CUT BANK, MT, Dec. 1, 2014 /CNW/ - Mountainview Energy Ltd. ("Mountainview" or the "Company") (TSXV: MVW) is pleased to announce its operating and financial results for the quarter ended September 30, 2014. The Company also announces that its reviewed financial statements and management's discussion and analysis for the quarter ended September 30, 2014, are available on SEDAR at www.sedar.com, and on Mountainview's website at www.mountainviewenergy.com.
Highlights of Mountainview's successful Q3 2014 are as follows:
- Successfully drilled three wells (1.0 net) in the quarter. This is the eleventh operated well drilled successfully, representing a 100% success rate in drilling operations. Initial production results continue to improve, with capital expenditures decreasing. The most recent well recorded a Company best IP30 rate of 552 boepd (348 boe/d net) and a Company low capital expenditure of $5.8 million ($3.7 million net). The remaining two wells drilled in Q3 are awaiting completion operations.
- Continued the workover program with one well (0.3 net) converted to a Rotoflex pump in the quarter. This makes a total of five wells (2.6 net) converted to longer life, lower operating cost Rotoflex pumps, out of the eight total (5.2 net) producing wells in Divide County, N.D. The remaining three wells will be converted when the current pumps reach the end of their useful life.
- Despite production interruptions due to previously discussed workovers, average production for the nine months ended September 30, 2014 was 839 boe/d, an increase of 44% over the average of 584 boe/d for nine months ended September 30, 2013.
- Generated operating netbacks of $28.83 per boe in Q3 2014, an increase of 10% when compared to $26.13 per boe in Q3 2013.
- Petroleum and natural gas sales for the nine months ended September 30, 2014 were $19 million, a 45% increase over the $13.1 million for the nine months ended September 30, 2013.
Certain selected quarterly financial and operational information is outlined below and should be read in conjunction with Mountainview's reviewed financial statements for the three and nine months ended September 30, 2014 and the audited financial statements for the years ended December 31, 2013 and 2012 and the accompanying management discussion and analysis filed with the Canadian securities regulatory authorities which may be accessed through the SEDAR website (www.sedar.com) and also on the Company's website: www.mountainviewenergy.com.
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($000's except per share amounts)
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Q3 2014
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9 Months Ended
Sept. 30, 2014
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Q3 2013
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9 Months Ended
Sept. 30, 2013
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Average production (boe/d)
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807
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839
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711
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584
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Petroleum and natural gas sales
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5,883
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19,000
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5,993
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13,070
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Operating netback (per boe)(1)
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28.83
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34.37
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26.13
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25.08
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Funds flow from operations(2)
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(332)
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(50)
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3,830
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4,389
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Per share basic
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(0.00)
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(0.00)
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0.02
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0.00
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Per share diluted
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(0.00)
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(0.00)
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0.02
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0.00
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Net income (loss)
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(1,638)
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(9,448)
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(387)
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(2,833)
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Per share basic
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(0.02)
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(0.11)
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(0.01)
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(0.03)
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Per share diluted(3)
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(0.02)
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(0.11)
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(0.01)
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(0.03)
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Capital expenditures(4)
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7,403
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21,646
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7,262
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30,345
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Total assets
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101,208
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101,208
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74,265
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74,265
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Net debt excluding financial derivatives(5)
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75,911
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75,911
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46,883
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46,883
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(1)
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Operating netback is a non-GAAP measure calculated as the average per boe of the Company's oil and gas sales plus realized gains on derivatives, less royalties, operating and transportation expenses.
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(2)
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Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with International Financial Reporting Standards as an indicator of Mountainview's performance. Funds flow from operations represents cash flow from operating activities prior to changes in non-cash working capital, transaction costs and decommissioning provision expenditures incurred. Mountainview also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share.
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(3)
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Due to the anti-dilutive effect of Mountainview's net loss for the three months and year ended December 31, 2013 and 2012, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts.
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(4)
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Capital expenditures are a non-GAAP measure, calculated as the purchase or sale price of an asset, plus development capital expenditures added to PP&E. Corporate acquisitions are excluded from this measure.
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(5)
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Net debt is a non-GAAP measure representing the total of bank indebtedness, accounts payables and accrued liabilities, less accounts receivables, deposits and prepaid expenses.
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Corporate
Mountainview exited the quarter with increased average production and operating netbacks when compared to the prior period quarter. New wells brought online in 2014 have offset intermittent production outages from ongoing workover operations to optimize pumps in Divide County, N.D. In addition, wells with the new Rotoflex pump have experienced no downtime. Mountainview expects to convert all wells to Rotoflex pumps once fluid levels naturally decline to a level best managed by a Rotoflex pump, and when the existing electronic submersible pumps reach the end of their useful life. Going forward, this pump optimization is expected to reduce operating costs and downtime, resulting in higher monthly average production volumes and operating netbacks. The workover operations impacted the lease operating costs for the quarter, resulting in a lower quarter over quarter operating netback per boe. Mountainview also experienced increased financing costs as a result of increased debt in the quarter. The net loss was further compounded by falling commodity prices in the quarter. Mountainview anticipates continuing the development of the infill drilling inventory, benefitting from capital efficiencies associated with pad drilling.
Financial
At quarter-end, Company net debt was $75.9 million and the Company had $49.4 million drawn on its available credit facility of $55.6 million. Funds flow from operations for Q3 2014 decreased from Q3 2013, mainly due to increased operating expenditures.
Exposure to volatility of differentials from WTI and industry concerns with respect to transportation restrictions in the Williston Basin translated into realized prices ranging from $86.63 per barrel of oil in Q3 2013, to $84.33 per barrel of oil in Q3, 2014. In response to this price volatility, the Company has entered into a financial hedging program which commenced in January, 2014. Mountainview had 10% of its production hedged for Q3, 2014, with a floor of $85.00 and a ceiling of $97.70. The Company plans to actively manage its hedging program as its production base grows.
Operations
The Company's Q3 2014 capital plan on its core 12 Gage asset in Divide County, N.D. included the drilling of three wells (1.0 net) and the installation of a Rotoflex pump on one well (0.3 net). The capital program in the quarter cost $7.4 million net to the Company with a 100% success rate. At quarter-end, the 3 wells (1.0 net) had been drilled in the target zone and were awaiting completion. Production equipment was also installed in the third quarter.
The Company has selectively increased its working interest in its assets whenever appropriate as it has become more experienced operationally. This experience has resulted in decreased capital costs on a per well basis from $8.3 million per well to $5.8 million per well.
Outlook
Mountainview has continued to deliver on its strategy of production and reserve growth. Utilizing funds flow from operations, available credit on its existing credit facility, and equity financing as necessary, Mountainview will continue to focus on the development of its core 12 Gage asset in Divide County, N.D.
The Company will continue to pursue a growth strategy using a combination of cash flow and available credit. Mountainview continues to monitor the commodity price environment and is actively pursuing a cost reduction strategy to maximize returns on its production.
Further development of the 12 Gage project may be accelerated through an equity financing and/or the refinancing of the existing line of credit. Any equity financing or debt refinancing would be dependent on capital requirements and market conditions, and subject to management and board approval.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas company listed on the TSX Venture Exchange, with a primary focus on the exploration, production and development of the Bakken and Three Forks Shale in the Williston Basin and the South Alberta Bakken.
Forward-Looking Statements
Certain information contained in this press release constitutes forward-looking statements. Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, the lack of availability of qualified service providers, personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, inability to meet or continue to meet listing requirements, the inability to obtain required consents, permits or approvals and the risk that actual results will vary from the results forecasted and such variations may be material. Readers are cautioned 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. The Company's actual results, performance or achievement could differ materially from those expressed in or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom.
The forward-looking statements contained in this press release are made as of the date of this press release. Mountainview disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Additionally, Mountainview undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf/bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Mountainview Energy Ltd.
Patrick M. Montalban, President & Chief Executive Officer, E-Mail: mvw@bresnan.net, Fax: (406) 873-2835; Brent Osmond, Vice President Finance & Chief Financial Officer, E-Mail: brento@mountainviewenergy.com, Phone: (403) 999-8511Copyright CNW Group 2014