PetroShale loses $2.7-million in second half of 2013
PetroShale loses $2.7-million in second half of 2013
2014-04-24 18:04 ET - News Release
Mr. Bruce Chernoff reports
PETROSHALE ANNOUNCES RESULTS FOR THE SIX MONTH PERIOD ENDED DECEMBER 31, 2013 AND UPDATED RESERVES
PetroShale Inc. has released its financial and operating results for the six-month period ended Dec. 31, 2013, as well as its updated reserves as at Dec. 31, 2013. The Company changed its financial year-end from June 30 to December 31 and as a result, the current reporting period is a six month stub period (July 1, 2013 to December 31, 2013), with the comparative period being the twelve months ended June 30, 2013. The Company's next reporting period will be the three months ended March 31, 2014.
PetroShale has filed its audited consolidated financial statements as at and for the period ended December 31, 2013 and the corresponding Management's Discussion and Analysis on SEDAR at www.sedar.com, and posted the information on PetroShale's website at www.petroshaleinc.com. Copies of the materials can also be obtained upon request without charge by contacting the Company directly.
Highlights:
- Reported production of 185 boe/d (Company interest, gross of royalty - 147 boe/d net of royalty interest), an increase of 52% over the year ended June 30, 2013, primarily due to the production generated from the Company's Stockyard Creek and Antelope/MJ Angus assets, which were acquired in August and May of 2013, respectively;
- Reported a strong operating netback of $56.75 (Company interest, gross of royalties, and excluding the impact of hedging - $71.58 net of royalty interest), reflecting higher realized pricing and lower operating expenses;
- Subsequent to the end of the period, completed two additional acquisitions in North Dakota, including the North Antelope Project operated by EOG Resources Inc. ("EOG"), and the acquisition of a 19% interest in 1,280 total acres of undeveloped land in Williams County, North Dakota, both of which add to the Company's growing base of existing or near-term cash flowing assets;
- Secured a subordinated loan facility with two significant shareholders, which provides PetroShale access to a $20 million revolving line of credit; and
- Increased proved plus probable ("P+P") reserves by 88% to 701.2 Mboe (561.9 Mboe net of royalty interest) as at December 31, 2013, and after reflecting acquisitions completed in the first quarter of 2014, P+P reserves increased further to 2,188 Mboe (1,750 Mboe net of royalty interest) on a pro forma basis.
Results of Oil and Gas Activities Six Months Ended Year Ended For the period ended December 31, 2013 June 30, 2013 ---------------------------------------------------------------------------- Sales volumes Oil and natural gas liquids (Bbl/d) 165 118 Natural gas (Mcf/d) 124 29 ---------------------------------------------------------------------------- Barrel of oil equivalent (Boe/d) 185 122 Operating Netbacks ($/Boe) Revenue $ 89.80 $ 83.02 Royalties (18.61) (18.59) Realized hedge gain 0.23 - Operating expenses (9.87) (14.56) Production taxes (4.57) (2.19) ---------------------------------------------------------------------------- Operating netback $ 56.98 $ 47.68 ---------------------------------------------------------------------------- Operating netback prior to hedging $ 56.75 $ 47.68 ----------------------------------------------------------------------------
Funds flow from operations was $264,000 for the six month period ended December 31, 2013 compared to $207,000 for the year ended June 30, 2013. For the six month period ended December 31, 2013, the Company reported a net loss of $2.7 million ($0.09 per share), compared to a loss of $21.1 million ($0.73 per share) for the year ended June 30, 2013.
2013 Year-End Reserves:
The reserves data in this press release is based upon evaluations by Netherland, Sewell & Associates, Inc. ("NSAI") with respect to our assets in the United States, and by Jim McIntosh Petroleum Engineering Ltd. ("McIntosh") with respect to our Canadian assets, all with an effective date of December 31, 2013. The reserves data summarizes PetroShale's crude oil, natural gas liquids and natural gas reserves and the net present values of future net revenue for these reserves using forecast prices and costs, not including the impact of any price risk management activities. The reserves data described herein as pro forma reflect an evaluation performed by NSAI of our United States assets, including those arising from the acquisitions completed by the Company subsequent to December 31, 2013, with an effective date of December 31, 2013, aggregated with the evaluation of our Canadian assets as described above. The Reserve Reports have been prepared in accordance with the standards contained in the COGE Handbook and the reserve definitions contained in NI 51-101 and CSA 51-324. No attempt was made to evaluate possible reserves.
Reserves Highlights:
- P+P reserves as at December 31, 2013 increased 88% to 701.2 Mboe (561.9 Mboe net of royalty), while total proved reserves increased 57% to 553.0 Mboe (448.5 Mboe net of royalty).
- 86% of PetroShale's total P+P reserves on a boe basis are light, sweet oil, and 94% are attributed to the U.S assets located in North Dakota and Montana.
- Before tax net present value (discounted at 10%) ("NPV10") of the Company's P+P reserves totaled $15.0 million, while the NPV10 of total proved reserves increased to $13.5 million.
- Following completion of acquisitions in the first quarter of 2014, pro forma P+P reserves increased further to 2,188 Mboe (1,750 Mboe net of royalty) with an NPV10 of $44.1 million.
Gross Company Interest Reserves AGGREGATED CANADA AND UNITED STATES OIL & GAS ASSETS RESERVES LIGHT AND MEDIUM NATURAL GAS OIL NATURAL GAS LIQUIDS BOE RESERVES CATEGORY Gross Net Gross Net Gross Net Gross Net (Mbbls) (Mbbls) (MMcf) (MMcf) (Mbbls) (Mbbls) (Mboe) (Mboe) PROVED: Developed Producing 305.9 256.4 234.0 193.2 - 0.6 344.9 289.2 Developed Non- Producing 44.1 33.7 56.4 43.1 - - 53.5 40.9 Undeveloped 128.2 98.2 158.1 121.0 - - 154.6 118.4 ---------------------------------------------------------------------------- TOTAL PROVED 478.2 388.3 448.5 357.3 - 0.6 553.0 448.5 PROBABLE 123.2 94.3 149.6 114.6 - - 148.1 113.4 ---------------------------------------------------------------------------- TOTAL PROVED PLUS PROBABLE 601.4 482.6 598.1 471.9 - 0.6 701.2 561.9 ---------------------------------------------------------------------------- Columns may not add due to rounding.
Net Present Value of Future Net Revenue AGGREGATED CANADA AND UNITED STATES OIL & GAS ASSETS BEFORE INCOME TAXES DISCOUNTED AT (%/year) RESERVES CATEGORY 0% 5% 10% 15% 20% ($000s) ($000s) ($000s) ($000s) ($000s) PROVED: Developed Producing 18,602.3 12,853.5 9,949.7 8,221.4 7,078.3 Developed Non- Producing 2,595.4 2,118.8 1,821.7 1,621.1 1,476.7 Undeveloped 4,375.3 2,720.6 1,762.2 1,147.8 727.2 ---------------------------------------------------------------------------- TOTAL PROVED 25,573.0 17,692.9 13,533.6 10,990.3 9,282.2 PROBABLE 4,119.4 2,437.9 1,485.6 891.0 488.3 ---------------------------------------------------------------------------- TOTAL PROVED PLUS PROBABLE 29,692.4 20,130.8 15,019.2 11,881.3 9,770.5 ---------------------------------------------------------------------------- Columns may not add due to rounding.
Reserves Reconciliation - Aggregate TOTAL CANADA (MBOE) TOTAL UNITED STATES (MBOE) Gross Gross Proved Proved Gross Gross Plus Gross Gross Plus Proved Probable Probable Proved Probable Probable ---------------------------------------------------------------------------- June 30, 2013 44.5 - 44.5 306.6 21.7 328.2 Discoveries - - - - - - Improved Recovery 3.9 - 3.9 - - - Technical Revisions - - - 38.7 (0.5) 38.2 Acquisitions - - - 196.6 127.6 324.2 Dispositions - - - - - - Economic Factors - - - (1.1) (0.6) (1.7) Production (2.8) - (2.8) (33.4) - (33.4) ---------------------------------------------------------------------------- December 31, 2013 45.6 - 45.6 507.4 148.2 655.5 TOTAL (MBOE) Gross Proved Gross Gross Plus Proved Probable Probable ---------------------------------------------------------------------------- June 30, 2013 351.1 21.7 372.8 Discoveries - - - Improved Recovery 3.9 - 3.9 Technical Revisions 38.7 (0.5) 38.2 Acquisitions 196.6 127.6 324.2 Dispositions - - - Economic Factors (1.1) (0.6) (1.7) Production (36.2) - (36.2) ---------------------------------------------------------------------------- December 31, 2013 553.0 148.2 701.2 Columns may not add due to rounding.
Letter to shareholders:
Throughout calendar 2013, we enhanced PetroShale's strategic position, which included changing the Company's year end to December 31. As a result of this change, this report provides our results and discusses our achievements for the six month period from July 1, 2013 to December 31, 2013.
As part of our ongoing strategy to acquire and consolidate working interests in the prolific Williston Basin in North Dakota, we completed several acquisitions that we anticipate will contribute to growth in production, reserves and cash flows. In August, 2013, we partnered with Slawson Exploration Inc. ("Slawson"), one of the largest private operators in the Williston Basin, to acquire certain assets within the Stockyard Creek field (situated in southern Williams County, North Dakota). These assets included 106 net leased acres giving the Company a 5.5% interest in a 17 well drilling program over three 640 acre sections. The Stockyard Creek assets are operated by Slawson, and to date include the successful drilling and completion of five wells, including four new wells that came on production in February 2014.
Subsequent to the end of 2013, two additional acquisitions were completed. The first was the acquisition of the North Antelope Project in McKenzie County, North Dakota, operated by EOG, a large and experienced operator in shale oil plays, including the Bakken. The Antelope Project provides PetroShale with an 18.75% working interest in a proposed drilling unit, which has been spaced for the drilling of 8 wells. Based on current capital plans, we expect results from those wells should have a positive impact on PetroShale's production and cash flows later in 2014. The second acquisition we completed after year end 2013 was the purchase of 245 net held-by-production acres, giving the Company an approximate 19% working interest in a 1,280 acre drilling unit in Williams County, North Dakota.
As a result of our activities to date, PetroShale's production has grown to approximately 240 boe/d currently. Following the acquisitions completed in the first quarter of 2014, our pro forma P+P reserves increased to approximately 2,188 Mboe (1,750 Mboe net of royalty), with a NPV10 of $44.1 million.
In addition to growing the Company's asset base, we also took steps in the latter half of 2013 to strengthen our Board and management team. PetroShale's management team and Board have extensive experience in managing and governing high-growth oil and natural gas entities. We look forward to a focused expansion of our operations in the Williston Basin.
We appreciate your continued support of PetroShale, and look forward to updating you on our progress and achievements in our next financial report, for the first quarter ended March 31, 2014.
M. Bruce Chernoff, Executive Chairman and CEO
We seek Safe Harbor.
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