CALGARY, Nov. 8, 2018 /CNW/ - (TSX: EGL): Eagle
Energy Inc. ("Eagle") is pleased to report its financial and
operating results for the third quarter ended September 30, 2018.
When reflecting on Eagle's third quarter and the Twining asset
sale, Wayne Wisniewski, President
and Chief Executive Officer, stated, "Eagle continues to execute
its previously announced plan to reduce debt and corporate
costs. To the end of September, and excluding one-time costs
associated with the Salt Flat and
Twining dispositions, our year-to-date general and administrative
expenses are 22% lower than 2017 levels. In addition, when
compared to 2017 year-end, we have reduced our term loan by
48%."
Mr. Wisniewski continued, "We are pleased to report that we have
successfully fracked our North
Texas horizontal well with 26 stages as planned using 2.21
million pounds of sand for an average of 85,000 pounds of sand per
stage. Initial production rates are very encouraging.
At the same point in time, and relative to our first
horizontal well, initial oil rates from our new well are
approximately 600 barrels of oil equivalent per day (492 barrels of
oil per day), which is about 100 barrels of oil per day higher than
our first horizontal well. This well is producing from the
middle Pennsylvanian formation. We will release updated
production information after artificial lift is installed and after
rates have stabilized."
In other news, to mitigate the effects of fluctuating prices on
a portion of its 2018 production, Eagle has entered into a fixed
price financial swap for 650 barrels of oil per day at a West Texas
Intermediate ("WTI") price of $US
75.08 per barrel for the months of October through December
2018. Eagle has no other production hedged at this time.
Third Quarter 2018 Financial Results
Eagle's unaudited condensed consolidated interim financial
statements and accompanying notes for the three and nine months
ended September 30, 2018 and related
management's discussion and analysis have been filed with the
securities regulators and are available online under Eagle's issuer
profile at www.sedar.com and on Eagle's website at
www.EagleEnergy.com.
This news release contains non-IFRS financial measures and
statements that are forward-looking. Investors should read
"Non-IFRS Financial Measures" and "Note about Forward-looking
Statements" near the end of this news release. Figures within
this news release are presented in Canadian dollars unless
otherwise indicated.
Highlights for the Three Months ended September 30, 2018
- Closed the sale of the Twining properties in Alberta on August
28 for cash proceeds of $CA 13.3 million and used
$US 8.1 million of the proceeds to
reduce long term debt, with the remaining proceeds allocated to
further fund the North Texas
drilling program.
- Reduced long term debt during the quarter by 21% (from
$US 38.5 million to $US 30.4 million) for a total reduction in long
term debt since 2017 year-end of 48% (from $US 58.2 million to $US
30.4 million).
- Improved field netback by 57% on a per barrel of oil equivalent
("boe") basis (from $17.85 to
$28.10 per boe) when compared to the
third quarter of 2017.
- General and administrative expenses to the end of September 2018, excluding one-time costs
associated with the Salt Flat and
Twining dispositions, are $1.5
million, or 22% lower than the 2017 comparative period.
Operations Update
- During the quarter, Eagle drilled and cased a third horizontal
well in North Texas at a location
approximately one mile from its initial horizontal well. This was
Eagle's first use of a new technology that enabled it to drill
approximately 4,000 feet of horizontal lateral and place the entire
horizontal section within the productive interval.
- Eagle entered into a fixed price financial swap for 650 barrels
of oil per day at a WTI price of $US
75.08 per barrel for the months of October through
December 2018.
Summary of Quarterly Results
|
|
|
Q3/2018
|
Q2/2018
|
Q1/2018
|
Q4/2017
|
Q3/2017
|
Q2/2017
|
Q1/2017
|
Q4/2016
|
($000's except for
boe/d and per share amounts)
|
|
|
|
|
|
|
|
|
Sales volumes –
boe/d
|
1,958
|
2,262
|
2,974
|
3,804
|
3,749
|
3,966
|
3,767
|
3,803
|
|
|
|
|
|
|
|
|
|
Revenue, net of
royalties
|
9,010
|
10,228
|
12,461
|
14,725
|
12,459
|
14,167
|
14,218
|
13,891
|
per boe
|
50.01
|
49.69
|
46.57
|
42.08
|
36.12
|
39.25
|
41.95
|
39.72
|
|
|
|
|
|
|
|
|
|
Operating,
transportation and marketing expenses
|
3,946
|
4,206
|
5,109
|
6,864
|
6,301
|
5,885
|
7,165
|
6,799
|
per boe
|
21.91
|
20.43
|
19.10
|
19.61
|
18.27
|
16.31
|
21.14
|
19.44
|
|
|
|
|
|
|
|
|
|
Field
netback(1)
|
5,064
|
6,022
|
7,352
|
7,861
|
6,158
|
8,282
|
7,053
|
7,092
|
per boe
|
28.10
|
29.26
|
27.47
|
22.47
|
17.85
|
22.94
|
20.81
|
20.28
|
|
|
|
|
|
|
|
|
|
Funds flow from
operations
|
1,622(2)
|
1,932
|
1,718(3)
|
3,488
|
3,346
|
4,272
|
1,589
|
3,901
|
per boe
|
9.00
|
9.39
|
6.42
|
9.98
|
9.70
|
11.84
|
4.69
|
11.15
|
per share –
basic
|
0.04
|
0.04
|
0.04
|
0.08
|
0.08
|
0.10
|
0.04
|
0.09
|
per share –
diluted
|
0.04
|
0.04
|
0.04
|
0.08
|
0.07
|
0.10
|
0.04
|
0.09
|
|
|
|
|
|
|
|
|
|
(Loss)
earnings
|
(1,887)
|
(15,093)
|
(2,568)
|
(14,293)
|
(4,711)
|
675
|
1,303
|
30,508
|
per share –
basic
|
(0.04)
|
(0.34)
|
(0.06)
|
(0.34)
|
(0.11)
|
0.02
|
0.03
|
0.72
|
per share -
diluted
|
(0.04)
|
(0.34)
|
(0.06)
|
(0.34)
|
(0.11)
|
0.02
|
0.03
|
0.72
|
|
|
|
|
|
|
|
|
|
Cash dividends
declared
|
-
|
-
|
-
|
-
|
-
|
-
|
425
|
637
|
per issued
share
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.00
|
0.01
|
0.015
|
|
|
|
|
|
|
|
|
|
Current
assets
|
13,270
|
10,920
|
14,941
|
13,869
|
11,122
|
11,847
|
18,819
|
9,302
|
Current
liabilities
|
9,686
|
5,762
|
7,528
|
13,715
|
8,042
|
6,599
|
11,474
|
74,758
|
Total
assets
|
141,264
|
159,935
|
174,877
|
207,314
|
213,867
|
222,155
|
233,951
|
218,199
|
Total non-current
liabilities
|
51,886
|
62,427
|
70,870
|
94,312
|
92,367
|
97,086
|
104,359
|
26,202
|
Shareholders'
equity
|
79,692
|
81,709
|
96,479
|
99,287
|
113,458
|
118,470
|
118,118
|
117,239
|
Shares
issued
|
44,244
|
43,750
|
43,750
|
43,302
|
43,302
|
42,857
|
42,857
|
42,452
|
|
(1) Field
netback is a Non-IFRS financial measure. See "Advisories –
Non-IFRS Financial Measures".
|
(2) Includes one-time disposition costs of
$0.7 million relating to the Twining disposition.
|
(3) Includes one-time disposition costs of
$3.4 million relating to the Salt Flat disposition.
|
For the three months ended September 30,
2018, sales volumes were lower than the previous quarters,
primarily due to the effect of the February
2018 Salt Flat disposition and the August 2018 Twining disposition being only
partially offset by additional production from wells drilled in
Eagle's North Texas area.
Third quarter 2018 field netback on a per boe basis decreased 4%
from the second quarter of 2018 due to slightly higher realized
commodity prices offset by higher royalties and increased operating
costs, primarily due to the turnaround on the Dixonville plant.
Third quarter 2018 funds flow from operations decreased 16% from
the second quarter of 2018 due to lower field netbacks and higher
third quarter administrative and financing expenses due to one-time
Twining disposition costs.
Total non-current liabilities decreased as a result of a
repayment of $10.5 million
($US 8.1 million at the period end
exchange rate) from the proceeds of the Twining disposition.
Changes in (loss) earnings from one quarter to the next often do
not move directionally or by the same amount as quarterly changes
in funds flow from operations. This is due to items of a
non-cash nature that factor into the calculation of (loss)
earnings, and those that are required to be fair valued at each
quarter end. Third quarter 2018 funds flow from operations
was 16% lower than the second quarter of 2018, yet the third
quarter 2018 loss was 87% less than the second quarter of 2018 due
to a non-cash impairment expense booked in the second quarter
relating to the Twining oil and gas properties based on the sale
agreement dated July 19, 2018.
Advisories
Non-IFRS Financial Measures
Statements throughout this news release make reference to the
term "field netback", which is a non-IFRS financial measure that
does not have a standardized meaning prescribed by IFRS and may not
be comparable to similar measures presented by other
issuers.
"Field netback" is calculated by subtracting royalties,
operating expenses, and transportation and marketing expenses from
revenues. This method of calculating field netback is in
accordance with the standards set out in the Canadian Oil and Gas
Evaluation Handbook maintained by the Society of Petroleum
Evaluation Engineers (Calgary Chapter). Management believes
that field netback provides useful information to investors and
management because such a measure reflects the quality of
production and the level of profitability.
Oil and Gas Advisories
The initial production rate is preliminary in nature and may not
be indicative of stabilized on-stream production rates.
Initial production results are not necessarily indicative of
long-term performance or of ultimate well recovery rates.
Note about Forward-Looking Statements
Certain of the statements made and information contained in this
news release are forward-looking statements and forward-looking
information (collectively referred to as "forward-looking
statements") within the meaning of Canadian securities
laws. All statements other than statements of historic fact
are forward-looking statements. Eagle cautions investors that
important factors could cause Eagle's actual results to differ
materially from those projected, or set out, in any forward-looking
statements included in this news release.
In particular, and without limitation, this news release
contains forward-looking statements pertaining to Eagle's expected
timing to provide a production update on its third horizontal well
drilled during the third quarter 2018 in North Texas, Eagle's intentions to reduce debt
and corporate costs and Eagle's hedging program to the end of
2018.
With respect to forward-looking statements contained in this
news release, assumptions have been made regarding, among other
things: continued performance of the third horizontal well; future
crude oil, NGL and natural gas prices, differentials and weighting;
future foreign exchange and interest rates; future capital
expenditures and the ability of Eagle to obtain financing on
acceptable terms; the ability of Eagle to complete its drilling
program; future production estimates, which are based on the
proposed drilling program with a success rate that, in turn, is
based upon historical drilling success and an evaluation of the
particular wells to be drilled, among other things; and projected
operating costs, which are estimated based on historical
information and anticipated changes in the cost of equipment and
services, among other things.
Eagle's actual results could differ materially from those
anticipated in these forward-looking statements as a result of the
following risk factors and those in Eagle's Annual Information Form
dated March 20, 2018 (the
"AIF"): volatility of crude oil, NGL, and natural gas
prices; commodity supply and demand; fluctuations in foreign
exchange and interest rates; inherent risks and changes in costs
associated with the development of petroleum properties; ultimate
recoverability of reserves; timing, results and costs of drilling
and production activities; availability and terms of financing and
capital; and new regulations and legislation that apply to the
operations of Eagle and its subsidiaries.
Additional risks and uncertainties affecting Eagle are contained
in the AIF under the heading "Risk Factors".
As a result of these risks and uncertainties, actual performance
and financial results may differ materially from any projections of
future performance or results expressed or implied by these
forward‐looking statements. New risks emerge from time to
time, and it is not possible for management to predict all of the
risks or to assess, in advance, the impact of each such risk on
Eagle's business, or the extent to which any risk, or combination
of risks, may cause actual results to differ materially from those
contained in any forward-looking statement.
Undue reliance should not be placed on forward-looking
statements, which are inherently uncertain, are based on estimates
and assumptions, and are subject to known and unknown risks and
uncertainties (both general and specific) that contribute to the
possibility that the future events or circumstances contemplated by
the forward-looking statements will not occur. Although
management believes that the expectations conveyed by the
forward-looking statements are reasonable based on information
available to it on the date the forward-looking statements were
made, there can be no assurance that the plans, intentions or
expectations upon which forward-looking statements are based will
in fact be realized. Actual results will differ, and the
difference may be material and adverse to Eagle and its
shareholders. These statements speak only as of the date of
this news release and may not be appropriate for other
purposes. Eagle does not undertake any obligation, except as
required by applicable securities legislation, to update publicly
or to revise any of the included forward-looking statements,
whether as a result of new information, future events or
otherwise.
Note Regarding Barrel of Oil Equivalency
This news release contains disclosure expressed as "boe" or
"boe/d". All oil and natural gas equivalency volumes have
been derived using the conversion ratio of six thousand cubic feet
("Mcf") of natural gas to one barrel ("bbl") of oil.
Equivalency measures may be misleading, particularly if used in
isolation. A conversion ratio of 6 Mcf:1 bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the well
head. In addition, given that the value ratio based on the
current price of oil as compared to natural gas is significantly
different from the energy equivalent of six to one, utilizing a boe
conversion ratio of 6 Mcf:1 bbl would be misleading as an
indication of value.
About Eagle Energy Inc.
Eagle is an oil and gas corporation with shares listed for
trading on the Toronto Stock Exchange under the symbol "EGL".
All material information about Eagle may be found on its website
at www.EagleEnergy.com or under Eagle's issuer profile at
www.sedar.com.
SOURCE Eagle Energy Inc.