CALGARY, AB--(Marketwired - August 20, 2015) - Kicking Horse Energy Inc. ("Kicking Horse" or the "Company") (TSX VENTURE: KCK) reports its operating and financial results for the three and six months ended June 30, 2015. The condensed interim consolidated financial statements and notes, as well as Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2015, are available on Kicking Horse's website and have been filed on SEDAR.
Highlights for Three Months Ended June 30, 2015
- Completed expansion of 16-7-63-5 W6M compressor and condensate stabilization facility ("16-7 Facility").
- Production increased to, and has been maintained at, approximately 4,000 boe/d since completing the 16-7 Facility expansion, with production for the three months ended June 30, 2015 averaging 3,034 boe/d.
- Brought 3 (2.25) net wells on production.
- Completed the 1-11-63-6 W6 and 8-11-63-6 W6 ("1-11 Well" and "8-11 Well") (1.5 net) wells.
- Sold 2.9 net sections, on an after earning basis, of shallow rights in the Wapiti area for $3.0 million.
- Acquired nine 100% working interest sections of Montney rights in Kakwa immediately offsetting the Company's West Kakwa acreage and within three miles of its East Kakwa production block in exchange for 27 sections of deep rights at Chime.
- As at June 30, 2015 Kicking Horse's debt to annualized Q2 2015 cash flow ratio was 1.7 times, down from 5.3 times at Q1 2015 and is based on Q2 2015 production volumes (being approximately 75% of current production).
Operations Update
Each of the 14-25-63-6 W6 and 15-25-63-6 W6 wells ("14-25 Well" and "15-25 Well") were fraced with sliding sleeve technology and each has now produced for over 90 days. The 90 day initial production ("IP 90") rates from each of these wells exceed the highest IP 90 rates experienced by the Company to date. The 14-25 Well has produced at gross average rates of 3,735 mcf/d and 704 bbls/d of liquids for a total average IP 90 production rate of 1,326 boe/d (gross), while the 15- 25 Well has produced at gross average rates of 3,421 mcf/d and 665 bbls/d of liquids for a total average IP 90 production rate of 1,235 boe/d (gross).
As previously announced, Kicking Horse recently resumed drilling operations, spudding the 13-25-63-6 W6 well ("13-25 Well") on July 5, 2015. The Company has now finished drilling the 13-25 Well and has prepared the well for completion operations, planning up to 98 individual fracs with frac spacing as close as 20 meters. Downhole pressure data from wells recently completed by the Company at East Kakwa has confirmed that fracs spaced at 30 meters are not in communication with each other, encouraging tighter frac spacing. Given the superior performance of the Company's newly completed wells, Kicking Horse expects that this tighter frac spacing should result in additional hydrocarbon production and improved economics from upcoming wells.
The Company will continue to demonstrate financial and operational flexibility. The Company has finished completion operations on, and has flow tested, the 1-11 Well and the 8-11 Well (1.5 net) in July 2015. The 1-11 Well has now been successfully brought on production and 8-11 Well is expected to be brought on production within the next few weeks. The Company has moved its contracted drilling rig to the 8-35-63-7 W6 location for the planned drilling of a vertical test well on its recently acquired Kakwa acreage.
The Company has delayed any additional drilling operations after the vertical test well until 2016. Within a scaled back capital program, the Company will proceed with completion of the 13-23-63-6 W6 ("13-23 Well") and the 13-25 Well (1.75 net) in late Q3 or early Q4 2015, which wells are expected to be on production late in 2015. The Company expects its 2015 capital program to be approximately $55 million with approximately $22 million to be incurred in the second half of the year with the majority of these expenditures expected to be incurred in Q3 2015.
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Financial and Operating Highlights |
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Financial
(000s, except per share amounts) |
| 3 Months
Ended Jun.
30, 2015 |
| | 3 Months
Ended Jun.
30, 2014 |
| | % Change |
| 6 Months
Ended Jun.
30, 2015 |
| | 6 Months
Ended Jun.
30, 2014 |
| | % Change |
| Petroleum and natural gas sales |
| $ | 12,130 |
| | $ | 3,113 |
| | 290% |
| $ | 18,065 |
| | $ | 6,855 |
| | 164% |
| Net income (loss) |
| | (2,144 |
) | | | 1,087 |
| | -297% |
| | (3,902 |
) | | | 2,555 |
| | -253% |
| | Per share- Basic |
| | (0.04 |
) | | | 0.06 |
| | -164% |
| | (0.06 |
) | | | 0.13 |
| | -149% |
| | Per share- Diluted |
| | (0.04 |
) | | | 0.05 |
| | -167% |
| | (0.06 |
) | | | 0.13 |
| | -151% |
| Funds from operations(1) |
| $ | 7,031 |
| | $ | 1,830 |
| | 284% |
| $ | 9,126 |
| | $ | 4,096 |
| | 123% |
| | Per share- Basic |
| | 0.12 |
| | | 0.09 |
| | 25% |
| | 0.15 |
| | | 0.21 |
| | -28% |
| | Per share- Diluted |
| | 0.12 |
| | | 0.09 |
| | 30% |
| | 0.15 |
| | | 0.20 |
| | -26% |
| Capital expenditures (net) |
| | 9,738 |
| | $ | 3,686 |
| | 164% |
| $ | 33,230 |
| | $ | 10,313 |
| | 222% |
| Net debt |
| | 47,811 |
| | | (4,435 |
) | | -1178% |
| | 47,811 |
| | | (4,435 |
) | | -1178% |
| Total assets |
| $ | 271,955 |
| | $ | 94,013 |
| | 189% |
| $ | 271,955 |
| | $ | 94,013 |
| | 189% |
| Shares outstanding (000s) |
| | 60,413 |
| | | 21,355 |
| | 183% |
| | 60,413 |
| | | 21,355 |
| | 183% |
| Operations |
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| Average daily production |
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| | | |
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| | Condensate & Oil (bbls/d) |
| | 1,582 |
| | | 244 |
| | 550% |
| | 1,268 |
| | | 269 |
| | 372% |
| | Other NGLs (bbls/d) |
| | 103 |
| | | - |
| | na |
| | 76 |
| | | - |
| | na |
| | Natural gas (mcf/d) |
| | 8,089 |
| | | 1,241 |
| | 552% |
| | 6,826 |
| | | 1,332 |
| | 413% |
| Combined (boe/d) |
| | 3,034 |
| | | 450 |
| | 574% |
| | 2,482 |
| | | 491 |
| | 406% |
| Average prices received |
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| | Condensate & Oil ($/bbl) |
| $ | 65.64 |
| | $ | 111.61 |
| | -41% |
| $ | 59.49 |
| | $ | 110.05 |
| | -46% |
| | Other NGLs ($/bbl) |
| | 26.40 |
| | | na |
| | na |
| | 24.63 |
| | | na |
| | na |
| | Natural gas ($/mcf) |
| | 63.24 |
| | | 111.61 |
| | -43% |
| | 57.52 |
| | | 110.05 |
| | -48% |
| Combined ($/boe) |
| $ | 43.94 |
| | $ | 75.98 |
| | -42% |
| $ | 40.21 |
| | $ | 77.18 |
| | -48% |
| | Royalties |
| | (2.09 |
) | | | (6.59 |
) | | -68% |
| | (2.10 |
) | | | (5.22 |
) | | -60% |
| | Operating expense |
| | (7.37 |
) | | | (12.30 |
) | | -40% |
| | (7.49 |
) | | | (8.80 |
) | | -15% |
| | Transportation expense |
| | (4.56 |
) | | | (4.56 |
) | | 0% |
| | (5.36 |
) | | | (6.47 |
) | | -17% |
| Operating netback ($/boe)(2) |
| $ | 29.92 |
| | $ | 52.53 |
| | -43% |
| $ | 25.26 |
| | $ | 56.69 |
| | -55% |
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| Notes: | | |
| (1) | | Funds from operations is a non-IFRS measure. The comparable IFRS measure is cash flow from operating activities. A reconciliation of the two measures can be found in the MD&A. |
| (2) | | Netback is a non-IFRS measure. Netback per boe is calculated by dividing the revenue and costs in total for the Company by the total production of the Company measured in boe. |
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About Kicking Horse Energy Inc.
Kicking Horse Energy Inc. is a public oil and gas company which is primarily focused on the development of Alberta's liquids-rich Montney Formation tight gas play. For more information, please see the Company's website: www.kickinghorseenergy.com
ADVISORY ON FORWARD-LOOKING STATEMENTS: This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "continue", "anticipate", "estimate", "may", "will", "should", "believe", "plans", "cautions" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains statements concerning expected results from tighter frac spacing in upcoming wells to be drilled, the timing for the 8-11 Well to be brought on production, the timing to drill a vertical well on recently acquired acreage, the timing of completion operations on, and expected production from, the 13-23 Well and the 13-25 Well and the amount and timing of capital expenditures in the second half of 2015.
Forward-looking statements or information are based on a number of material factors, expectations or assumptions of Kicking Horse which have been used to develop such statements and information but which may prove to be incorrect. Although Kicking Horse believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Kicking Horse 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. In particular, in addition to other factors and assumptions which may be identified herein, no assurances can be given respecting: whether the Company's exploration and development activities respecting the Deep Basin project will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; that the results of production tests will be indicative of the long-term performance of the recently drilled wells or of ultimate recovery from the recently drilled wells; the ultimate size and scope of any hydrocarbon bearing formations at the Deep Basin project; that additional drilling operations in the Deep Basin project will be successful such that further development activities in this area is warranted; that Kicking Horse's efforts to raise additional capital will be successful; that Kicking Horse will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the accuracy of the estimates of Kicking Horse's reserve volumes; the general stability of the economic and political environment in which Kicking Horse operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Kicking Horse to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Kicking Horse operates; and the ability of Kicking Horse to successfully market its oil and natural gas products.
Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Kicking Horse or by third party operators of Kicking Horse's properties, increased debt levels or debt service requirements; inaccurate estimation of Kicking Horse's oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Kicking Horse's public disclosure documents. Additional information regarding some of these risk factors may be found under "Risk Factors" in the Company's annual MD&A for the period ended December 31, 2014 and in the Company's Annual Information Form, both of which can be found at www.sedar.com. The reader is cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and Kicking Horse undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Certain Defined Terms
boe - barrels of oil equivalent
boe/d - barrels of oil equivalent per day
bbl - barrel
bbls/d - barrels per day
mcf - thousand cubic feet
mcf/d - thousand cubic feet per day
ADVISORY ON USE OF "boes": "boes" 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: 1 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.
Non-IFRS Measurements: Within this release references are made to terms commonly used in the oil and gas industry. Funds from operations, funds from operations per share and netbacks do not have any standardized meaning under IFRS and are referred to as non-IFRS measures. Funds from operations per share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net income per share. Operating netbacks equal total petroleum and natural gas sales net of royalties less operating and transportation expenses calculated on a boe basis. Management utilizes these measures to analyze operating performance. The Company's calculation of the non-IFRS measures included herein may differ from the calculation of similar measures by other issuers. Therefore, the Company's non-IFRS measures may not be comparable to other similar measures used by other issuers. Funds from operations is not intended to represent operating profit for the period nor should it be viewed as an alternative to operating profit, net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Non-IFRS measures should only be read in conjunction with the Company's annual audited and interim financial statements. A reconciliation of these measures can be found in the MD&A.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.