Seaview Energy Inc. Releases Financial and Operating Results Three Months Ended March 31, 2010, Increase to 2010 Capital Budget
May 19 2010 - 7:55PM
Marketwired Canada
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UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF U.S. SECURITIES LAWS.
Seaview Energy Inc. ("Seaview" or the "Company") (TSX VENTURE:CVU.A) (TSX
VENTURE:CVU.B) is pleased to provide shareholders with an update on corporate
developments and the Company's first quarter 2010 financial and operational
results.
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SELECTED INFORMATION
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Financial ($000's except per share
amounts) Q1 2010 Q1 2009 % Change
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Petroleum and natural gas sales $ 10,773 $ 7,000 54%
Funds flow from operations (1) 4,508 2,910 55%
Basic per share (2) 0.07 0.06 17%
Diluted per share (2) 0.06 0.06 -
Net income (loss) 335 (1,061) 132%
Basic per share (2) 0.01 (0.02) 150%
Diluted per share (2) 0.00 (0.02) 100%
Capital expenditures (3) 8,084 5,914 37%
Net debt 43,896 25,507 72%
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Shares Outstanding at period end (000's)
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Class A 65,454 50,005 31%
Class B 1,054 1,054 -
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Operations
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Daily production
Natural gas (mcf/d) 16,544 9,464 75%
Light oil and NGLs (bbl/d) 480 388 24%
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Total production (boe/d) 3,237 1,965 65%
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Average realized sales price (net of risk
management gains or losses)
Natural gas (per mcf) $ 5.12 $ 6.34 (19%)
Light oil and NGL (per bbl) 72.92 45.80 59%
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Netback per boe (1)
Sales price $ 37.95 $ 34.56 10%
Realized risk management gains (losses) (0.97) 5.02 (119%)
Sales price (net of realized risk
management gains/losses) 36.98 39.58 (7%)
Royalties 5.92 7.60 (22%)
Operating expenses 11.10 10.19 9%
Transportation 1.29 1.73 (25%)
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Operating netback (1) $ 18.67 $ 20.06 (7%)
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(1) The Company uses "funds flow from operations" and "funds flow from
operations per share" which do not have any standardized meaning
prescribed by Canadian GAAP. The terms are used to analyze operating
performance and leverage. The Company uses "Netback per boe" and
"Operating Netback" which do not have any standardized meaning
prescribed by Canadian GAAP. The terms are used to evaluate performance
and in capital allocation decisions.
(2) Weighted average diluted shares outstanding for Q1 2010 include both the
impact of the conversion of the Class B shares and the effect of the
granted options as dilutive while the impact of both of these have been
excluded from Q1 2009 as they would have been anti-dilutive.
(3) Capital expenditures include only the cash additions for the period and
capitalized G&A expense.
HIGHLIGHTS OF THE FIRST QUARTER 2010 AND SUBSEQUENT EVENTS
- Average production for Q1 2010 was 3,237 boe/d, an increase of 65% relative to
Q1 2009 average production of 1,965 boe/d (26% increase per basic weighted
average share) and a 19% increase compared to Q4 2009 average production of
2,729 boe/d (19% increase per basic weighted average share);
- Since commencing operations on October 17, 2007, record production levels in
the first quarter of 2010 mark the Company's tenth consecutive quarter of
growth;
- Funds flow from operations for Q1 2010 increased 55% to $4.5 million from $2.9
million in Q1 2009. Funds flow from operations increased 17% per basic weighted
average share over the same period;
- The Company drilled five wells (4.0 net) in the quarter with an 80% success rate;
- Seaview has successfully drilled and completed the Company's first Cardium
horizontal well at Wapiti establishing the presence for a large oil in place
resource play with the potential for multiple follow-up drilling locations;
- Subsequent to quarter end, Seaview disposed of its southeast Saskatchewan
assets, with production of approximately 200 boe/d, for gross proceeds of $33
million. The disposition closed on April 29, 2010; and
- Subsequent to quarter end, the credit facility was confirmed by the lenders at
$52 million with the next interim review date set for August 1, 2010. Taking
into account the asset disposition and based on estimated net debt of
approximately $10 million at the time of closing, Seaview has $42 million of
available credit capacity to pursue strategic opportunities.
OPERATIONS UPDATE
Activity for the winter program in the first quarter of 2010 included drilling
five wells (4.0 net) at an 80% success rate. The drilling program was balanced
between lower risk development drilling in the Peace River Arch and exploration
for Cardium oil and gas reserves in the Wapiti area.
Peace River Arch
After the disposition of the Company's southeast Saskatchewan properties, the
Peace River Arch core area has become the primary operating focus for the
company. The Company's assets in this region feature high quality, long life
natural gas and light oil reserves, ownership in key processing infrastructure
and over 26,000 net acres of undeveloped land. Due to the multi-zone nature of
the Company's position in the Arch, Seaview maintains an extensive inventory of
conventional exploration and development projects including exposure to the
Lower Montney resource play, targeting natural gas in Pouce Coupe.
During the first quarter of 2010, the Company re-drilled one Montney well (1.0
net), which has been successfully completed and brought on stream in April,
adding over 80 boe/d net for Q2-2010 and drilled one unsuccessful well (1.0 net)
at Boundary Lake. In addition, the Company completed construction of facilities
to tie-in 2 wells (1.4 net) expected to contribute an additional 170 boe/d of
new production prior to the third quarter.
Finally, Seaview has 2 wells (1.8 net) to be tied in, having initial production
of more than 500 boe/d, which are expected to be tied-in prior to year-end,
contingent on facility access and improved natural gas prices.
Wapiti Exploration Program
During the first quarter, Seaview successfully drilled and completed the
Company's first Cardium horizontal well at Wapiti. This exploration well was
drilled 8 km southwest of the Wapiti Cardium A oil pool and represents the first
multi staged fraced horizontal Cardium well completed in the area. Seaview
believes this well has successfully proven the presence of a significant light
oil resource play.
Seaview has expanded the capital program in Wapiti by $10 million which will see
a total of 4 horizontal wells (2.5 net) drilled in 2010, to further delineate
the resource potential of the Company's landbase. The Company is planning to
drill two Cardium oil horizontal wells (1.1 net) immediately after break-up.
Results from the first exploratory horizontal well are being held confidential.
Facilities are currently under construction with initial production expected
early in the third quarter.
Seaview recently increased its land position by 7 sections (3.4 net) in Wapiti.
Through an aggressive farm-in and acquisition strategy, the Company has now
assembled a sizable land position with exposure to 18.5 sections (9.9 net) of
highly prospective lands within the Cardium light oil resource fairway.
Based on reserves data from the Energy Resources Conservation Board ("ERCB"),
the Wapiti Cardium A pool contains original oil in place ("OOIP") of 121 million
barrels of oil and original gas in place ("OGIP") of 67 billion cubic feet of
solution gas over 14.3 gross sections. Seaview's horizontal well was drilled
offsetting existing vertical wells indicating similar log and reservoir
parameters to the Wapiti Cardium A pool. Based on the offsetting vertical wells
and the reservoir encountered within the 1000 meter horizontal section, Seaview
believes its lands offer a comparable resource potential hosted within a lower
permeability reservoir adjacent to the conventional pool.
In addition to the Cardium oil project, Seaview has successfully drilled and
completed 2 Cardium gas wells (0.64 net), which have recently been tied-in and
are on production contributing 55 boe/d net.
Southeast Saskatchewan
Subsequent to the quarter end, Seaview announced and closed the disposition of
its southeast Saskatchewan assets for gross proceeds of $33 million. The
disposition closed on April 29, 2010 and the Company has initially used the
proceeds to reduce bank debt. Concurrently, the Company's credit facility was
confirmed at $52 million, post closing. Seaview's net debt was reduced to
approximately $10 million at the time of closing, providing the Company with
access to approximately $42 million of available credit to pursue the capital
program and strategic acquisitions.
COMMODITY PRICE RISK MANAGEMENT
A key component to Seaview's balance sheet management is the Company's commodity
price risk program. The price risk management program is intended to reduce
price volatility in order to support cash flow, protect acquisition economics
and finance ongoing capital expenditures.
Seaview currently has approximately 1,430 boe/d (approximately 46% of estimated
current production) hedged for the remainder of 2010;
- 7,778 GJ/d of natural gas hedged in puts and fixed contracts providing for a
"net of cost" floor of $4.68/GJ ($4.94/mcf), which is a 13% premium to the
current calendar AECO 2010 futures strip of $4.17/GJ, and a 27% premium to the
current AECO strip price of $3.68/GJ;
- 200 bbl/d of crude oil hedged in put contracts for 2010 with a "net of cost"
floor of CDN$75.00/bbl;
- On a combined basis, Seaview has 8,570 mcfe/d, hedged at a "net of cost" floor
price of $6.00/mcfe, which will provide for minimum revenue of $14.1 million for
the remainder of 2010.
EXPANDED 2010 CAPITAL BUDGET
Seaview's board of directors has approved an increase to the 2010 capital budget
to $22.2 million, up from previous guidance of $11.5 million. As a result of the
exploration success at Wapiti, the 2010 capital budget includes drilling a total
of 4 horizontal wells in Wapiti to evaluate the long term growth potential of
the Wapiti Cardium project.
For the remainder of 2010, Seaview is planning to drill 6 wells (3.6 net), as
well as complete the equip and tie-in of 3 wells (2.25 net) with estimated
behind pipe production capacity of 500 boe/d to be brought online over the
balance of the year. Given the higher weighting of capital directed towards
oil-weighted plays, Seaview expects to more than double exit crude oil and
liquids production to 450 bbl/d compared to current crude oil and liquids
production of 220 boe/d.
Seaview has a recently approved $52 million line of credit, with current
estimated net debt of approximately $10 million. Accordingly the Company has
approximately $42 million of available credit to capitalize the Company's
development and exploration program, and pursue strategic acquisition
opportunities.
Combined with the Company's growing prospect inventory and solid financial
position, Seaview is well positioned to continue its track record of growth in
cash-flow, production and reserves on a per share basis.
OUTLOOK; UPWARD REVISION TO 2010 GUIDANCE
Including the impact of the recent Wapiti oil success and expanded capital
budget, Seaview is well positioned to continue its growth strategy for 2010.
Seaview's Peace River Arch core area featuring high quality, long-life reserves,
combined with the emerging Cardium light oil resource play, provide the Company
with a significant drilling inventory.
As a result of the recent corporate success, Seaview provides the following
upwardly revised guidance for 2010:
- Forecast 2010 average daily production estimate of more than 3,100 boe/d
compared to 2009 annual average production of 2,321 boe/d resulting in an
estimated forecast production growth of 34% per share (based on 65.48 million
Class A shares outstanding);
- Upward revision to 2010 estimated exit production to more than 3,450 boe/d
including over 450 bbl/d of crude oil and natural gas liquids;
- Upward revision to forecasted 2010 capital budget to $22.2 million;
- Seaview has a $52 million line of credit, with current estimated net debt of
approximately $10 million;
- Seaview has more than $42 million of available credit facilities to capitalize
the Company's development and exploration programs and pursue strategic
acquisition opportunities;
- Seaview's Peace River Arch core area features a solid production capacity of
more than 3,200 boe/d currently, Company owned infrastructure and a prospective
land base consisting of 141,236 gross acres (59,319 net) of land, including over
26,000 net acres of undeveloped land;
- Seaview has established significant positions in resource plays providing for
longer-term growth potential in a diverse portfolio of assets targeting both
light oil and natural gas plays, including:
-- In Wapiti, the Company has assembled a sizable land position with exposure to
18.5 sections of land (9.9 net) targeting a Cardium light oil resource play.
Seaview plans to increase capital spending by $10 million over the balance of
2010 to drill a total of 4 horizontal multi-frac wells (2.5 net) to delineate
the resource potential of the Company's land position;
-- In Pouce Coupe, the Company holds interests in 20 sections of land (3.5 net)
targeting a Doig-Montney natural gas resource play. Seaview's land position is
on trend with successful industry development activities further reducing the
risk of full development when economics are more viable; and
-- In Harlech, Seaview holds a 25% working interest in 9 contiguous sections of
land (2.25 net) targeting multi-zone Cretaceous and Nordegg gas resource
potential. The Harlech area offers exposure to liquids rich natural gas
reservoirs.
- Strong commodity hedging program providing for downside protection on 46% of
2010 forecasted average production generating a minimum $14.1 million gross
revenue for the remainder of 2010; and
- 65.48 million Class A shares and 1.0 million Class B shares outstanding.
RELEASE OF FIRST QUARTER FINANCIALS
Seaview has filed its financial results for the period ended March 31, 2010
including the unaudited interim consolidated financial statements and related
management's discussion and analysis ("MD&A"). These filings will be available
in their entirety at www.seaviewenergy.com and www.sedar.com or by contacting
the Company directly.
ANNUAL GENERAL MEETING
Seaview's Annual General Meeting is scheduled for 3:30 pm on Wednesday, June 2,
2010 in the Angus/Northcote Room at the Bow Valley Conference Centre, Suite 300,
205 - 5th Ave SW, Calgary, Alberta.
Barrels of oil equivalent (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural
gas to one barrel (bbl) of oil is based on an energy conversion method primarily
applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead. All boe conversions in this press release are
derived by converting natural gas to oil in the ratio of six thousand cubic feet
of natural gas to one barrel of oil. Certain financial amounts are presented on
a per boe basis, such measurements may not be consistent with those used by
other companies.
Estimated values contained in this press release do not represent fair market value.
This press release may contain forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements may include estimates,
plans, anticipations, expectations, opinions, forecasts, projections, guidance
or other similar statements that are not statements of fact. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause actual results to
differ materially from those anticipated or implied in the forward-looking
statements. These risks include, but are not limited to: the risks associated
with the oil and gas industry (e.g. 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 estimates; the uncertainty of estimates and projections relating to
production, costs and expenses and health, safety and environmental risks),
commodity price and exchange rate fluctuation and uncertainties resulting from
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures. The Company's forward-looking statements are
expressly qualified in their entirety by this cautionary statement. The
forward-looking statements contained in this press release are made as of the
date hereof and the Company 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.
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