Seaview Energy Inc. Releases Financial and Operating Results for the Three and Six Months Ended June 30, 2010, and Wapiti Cardiu
August 18 2010 - 9:13PM
Marketwired Canada
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
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 second quarter 2010 financial and operational
results.
----------------------------------------------------------------------------
SELECTED INFORMATION
----------------------------------------------------------------------------
Financial ($000's
except per share % %
amounts) Q2 2010 Q2 2009 Change YTD 2010 YTD 2009 Change
----------------------------------------------------------------------------
Petroleum and
natural gas sales $ 9,543 $ 7,463 28% $ 20,316 $ 14,463 40%
Funds flow from
operations (1) 4,374 3,076 42% 8,882 5,986 48%
Basic and diluted
per share (2) 0.07 0.06 17% 0.13 0.12 8%
Net loss (1,840) (3,273) 41% (1,505) (4,334) 63%
Basic and diluted
per share (2) (0.03) (0.06) 50% (0.02) (0.08) 75%
Capital expenditures
(3) 4,812 27,969 (83%) 12,896 33,883 (62%)
Property disposition (33,090) - 100% (33,090) - 100%
Net debt to funds
flow from
operations ratio 0.63 3.02 (79%) 0.63 3.02 (79%)
----------------------------------------------------------------------------
Shares Outstanding
at period end (000's)
----------------------------------------------------------------------------
Class A 65,479 54,172 21% 65,479 54,172 21%
Subscription
receipts - 11,246 (100%) - 11,246 (100%)
Class B 1,054 1,054 - 1,054 1,054 -
----------------------------------------------------------------------------
Operations
----------------------------------------------------------------------------
Daily production
Natural gas (mcf/d) 17,084 9,976 71% 16,815 9,721 73%
Light oil and NGLs
(bbl/d) 374 403 (7%) 426 396 8%
----------------------------------------------------------------------------
Total production
(boe/d) 3,221 2,066 56% 3,229 2,016 60%
----------------------------------------------------------------------------
Average realized sales
price (net of risk
management gains)
Natural gas (per
mcf) $ 4.59 $ 5.79 (21%) $ 4.85 $ 6.06 (20%)
Light oil and NGL
(per bbl) 70.87 60.20 18% 72.02 53.18 35%
----------------------------------------------------------------------------
Netback per boe (1)
Sales price $ 30.35 $ 30.24 - $ 34.14 $ 32.33 6%
Realized risk
management gains 2.22 9.46 (77%) 0.62 7.31 (92%)
Sales price (net of
realized risk
management gains) 32.57 39.70 (18%) 34.76 39.64 (12%)
Royalties 4.83 4.57 6% 5.37 6.04 (11%)
Operating expenses 8.07 12.86 (37%) 9.58 11.57 (17%)
Transportation 1.38 1.49 (7%) 1.33 1.60 (17%)
----------------------------------------------------------------------------
Operating netback(1) $ 18.29 $ 20.78 (12%) $ 18.48 $ 20.43 (10%)
----------------------------------------------------------------------------
(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 all periods exclude both
the impact of the conversion of the Class B shares and the effect of the
granted options 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 SECOND QUARTER 2010 AND SUBSEQUENT EVENTS
-- Average production for Q2 2010 was 3,221 boe/d, an increase of 56%
relative to Q2 2009 average production of 2,066 boe/d (21% increase per
basic weighted average share), essentially flat compared to Q1 2010
average production of 3,237 boe/d despite the sale of 200 boe/d of
production from southeast Saskatchewan which impacted Q2 average
production;
-- Funds flow from operations for Q2 2010 increased 42% to $4.4 million
from $3.1 million in Q2 2009. Funds flow from operations increased 17%
per basic weighted average share despite commodity prices declining 18%
per boe over the same period;
-- On April 29, 2010, Seaview disposed of its southeast Saskatchewan
assets, with production of approximately 200 boe/d, for gross proceeds
of $33 million representing sale metrics of over $165,000 per flowing
barrel of production;
-- Proceeds of the sale were used to reduce net debt to $10.6 million
(including unrealized gains on financial contracts) representing
trailing debt to annualized Q2 2010 cash flow ratio of 0.60;
-- Seaview's credit facility has been confirmed by the lenders at $52
million with the next interim review set for February 2011 providing for
$41 million of available credit facilities to fund the Company's capital
program in the Wapiti Cardium light oil resource play;
-- Achieved operating costs of $8.07 per boe, representing a 37% reduction
in operating expenses per boe compared to Q2 2009 due to selling high
operating cost Saskatchewan assets combined with high-grading current
production base to high deliverability, low operating cost assets in
Peace River Arch;
-- During Q2 2010, operations focused on equipping and tie-in activities
focused in the Peace River Arch and Wapiti core areas. In the Peace
River Arch area, the Company brought on 2 gas wells (1.4 net). In
Wapiti, the facilities to produce the Company's first horizontal well
(0.68 net) were completed with initial production in Wapiti commencing
in August 2010;
-- The Company's first Wapiti exploration well at 100/01-09-066-08W6 was
placed on production on August 10, 2010. Over the last 24 hour period
the well produced 170 bbl/d of high quality 41 degree API crude oil plus
197 mcf/d of associated solution gas for a combined 203 boe/d (138 boe/d
net);
-- Subsequent to the end of the quarter, Seaview successfully drilled and
cased 2 additional horizontal wells (1.5 net) targeting the Wapiti
Cardium light oil resource play. Completion operations have begun at
100/04-17-066-07W6 (Seaview net working interest of 78.3%). The third
Wapiti Cardium horizontal exploration well drilled at 100/04-22-066-08W6
(Seaview net working interest of 76.0%) will be completed in late Q3
2010;
-- As a result of the Company's aggressive land strategy in Wapiti, Seaview
now has exposure to 18.5 sections (10.5 net) of highly prospective lands
within the Cardium light oil resource fairway; and
-- With Seaview's early operational success and growing land position,
Management believes that the Wapiti Cardium light oil resource play
provides Seaview with a long term development asset with over 74
potential horizontal development locations (42 net).
OPERATIONS UPDATE
Activity in the second quarter of 2010 focused on tie-ins in Wapiti and Peace
River Arch, as well as preparing for the second phase of Wapiti exploration
drilling including 2 Cardium horizontal wells (1.5 net).
Wapiti Exploration Program
Seaview has established itself as a leader in developing the Wapiti Cardium
light oil resource play by quickly accumulating a sizeable land position within
the prospective Cardium fairway. Through a series of farm-ins and acquisitions,
the Company now has exposure to 18.5 sections (10.5 net) of highly prospective
lands. The lands are operated by Seaview (average 57% working interest).
The lands are situated within a low permeability reservoir offsetting the Wapiti
Cardium A pool. Based on reserves data from the Energy Resources Conservation
Board, 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 first horizontal well (68.0% working interest) was drilled at
100/01-09-066-08W6 during the first quarter and successfully completed using
multi-frac technology. This well was completed with an energized oil fracture
featuring a total of 10 stages of 15 tonnes per stage. The successful test for
crude oil at this location validates the presence of a significant light oil
resource play, extending the fairway a minimum of 5 miles southwest of the
existing Cardium A pool.
The 100/01-09-066-08W6 well was placed on production on August 10, 2010. Over
the last 24 hour period the well produced 170 bbl/d of high quality 41 degree
API crude oil plus 197 mcf/d of associated solution gas for a combined 203 boe/d
(138 boe/d net).
Subsequent to the end of the second quarter, Seaview has drilled and cased the
second horizontal well to evaluate the southern extension of the Cardium trend
located at 100/04-17-066-07W6 (Seaview net working interest of 78.3%). The 4-17
location was drilled approximately 3 miles southeast of the existing
conventional pool, further delineating the resource potential within the
prospective fairway. Completion operations are currently underway at this
location. Based on evaluation of the testing and production data from the 1-9
frac, Seaview has revised the completion program to include a total of 13 stages
with 20 tonnes per fracture stage.
In addition, Seaview has drilled and cased the Company's third horizontal well
located at 100/04-22-066-08W6 (Seaview net working interest of 76.0%). Similar
to the previous wells, the 4-22 location encountered over 1100 m of contiguous
net pay in the Cardium formation supporting the continuity of reservoir quality
over Seaview's existing lands. Completion operations are scheduled to start in
late Q3 2010.
The 4-17 and 4-22 wells will qualify for the Alberta Government's Horizontal Oil
New Well Royalty Rate of 5% for 24 months, to a maximum of 60,000 barrels of
production. The 1-9 well was drilled prior to the announcement of the Horizontal
Oil New Well Royalty Rate program, but will still qualify for the 5% royalty
rate for 12 months to a maximum of 50,000 barrels of production.
With Seaview's early operational success and growing land position, Management
believes that the Wapiti Cardium light oil resource play provides Seaview with a
long term development asset with over 74 potential horizontal development
locations (42 net).
Seaview believes the Wapiti Cardium light oil resource play contains the
essential elements of a profitable resource play including:
-- Large areal extent, supported by numerous logs and tests validating the
reservoir continuity;
-- Contiguous resource potential including an average of 10 m of vertical
pay exceeding 6% porosity providing for significant accumulation of
light oil, and a high degree of repeatability;
-- Ability to improve drilling and completion techniques leading to lower
capital costs and higher productivity over time; and
-- Scalable project targeting high quality light oil (41 degree API).
Continued success in developing the Wapiti Cardium light oil play could add
significant incremental upside to Seaview's current asset base. The Company will
therefore continue to focus on proving the commerciality of this play throughout
the balance of 2010.
Peace River Arch
During the second quarter of 2010, the Company completed construction of
facilities to tie-in 2 wells (1.4 net) adding production in the Boundary Lake
and Sinclair areas. Contingent on facility access and improved natural gas
prices, Seaview has 2 additional wells (1.8 net) located in Boundary Lake to be
tied in prior to year-end, having initial production capability of more than 500
boe/d.
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 1,411 boe/d (approximately 45% of estimated
current production) hedged for the remainder of 2010, as follows:
-- 7,668 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 34%
premium to the current calendar AECO 2010 futures strip of $3.49/GJ, and
a 46% premium to the current AECO strip price of $3.21/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 8,466 mcfe/d, hedged at a "net of cost"
floor price of $6.01/mcfe, which will provide for minimum revenue of
$9.4 million for the second half of 2010.
OUTLOOK; 2010 GUIDANCE
Including the impact of the recent Wapiti oil success, 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
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);
-- 2010 estimated exit production of more than 3,450 boe/d including over
450 bbl/d of crude oil and natural gas liquids;
-- Forecasted 2010 capital budget of $22.2 million;
-- Seaview's credit facility has been confirmed by the lenders at $52
million. The next interim review is set for February 2011. As at quarter
end, Seaview had approximately $41 million of available credit capacity
to pursue strategic opportunities;
-- 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 (10.5 net) targeting a Cardium
light oil resource play. Seaview plans to spend $10 million total in
2010 to drill a total of 4 horizontal multi-frac wells (2.9 net) to
delineate the resource potential of the Company's land position;
-- In Pouce Coupe, the Company holds interests in 21 sections of land
(4.5 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
45% of 2010 forecasted average production generating a minimum $9.4
million gross revenue for the second half of 2010; and
-- 65.48 million Class A shares and 1.0 million Class B shares outstanding.
RELEASE OF SECOND QUARTER FINANCIALS
Seaview has filed its financial results for the period ended June 30, 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.
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.
Seaview Energy Inc. Class B (TSXV:CVU.B)
Historical Stock Chart
From Jun 2024 to Jul 2024
Seaview Energy Inc. Class B (TSXV:CVU.B)
Historical Stock Chart
From Jul 2023 to Jul 2024
