Trafina Announces Q1 2012 Financial and Operating Results
CALGARY, ALBERTA--(Marketwire - May 28, 2012) -
Trafina Energy Ltd. ("Trafina" or the "Company") (TSX VENTURE:TFA.A) announces its financial and operating results for the three months ended March 31, 2012. Trafina's first quarter 2012 financial statements and management's discussion and analysis have been filed on SEDAR at www.sedar.com and are available on the Company's website at www.trafinaenergy.com.
OUTLOOK
Generating sufficient funds flow from operations was a challenge in the first quarter of 2012, as natural gas prices continued to decline and heavy oil differentials widened significantly. As a result, management's focus became clear: reduce overhead, streamline operations going forward and explore all strategic alternatives available to the Company. These initiatives may result in the sale of other producing assets, the issuance of equity and/or possible mergers or acquisitions.
At March 31, 2012 the Company had net debt and working capital deficiency of approximately $3.371 million, excluding the fair value of its commodity contracts. The Company's current maximum available lending amount on its revolving operating demand facility is $3.5 million. The Company anticipates a reduction of its current lending facility which will increase the risk that the Company may not be able to fulfill its obligations to its creditors. As mentioned, the Company has taken steps, such as reducing overhead, streamlining operations and selling various assets in an effort to alleviate its current debt problem. Effective April 30, 2012, Mr. Ben VanRootselaar resigned his position as Vice President, Engineering and Mr. Edward Marcinew resigned his position as Vice President, Exploration of the Company. The Company has also entered into an agreement to sell its southwest Saskatchewan properties for approximately $1.35 million. The sale is expected to close May 31, 2012. Management has also entered into discussions with its lender to jointly develop a plan to pay down its obligations.
The Company's McMullen property continues to show positive results as production has remained steady at 70 bbl/day. Additionally, approval has been received to drill up to 24 slant wells and the Company may apply for an additional eight slant well locations in the second quarter. Water production is a normal operational challenge in the area, and the Company has commenced application for a salt water disposal well. Approval is expected in approximately six to eight months. Elimination of third party water disposal charges will dramatically reduce field operating costs. However, these operations will depend on the Company's ability to raise additional capital. The Company has also commenced its application to the Alberta Crown for oil sands royalty rate reduction. Once approved, the Crown royalty rate as a percentage of oil sales is expected to be below five percent.
| SELECTED FINANCIAL INFORMATION |
| |
| For the three months ended March 31 |
| 2012 | | 2011 | | % Change |
| Total petroleum and natural gas revenue ($) | 1,071,996 | | 1,537,110 | | -30 |
| Royalties ($) | 108,812 | | 140,177 | | -22 |
| Operating, processing, and transportation expenses ($) | 1,004,825 | | 1,063,145 | | -5 |
| Funds flow used-in operations(1) ($) | (443,254 | ) | (217,074 | ) | +104 |
| | per basic and diluted common share ($) | (0.01 | ) | (0.01 | ) | |
| Weighted average basic shares outstanding | 55,690,562 | | 29,941,262 | | +86 |
| Net loss ($) | (786,748 | ) | (936,238 | ) | -16 |
| | per basic and diluted common share ($) | (0.01 | ) | (0.03 | ) | |
| Net capital (dispositions) expenditures - cash ($) | (235,285 | ) | 1,996,919 | | --- |
| Total assets ($) | 14,373,167 | | 18,985,901 | | -24 |
| Net debt and working capital deficiency(2) ($) | 3,371,449 | | 8,427,247 | | -60 |
| | | | | | |
| | (1) | Funds flow used in operations is a Non-IFRS Measure. See "Non-IFRS Measures". |
| | (2) | Net debt and working capital deficiency consists of current assets minus current liabilities less effects of commodity contracts. |
About Trafina
Trafina is a junior oil and gas company based in Calgary, Alberta. The Company's main areas of interest are in the McMullen area of Alberta with other operated and non-operated production in Wetaskiwin. Trafina's shares trade on the TSX Venture Exchange under the stock symbol TFA.A and warrants trade under the stock symbol TFA.WT.A.