CALGARY, ALBERTA--(Marketwired - June 26, 2014) -
(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)
Canamax Energy Ltd. ("Canamax" or the "Company") (TSX VENTURE:CAC) is pleased to announce the Company's financial and operational results for the fourth quarter and year ended February 28, 2014.
Highlights - Year Ended February 28, 2014
From the prior year end of February 28, 2013 through to August 2013, the only asset held by Canamax in western Canada was a 6% working interest in two producing natural gas wells at Brazeau River (west central Alberta) with net production of 10 boe/d. Since August, the Company has focused on consolidating financially distressed microcap oil and gas companies and acquiring low risk, development opportunities. As part of this plan, Canamax completed the following transactions and property development work during the year which resulted in a year end exit production rate of 430 net boe/d:
- Acquired the remaining 94% working interest at Brazeau River at no cash cost to Canamax (total production addition of approximately 155 boe/d). Canamax received net consideration of $0.2 million to take this working interest plus working interests in two other properties along with the related abandonment liabilities.
- Successfully increased the gross production at Brazeau River from 165 boe/d to 400 boe/d by re-completing 2 shut-in wells in the Cardium and co-mingling one of the producing wells. In addition, Canamax re-routed the natural gas production through new, Company owned compression facilities which optimized production rates and significantly reduced operating expenses.
- Acquired the Flood property in northwest Alberta from a financially distressed company during October for net consideration of $0.5 million (such property consisting of a 100% working interest in 37 sections, three shut-in Montney oil wells and a new oil battery).
- Successfully drilled an additional Montney oil well and a water injection well at Flood in January. The total estimated shut-in production capability from the four oil wells of approximately 100 boe/d is expected to be brought on to production at the end of June 2014 once the water handling/disposal facilities in the area are operational.
- Commenced the drilling of a farm-in well at Wapiti (west central Alberta) during January 2014, which was successfully completed in March as a producing Cardium well. The initial 30-day production rate (IP30) for this well was approximately 405 boe/d gross (86% oil & NGL's) and 286 boe/d net. Canamax is targeting a stabilized net production rate from this well of 100 boe/d once a pump is installed on this well at the end of June.
To fund the above acquisitions and development work, Canamax raised $7.0 million in net proceeds from two private placement financings during the fiscal year. Proved and probable petroleum and natural gas reserves increased significantly from 7,000 boe at February 28, 2013 (NPV 10% of $0.2 million) to 2.5 million boe at February 28, 2014 (NPV 10% of $38.4 million).
Financial and Operational Summary
For the fourth quarter and year ended February 28, 2014:
Financial (1)
($000 except share, per share and per boe amounts) |
Three
months
(Unaudited) |
Twelve
months |
| Revenue |
$1,966 |
$2,959 |
| Operating netback (2) |
$1,113 |
$1,711 |
| Funds from continuing operations (2) (3) |
$527 |
$250 |
|
- per share |
$0.02 |
$0.02 |
| Net earnings (loss) - continuing operations (3) |
$939 |
($183) |
|
- per share |
$0.04 |
($0.01) |
| Net loss - discontinued operations |
- |
($551) |
|
- per share |
- |
($0.03) |
| Net capital expenditures (4) |
$6,741 |
$7,280 |
| Net Proceeds from financings |
$2,134 |
$6,951 |
| Proceeds from share purchase warrant and stock option exercises |
$1,209 |
$1,209 |
| Cash and working capital balance - end of period |
$119 |
$119 |
| Common shares outstanding - end of period (in 000) |
26,994 |
26,994 |
|
|
|
| Operating |
|
|
| Average Daily Production |
|
|
| Oil and NGL's (bbls/d) |
178 |
68 |
| Natural gas (mcf/d) |
1,530 |
631 |
| Oil equivalent (boe/d) |
433 |
173 |
|
|
|
| Average Price |
|
|
| Oil and NGL's ($/bbl) |
72.34 |
74.81 |
| Natural gas ($/mcf) |
5.87 |
4.78 |
| Oil equivalent ($/boe) |
50.48 |
40.31 |
|
|
|
| Royalties & Operating expenses ($/boe) |
21.88 |
19.77 |
| Operating netback ($/boe) |
28.60 |
27.09 |
| Notes: |
|
| (1) Financial information for the comparable periods in 2013 has not been provided as Canamax did not have material operations in Canada during those periods. |
|
| (2) See "Non IFRS Measures". |
|
| (3) During the year ended February 28, 2014, Canamax terminated its Colombia operations (including shutting down the office in Bogota and terminating all staff) to focus on operations in western Canada. The Colombia operations have therefore been reflected as discontinued operations. |
|
| (4) Net capital expenditures reflect property acquisitions (net of property dispositions), combined with drilling, completion and facility expenditures. |
|
Significant Events Subsequent to Year End
Acquisition of Ki Exploration
Canamax continued to execute on its mandate of acquiring peer companies at favourable financial metrics with the acquisition of Ki Exploration Inc. ("Ki") on April 30, 2014. The $6.0 million acquisition cost was comprised of approximately $3.6 million in Canamax equity units and the assumption of $2.4 million of Ki's working capital deficit. The equity units were priced at $1.20 per unit and comprised of one common share and one-half of a share purchase warrant. Each whole share purchase warrant entitles the holder to purchase one common share for $2.40 until March 31, 2016.
At the acquisition date, Ki was producing approximately 330 boe/d, with trailing twelve-month field cash flow of approximately $2.0 million - resulting in a purchase price of approximately $18,000 per flowing boe and three times cash flow.
Closing of $13.0 million financing
On April 30 and May 15, 2014, Canamax closed two tranches of a brokered private placement financing. The Company raised gross proceeds of approximately $13.0 million (net proceeds of $12.0 million) through the issue of 10,433,384 financing units at a price of $1.25 per unit. Each unit consisted of one common share and one-half of a share purchase warrant. Each whole share purchase warrant entitles the holder to purchase one common share at an exercise price of $2.40 until March 31, 2016.
New Management Team
During March, the following senior management team members were appointed by the Company: Brad Gabel, President & CEO; Chris Martin, Vice President, Finance & CFO and Jeremy Krukowski, Vice President, Operations and COO. Mr. Gabel and Mr. Martin bring significant acquisition and divestiture and public markets experience to Canamax, while Mr. Krukowski brings significant operational experience to the Company.
Outlook
Management of Canamax continues to see corporate acquisition opportunities in western Canada given the number of junior oil and gas companies in financial distress - the residual effects of low natural gas prices from 2010 through 2013 and the limited access to capital during those periods. In addition, we continue to negotiate property acquisitions with peer companies in an effort to enhance our core operating areas. The focus of these strategic corporate and property acquisitions is to continue to build high working interest, contiguous land positions in our core areas with significant low risk, development upside.
The net proceeds of $12.0 million from our recently closed financing has significantly strengthened our balance sheet, and will allow us to execute our $14 million capital expenditure plan for the remainder of the year, with little or no debt. Our strong financial position will also allow us to continue seeking accretive acquisitions in this opportunistic market.