canaccord
TriOil Resources* (TOL : TSX-V : $3.00)Net Change: -0.04, % Change: -1.32%, Volume: 402,010Blame It On The Weatherman. TriOil was under pressure after reporting a Q3 miss, driven mainly by wet weather. The company reported Q3/12 cash flow of $0.09/share, below consensus expectations $0.12/share. The miss was primarily due to lower realized prices ($60.49/boe vs. estimates of $64.76/boe). Production was also ~250 boe/d lower than expected due to ~70 boe/d of non-core dispositions and wet weather causing delays at Kaybob. Unseasonably wet weather, particularly in Kaybob, also impacted drilling and new tie-in operations. In the quarter, the company drilled 11 (7.9 net) wells - 7 (5.6 net) Dunvegan wells at Kaybob and 4 (2.3 net) Cardium wells at Lochend. In all, 7 (3.3 net) wells were brought on production. According to the company, activity levels have remained high since mid-summer and they still plan to execute their full 2012 capital program in both of key light oil projects at Lochend and Kaybob. So far this quarter, the company has drilled 3 (1.6 net) wells, 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. Current production is around 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. A Bay Street analyst commented that given Q3/12 results he now expects 2012E average production to come in lower than guidance of 2,300-2,500 boe/d. However, with current production now at ~3,000 boe/d and several wells left to come on production, 2012 exit guidance of 3,400-3,600 boe/d appears to be safe. The analyst reiterated their bullish stance, noting that TriOil has a strong balance sheet, a promising growth outlook and a potential near-term reserve catalyst at Kaybob.