Petro-Reef Resources Ltd. (TSX VENTURE:PER), ("Petro-Reef" or the "Company") is
pleased to release its financial and operating results for the three and six
month periods ended June 30, 2012. This press release should be read in
conjunction with the Company's June 30, 2012 quarterly financial statements and
MD&A filed on Sedar.
Financial Summary
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Three months ended June 30
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2012 2011 % Change
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Oil and gas revenue $ 2,522,702 $ 2,249,472 12
Cash flow from operations (1) 511,217 953,248 (46)
Per share - basic and diluted 0.01 0.02 (52)
Net income 926,424 1,363 -
Per share - basic and diluted 0.01 0.00 -
Net debt (1) 12,695,625 13,793,310 (8)
Capital expenditures $ 756,242 $ 2,368,000 (68)
Shares outstanding - end of period 62,239,477 56,261,477 11
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Six months ended June 30
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2012 2011 % Change
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Oil and gas revenue $ 5,378,595 $ 5,371,751 0
Cash flow from operations (1) 1,738,981 2,587,396 (33)
Per share - basic and diluted 0.03 0.05 (44)
Net income (loss) 815,042 (1,052,232) -
Per share - basic and diluted 0.01 (0.02) -
Net debt (1) 12,695,625 13,793,310 (8)
Capital expenditures $ 1,602,074 $ 5,996,000 (73)
Shares outstanding - end of period 62,239,477 56,261,477 11
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(1) Non GAAP measure
Daily Production and Commodity Prices
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Three months ended June 30 2012 2011 % Change
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Daily production
Oil and NGLs (bbl/d) 341 163 109
Natural gas (mcf/d) 1,866 2,555 (27)
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Oil equivalent (boe/d @ 6:1) 652 589 11
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Realized commodity prices ($CDN)
Oil and NGLs (bbl) 68.88 91.68 (25)
Natural gas (mcf) 2.28 3.81 (40)
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Oil equivalent (boe @ 6:1) 41.53 42.15 (1)
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Average prices for oil and gas dropped sharply in Q2 2012 as the average oil
price dropped 25% and the average gas price fell by 40%.However, the average
price per boe remained level as oil production increased to 52% of total
production from 28% in Q2 2011.
Daily production volumes increased by 11% to 652 boe/d in the three months ended
June 30, 2012 as compared to 589 boe/d for the same period in 2011. Oil volumes
increased by 109% quarter over quarter while gas production decreased by 27%. In
Q2 2012 oil and NGL production comprised 52% of total production as compared to
28% in Q2 2011.
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Six months ended June 30 2012 2011 % Change
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Daily production
Oil and NGLs (bbl/d) 325 229 42
Natural gas (mcf/d) 2,303 2,808 (18)
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Oil equivalent (boe/d @ 6:1) 709 697 2
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Realized commodity prices ($CDN)
Oil and NGLs (bbl) 75.19 81.06 (7)
Natural gas (mcf) 2.28 3.94 (42)
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Oil equivalent (boe @ 6:1) 41.42 42.72 (3)
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Average prices for oil and gas decreased in the six months ended June 30, 2012
as the average oil price dropped 7% and the average gas price fell by
42%.However, the average price per boe only decreased by 3% as oil production
increased by 42% as compared to the same period in 2011.
Daily production volumes increased by 2% to 709 boe/d in the six months ended
June 30, 2012 as compared to 697 boe/d for the same period in 2011. Oil volumes
increased by 42% while gas production decreased by 18%. In the six months ended
June 30, 2012 oil and NGL production comprised 46% of total production as
compared to 33% in 2011.
Revenue by product
Three months ended June 30 2012 2011 % Change
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CDN $
Oil revenue 2,134,766 1,365,342 56
Natural gas revenue 387,936 884,130 (56)
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Total revenue 2,522,702 2,249,472 12
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In Q2 2012 oil revenues comprised 85% of total revenue as compared to 61% in Q2
2011. Oil revenue increased by 56% while natural gas revenue decreased by 56%.
Six months ended June 30 2012 2011 % Change
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CDN $
Oil revenue 4,429,626 3,427,498 29
Natural gas revenue 948,969 1,944,254 (51)
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Total revenue 5,378,595 5,371,752 0
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For the six months ended June 30, 2012 oil revenues comprised 82% of total
revenue as compared to 64% in the same period in 2011. Oil revenue increased by
29% while natural gas revenue decreased by 51%.
Earnings and Cash Flow Summary
Three months ended % %
June 30 2012 2011 Change 2012 2011 Change
CDN $ ($/boe) ($/boe)
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Gross Revenue 2,522,702 2,249,472 12 41.53 42.15 (1)
Royalties (347,700) (369,899) (6) (5.72) (6.93) (17)
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Revenue after
royalties 2,175,002 1,879,573 16 35.81 35.22 2
Operating expenses 827,282 831,653 (1) 13.62 15.58 (13)
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Operating netback
(1) 1,347,720 1,047,920 29 22.19 19.64 13
Realized gain (loss)
on financial
derivative
instruments (19,354) 304,819 - (0.32) 5.71 -
General &
administrative
expenses 660,246 303,152 118 10.87 5.68 91
Interest expense 156,903 96,339 63 2.58 1.81 43
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Cash flow from
operations (1) 511,217 953,248 (46) 8.42 17.86 (53)
Unrealized gain
(loss) on financial
derivative
instruments 1,594,928 394,883 304 26.26 7.40 -
Other income - - - 0.00 0.00
Stock based
compensation 33,208 192,717 (83) 0.55 3.61 (85)
Accretion 10,996 17,386 (37) 0.18 0.33 (44)
Depletion and
depreciation 1,135,517 1,229,832 (8) 18.70 23.04 (19)
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Income before income
taxes 926,424 (91,804) - 15.25 (1.72) -
Deferred income tax
(recovery) - (93,167) - 0.00 (1.75) -
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Net Income 926,424 1,363 - 15.25 0.03 -
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Per Share - Basic 0.01 0.00
Per Share - Diluted 0.01 0.00
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Six months ended June % %
30 2012 2011 Change 2012 2011 Change
CDN $ ($/boe) ($/boe)
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Gross Revenue 5,378,595 5,371,751 0 41.42 42.72 (3)
Royalties (623,225) (882,957) (29) (4.80) (7.02) (32)
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Revenue after royalties4,755,370 4,488,794 6 36.62 35.70 3
Operating expenses 1,646,413 1,677,727 (2) 12.68 13.34 (5)
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Operating netback (1) 3,108,957 2,811,067 11 23.94 22.36 7
Realized gain (loss) on
financial derivative
instruments (117,292) 479,954 - (0.90) 3.82 -
General &
administrative
expenses 961,284 507,876 89 7.40 4.04 83
Interest expense 291,400 195,749 49 2.24 1.56 44
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Cash flow from
operations (1) 1,738,981 2,587,396 (33) 13.39 20.58 (35)
Unrealized gain (loss)
on financial
derivative instruments1,523,909 (508,790) - 11.74 (4.05) -
Other income 230,252 250,919 (8) 1.77 2.00 (11)
Stock based
compensation 120,579 333,253 (64) 0.93 2.65 (65)
Accretion 21,960 34,329 (36) 0.17 0.27 (38)
Depletion and
depreciation 2,535,561 2,867,450 (12) 19.53 22.80 (14)
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Income (loss) before
income taxes 815,042 (905,507) - 6.28 (7.20) -
Deferred income tax
expense - 146,725 - 0.00 1.17 -
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Net Income (loss) 815,042 (1,052,232) - 6.28 (8.37) -
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Per Share - Basic 0.01 (0.02)
Per Share - Diluted 0.01 (0.02)
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(1) Non-GAAP measure
Forward-Looking Statements: All statements, other than statements of historical
fact, set forth in this news release, including without limitation, assumptions
and statements regarding reservoirs, resources and reserves, future production
rates, exploration and development results, financial results, and future plans,
operations and objectives of the Corporation are forward-looking statements that
involve substantial known and unknown risks and uncertainties. Some of these
risks and uncertainties are beyond management's control, including but not
limited to, the impact of general economic conditions, industry conditions,
fluctuation of commodity prices, fluctuation of foreign exchange rates,
environmental risks, industry competition, availability of qualified personnel
and management, availability of materials, equipment and third party services,
stock market volatility, timely and cost effective access to sufficient capital
from internal and external sources. The reader is cautioned that assumptions
used in the preparation of such information, although considered reasonable by
the Corporation at the time of preparation, may prove to be incorrect. There can
be no assurance that such statements will prove to be accurate and actual
results and future events could differ materially from those anticipated in such
statements.
Reference is made to barrels of oil equivalent (BOE). Barrels of oil equivalent
may be misleading, particularly if used in isolation. In accordance with
National Instrument 51-101, a BOE conversion ratio for natural gas of 6 Mcf: 1
bbl has been used, which is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
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