CALGARY, Aug. 27, 2014 /CNW/ - Pinecrest Energy Inc.
("Pinecrest" or the "Company") announces that it has filed on SEDAR
its unaudited financial statements and related Management's
Discussion and Analysis ("MD&A") for the three and six month
period ended June 30, 2014. The
statements will be available for review at www.sedar.com or
www.pinecrestenergy.com.
|
|
|
June
30
|
Three months
ended
|
Six months
ended
|
|
2014
|
2013
|
2014
|
2013
|
FINANCIAL
|
|
|
|
|
Petroleum and natural
gas sales
|
18,167
|
29,573
|
36,396
|
63,402
|
Funds flow from
operations (1)
|
5,950
|
16,374
|
13,187
|
37,753
|
Per
share - basic
|
$0.03
|
$0.08
|
$0.06
|
$0.17
|
Per
share - diluted
|
$0.03
|
$0.07
|
$0.06
|
$0.16
|
Net income
|
407
|
4,196
|
697
|
7,912
|
Per
share - basic
|
$0.00
|
$0.02
|
$0.00
|
$0.04
|
Per
share - diluted
|
$0.00
|
$0.02
|
$0.00
|
$0.03
|
Capital
expenditures
|
777
|
2,331
|
1,785
|
55,875
|
Net debt and working
capital deficit (2)
|
114,778
|
120,774
|
114,778
|
120,774
|
Common Shares
Outstanding
|
|
|
|
|
Weighted average ā basic
|
217,212
|
216,437
|
217,212
|
217,071
|
Weighted average ā diluted
|
221,961
|
229,474
|
221,994
|
233,977
|
OPERATING
|
|
|
|
|
Number of
days
|
91
|
91
|
181
|
181
|
Production
|
|
|
|
|
Crude
oil (bbls/d)
|
1,916
|
3,467
|
1,974
|
3,855
|
Natural
gas (mcf/d)
|
457
|
561
|
412
|
418
|
NGL
(bbls/d)
|
78
|
54
|
64
|
38
|
Barrels
of oil equivalent (boe/dā6:1)
|
2,070
|
3,615
|
2,106
|
3,963
|
Average realized
price (3)
|
|
|
|
|
Crude
oil ($/bbl)
|
103.69
|
92.40
|
101.37
|
90.05
|
Natural
gas ($/mcf)
|
0.55
|
3.55
|
0.50
|
3.22
|
NGL
($/bbl)
|
9.19
|
48.17
|
12.03
|
47.06
|
Netback per boe
($)(1)
|
|
|
|
|
Petroleum and natural gas sales
|
96.45
|
89.90
|
95.47
|
88.40
|
Royalties
|
(18.80)
|
(7.23)
|
(16.58)
|
(6.67)
|
Production and transportation expenses
|
(24.97)
|
(22.31)
|
(26.37)
|
(20.45)
|
Field
netback
|
52.68
|
60.36
|
52.52
|
61.28
|
Realized
loss on derivative financial instruments
|
(3.94)
|
(3.59)
|
(3.28)
|
(2.43)
|
Operating netback
|
48.74
|
56.77
|
49.24
|
58.85
|
Wells
drilled
|
|
|
|
|
Gross
|
-
|
-
|
-
|
12
|
Net
|
-
|
-
|
-
|
11.3
|
Success
rate (%)
|
n/a
|
-
|
n/a
|
100
|
|
|
|
|
|
(1)
Non-GAAP measure
|
(2)
Excludes $1.1 million liability (2013 - $3.7 million) related to
the fair value of derivative financial instruments
|
(3) Before
the effects of derivative financial instruments
|
Operations Update and Outlook
During the second quarter of 2014, Pinecrest continued
remediation efforts on certain producing wells and deferred capital
spending on all new drilling. The Company's current strategy
is to limit capital spending, maintain a relatively flat production
profile and apply excess cash flow towards reducing indebtedness
while monitoring the performance of its waterfloods and remediation
efforts.
The Pinecrest technical team has furthered its understanding in
the Slave Point reservoir and has identified certain pumping
limitations they believe contribute to the reduced production
performance in certain of its horizontal wells. With an
understanding of these reservoir effects, the Company has begun to
implement a remediation plan to address these potential
limitations.
Pinecrest will continue to apply all of its free cash flow,
other than maintenance capital, towards reducing its
indebtedness. Exit Q3 2014 net debt and working capital is
estimated to be approximately $112
million before unrealized hedging gains or losses.
Pinecrest's banking syndicate has extended the annual borrowing
base review until September 29,
2014.
The Company averaged 2,070 boed for Q2, 2014. Based on
field estimates, current production capability is 2,000 boed.
Pinecrest is encouraged that we have been able to maintain a
relatively flat production profile throughout the first half of
2014 with minimal capital being spent on production optimization
and maintenance.
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. The Company will undertake remedial action
as required.
Pinecrest management is encouraged by the positive increase in
oil production that has been sustained for over five months
resulting from the treatment undertaken in Q1, 2014 on the Evi #2
03-32-087-11W5 well. Field estimates for July show the well
producing at approximately 31 bopd with an 88% water cut, and
production of approximately 50 bopd, with an 84% water cut during
the first three weeks of August.
Evi #2 and Evi #3 waterfloods continue to demonstrate the low
decline, long life nature of the Slave Point reservoir in the Red
Earth area.
|
|
|
Evi # 2 Waterflood
Production
Time
Period
|
Production
(bopd)
|
Water
cut
(%)
|
Q1, 2014
|
Actual
|
77
|
88
|
Q2, 2014
|
Actual
|
109
|
84
|
July, 2014
|
Field
estimate
|
108
|
84
|
|
|
|
Evi #3 Waterflood
Production
Time
Period
|
Production
(bopd)
|
Water
cut
(%)
|
Q1, 2014
|
Actual
|
109
|
50%
|
Q2, 2014
|
Actual
|
113
|
57%
|
July, 2014
|
Field
estimate
|
~ 122
|
52%
|
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.
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.