Asset and Balance Sheet Management Top Priorities CALGARY, May 1,
2012 /CNW/ - - Progress Energy Resources Corp. ("Progress" or the
"Company") announced results for the first quarter of 2012 (the
"Quarter"). Capital investment in the Quarter was $102.8
million net or $215.1 million gross including the North Montney
Joint Venture ("NMJV"). In the Quarter capital expenditures were
prioritized to the NMJV with PETRONAS, the Company's proprietary
North Montney properties in British Columbia, and the Dunvegan
light oil play in the Alberta Deep Basin. In light of the continued
decline in North American natural gas prices, Progress also
announced today that the Company has reduced its 2012 capital
program by approximately $100 million to $270 million, net. The
reduction will be applied solely to the Company's proprietary North
Montney program. The NMJV spending will remain as planned at $341
million ($50 million net) and the Dunvegan light oil program will
increase to $50 million net. "Progress is in the fortunate position
of having minimal bank debt and a joint venture program where
the majority of the capital investment is carried by our partner
for the next 3 to 5 years." said Michael Culbert, President and
Chief Executive Officer of Progress. "Reducing proprietary
capital while continuing to develop our Montney assets allows us to
grow shareholder value in a weak natural gas price environment and
continue to advance our LNG Export Joint Venture toward final
investment decision by late 2014." Highlights -- Generated cash
flow of $41.3 million in the Quarter or $0.18 per share, diluted;
-- Subsequent to the Quarter, Progress extended its 3-year
extendible revolving $650 million credit facility maturity date
from April 2014 to April 2015; -- Production averaged 46,766
barrels of oil equivalent ("boe") per day in the Quarter; volumes
for the Quarter were impacted by the previously announced planned
shut-ins and the deferral of tie-ins and completions; -- Total
liquids production in the Quarter was 6,870 barrels per day, up 26
percent compared to the first quarter of 2011; -- Current
production is approximately 43,500 boe per day with approximately
6,500 to 7,000 boe per day either shut-in or yet to be tied-in; due
to the reduction of capital, an additional eight net wells are
standing awaiting completion; -- Drilled a total of 20 wells (14.8
net) during the Quarter; -- Drilled seven horizontal (6.8 net)
Montney wells and completed two of the seven wells in the
proprietary North Montney program during the Quarter; -- Drilled
five horizontals and two vertical (3.5 net) Montney wells on the
NMJV properties. Five Montney horizontals at Lily were completed in
the Quarter, with the wells testing at an average flow test rate of
5.2 mmcf per day at an average flowing pressure of 12.3 Mpa after
five days; -- Drilled six Dunvegan horizontal oil wells (4.5 net)
in the Deep Basin during the Quarter. Current production from 7.5
net Dunvegan horizontals is approximately 1,800 boe per day. North
Montney Proprietary Program Progress holds the industry's largest
Montney land position of approximately 800,000 net acres. The
Company's primary focus is in the North Montney in the Foothills of
northeast British Columbia where Progress holds approximately
625,000 net acres of largely contiguous Montney rights. In
February 2012, Progress announced a reduction in its capital
program, along with plans to shut in approximately 10 percent of
total natural gas production by April 2012, while delaying the
completion of selected wells. In the Quarter, Progress drilled
seven horizontals targeting both the upper and lower Montney and,
as per the previously announced capital reduction, only two of the
wells were completed. In addition, Progress completed three
wells that were drilled in the fourth quarter of 2011, one Montney
horizontal at Caribou and two Montney horizontals at Town
North. All five of these wells were tested successfully but
are now shut in as part of the Company's corporate shut-in program.
North Montney Joint Venture Progress, along with its partner, has
begun aggressively developing the NMJV properties at Altares, Lily
and Kahta. Gross capital spending on the NMJV in the Quarter
was $113.5 million ($14.2 net) and included drilling and
completions, three 3D seismic programs, facility construction and
selective land acquisitions. Five horizontals and two vertical
Montney wells (3.5 net) were drilled in the Quarter, with
horizontals targeting both the upper and lower Montney at Lily and
a vertical test at Kahta. Drilling in the Altares area is
ongoing with two rigs running through spring
break-up. Preliminary results have confirmed the in-situ
overpressuring and robust thickness of the Montney on the NMJV
lands with the first five horizontals in the Lily area testing at
an average flow test rate of 5.2 mmcf per day at an average flowing
pressure of 12.3 Mpa after five days. The first NMJV production
will be on stream by mid-May through newly constructed facilities
at Lily. During the Quarter, the NMJV acquired an additional nine
strategic sections of land that fell within the Lily area. In
addition, all 156,851 acres of the NMJV now have 3D seismic
coverage which is currently being processed and will be available
during the second quarter. As part of the total consideration of
$1.07 billion that PETRONAS paid to acquire a 50% working interest
in the Altares, Lily and Kahta properties, $802.5 million will be
paid in the form of a capital carry over the next three to five
years. At the end of the Quarter, the remaining capital carry
balance was approximately $745 million. The detailed feasibility
study ("DFS") for the LNG Export Joint Venture ("LEJV") that was
launched in November 2011 is approximately 75 percent complete.
Completion of the DFS remains on track for the end of the third
quarter of 2012, at which time the project is expected to enter the
pre-FEED phase (Front-End Engineering and Design phase). The
involvement of key stakeholders has been a focus; First Nations,
the provincial and federal governments, third party pipeline
companies and potential off-takers have all been actively engaged
as the LEJV continues its path towards final investment decision in
late 2014. Deep Basin Light Oil Progress drilled six wells (4.5
net) targeting its Dunvegan light oil play in the Deep Basin of
northwest Alberta. Four of the wells were completed and
brought on production in the Quarter, while two will be completed
in the third quarter of 2012. Current production from the
Dunvegan is approximately 1,800 boe per day (75 percent liquids)
from 7.5 net wells. Progress plans to drill six additional
Dunvegan horizontals in the second half of the year, with exit
production expected to be approximately 2,600 boe per day. Progress
holds a material land position covering approximately 250,000 net
undeveloped acres in the Deep Basin of northwest Alberta, including
approximately 110,000 acres of Montney rights. Given the large and
contiguous nature of the land base, the Company is able to test
play concepts, including liquids-rich gas plays and light oil
plays, and with success can quickly capitalize on its existing land
position at a lower cost than industry competitors. Financial
Strength Cash flow for the Quarter was $41.3 million or $0.18 per
share, diluted. Net capital investment was $102.8 million
($215.1 million gross). As at March 31, 2012, the Company was
drawn $40 million on its credit facility. In April 2011,
Progress amended and restated its bank credit facility to be a
covenant-based facility rather than a borrowing base facility. This
facility is a 3-year extendible revolving facility in the amount of
$650 million from a syndicate of lenders with an initial maturity
date of April 2014. The maturity date may, at the request of
the Company and with the consent of the lenders, be extended on an
annual basis. Subsequent to the Quarter, the maturity date
was extended to April 2015. Debt-to-total capitalization as
at March 31, 2012 was 15 percent. Progress' average natural gas
price in the Quarter was $2.49 per thousand cubic feet ("mcf"),
including the impact of the Company's hedging program.
Progress's realized price from natural gas properties, which
includes the impact of natural gas liquids, was $3.64 per
mcf. Royalty rates averaged 8.7 percent in the Quarter as a
result of lower natural gas prices and the impact of increased
North Montney production benefiting from the British Columbia deep
drilling credit. As at March 31, 2012 total credits available
to Progress to offset future royalty expense as a result of the
British Columbia Deep Royalty Credit Program was $92.5
million. Operating costs averaged $5.84 per boe in the
Quarter reflecting the Company's continued focus on operational
efficiencies and maximization of volumes through existing
facilities. Progress has entered into a series of hedges on a
portion of its natural gas production buying puts on 70,000
gigajoule ("GJ") per day at a net floor of $2.00 per GJ. The
Company also entered into a series of AECO fixed price swaps on
82,500 GJ per day at an average net price of $2.01 per GJ. Progress
sold NYMEX WTI call options on 1,750 barrels ("bbls") per day of
oil production at a net cap of $106.28 for the period of March 1,
2012 to June 30, 2012 and for a net cap of $118.40 for the period
July 1, 2012 to August 31, 2012. As noted earlier, in response to
the continuing natural gas price environment, Progress is adjusting
its planned 2012 capital spending program to $270 million, down
from $365 million announced in February, 2012. "We believe it
is prudent to further decrease spending on our proprietary North
Montney program given the continued weakness in North American
natural gas markets," said Mr. Culbert. "Protecting our balance
sheet is of outmost importance in order to position ourselves to
succeed in realizing our long term goal of reaching 100,000 boe per
day by 2015." Under the revised budget, approximately $170 million
will be invested in the Company's proprietary North Montney
program, $50 million net (gross budget of $341 million) on the NMJV
properties, and $50 million in the Deep Basin targeting Progress'
Dunvegan light oil play. Based on the adjusted capital
program for 2012, Progress expects to exit the year at
48,000-50,000 boe per day. Second Quarter Dividend and Dividend
Reinvestment Program The Board of Directors of Progress today
announced that the second quarter eligible dividend will be
maintained at $0.10 per share. The eligible dividend will be
payable on July 16, 2012 to common shareholders of record as of
June 30, 2012. The ex-dividend date is expected to be June 27,
2012. Based on the May 1, 2012 closing share price on the
Toronto Stock Exchange of $11.27, this represents an annualized
yield of 3.5 percent. The amount of future cash dividends, if
any, is subject to the discretion of the Progress Board of
Directors. Progress has a dividend reinvestment plan (the "DRIP")
that allows eligible shareholders of Progress to direct that their
cash dividends be reinvested in additional common shares.
Progress's current DRIP participation rate is approximately 40
percent. A registered shareholder who wishes to enroll in the
DRIP may do so by contacting Computershare Trust Company of Canada,
the Plan Agent. Beneficial shareholders who wish to
participate in the DRIP should contact the broker or other nominee
through which their common shares are held to provide appropriate
enrollment instructions and to ensure any deadlines or other
requirements that such broker or nominee may impose or be subject
to are met. U.S. residents may not participate in the DRIP program.
Consolidated Financial Statements and MD&A First Quarter 2012
Consolidated Financial Statements and Notes to the Consolidated
Financial Statements and Management's Discussion and Analysis for
Progress Energy Resources Corp. have been filed on SEDAR
(www.sedar.com) under Progress Energy Resources Corp. and can also
be accessed on the Company's website at www.progressenergy.com.
Progress is a Calgary based energy Company primarily focused on
natural gas exploration, development and production in northeast
British Columbia and northwest Alberta. Common shares of Progress
are listed on the Toronto Stock Exchange under the symbol PRQ.
Annual Meeting of Shareholders Progress' Annual and Special Meeting
of Shareholders is scheduled for Wednesday, May 2, 2012 at 3:30
p.m., Calgary time, at the Calgary Petroleum Club, 319-5(th) Avenue
S.W. Calgary, Alberta. Advisory Regarding Forward-Looking
Statements This press release and financial highlights table
(collectively the "press release") contains forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions are intended to identify forward-looking
information or statements. In particular, forward looking
statements in this press release include, but are not limited to,
statements with respect to the focus of capital expenditures, the
timing of capital spending and the results therefrom; payment of
dividends; projections of future land holdings; completion of
planned facility expansions and the timing thereof; future drilling
plans and programs, the timing thereof and the results therefrom;
timing of development of resources; expected commodity prices and
industry conditions. The forward-looking statements and
information are based on certain key expectations and assumptions
made by Progress, including expectations and assumptions concerning
prevailing commodity prices and exchange rates, applicable royalty
rates and tax laws; future well production rates; reserve and
resource volumes; the performance of existing wells; the success
obtained in drilling new wells; and the sufficiency of budgeted
capital expenditures in carrying out planned activities; and the
availability and cost of labour and services and future operating
costs. Although Progress believes that the expectations and
assumptions on which such forward-looking statements and
information are based are reasonable, undue reliance should not be
placed on the forward looking statements and information because
Progress can give no assurance that they will prove to be correct.
Since forward-looking statements and information 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, the risks associated
with the oil and gas industry in general such as operational risks
in development, exploration and production; delays or changes in
plans with respect to exploration or development projects or
capital expenditures; the uncertainty of reserve and resource
estimates; the uncertainty of estimates and projections relating to
reserves, resources, production, costs and expenses; health, safety
and environmental risks; commodity price and exchange rate
fluctuations; marketing and transportation; loss of markets;
environmental risks; competition; incorrect assessment of the value
of acquisitions; failure to realize the anticipated benefits of
acquisitions; ability to access sufficient capital from internal
and external sources; changes in legislation, including but not
limited to tax laws, royalties and environmental regulations.
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press
release in order to provide securityholders with a more complete
perspective on the Company's future operations and such information
may not be appropriate for other purposes. 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 that the
Company will derive there from. Readers are cautioned that
the foregoing lists of factors are not exhaustive. These
forward-looking statements are made as of the date of this press
release and the Company disclaims any intent or obligation to
update publicly any forward-looking statements, whether as a result
of new information, future events or results or otherwise, other
than as required by applicable securities laws. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect
the operations or financial results of Progress are included in
reports on file with applicable securities regulatory authorities
and may be accessed through the SEDAR website
(www.sedar.com). The forward-looking statements and
information contained in this press release are made as of the date
hereof and Progress undertakes no obligation 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. Barrels of Oil Equivalent
"Boe" means barrel of oil equivalent on the basis of 1 boe to 6,000
cubic feet of natural gas. Boe's may be misleading, particularly if
used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic
feet of natural gas is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Progress Energy
Resources Corp. CONTACT: Greg Kist, Vice President, Marketing,
Corporate and GovernmentRelationsProgress Energy Resources
Corp.403-539-1809 gkist@progressenergy.comKurtis Barrett, Analyst,
Investor Relations and MarketingProgress Energy Resources
Corp.403-539-1843 kbarrett@progressenergy.com
Copyright
Petrus Resources (TSX:PRQ)
Historical Stock Chart
From Jun 2024 to Jul 2024
Petrus Resources (TSX:PRQ)
Historical Stock Chart
From Jul 2023 to Jul 2024