CALGARY, ALBERTA--(Marketwired - May 27, 2014) - Lightstream Resources Ltd. ("Lightstream" or the "Company") (TSX:LTS), is pleased to announce that our new Swan Hills battery is operational and that we have entered into an agreement to complete a further non-core asset disposition for gross proceeds of $98 million. In connection with the disposition, we have updated our production guidance for the year.
The Swan Hills region of our Alberta/BC business unit has become an area of focus and growth for Lightstream. To support this growth we have built a 3,500 bopd battery, which has been 100% commissioned and is now commencing operations. The seven wells we drilled and completed during this past winter drilling season are being brought on-stream through this facility and are expected to add over 2,000 boepd (95% light oil) of production for the full month of June. In addition, four other wells that currently produce through multi-well truck-out batteries are now tied-in to our new facility, resulting in additional conserved sales gas volumes. The battery and extensive tie-in activities, including a 1.8 km sales oil pipeline and 7.6 km gas pipeline, have been completed on budget at a total cost of $26 million and will provide us a platform to expand operations in the area. We plan to drill at least four additional wells in the second half of the year, which will also be tied into this facility. With this battery coming on-stream, we expect second quarter production to be in-line with our first quarter.
We continue to execute on our asset disposition plan and have entered into an agreement, expected to close mid-July, to sell a portion of our Conventional business unit assets in southeast Saskatchewan for gross proceeds of $98 million. These non-core assets consist of approximately 1,000 boepd of production (96% liquids weighted), 3.9 MMboe of proved plus probable ("2P") reserves, and 36,250 net acres of land (20,160 net undeveloped acres).
The asset disposition package represents 20% of the production associated with our Conventional business unit and includes 700 (356 net) wells, representing 36% of our Conventional business unit wellbores. Transaction metrics for this non-core asset disposition are:
- Annualized Q1 2014 Cash flow: 5.2x
- Q1 2014 Production: $98,000/boepd
- Proved and Probable Reserves: $25.13/boe ($29.10/boe, including future development costs)
Subject to the successful closing of this disposition, we also expect to reduce our decommissioning liabilities by approximately $17 million.
This property sale advances our 2014 and 2015 objectives to reduce debt and achieve $600 million of non-core asset disposition proceeds. Including this current transaction, our cumulative 2014 asset disposition proceeds are $351 million. While we have exceeded our 2014 minimum target of $300 million, we plan to continue to actively pursue additional dispositions this year. The table below is a summary of our 2014 non-core asset sales.
| |
Dispositions
To-Date |
Current
Transaction |
Total |
Cumulative Metrics |
| Production |
2,015 boepd |
1,000 boepd |
3,015 boepd |
$116,418/boepd |
| Reserves (2P) |
3.8 MMboe |
3.9 MMboe |
7.7 MMboe |
$48.38/boe(1) |
| Cash Flow |
$ 25 M |
$19 M |
$44 M |
8.0x |
| Disposition Proceeds |
$ 253 M |
$ 98 M |
$351 M |
|
| (1) |
Future development costs of $21.5 million included in reserve metric calculation |
On a go-forward basis, the cash flow impact of these dispositions is improved by at least $12 million in cash interest savings.
2014 Guidance Update
In connection with our $98 million non-core asset disposition, we are revising our full year average production guidance, with the remainder of guidance unchanged for 2014.
| |
REVISED GUIDANCE
May 27, 2014 |
ORIGINAL GUIDANCE
March 3, 2014 |
| |
|
|
| Average Production (boe/d) |
43,000 - 45,000 |
43,500 - 45,500 |
| |
|
|
| Exit Production (boe/d) |
unchanged |
45,000 - 47,000 |
| |
|
|
| Oil and Liquids Weighting |
unchanged |
80% |
| |
|
|
| Funds Flow(1) |
|
|
| |
|
|
| |
Funds Flow from Operations ('000) |
unchanged |
$635,000 - $665,000 |
| |
|
|
| |
Funds Flow per share(2) |
unchanged |
$3.19 - $3.34 |
| |
|
|
| Dividends per share |
unchanged |
$0.48 |
| |
|
|
| Capital Expenditures(3) |
|
|
| |
|
|
| |
Drill, Complete, Equip and Tie-in ('000) |
unchanged |
$350,000 - $370,000 |
| |
|
|
| |
Facilities, Workovers and Optimizations ('000) |
unchanged |
$120,000 - $140,000 |
| |
|
|
| |
Land, Seismic and Other ('000) |
unchanged |
$55,000 - $65,000 |
| |
|
|
| Total Capital Expenditures ('000) |
unchanged |
$525,000-$575,000 |
| |
|
| (1) |
Commodity price assumptions include WTI US$95.00/bbl, AECO CDN$4.00/Mcf, foreign exchange rate of US$/CDN$0.90, and corporate light oil differential of 10%. |
| |
| (2) |
Funds flow per share calculation based on 199 million shares outstanding for 2014. |
| |
| (3) |
Projected capital expenditures exclude acquisitions, which are evaluated separately. |
Lightstream Resources Ltd. is an oil and gas exploration and production company combining light oil Bakken and Cardium resource plays with conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. Lightstream is applying leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with other emerging resource play opportunities. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.
Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to an asset disposition, expected facilities, expected future tie-in of future production to facilities, results from operations, future production rates, proposed exploration and development activities (including the number of wells to be drilled, completed and put on production), projected capital expenditures, the timing of certain projects, the anticipated completion of asset dispositions, and future dividend payments. The forward-looking statements are based on certain key expectations and assumptions, including closing of the asset disposition, expectations and assumptions concerning the success of future drilling, completion, recompletion and development activities, the performance of new and existing wells, prevailing commodity prices and economic conditions, the market for asset dispositions and the ability of counterparties to close on dispositions, the availability and cost of labour and services, timing of pipeline and facilities construction, access to third party facilities and weather and access to drilling locations. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, risks that asset dispositions cannot be completed, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), commodity price and exchange rate fluctuations and general economic conditions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. Except as may be required by applicable securities laws, Lightstream assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.
BOEs. Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.
Well Counts. All references to well counts are on a net basis.