Seaview Energy Inc. Releases Financial and Operating Results for the Year and Three Months Ended December 31, 2010
April 06 2011 - 7:13PM
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. (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B)("Seaview" or the
"Company") is pleased to provide shareholders with an update on the Company's
2010 financial and operational results.
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SELECTED INFORMATION
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Financial ($000's except % %
per share amounts) Q4 2010 Q4 2009 Change 2010 2009 Change
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Petroleum and natural
gas sales 7,642 $ 10,377 (26%) 35,171 $ 33,504 5%
Funds flow from
operations (1) 4,244 5,024 (16%) 17,577 15,120 16%
Basic and diluted per
share (2) 0.06 0.08 (25%) 0.26 0.26 -
Net loss (2,562) (2,366) 8% (4,701) (9,607) 51%
Basic and diluted per
share (2) (0.04) (0.04) - (0.07) (0.16) 56%
Capital expenditures (3) 8,842 5,368 65% 27,357 16,567 65%
Property acquisitions
(dispositions) 3,315 3,840 (14%)(29,775) 30,455 (198%)
Net debt to funds flow
from operations ratio 1.15 2.67 (57%) 1.15 2.67 (57%)
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Shares Outstanding at period end (000's)
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Class A 65,537 65,433 - 65,537 65,433 -
Class B 1,054 1,054 - 1,054 1,054 -
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Operations
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Daily production
Natural gas (mcf/d) 14,016 13,703 2% 15,223 11,422 33%
Light oil and NGLs
(bbl/d) 305 445 (31%) 370 417 (11%)
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Total production (boe/d) 2,641 2,729 (3%) 2,907 2,321 25%
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Average realized sales price (net of risk
management gains)
Natural gas (per mcf) 4.48 $ 6.06 (26%) 4.65 $ 5.88 (21%)
Light oil and NGL (per
bbl) 66.27 66.92 (1%) 69.16 58.92 17%
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Netback per boe (1)
Sales price 28.60 $ 35.35 (19%) 31.47 $ 32.00 (2%)
Realized risk
management gains 2.85 5.98 (52%) 1.68 7.55 (78%)
Sales price (net of
realized risk
management gains) 31.45 41.33 (24%) 33.15 39.55 (16%)
Royalties 3.02 4.52 (33%) 4.12 4.90 (16%)
Operating expenses 5.44 11.80 (54%) 7.65 11.57 (34%)
Transportation 1.63 1.27 28% 1.43 1.44 (1%)
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Operating netback (1) 21.36 $ 23.74 (10%) 19.95 $ 21.64 (8%)
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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 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 2010 AND SUBSEQUENT EVENTS
-- Average production for 2010 was 2,907 boe per day, an increase of 25%
relative to 2009 average production of 2,321 boe per day (increase of
11% per basic weighted average share);
-- Funds flow from operations for 2010 increased 16% to $17.6 million from
$15.1 million in 2009;
-- Closed the disposition of Seaview's assets in Southeast Saskatchewan for
$33 million on April 29, 2010 representing disposition metrics of
$165,000 per flowing barrel. The Company reduced corporate debt levels
to below $11 million at closing, providing available credit facilities
of over $40 million to finance new exploration projects;
-- Executed a series of strategic farm-ins and land acquisitions to
assemble a large, contiguous land position in the emerging Wapiti
Cardium light oil resource play:
-- Accumulated 42.5 sections (22.8 net) of prospective lands setting up
extensive drilling inventory with over 170 horizontal development
locations (91 net) targeting high quality, high net-back light oil
and associated natural gas production;
-- Drilled 8 Cardium horizontal wells (5.0 net) at 100% success rate
establishing light oil resource potential over the majority of the
Company's Wapiti lands;
-- Demonstrated improved initial production rates while lowering
capital costs through continuous improvement of both drilling and
completion practices; and
-- Tested the application of new technologies to maximize the potential
of the Wapiti Cardium light oil resource fairway.
-- Established light oil resource potential of the Wapiti Cardium play
demonstrated by strong reserve additions:
-- Total Proven reserve additions of 1,450 Mboe, including 1,032 Mbbls
of crude oil and natural gas liquids with Net Present Value (BTAX
10% discount factor) of $22.4 million;
-- Total Proven plus Probable reserve additions of 3,165 Mboe,
including 2,264 Mbbls of crude oil and natural gas liquids with Net
Present Value (BTAX 10% discount factor) of $41.8 million;
-- The evaluation from Sproule Associates Limited, the Company's
independent engineering firm, recognized reserves on 23 Cardium
horizontal wells (13.3 net) representing 16% of Seaview's total
Wapiti net well locations based on 4 wells per section; and
-- Continued success in developing the Wapiti Cardium light oil play
could add significant incremental upside to Seaview's current
reserves and net asset value.
-- Net debt at the end of 2010 was $20.3 million compared to $40.3 million
at the end of 2009 representing a 50% reduction over the prior year; and
-- In February 2011, Seaview's credit facility has been confirmed, by the
lenders, at $52 million with the next interim review set for May 31,
2011, providing for approximately $30 million of available credit
facilities at year end to fund the Company's capital program in the
Wapiti Cardium light oil resource play.
Wapiti Results and Activity Plans
Seaview's strategy in 2010 focused on accumulating a large, contiguous land
position targeting a potential light oil resource play in the Wapiti Cardium
fairway. Industry activity in Wapiti has increased substantially since Q1-10
following Seaview's initial exploration success at 100/01-09-066-07W6 (The "1-9
well"). As at April 2011, industry has licensed 24 locations targeting the
Cardium.
Over the course of 2010, Seaview successfully drilled 7 Cardium horizontal
exploration wells (4.3 net) to evaluate the Company's lands. Subsequent to
December 31, 2010, Seaview has drilled and cased one additional Cardium
horizontal well (0.7 net).
The Company's focus continues to be on the evaluation of the extensive land
position in Wapiti through exploration drilling. In addition, Seaview continues
to see improved test results with the evolution of the completion technology
designed to optimize production and ultimate reserves potential of the Company's
Wapiti property.
The current status of the 8 Wapiti horizontal wells (5.0 net) is as follows:
-- 4 horizontal wells (2.7 net) are currently on production, including
conservation of associated solution gas. In addition to crude oil
production, the natural gas liquid yields from the Company's Wapiti
wells have been over 85 bbls per mmcf of associated solution gas.
Seaview's fourth horizontal well located at 100/12-14-067-9W6 (73.7% WI)
came on production in mid-March and continues to produce remaining load
oil while flowing to sales;
-- 3 horizontal wells (1.7 net) have been completed and are awaiting tie-in
including 100/14-28-067-08W6 ("the 14-28 well") (37% WI in Petroleum;
18% WI in natural gas), 100/01-17-066-08W6 (67.6% WI) and 100/01-03-066-
08W6 (64.4% WI). The completions of each of these wells utilized the
same completion technology as the 14-28 well;
-- The Company elected to proceed with the equip and tie-in of each of
these locations, in order to continue evaluation and testing through
spring break-up. Seaview anticipates all 3 locations (1.7 net) to be
producing within the next month; and
-- 1 horizontal well (0.5 net) at 100/16-12-066-08W6 has been drilled and
cased with completion to commence after spring break-up.
Wapiti Exploration Program
Results to date in the Wapiti area continue to validate the Company's strategy
of accumulating a large, contiguous position targeting light oil in the Wapiti
Cardium fairway.
With 8 Cardium horizontal wells (5.0 net) drilled to date, Seaview has made
significant progress towards evaluating the resource potential throughout the
Company's land base in Wapiti. Management is encouraged by the exploration
results to date and remain confident that the Wapiti Cardium light oil resource
play offers a sizeable and repeatable opportunity.
Management also expects the economics of the play and initial production rates
will continue to improve through the optimization of completion technology
during this initial phase of exploration.
Seaview's opportunity base within the prospective Wapiti Cardium light oil
resource fairway has the following characteristics:
-- Exposure to earn up to 42.5 sections (22.8 net) of prospective Cardium
rights;
-- An extensive drilling inventory with over 170 horizontal development
locations (91 net); and
-- Excellent operational focus featuring a large contiguous land position
directly offsetting the Company's recent successful Cardium exploration
activities.
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), and
natural gas with high liquid recovery NGL's.
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 1,485 boe/d hedged for 2011, as follows:
-- 8,140 GJ/d of natural gas hedged in put contracts providing for a "net
of cost" floor of $4.18/GJ ($4.42/mcf), which is a 14% premium to the
current calendar AECO 2011 futures strip of $3.66/GJ, and a 19% premium
to the current AECO strip price of $3.51/GJ;
-- 200 bbl/d of crude oil hedged in put contracts for 2011 with a "net of
cost" floor of CDN$75.00/bbl; and
-- On a combined basis, Seaview has 8,913 mcfe/d, hedged at a "net of cost"
floor price of $5.50/mcfe, which will provide for minimum revenue of
$17.9 million for 2011.
OUTLOOK
Management successfully completed several strategic initiatives during 2010 to
position the Company for long term sustainability and growth. The combined
impacts of significantly reducing debt, high grading operations towards higher
net back production and early exploration success in the Wapiti Cardium light
oil resource play provides a solid platform for long term growth of reserves,
production and cash flow on a per share basis.
The Company's focused long-life, low cost Peace River Arch asset and strong
balance sheet provide a stable capital base to support development of the upside
potential in the Wapiti Cardium play, and support ongoing exploration projects.
Seaview now has the following characteristics:
-- Total Proven reserves of 6,578 Mboe (23% light oil and natural gas
liquids);
-- Total Proven plus Probable reserves of 11,823 Mboe (26% light oil and
natural gas liquids), effective December 31, 2010, as evaluated by
Sproule Associates Ltd. using National Instrument 51-101 reserve
definitions;
-- Reserve life index is 12.3 years based on Total Proven plus Probable
reserves and Q4 2010 production of 2,641 boe per day;
-- Year-end net debt of $20.3 milllion, with approximately $32 million of
available credit capacity;
-- 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 targeting a
Cardium light oil resource play:
-- Exposure to earn up to 42.5 sections (22.8 net) of prospective
Cardium rights;
-- An extensive drilling inventory with over 170 horizontal development
locations (91 net);
-- Scalable project targeting high quality light oil (41 degree API),
and natural gas with high liquid recovery NGL's; and
-- Excellent operational focus featuring a large contiguous land
position directly offsetting the Company's recent successful Cardium
exploration activities.
-- In Pouce Coupe, the Company holds interests in 21 sections (4.5 net) of
land 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 (2.25 net) of land targeting multi-zone Cretaceous and Nordegg
gas resource potential. The Harlech area offers exposure to liquids rich
natural gas reservoirs.
-- Commodity hedging program providing for downside protection on 1,485 boe
per day for 2011 at a "net of cost" floor price of $5.50/mcfe, providing
minimum 2011 revenue of $17.9 million; and
-- 65.54 million Class A shares and 1.0 million Class B shares outstanding,
as at December 31, 2010.
RELEASE OF 2010 FINANCIALS AND ANNUAL INFORMATION FORM
Seaview has filed its financial results for the year ended December 31, 2010
including the audited consolidated financial statements and related management's
discussion and analysis ("MD&A") and the Annual Information Form which includes
Seaview's reserves data and other oil and gas information for the year ended
December 31, 2010 as mandated by National Instrument 51-101 Standards for
Disclosure for Oil and Gas Activities of the Canadian Securities Administrators.
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.
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