CALGARY, Jan. 2, 2019 /CNW/ - (TSX : EGL): Eagle Energy
Inc. ("Eagle") provides an operational update on its North Texas development program and
announces that it has entered into a forbearance agreement with its lenders.
Operational Update
Wayne Wisniewski, President and Chief Executive Officer of Eagle, stated, "We are pleased to
report updated production for the Robinson 2H, our most recent North
Texas horizontal well. The initial production rate for 30 days ("IP30") for the well was 518 barrels of oil
equivalent per day ("boe/d") (414 barrels of oil per day), which is approximately 96 boe/d (76 barrels of oil per day)
higher than the IP30 rate was for our first well drilled in the same North Texas operating area.
The new well is presently producing on artificial lift and is declining as per our expectations. Although IP30
production from our latest well was higher than our first well, it is too early to determine estimated ultimate reserve
recovery. The price we receive for our oil from the North Texas field is unaffected by the
Canadian oil differentials, with the result being a field netback of approximately $CA 40.00 per barrel of oil in November."
Mr. Wisniewski continued, "Unfortunately, the good news of our latest well in North Texas is
overshadowed by the crisis of high Canadian oil differentials and falling WTI prices at the end of the year. As a result of
the high Canadian oil differentials, we have implemented a selective well shut-in program at our Dixonville field in order to maximize cashflow from the property at various reduced WTI and Canadian
differential combinations. By implementing the selective shut-in program, we are able to remain cashflow positive at the
field level for the fourth quarter. We are monitoring WTI and Canadian differentials several times per week and responding
accordingly. Eagle is exempt from the mandatory Alberta curtailment program starting in
January of 2019."
Forbearance Agreement
Due to the persistent low WTI prices and high Canadian oil differentials, Eagle has advised the administrative agent and
lenders (collectively, the "Lenders") under the loan and security agreement dated March 13,
2017 among Eagle, its subsidiaries and the Lenders, as amended (the "Loan Agreement") that Eagle may not meet one
or more of its financial covenants at year end 2018. In anticipation of a potential event of default occurring at year end,
Eagle has entered into a limited forbearance agreement (the "Forbearance Agreement") with the Lenders. Under the
Forbearance Agreement, the Lenders have agreed to forbear from exercising their rights and remedies arising if Eagle fails to
meet any of its financial covenants as of December 31, 2018 until January
31, 2019 (the "Forbearance Period") so long as no termination event has occurred during the Forbearance Period.
A "termination event" means, in summary, a breach of a representation, warranty, covenant or term under the Forbearance
Agreement, a default under the Loan Agreement other than the failure to meet the financial covenants as of December 31, 2018, or any event or condition has occurred after the effective date of the Forbearance Agreement
which has a material adverse effect as defined in the Loan Agreement and determined by the Lenders.
Eagle continues to work with its financial advisors to investigate, evaluate and consider possible asset sales and
restructuring alternatives available to Eagle. Eagle does not intend to comment further regarding this review process
unless a specific transaction or other alternative is approved by the board of directors of Eagle, the review process is
concluded or it is otherwise determined that further disclosure is appropriate or required by law.
Advisories
Note about Initial Production Rates
The IP30 rate is preliminary in nature and may not be indicative of stabilized on-stream production rates. Initial
production results are not necessarily indicative of long-term performance or of ultimate well recovery rates.
Note about Forward-Looking Statements
Certain of the statements made and information contained in this news release are forward-looking statements and
forward-looking information (collectively referred to as "forward-looking statements") within the meaning of Canadian securities
laws. All statements other than statements of historic fact are forward-looking statements. Eagle cautions investors
that important factors could cause Eagle's actual results to differ materially from those projected, or set out, in any
forward-looking statements included in this news release.
In particular, and without limitation, this news release contains forward-looking statements pertaining to Eagle's
expectations regarding its North Texas development program, production from its third
North Texas horizontal well, operational measures taken by Eagle on its Dixonville property and expectations regarding the impact of these measures on field level cash flow from
this property, expectations regarding Eagle's financial covenants and other terms of the Loan Agreement; the terms of the
Forbearance Agreement; and expectations regarding Eagle's process to consider potential asset sales and restructuring
alternatives. With respect to forward-looking statements contained in this news release, assumptions have been made
regarding expected future production, which is based on a success rate that, in turn, is based upon historical drilling success
and an evaluation of the particular well, among other things; anticipated operating and capital costs and future fluctuations in
those costs; future fluctuations in oil, natural gas and natural gas liquids prices, and reserves estimates and reservoir
performance.
Eagle's actual results could differ materially from those anticipated in these forward-looking statements as a result of the
following risk factors and those in Eagle's Annual Information Form dated March 20, 2018 (the
"AIF"): unexpected fluctuations in oil, natural gas and natural gas liquids prices; the inherent risks associated with the
development of petroleum properties; delays, unexpected results and costs of drilling and production activities; and the
availability and terms of financing and capital. Additional risks and uncertainties affecting Eagle are contained in the
AIF under the heading "Risk Factors".
As a result of these risks, actual performance and financial results in 2018 and 2019 may differ materially from any
projections of future performance or results expressed or implied by these forward?looking statements. New factors emerge
from time to time, and it is not possible for management to predict all of these factors or to assess, in advance, the impact of
each such factor on Eagle'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.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and
assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the
possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. Although
management believes that the expectations conveyed by the forward-looking statements are reasonable based on information
available to it on the date the forward-looking statements were made, there can be no assurance that the plans, intentions or
expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the
difference may be material and adverse to Eagle and its shareholders. These statements speak only as of the date of this
news release and may not be appropriate for other purposes. Eagle does not undertake any obligation, except as required by
applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a
result of new information, future events or otherwise.
Note Regarding Barrel of Oil Equivalency
This news release contains disclosure expressed as "boe" or "boe/d". All oil and natural gas equivalency volumes have
been derived using the conversion ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of oil.
Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 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
well head. In addition, given that the value ratio based on the current price of oil as compared to natural gas is
significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf:1 bbl would be
misleading as an indication of value.
About Eagle Energy Inc.
Eagle is an oil and gas corporation with shares listed for trading on the Toronto Stock Exchange under the symbol "EGL".
All material information about Eagle may be found on its website at www.EagleEnergy.com or under Eagle's issuer profile at www.sedar.com.
SOURCE Eagle Energy Inc.
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