CALGARY,
Alberta, Nov. 10, 2011
/PRNewswire/ - Equal Energy Ltd. ("Equal" or "the Company") (TSX:
EQU): (NYSE: EQU) is pleased to announce its financial and
operating results for the third quarter ended September 30, 2011.
Don Klapko,
President and Chief Executive Officer commented, "The third quarter
of 2011 represents the first full quarter incorporating the Hunton
production from the June 1, 2011
acquisition of the principal assets of our former joint venture
partner in Oklahoma. Our
production volume averaged 11,263 boe per day for Q3 2011,
representing a 19% increase over the Q2 2011 average of 9,467 and a
28% increase from Q3 2010 of 8,777 boe per day."
Subsequent to the quarter end, Equal announced
the divestiture of non-core assets for proceeds of $49.4 million with the intention of improving the
balance sheet. In particular, we now have all the required
financial flexibility to retire the $39.1
million of 8.25% convertible debentures coming due in
June 2012.
Q3 2011 was a very active quarter with the drill
bit with up to four rigs running, two in Canada and two in Oklahoma. Capital expenditures during
the quarter were $29 million focused
on our core plays at Twin Cities Central Dolomite, Alliance Viking
and Lochend Cardium with additional capital spent on a seven well
vertical Hunton program at our K9/Big Bird area in Oklahoma.
Oklahoma
Hunton Vertical Program
Our seven well vertical drilling program in Oklahoma has successfully added to our Hunton
production and also has the added benefit of preserving the
Mississippian rights in the seven sections drilled that would have
otherwise expired prior to the end of Q3. By the end of Q3,
six of the seven wells were tied-in and producing a total of
approximately 270 boe per day with one well awaiting tie in during
Q4. One well of this program was perforated in the
Mississippian zone and is showing encouraging results. This
well will require fracture stimulation to achieve its full
potential and is planned for early 2012.
Emerging Mississippian Play
Equal now has over 11,100 net undeveloped acres held by production
in the Mississippian play and another 8,700 net undeveloped acres
held under leases. This land base has enough size to add a
stand-alone Mississippian play to our portfolio and is located in
an area that has seen significant nearby drilling activity by large
U.S. independent E&P companies using horizontal, multi-stage
frac technology. Equal is reviewing the various alternatives
to develop this asset during the upcoming year.
Twin
Cities/Central Dolomite Core Area
In our Twin Cities/Central
Dolomite area ("TCCD") where 2011 drilling commenced on
March 26, 2011 we continue to
demonstrate our core Hunton drilling performance and the drilling
results have confirmed our optimism about this play. One TCCD
well drilled by Equal in 2010 came on stream on October 28, 2010, inclined steadily for the first
four months and continues to produce at a steady rate of 160 boe
per day.
During 2011, Equal has drilled a total of six
TCCD horizontal multi-leg wells. To date, five of the six
wells are on production with performance on average meeting
expectation, delivering total production at this time of
approximately 510 boe per day. The sixth TCCD well is
expected to be tied-in during November
2011.
Canada
In Canada, we
brought on more oil in our two core light oil reserve plays with
generally improving performance as we advance our knowledge of the
geology and drilling and completion techniques.
Viking
During Q3, we drilled an additional three Viking
oil wells, resulting in a total of nine wells drilled in 2011 and a
total of fifteen wells into the play. All wells are currently
on production. During the quarter, we also tested new
drilling and completion techniques that included the use of a
built-for-purpose drilling rig, a modified casing strategy and an
innovative continuous fracture stimulation tool. We believe
that ultimately these methods will result in lower costs and better
productivity as we tackle this large resource on Company lands.
Cardium
During Q3, we drilled and brought on stream one additional Cardium
oil well bringing the total to three for 2011 and a total of eight
wells drilled into the play. The three 2011 wells are among
the strongest of all our wells drilled to date. Participation
in an industry gas gathering system allowed us to ship the first of
our associated gas production from this play, which until now has
not be saleable. By early 2012, we anticipate having all our
associated gas conserved and sold into the market.
The following table is a summary of selected
financial and operational information for the three and nine months
ended September 30, 2011 with
comparative 2010 figures.
|
|
|
|
|
Q3 2011 Financial and
Operations Summary |
Three months ended
September 30 |
|
Nine
months ended
September 30 |
|
(in thousands except for
volumes, percentages and per share and boe amounts) |
2011 |
2010 |
Change |
2011 |
2010 |
Change |
FINANCIAL |
|
|
|
|
|
|
Oil, NGL and natural gas revenues
including realized hedging |
44,452 |
34,267 |
30% |
121,354 |
109,009 |
11% |
Funds from operations
(1) |
17,435 |
11,402 |
53% |
45,617 |
37,302 |
22% |
Per share - basic ($) |
0.50 |
0.42 |
19% |
1.47 |
1.58 |
(7%) |
Per share - diluted
($) |
0.50 |
0.42 |
19% |
1.43 |
1.58 |
(9%) |
Net income/(loss) |
(2,642) |
(3,111) |
(15%) |
468 |
(4,096) |
(111%) |
Per share - basic ($) |
(0.08) |
(0.11) |
(27%) |
0.02 |
(0.17) |
(112%) |
Per share - diluted
($) |
(0.08) |
(0.11) |
(27%) |
0.01 |
(0.17) |
(106%) |
Total assets |
536,232 |
397,499 |
|
536,232 |
397,499 |
|
Working capital deficit
including
long-term debt (2) |
(141,864) |
(3,995) |
|
(141,864) |
(3,995) |
|
Convertible debentures |
80,332 |
120,016 |
|
80,332 |
120,016 |
|
Shareholders' equity |
243,810 |
216,904 |
|
243,810 |
216,904 |
|
SHARES OUTSTANDING |
|
|
|
|
|
|
Shares outstanding - basic
(000s) |
34,667 |
27,115 |
|
31,124 |
23,551 |
|
Shares outstanding - diluted
(000s) |
34,667 |
27,115 |
|
31,849 |
23,551 |
|
Shares outstanding at period end
(000s) |
34,736 |
27,673 |
|
34,736 |
27,673 |
|
OPERATIONS |
|
|
|
|
|
|
Average daily
production |
|
|
|
|
|
|
Oil (bbls per day) |
2,306 |
2,596 |
(11%) |
2,472 |
2,473 |
0% |
NGL (bbls per day) |
3,580 |
2,395 |
49% |
2,869 |
2,530 |
13% |
Gas (mcf per day) |
32,264 |
22,713 |
42% |
26,767 |
25,672 |
4% |
Total (boe per day) |
11,263 |
8,777 |
28% |
9,802 |
9,282 |
6% |
Average sales price |
|
|
|
|
|
|
Oil ($ per bbl) |
82.24 |
68.00 |
21% |
81.70 |
70.32 |
16% |
NGL ($ per bbl) |
48.40 |
38.23 |
27% |
49.04 |
41.63 |
18% |
Gas ($ per mcf) |
3.73 |
4.59 |
(19%) |
3.80 |
4.68 |
(19%) |
Cash flow netback
(1) ($ per boe) |
|
|
|
|
|
|
Revenue (3) |
42.90 |
42.44 |
1% |
45.35 |
43.02 |
5% |
Royalties |
8.82 |
8.23 |
7% |
9.17 |
8.83 |
4% |
Production expenses |
11.11 |
11.88 |
(6%) |
11.63 |
10.80 |
8% |
Transportation
expenses |
0.39 |
0.62 |
(37%) |
0.49 |
0.69 |
(29%) |
Operating netback |
22.58 |
21.71 |
4% |
24.06 |
22.70 |
6% |
General and
administrative |
2.67 |
5.94 |
(55%) |
3.62 |
5.10 |
(29%) |
Cash interest expense |
2.81 |
3.49 |
(19%) |
3.19 |
3.34 |
(4%) |
Other cash costs |
0.27 |
(1.84) |
(115%) |
0.20 |
(0.46) |
(143%) |
Cash flow netback |
16.83 |
14.12 |
19% |
17.05 |
14.72 |
16% |
(1) |
Funds from
operations and cash flow netback are non-GAAP financial
measures. |
(2) |
Working capital
deficit including long-term debt is a non-GAAP term and includes
total bank debt, current assets and current liabilities excluding
convertible debentures and unrealized gains/losses on commodity
contracts. |
(3) |
Price received
includes realized commodity contract gains or losses and excludes
unrealized mark-to-market gain or loss. |
Equal Energy Ltd.'s complete unaudited,
consolidated financial statements, accompanying notes and
Management's Discussion and Analysis for the quarter ended
September 30, 2011 will be available
on Equal's website at www.equalenergy.ca, on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml.
About Equal Energy Ltd.
Equal is an exploration and production oil and gas company based in
Calgary, Alberta, Canada with its
United States operations office
located in Oklahoma City,
Oklahoma. Equal's shares and debentures are listed on the
Toronto Stock Exchange under the symbols (EQU, EQU.DB.A, EQU.DB.B)
and Equal's shares are listed on the New York Stock Exchange under
the symbol (EQU). The portfolio of oil and gas properties is
geographically diversified with producing properties located in
Alberta, British Columbia, Saskatchewan and Oklahoma. Current production is comprised of
approximately 52 percent crude oil and natural gas liquids and 48
percent natural gas. Equal has compiled a multi-year drilling
inventory for its properties including its new oil play
opportunities in the Cardium and Viking in central Alberta in addition to its extensive inventory
of drilling locations in the Hunton liquids-rich, natural gas play
in Oklahoma.
Forward-Looking Statements
Certain information in this press release constitutes
forward-looking statements under applicable securities law. Any
statements that are contained in this press release that are not
statements of historical fact may be deemed to be forward-looking
statements. Forward-looking statements are often identified by
terms such as "may," "should," "anticipate," "expects," "seeks" and
similar expressions.
Forward-looking statements necessarily
involve known and unknown risks, including, without limitation,
risks associated with oil and gas production; marketing and
transportation; loss of markets; volatility of commodity prices;
currency and interest rate fluctuations; imprecision of reserve
estimates; environmental risks; competition; incorrect assessment
of the value of acquisitions; failure to realize the anticipated
benefits of acquisitions or dispositions; inability to access
sufficient capital from internal and external sources; changes in
legislation, including but not limited to income tax, environmental
laws and regulatory matters. Readers are cautioned that the
foregoing list of factors is not exhaustive.
Readers are cautioned not to place undue
reliance on forward-looking statements as there can be no assurance
that the plans, intentions or expectations upon which they are
placed will occur. Such information, although considered reasonable
by management at the time of preparation, may prove to be incorrect
and actual results may differ materially from those anticipated
forward-looking statements contained in this press release are
expressly qualified by this cautionary statement. Financial
outlook information contained in this press release about
prospective cash flows is based on assumptions about future events,
including economic conditions and proposed courses of action, based
on management's assessment of the relevant information currently
available. Readers are cautioned that any such financial
outlook information contained herein should not be used for
purposes other than for which it is disclosed herein.
Additional information on these and other
factors that could affect Equal's operations or financial results
are included in Equal's reports on file with Canadian and U.S.
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), the SEC's website
(www.sec.gov), Equal's website
(www.equalenergy.ca) or by contacting Equal.
Furthermore, the forward looking statements contained in this news
release are made as of the date of this news release, and Equal
does not undertake any obligation to update publicly or to revise
any of the included forward-looking statements, whether as a result
of new information, future events or otherwise, except as expressly
required by securities law.
CONVERSION: Natural gas volumes
recorded in thousand cubic feet ("mcf") are converted to barrels of
oil equivalent ("boe") using the ratio of six (6) mcf to one (1)
barrel of oil ("bbl"). Boe's may be misleading, particularly
if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl
is based on an energy equivalent conversion method primarily
applicable at the burner tip and does not represent a value
equivalent at the wellhead.
SOURCE Equal Energy Ltd.