CALGARY, ALBERTA--(Marketwired - Nov. 6, 2013) - Angle Energy Inc. ("Angle" or the "Company") (TSX:NGL) today announced the financial and operating results for the three and nine months ended September 30, 2013. Angle reported positive earnings of $1.7 million for the third quarter of 2013 or $0.02 per share, an increase of approximately $4.1 million or 169% over the same period of 2012. The improved financial results were due to a combination of commodity price gains as well as increased operating netbacks resulting from the transition to more profitable barrels of production.
PROPOSED TRANSACTION
On July 3, 2013 Angle announced the initiation of a broad public process to identify and evaluate strategic alternatives to enhance shareholder value. On October 15, 2013, Angle announced that it had entered into an agreement (the "Arrangement Agreement") pursuant to which Bellatrix Exploration Ltd. has agreed to acquire all of the issued and outstanding common shares of Angle and all of Angle's issued and outstanding 5.75% convertible unsecured subordinated debentures with a maturity date of January 31, 2016.
Under the terms of the Arrangement, Angle shareholders will receive, at their election, for each Angle Common Share held, either: (i) $3.85 in cash; or (ii) 0.4734 of a Bellatrix common share, subject to the cash amount payable to Angle shareholders equaling $69.7 million and thus subject to prorating. Pursuant to the Arrangement, if approved by holders of the Debentures, such holders of the Debentures will receive $1,040 in cash per Debenture, plus all accrued and unpaid interest to the day immediately prior to the effective date of the Arrangement. The transaction will be effected by way of a Plan of Arrangement pursuant to the Alberta Business Corporations Act.
Bellatrix will also assume Angle's net debt, estimated at $185 million (excluding $60 million in Debentures and $16 million in estimated transaction and severance costs associated with the Arrangement, which includes $2.4 million of costs to acquire the Debentures and assumes cashless exercise of in-the-money options based on the cash offer of $3.85 per share), as at September 30, 2013.
Bellatrix Exploration Ltd., a public oil and gas company with focused operations in the Cardium light oil resource trend and in the Notikewin/Falher intervals in Western Canada, combined with Angle's assets will create one of the largest Cardium producers and landholders in Alberta.
Separate Angle Energy Inc. and Bellatrix Exploration Ltd. securityholder meetings will be held in mid-December, 2013 to consider the Arrangement Agreement, described in the joint management information circular, which will be mailed in mid-November. The closing of the Arrangement is expected to occur in mid-December.
COMPANY HIGHLIGHTS
- Funds from operations for the three and nine months ended September 30, 2013 were $20.3 million and $64.2 million respectively, versus $19.7 million and $61.5 million respectively for the same periods in 2012. The improved results are due to the impact of improved commodity pricing, especially from oil production, and the change in production mix.
- Angle's operating netback in the third quarter was $27.50/boe, a 43% improvement over the average operating netback of $19.20/boe in the third quarter of 2012, reflecting the transition to a greater proportion of light oil, condensate and other natural gas liquids, which now account for 58% of the Company's production.
- Light crude oil and condensate production averaged 3,242 bbls/day in the third quarter, which was in line with second quarter, 2013. Production increased by approximately 21% versus the third quarter of 2012 and 22% versus the nine month period ended September 30, 2012 after taking into account the light crude oil and condensate production related to the disposed non-core Edson assets (closed January 9, 2013) of approximately 395 bbls/day and 380 bbls/day respectively for each of the three and nine months ended September 30, 2012.
- Third quarter average daily production was 10,255 boe/day (42% natural gas, 32% light crude oil and condensate, and 26% NGLs), down 6% from second quarter 2013 average daily production of 10,926 boe/day. The decrease is a result of natural declines impacting production due to limited activity during the second quarter 2013 spring break-up and both scheduled and unscheduled facility downtime during the third quarter of 2013. October 2013 average daily production is estimated to be approximately 11,450 boe/day, including 270 boe/day of unscheduled production downtime, resulting from the drilling program conducted in the third quarter.
- Capital investment in the third quarter of 2013 was $49.6 million, which included $44.0 million on drilling, completions, equipping and tie-in of wells. Fourteen gross (12.3 net) wells were drilled with a 100% success rate, with 12 gross (11.0 net) targeting light crude oil. Efficiencies were achieved in all project areas, which accelerated some of the fourth quarter capital spending into the third quarter.
- For 2013 year-to-date, Angle invested $135.2 million (excluding proceeds from dispositions), which included $116.2 million on drilling, completions, equipping and tie-in of wells. A total of 34 gross (29.5 net) wells were drilled in the nine months ended September 30, 2013 with a 97% success rate.
- The Company exited the third quarter with $244.3 million of net debt (including $60 million of convertible debentures).
The following table provides a summary of the Company's operating and financial results for the three and nine months ended September 30, 2013 and 2012 and should be read in conjunction with Angle's interim consolidated financial statements and related Management's Discussion and Analysis ("MD&A"). The Company has filed its interim consolidated financial statements and related MD&A for the three and nine months ended September 30, 2013 on www.sedar.com and www.angleenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
| |
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
|
| |
2013 |
|
2012 |
|
% Change |
|
2013 |
|
2012 |
|
% Change |
|
| ($000s, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
| FINANCIAL |
|
|
|
|
|
|
|
|
|
|
|
|
| Oil and natural gas revenues |
44,551 |
|
41,678 |
|
7 |
|
131,529 |
|
133,510 |
|
(1 |
) |
| Funds from operations (1) |
20,321 |
|
19,747 |
|
3 |
|
64,184 |
|
61,545 |
|
4 |
|
| |
Per share - basic ($) |
0.25 |
|
0.24 |
|
4 |
|
0.79 |
|
0.77 |
|
3 |
|
| |
Per share - diluted ($) |
0.25 |
|
0.24 |
|
4 |
|
0.79 |
|
0.77 |
|
3 |
|
| Cash flow from operating activities |
17,646 |
|
20,201 |
|
(13 |
) |
61,832 |
|
60,453 |
|
2 |
|
| Net income (loss) and comprehensive income (loss) |
1,665 |
|
(2,430 |
) |
(169 |
) |
9,970 |
|
558 |
|
1,687 |
|
| |
Per share - basic ($) |
0.02 |
|
(0.03 |
) |
(167 |
) |
0.12 |
|
0.01 |
|
1,100 |
|
| |
Per share - diluted ($) |
0.02 |
|
(0.03 |
) |
(167 |
) |
0.12 |
|
0.01 |
|
1,100 |
|
| Capital expenditures (2) |
49,572 |
|
31,178 |
|
59 |
|
135,237 |
|
128,363 |
|
5 |
|
| Total assets (end of period) |
633,021 |
|
670,358 |
|
(6 |
) |
633,021 |
|
670,358 |
|
(6 |
) |
| Net debt (end of period) (3) |
244,344 |
|
234,467 |
|
4 |
|
244,344 |
|
234,467 |
|
4 |
|
| Shareholders' equity (end of period) |
335,975 |
|
371,094 |
|
(9 |
) |
335,975 |
|
371,094 |
|
(9 |
) |
| COMMON SHARE DATA |
|
|
|
|
|
|
|
|
|
|
|
|
| Shares outstanding (000s) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
At end of period |
81,052 |
|
81,052 |
|
- |
|
81,052 |
|
81,052 |
|
- |
|
| |
Weighted average - basic |
81,052 |
|
80,974 |
|
- |
|
81,052 |
|
79,858 |
|
1 |
|
| |
Weighted average - diluted |
81,397 |
|
81,010 |
|
- |
|
81,268 |
|
80,014 |
|
2 |
|
| OPERATING |
|
|
|
|
|
|
|
|
|
|
|
|
| Sales |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Natural gas (mcf/d) |
25,872 |
|
46,681 |
|
(45 |
) |
28,364 |
|
49,828 |
|
(43 |
) |
| |
NGLs (bbls/d) |
2,701 |
|
3,375 |
|
(20 |
) |
2,829 |
|
3,562 |
|
(21 |
) |
| |
Light crude oil and condensate (bbls/d) |
3,242 |
|
3,066 |
|
6 |
|
3,285 |
|
3,083 |
|
7 |
|
| |
Total oil equivalent (boe/d) |
10,255 |
|
14,222 |
|
(28 |
) |
10,841 |
|
14,950 |
|
(28 |
) |
| Average wellhead prices |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Natural gas ($/mcf) |
2.90 |
|
2.38 |
|
22 |
|
3.30 |
|
2.24 |
|
47 |
|
| |
NGLs ($/bbl) |
27.57 |
|
22.64 |
|
22 |
|
25.77 |
|
26.89 |
|
(4 |
) |
| |
Light crude oil and condensate ($/bbl) |
101.88 |
|
84.32 |
|
21 |
|
94.50 |
|
88.42 |
|
7 |
|
| |
Combined average ($/boe) |
46.77 |
|
31.36 |
|
49 |
|
44.00 |
|
32.09 |
|
37 |
|
| Netbacks ($/boe) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Operating (4) |
27.50 |
|
19.20 |
|
43 |
|
27.83 |
|
19.23 |
|
45 |
|
| |
Funds from operations (1) |
21.54 |
|
15.09 |
|
43 |
|
21.69 |
|
15.02 |
|
44 |
|
| Gross (net) wells drilled (#) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Natural gas |
2 (2.0 |
) |
2 (2.0 |
) |
- (- |
) |
5 (3.5 |
) |
10 (9.7 |
) |
-50(-64 |
) |
| |
Oil |
12 (10.3 |
) |
8 (5.1 |
) |
50 (102 |
) |
29 (26.0 |
) |
26 (20.4 |
) |
12(27 |
) |
| |
Total |
14 (12.3 |
) |
10 (7.1 |
) |
40 (73 |
) |
34 (29.5 |
) |
36 (30.1 |
) |
-6(-2 |
) |
| Average working interest (%) |
88 |
|
71 |
|
24 |
|
87 |
|
84 |
|
4 |
|
(1) Funds from operations, funds from operations per share and funds from operations per boe are not recognized measures under International Financial Reporting Standards (IFRS). Refer to the Management's Discussion and Analysis for further discussion.
(2) Total capital expenditures, including acquisitions and excluding proceeds on dispositions.
(3) Current assets less current liabilities, bank debt and the $60 million face value of the convertible debentures, excluding current derivative instruments and held-for-sale assets and liabilities.
(4) Operating netback equals oil and natural gas revenues including realized gains and losses on derivative instruments less royalties, operating costs and transportation costs calculated on a per-boe basis. Operating netback is not a recognized measure under IFRS and therefore may not be comparable with the calculations of similar measures presented by other companies.
(5) For a description of the boe conversion ratio, refer to "Boe Conversions" in the Management's Discussion and Analysis.
Financial Highlights
In the third quarter of 2013, oil and natural gas revenues were $44.6 million compared to $43.7 million in the second quarter of 2013. Third quarter 2013 funds from operations increased by approximately 27% over the same period for 2012 after adjusting 2012 amounts for the funds flow contributions related to the disposed non-core Edson assets. Funds from operations for the third quarter were $20.3 million or $0.25 per diluted share, similar to funds from operations for the second quarter of 2013 of $20.4 million. Funds from operations for the third quarter of 2013 were positively impacted by improved commodity pricing, especially from increased oil production, offset by higher royalties.
Third quarter production was 10,255 boe/day, down 6% from second quarter 2013 production of 10,926 boe/day and down by 28% versus the same period in 2012, reflecting the transition to fewer but more profitable barrels of oil equivalent and the impact of the sale of the non-core Edson natural gas assets. Approximately 2,800 boe/day in production related to the disposed non-core Edson assets is included in the comparative numbers for the third quarter of 2012. Production decreased approximately 28% for the nine months ended September 30, 2013 versus the same period of 2012, which includes approximately 2,900 boe/day of production related to the disposed Edson assets. Third quarter 2013 production was impacted by natural declines in production due to reduced drilling activity during the second quarter 2013 spring break-up and both scheduled and unscheduled facility downtime during the third quarter 2013. This decline in production was offset by higher than anticipated realized commodity prices.
Light crude oil and condensate production averaged 3,242 bbls/day in the third quarter, which was in line with second quarter 2013 and increased 6% versus third quarter 2012 production. During the three months ended September 30, 2013, Angle's commodity volume mix was as follows:
- 42% natural gas versus 55% for the same period in 2012;
- 32% light crude oil and condensate versus 21% for the same period in 2012; and
- 26% NGLs versus 24% for the same period in 2012.
Angle's operating netback in the third quarter was $27.50/boe, a 43% improvement over the average operating netback of $19.20/boe in the third quarter of 2012, reflecting the transition to more profitable production.
Operational Highlights
Highlights of Angle's third quarter operations were previously released in a press release dated September 23, 2013. Year-to-date, Angle drilled 34 gross (29.5 net) wells, primarily focused on drilling Cardium light crude oil projects. Angle has an average working interest of 87% and a 97% drilling success rate.
During the third quarter, Angle drilled and rig released 14 gross (12.3 net) horizontal wells, with 100% success. Of the 14 gross wells, 6 gross (4.3 net) were in Ferrier, 7 gross (7.0 net) were at Harmattan, and there was 1 gross (1.0 net) at Lone Pine Creek.
Capital investment in the third quarter of 2013 was $49.6 million, which included $44.0 million on drilling, completions, equipping and tie-in of wells. For 2013 year-to-date, Angle invested $135.2 million, which included $116.2 million on drilling, completions, equipping and tie-in of wells. The Company conducted an efficient drilling program in the third quarter, with the result that some capital activity originally scheduled in the fourth quarter was accelerated into the third quarter, including the drilling of two additional wells and the construction of an emulsion line and well batteries. As a result of the successful third quarter drilling program, October monthly average production is approximately 11,450 boe/day (41% natural gas, 34% light oil and condensate, and 25% NGLs). October average daily production rates were reduced by approximately 270 boe/day due to a seven day unplanned maintenance shut-down at the Keyera Strachan processing facility.
During the third quarter of 2013, Angle added to its significant land position in the Davey area bringing the total inventory to over 50 net sections of 100% working interest, Crown acreage in the emerging Mannville light crude oil play. A second well (100% working interest) was drilled and completed in the third quarter in Davey, a three mile step out from the initial discovery well. The well, which was drilled to preserve land tenure and to test reservoir quality in the northern area of the play, has been placed on pump and continues to clean up post the slick-water fracture completion. The discovery well continues to show stable rates and is producing on pump at approximately 175 boe/day with approximately 64% light crude oil and condensate volumes.
An additional (100% working interest) well is currently being drilled, and will be completed during the fourth quarter in the Davey area.
For the three months ended September 30, 2013 operating expenses per boe increased to $6.07/boe compared to the third quarter 2012 of $5.93/boe. For the nine months ended September 30, 2013 operating expenses per boe increased to $5.89/boe from $5.67/boe in the comparable period of 2012. The increase in operating costs per barrel is a function of the Company producing a higher percentage of light crude oil and NGLs, which carries a higher operating cost per boe versus the production of natural gas. The increase was partially offset by operational cost savings as a result of the Company's 100% owned oil battery at Harmattan.
2013 CAPITAL PROGRAM AND GUIDANCE
Subject to the closing of the proposed transaction with Bellatrix, the Company reaffirms its guidance previously provided on August 8, 2013.
The Company expects to invest between $145 million and $150 million for 2013. As a result, the Company expects to drill at least 37 wells (31.1 net) in 2013 and is forecasting full-year average production to be approximately 10,500 boe/day to 10,800 boe/day, with an exit rate of between 10,500 boe/day and 11,000 boe/day. Angle continues to focus on the higher value light crude oil and liquids barrels, and estimates that light crude oil and liquids will comprise approximately 56% of the total average annual production per day.
ABOUT ANGLE
Angle Energy Inc. is a public, Calgary-based oil and gas exploration and development company incorporated in 2004. Angle's objective is to build shareholder value through the profitable growth of its high quality asset base through a combination of drilling and strategic acquisitions. Angle's proven and dedicated team of industry specialists are focused on identifying and developing high quality assets in the Western Canadian Sedimentary Basin, with an emphasis in west central Alberta. Common shares of Angle are listed for trading on the Toronto Stock Exchange under the symbol "NGL."
Basis of Presentation
Production information is commonly reported in units of barrel of oil equivalent ("boe"). For purposes of computing such units, natural gas is converted to equivalent barrels of crude oil using a conversion factor of six thousand cubic feet of gas to one barrel of oil. This conversion ratio of 6:1 is based on an energy equivalent conversion for the individual products, primarily applicable at the burner tip, and does not represent a value equivalency at the wellhead. Such disclosure of boe may be misleading, particularly if used in isolation.
Future Outlook and Forward-Looking Information
Information set forth in this press release contains estimates and forward-looking statements and are made as of November 6, 2013, including production levels and product mix, impact of operating expenses and estimated cash flows on forecast net debt levels, identification of new projects and drilling results. These forward-looking statements are based on assumptions as of that date and the reader should refer to the forward-looking statements section disclosed in September 30, 2013 Management Discussion and Analysis and the most recent Annual Information Form as filed on SEDAR. By their nature, estimates and forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Angle's control, including, among other things, timing of the Company's and Bellatrix's securityholder meetings and the timing and completion of the transaction, impact of reservoir quality, decline rates, volatility of commodity prices, drilling techniques, costs of third party services, general economic conditions, industry conditions, environmental risks, competition and interest from other industry participants, the lack of availability of qualified personnel or management, ability to access sufficient capital, the timely receipt of required court and regulatory approval and satisfaction of other closing conditions in all material respects in accordance with the terms of the Arrangement Agreement and the ability to identify and consummate business opportunities.
New factors emerge from time to time, and it is not possible for Management to predict all of such factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Company's course of action would depend upon its assessment of the future considering all information then available.
Readers are cautioned that the assumptions and factors discussed in this press release are not exhaustive and that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise, and as such, undue reliance should not be placed on forward-looking statements. Angle's actual results, performance or achievement could differ materially from those expressed in, or implied by, these estimates and forward-looking statements, and accordingly, no assurance can be given that any of the events anticipated by the estimates and forward-looking statements will transpire or occur, or if any of them do so, what benefits that Angle or its shareholders will derive there from. Unless required by law, Angle disclaims any intention or obligation to update or revise any estimates and forward-looking statements, whether as a result of new information, future events or otherwise. The estimates and forward looking statements are expressly qualified by these cautionary statements.