, for $83.3 million, adding approximately 1,944 boe/d (65% oil and natural gas liquids ("NGLs")) of operated production in West Central Alberta; and
- Completed the acquisition of medium gravity oil-producing assets concentrated in the Killam area of East Central Alberta (the "Killam Assets") for $30.5 million on November 19, 2014, with an effective date of October 1, 2014, adding approximately 576 boe/d (61% oil and NGLs) of operated production plus access to wholly-owned infrastructure.
For additional information in respect of Exoro and the Killam Assets, please see the Company's news release dated October 15, 2014.
OPERATIONS UPDATE
In support of its growth strategy, the Company plans to spend approximately $7.0 million in the aggregate in November and December 2014. These expenditures will be used to drill up to 3 (3.0 net) Killam horizontal oil wells during the fourth quarter, targeting medium gravity oil in the Lloydminster sands. The Company intends to initially complete up to 2 (2.0 net) of the wells prior to year end using multi-stage fracture stimulation. In addition, Elkwater is also planning to drill up to 2 (1.8 net) Pembina Cardium horizontal oil wells in the Drayton Valley area by the end of December, of which up to 1 (1.0 net) well will be completed prior to year end with 1 (0.83 net) well expected to be brought on production concurrent with the third Killam well in early 2015.
Capitalizing on its balance sheet strength, Elkwater continues to seek value driven acquisitions, including the consolidation of land positions in existing project areas, as well as seeking new opportunities in complementary shallow, light oil horizons within its Central Alberta core region. In addition, the Company is sharply focused on delivering high growth rates in production and cash flows, as well as adding future inventory locations to sustain longer-term growth.