CALGARY, ALBERTA--(Marketwired - Feb. 11, 2016) - Lightstream Resources Ltd. ("Lightstream" or the "Company") (TSX:LTS) announces 2015 year-end reserves and first half 2016 guidance.
HIGHLIGHTS
2015 RESERVES
- The net present value (before tax, discounted at 10%) of our 2015 year-end 2P reserves was $2.2 billion based on our independent reserve evaluation and, excluding debt, equates to $2.90 per basic share.
- Our 2015 year-end reserves evaluation resulted in 2P reserves of 142.4 MMboe (77% light-oil and liquids weighted).
- Minimal capital investment in a low commodity price environment resulted in 2P reserve additions of 4.3 MMboe, representing a 37% replacement of production. These additions were offset by economic revisions of 5.1 MMboe due to lower commodity price assumptions and technical revisions of 6.2 MMboe attributable to well performance, undeveloped locations and land expiries.
- Our 2015 2P finding & development ("F&D") cost excluding revisions was $24.88/boe. The decrease in 2P reserves, including revisions, and negative capital estimate, including lower future development costs ("FDC"), resulted in a 2015 2P F&D cost of $30.26/boe.
GUIDANCE
- 2015 production averaged 31,392 boepd, Q4 2015 production averaged 28,260 boepd with exit production of 27,410 boepd (December 2015), all within our 2015 guidance estimates.
- 2015 capital expenditures (unaudited and before asset acquisitions and divestitures ("A&D")) were $107 million, in line with 2015 guidance estimates.
- As commodity prices have continued their trajectory downward, we are maintaining a conservative capital plan for the first half of 2016 of approximately $16 million, with spending principally focused on capital maintenance projects, optimization and EOR initiatives.
- With this moderate level of investment, we anticipate production to average between 25,000 to 25,500 boepd for the first half of 2016.
- Assuming a WTI oil price of US$35/bbl, an AECO gas price of $2.50/mcf and a Cdn$/US$ exchange rate of $0.70, we are projecting 1H 2016 EBITDA of approximately $48 million and funds flow from operations to be approximately -$22 million.
- Based on year-end 2015 debt balances, we currently have approximately $195 million in available liquidity under our credit facility, which is subject to a borrowing base review by April 30, 2016.
2015 RESERVES EVALUATION
Independent reserves evaluator, Sproule Associates Limited ("Sproule"), completed their evaluation of Lightstream's reserves effective December 31, 2015 ("Sproule Report").
The Sproule Report was done in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserves information as required under NI 51-101 will be included in our Annual Information Form which will be filed on SEDAR on or before March 31, 2016.
Unless otherwise noted, all reserves herein are "Company Interest" reserves, which represent the Company's working interest and royalty interest share of reserves, before deduction of the Company's royalty obligations.
All values in this press release are based on Sproule's forecast prices and estimates of future operating and capital costs at December 31, 2015.
| RESERVES SUMMARY |
| |
Company Gross1 |
|
Royalty Interests2 |
|
Company Interest |
| |
Total Oil (Mbbl) |
|
NGL (Mbbl) |
|
Natural Gas (MMcf) |
|
Sub-total (Mboe) |
|
Sub-total (Mboe) |
|
Total (Mboe) |
| Proved Developed Producing |
35,724 |
|
5,360 |
|
89,298 |
|
55,967 |
|
165 |
|
56,132 |
| Total Proved |
59,603 |
|
8,138 |
|
130,234 |
|
89,447 |
|
171 |
|
89,618 |
| Proved + Probable (2P) |
97,240 |
|
12,657 |
|
193,572 |
|
142,159 |
|
262 |
|
142,421 |
- Company Gross reserves represent the Company's working interest share of reserves excluding the Company's royalty interests in reserves and before deduction of royalty obligations.
- Royalty interest reserves owned by the Company.
COMPANY INTEREST RESERVE RECONCILIATION (Mboe)
| |
Proved Developed |
|
Total |
|
Proved+ |
|
| |
Producing |
|
Proved |
|
Probable |
|
| Lightstream reserves at December 31, 2014 |
67,248 |
|
103,242 |
|
161,222 |
|
| 2015 production |
(11,458 |
) |
(11,458 |
) |
(11,458 |
) |
| Net dispositions |
(161 |
) |
(161 |
) |
(231 |
) |
| Net additions |
503 |
|
(2,005 |
) |
(7,112 |
) |
| Lightstream reserves at December 31, 2015 |
56,132 |
|
89,618 |
|
142,421 |
|
| |
|
|
|
|
|
|
| Lightstream year-over-year change in reserves |
(17 |
%) |
(13 |
%) |
(12 |
%) |
| Lightstream production replacement including revisions1 |
4 |
% |
(17 |
%) |
(62 |
%) |
- Represents net reserve additions as a percentage of 2015 production.
Year-end 2015 2P reserves were 142.4 MMboe, after 11.5 MMboe of production, the addition of 4.3 MMboe as a result of capital investment (representing 37% of 2015 production), 5.1 MMboe in negative economic revisions, 6.2 MMboe in technical revisions and 0.1 MMboe of non-core asset dispositions. Revisions consisted of both proved and probable reserves, mainly in our Cardium business unit.
| PRICE FORECASTS |
| Year |
WTI Cushing Oklahoma ($US/bbl) |
|
Canadian Light Sweet Crude 40º API ($Cdn/bbl) |
|
Alberta AECO-C Spot ($Cdn/MMBTU) |
|
Edmonton Pentanes Plus ($Cdn/bbl) |
|
Edmonton Butane ($Cdn/bbl) |
|
Edmonton Propane ($Cdn/bbl) |
| 2016 |
45.00 |
|
55.20 |
|
2.25 |
|
59.10 |
|
39.09 |
|
9.09 |
| 2017 |
60.00 |
|
69.00 |
|
2.95 |
|
73.88 |
|
51.43 |
|
13.64 |
| 2018 |
70.00 |
|
78.43 |
|
3.42 |
|
83.98 |
|
58.46 |
|
25.84 |
| 2019 |
80.00 |
|
89.41 |
|
3.91 |
|
95.73 |
|
66.64 |
|
35.35 |
| 2020 |
81.20 |
|
91.71 |
|
4.20 |
|
98.19 |
|
68.35 |
|
42.30 |
| 2021 |
82.42 |
|
93.08 |
|
4.28 |
|
99.66 |
|
69.38 |
|
42.94 |
| 2022 |
83.65 |
|
94.48 |
|
4.35 |
|
101.16 |
|
70.42 |
|
43.58 |
| 2023 |
84.91 |
|
95.90 |
|
4.43 |
|
102.68 |
|
71.48 |
|
44.24 |
| 2024 |
86.18 |
|
97.34 |
|
4.51 |
|
104.22 |
|
72.55 |
|
44.90 |
| 2025 |
87.48 |
|
98.90 |
|
4.59 |
|
105.78 |
|
73.64 |
|
45.57 |
| 2026 |
88.79 |
|
100.28 |
|
4.67 |
|
107.37 |
|
74.74 |
|
46.26 |
| Escalation rate of 1.5% thereafter |
The Sproule December 31, 2015 forecast pricing for West Texas Intermediate ("WTI") oil and natural gas at AECO for 2016 was US$45/bbl and CDN$2.25/MMBTU, respectively. This represents a 31% reduction in forecast 2016 WTI oil pricing and a 33% reduction in forecast natural gas pricing when compared to Sproule's forecast pricing for 2016 at December 31, 2014.
NET PRESENT VALUE - BEFORE TAX ($ millions)1,2
| |
0 |
% |
5 |
% |
10 |
% |
| Proved Developed Producing |
$1,557 |
|
$1,257 |
|
$1,042 |
|
| Total Proved |
2,356 |
|
1,775 |
|
1,385 |
|
| Proved + Probable (2P) |
$4,193 |
|
$2,946 |
|
$2,184 |
|
- Estimated values of future net revenue disclosed herein do not represent fair market value.
- Company working interest reserves value plus royalties received less royalties and burdens.
Sproule's net present value of our 2P reserves before tax, discounted at 10%, was $2.2 billion at year end 2015, compared to $3.2 billion at year end 2014. The majority of the reduction is attributable to the lower year-end 2015 price forecast.
F&D AND FD&A COSTS
For the year ended Dec. 31, 2015 |
|
|
|
|
|
|
| |
|
F&D |
|
Acquisitions & Dispositions |
|
FD&A |
|
| Capital expenditures (unaudited-$000s) |
|
|
|
|
|
|
| |
Capital expenditures |
106,571 |
|
- |
|
106,571 |
|
| |
Net Acquisition/Disposition1 receipts |
- |
|
(12,144 |
) |
(12,144 |
) |
| |
Total capital |
106,571 |
|
(12,144 |
) |
(94,427 |
) |
| Less: Land value |
2,092 |
|
|
|
2,092 |
|
| Total capital excluding land value |
104,479 |
|
(12,144 |
) |
92,336 |
|
| Change in FDC ($000s) |
|
|
|
|
|
|
| |
Total Proved |
(203,018 |
) |
- |
|
(203,018 |
) |
| |
Proved + Probable (2P) |
(321,756 |
) |
- |
|
(321,756 |
) |
| Total costs ($000s) |
|
|
|
|
|
|
| |
Total Proved |
(96,447 |
) |
(12,144 |
) |
(108,590 |
) |
| |
Proved + Probable (2P) |
(215,185 |
) |
(12,144 |
) |
(227,329 |
) |
| Net reserve additions (mboe) |
|
|
|
|
|
|
| |
Total Proved |
(2,005 |
) |
(161 |
) |
(2,166 |
) |
| |
Proved + Probable (2P) |
(7,112 |
) |
(231 |
) |
(7,343 |
) |
| |
F&D and FD&A costs ($/boe) |
|
|
|
|
|
|
| |
Total Proved |
48.10 |
|
75.43 |
|
50.13 |
|
| |
Proved + Probable (2P) |
30.26 |
|
52.57 |
|
30.96 |
|
| |
|
|
|
|
|
|
|
| For the 5 years-ended Dec. 31, 20152 |
|
|
|
|
|
|
| |
F&D and FD&A costs ($/boe) |
|
|
|
|
|
|
| |
Total Proved |
37.02 |
|
58.93 |
|
27.33 |
|
| |
Proved + Probable (2P) |
37.98 |
|
40.03 |
|
36.09 |
|
- Represents net sales price received from dispositions plus the net cost of acquisitions.
- 5 year F&D and FD&A figures include capital, change in future development costs, reserves added and net revisions from 2011-2015.
Based on 2015 capital spending of $107 million, a reduction in FDC of $322 million and a decrease in total reserves of 7.1 MMboe, 2P F&D costs are $30.26/boe for 2015. 2P F&D costs are $24.88/boe based on $107 million in capital spending for 2015 and reserve additions of 4.3 MMboe, resulting in an operating recycle ratio of 1.0 time. 2P reserves include 485 (292 Bakken, 152 Cardium, 41 AB/BC) net undeveloped locations with FDC of $1,120 million representing F&D costs of $18.51/boe.
Over the past 5 years we have added 86.2 MMboe of 2P reserves with F&D costs of $37.98/boe, generating an operating recycle ratio of 1.2 times and replacing production by 117%. Our FD&A over the same 5-year period is $36.09/boe.
FIRST HALF 2016 GUIDANCE
In 2015, our capital spending program for the year (before A&D) was $107 million (unaudited), which was below the mid-point of our capital guidance as we continued to curtail capital spending. Annual average production of 31,392 boepd for 2015 and production for the fourth quarter 2015 of 28,260 boepd were within our 2015 guidance.
We remain committed to preserving the long-term value of our assets through the continuing downturn of this commodity cycle. As such, we will currently not be deploying discretionary DCET capital and our first half 2016 program is approximately $16 million. This capital plan is focused on capital maintenance projects, optimization and EOR initiatives to moderate our declines. In this scenario, we anticipate production to continue to decline in the forecast period. A US$5.00/bbl change in the WTI oil price would result in approximately a $15.5 million impact in funds flow from operations (assuming no other changes in our economic assumptions).
| ($000s, except where noted and per share amounts) |
1H 2016 Guidance
(Feb 11, 2016) |
|
| Production (1H average) |
|
|
| |
Total (boe/d) |
25,000 - 25,500 |
|
| |
Light-oil and Liquids Weighting |
68 |
% |
| |
|
|
| EBITDA1 |
~ 48,000 |
|
| Funds Flow from Operations |
~ (22,000 |
) |
| Funds Flow per share1,2 |
~ (0.11 |
) |
| Capital Expenditures2 |
15,500 - 16,500 |
|
| |
|
|
| Pricing Assumptions: |
|
|
| |
Crude oil - WTI (US$/bbl) |
35.00 |
|
| |
Crude oil - WTI (Cdn$/bbl) |
42.86 |
|
| |
Corporate oil differential (US$) |
5.60 |
|
| |
Natural gas - AECO (Cdn$/mcf) |
2.50 |
|
| |
Exchange rate (Cdn$/US$) |
0.70 |
|
- Funds flow per share calculation based on 198 million basic shares outstanding.
- Projected capital expenditures exclude acquisitions and divestitures, which are reviewed separately.
While we continue to restrict capital spending in this environment, we are prepared to initiate a drilling program when the macroeconomic environment warrants investment.
Lightstream Resources Ltd. is an oil and gas exploration and production company focused on light oil in the Bakken and Cardium resource plays. We are committed to delivering industry leading operating netbacks, strong cash flows and consistent operating results through leading edge technology applied to a multi-year inventory of existing and emerging resource play opportunities. Our long-term strategy is to efficiently develop our assets and deliver an attractive dividend yield.
The Company's annual audit of our consolidated financial statements is not yet complete and accordingly all financial and production amounts herein are management's estimates which are unaudited and subject to change.
Oil and Gas Advisories. All evaluations and reviews of future net revenues are stated prior to any provision for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for well for which reserves have been assigned and estimated future well abandonment costs. It should not be assumed that the present worth of estimated future net revenues presented in the tables above represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained and variances could be material. The recovery and reserves estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.
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.
This press release contains metrics commonly used in the oil and natural gas industry, such as "recycle ratio", "finding and development costs or F&D", "finding development and acquisition costs or FD&A" and "operating netbacks". These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.
FD&A cost is the sum of capital expenditures incurred in the period and the change in future development capital required to develop reserves. FD&A cost per boe is determined by dividing current period net reserve additions into the corresponding period's FD&A cost. The Company uses F&D costs, both including and excluding acquisitions and dispositions, as a measure of the efficiency of its overall capital program including the effect of acquisitions and dispositions.
Recycle ratio is measured by dividing the operating netback by the F&D costs per boe for the year. Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period and demonstrates profitability relative to commodity prices per unit of production.
Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare Lightstream's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this press release, should not be relied upon for investment or other purposes.
Non-GAAP Measures. This press release contains financial terms that are not considered measures under IFRS, such as funds flow from operations, funds flow per share, operating netback, capital expenditures and EBITDA. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders. Specifically, funds flow from operations reflects cash generated from operating activities before changes in non-cash working capital and funds flow per share is calculated as funds flow from operations divided by the weighted average number of shares outstanding for the period. Management considers funds flow from operations important as it helps evaluate performance and demonstrate the ability to generate sufficient cash to fund future growth opportunities, pay dividends and repay debt. Profitability relative to commodity prices per unit of production is demonstrated by an operating netback. Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period. EBIDTA is defined as earnings before interest, taxes, depletion and depreciation, and other non-cash items. These measures may not be comparable to those reported by other companies nor should they be viewed as an alternative to cash flow from operations or other measures of financial performance calculated in accordance with IFRS. Further information in respect of these non-GAAP measures is set forth in our MD&A.
Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to financial results, results from operations, future production rates, plans and objectives, our capital budget for 2016, projected capital expenditures, the timing of certain projects, future finding and development costs, and the sufficiency of our financial resources to fund our operations. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the success of future operating activities, the performance of existing wells, prevailing commodity prices and economic conditions, the availability and cost of labour and services, timing of pipeline and facilities construction, access to third party facilities, weather and access to 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 access to capital, commodity price and exchange rate fluctuations, risks associated with the oil and gas industry in general (e.g., operational risks in production; delays or changes in plans with respect to capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, changes in applicable regulatory regimes and health, safety and environmental risks)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.