TSX Venture Exchange: PRY
CALGARY,
May 26, 2014 /CNW/ - Pinecrest Energy
Inc. ("Pinecrest" or the "Company") is pleased to announce that it
has filed on SEDAR its unaudited financial statements and related
Management's Discussion and Analysis ("MD&A") for the three
month period ending March 31,
2014. The statements will be available for review at
www.sedar.com or www.pinecrestenergy.com.
|
|
|
March 31 |
Three
months ended |
|
2014 |
2013 |
FINANCIAL |
|
|
Petroleum and natural gas sales |
18,229 |
33,829 |
Funds flow from
operations(1) |
7,237 |
21,378 |
Per share - basic |
$0.03 |
$0.10 |
Per share - diluted |
$0.03 |
$0.09 |
Net income |
290 |
3,716 |
Per share - basic |
$0.00 |
$0.02 |
Per share - diluted |
$0.00 |
$0.02 |
Capital expenditures |
1,008 |
53,545 |
Net debt and working capital deficit
(2) |
(119,947) |
(131,591) |
Common Shares Outstanding |
|
|
Weighted average - basic |
217,212 |
214,311 |
Weighted average -
diluted |
222,027 |
233,947 |
OPERATING |
|
|
Number of days |
90 |
90 |
Production |
|
|
Crude oil (bbls/d) |
2,033 |
4,246 |
Natural gas (mcf/d) |
366 |
274 |
NGL (bbls/d) |
49 |
23 |
Barrels of oil equivalent
(boe/d-6:1) |
2,143 |
4,315 |
Average realized price (3) |
|
|
Crude oil ($/bbl) |
99.16 |
88.12 |
Natural gas ($/mcf) |
0.43 |
2.52 |
NGL ($/bbl) |
16.58 |
44.40 |
Netback per boe ($)(1) |
|
|
Petroleum and natural gas sales |
94.51 |
87.12 |
Royalties |
(14.41) |
(6.20) |
Transportation and production
expenses |
(27.72) |
(18.88) |
Field netback |
52.38 |
62.04 |
Realized loss on derivative financial
instruments |
(2.64) |
(1.44) |
Operating netback |
49.74 |
60.60 |
Wells drilled - Gross |
- |
12 |
Wells drilled - Net |
- |
11.3 |
Success rate (%) |
n/a |
100 |
(1) Non-GAAP
measure
(2) Net debt and working
capital is defined as current assets minus current liabilities,
plus outstanding debt, excluding derivative financial
instruments
(3) Before the effects of
commodity price derivative contracts
Operations Update and Outlook
During the first quarter, Pinecrest successfully undertook
remediation efforts on certain producing wells and deferred capital
spending on all new drilling. The Company's current strategy
is to limit capital spending while applying excess cash flow
towards reducing indebtedness and monitoring waterfloods and the
results of its remediation efforts.
The Pinecrest technical team, with the
assistance of a third party technical expert, has identified some
production impediments which they believe are the cause of the
reduced production in its horizontal wells. With an
understanding of these reservoir effects, the Company developed
remediation plans and implemented treatments on selected vertical
Slave Point producers with initial results that are
encouraging. The wells that were effectively stimulated have
sustained an increase of 1.5 to 2 times production three months
later.
Based on these positive results, Pinecrest
conducted remediation work on certain horizontal wells.
Different treatment techniques with varied implementation costs and
benefits were completed. Production from the wells has continued to
improve. The wells are being monitored and further work is
being planned for the balance of the Company's vertical and
horizontal well inventory based on the results of these
operations. The average treatment cost was $115,000 per well.
An encouraging initial result has been obtained
from a treatment conducted on the Evi #2 Waterflood
102/03-32-087-11W5/0 producing well. The treatment improved
the oil production rate from less than 10 barrels per day to an
average of over 40 barrels per day, while reducing the watercut
from 96% to less than 84%. Total oil production from the Evi
#2 Waterflood is now up to an average of over 120 barrels per day
from a low of 40 barrels per day in February, 2014. This
result validates the technical team's conclusions regarding the
cause of the changes in the oil production rate.
An updated capital plan will be provided later
this year and until such time, Pinecrest will apply all of its free
cash flow, other than maintenance capital, towards reducing its
indebtedness. In this regard, exit Q2 2014 net debt and
working capital is estimated to be approximately $115 million before unrealized hedging gains or
losses. Pinecrest's banking syndicate has extended the
borrowing base review until July 31,
2014.
The Company averaged 2,150 boed for Q1 and
exited Q1 at 2,250 boed. Average production for April, based
on field estimates was 2,150 boed with an additional 100 boed
shut-in. With minimal capital being spent on production
optimization and maintenance during Q1 2014, Pinecrest is
encouraged that we have been able to maintain a relatively flat
production profile throughout Q1 2014. Looking forward to Q2,
Pinecrest anticipates that overall production will be temporarily
reduced by spring break-up in the Red Earth area with every effort
being undertaken to mitigate the effects of additional
downtime.
The Company continues to maintain voidage and
monitor the performance of its seven operated waterflood
schemes. Early production gains followed by setbacks on
certain waterfloods are being addressed. These setbacks were
believed to be primarily caused by the impediments mentioned
above. The Company will undertake remedial action as
required. Since February, 2014, all waterflood production is
stable or increasing as is expected in its phase of voidage
replacement.
While further production monitoring and
additional time is required to fully substantiate the early and
encouraging remedial treatments, the Company is cautiously
optimistic that the results and learnings can be applied to the
Company's large drilling inventory with improved capital
efficiencies.
In addition to remediation treatments, Pinecrest
is looking at more cost effective and potentially improved initial
completion techniques to be undertaken when our drilling program
resumes. With lower capital costs for new wells, and
improvement in production, Pinecrest believes positive steps are
being taken to unlock the large oil resource in the Greater Red
Earth area.
Annual General and Special Meeting
The Pinecrest Annual General and Special Meeting is scheduled for
10:00am on Tuesday, June 10, 2014 at the Bow Valley
Conference Centre, Angus/Northcote Room, located at 300, 205 - 5th
Avenue S.W., Calgary. Alberta, T2P
2V7.
Advisory
The information in this press release
contains certain forward-looking statements. These statements
relate to future events or our future performance. All statements
other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "seek", "anticipate",
"plan", "continue", "estimate", "expect", "may", "will", "project",
"predict", "potential", "targeting", "intend", "could", "might",
"should", "believe", "would" and similar expressions. In
particular, forward looking statements in this press release
includes, but is not limited to: waterflood and production
optimization, oil recovery rates, drilling plans for 2014, expected
production, expected oil to water ratios, the effects of
waterfloods on recovery factors, decline rates, expectations for
wells, success in drilling and waterflood activities, production
rates, the quantity of reserves, and projections of market prices,
and costs. These statements involve substantial known and unknown
risks and uncertainties, certain of which are beyond Pinecrest's
control, including: the impact of general economic conditions;
industry conditions; changes in laws and regulations including the
adoption of new environmental laws and regulations and changes in
how they are interpreted and enforced; fluctuations in commodity
prices and foreign exchange and interest rates; stock market
volatility and market valuations; access to capital; volatility in
market prices for oil and natural gas; liabilities inherent in oil
and natural gas operations; uncertainties associated with
estimating oil and natural gas reserves; competition for, among
other things, capital, acquisitions, of reserves, undeveloped lands
and skilled personnel; incorrect assessments of the value of
acquisitions; changes in income tax laws or changes in tax laws and
incentive programs relating to the oil and gas industry;
geological, technical, drilling and processing problems and other
difficulties in producing petroleum reserves. Pinecrest's actual
results, performance or achievement could differ materially from
those expressed in, or implied by, such forward-looking statements
and, accordingly, no assurances can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur or, if any of them do, what benefits that Pinecrest will
derive from them. Forward-looking statements are made as of the
date herein except as required by law, Pinecrest undertakes no
obligation to publicly update or revise any forward-looking
statements. Many of these risks and uncertainties and
additional risk factors are described in the Company's Annual
Information Form which is available at www.sedar.com. Readers
should review such risk factors and others referred to in documents
Pinecrest files at www.sedar.com.
Statements relating to "reserves" or
"resources" are deemed to be forward-looking statements, as they
involve the implied assessment, based on certain estimates and
assumptions, that the resources or reserves described can be
profitably produced in the future.
The Corporation uses the following terms for
measurement within this press release that do not have a
standardized prescribed meaning under GAAP and these measurements
may differ from other companies and accordingly may not be
comparable to measures used by other companies. The terms "funds
from operations" and "operating netback" are not recognized
measures under the applicable GAAP. Management of the Corporation
believes that these terms are useful, in addition to profit and
loss and cash flow from operating activities as defined by GAAP,
for evaluating the Corporation's operating performance and
leverage. Funds from operations is expressed as cash flow from
operating activities before changes in non-cash working capital and
asset retirement expenditures. Operating netback is a measure of
operating margin used in capital allocation decisions. Pinecrest
defines operating netback as average realized price per boe, less
royalties per boe, less operating and transportation expenses per
boe, plus any realized gain or loss per boe on financial
instruments.
Barrels of Oil Equivalent ("boe") may be
misleading, particularly if used in isolation. A boe conversion
ratio of 6MCF:1bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. Given that the value
ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE Pinecrest Energy Inc.