Renegade Petroleum Ltd. Announces a $58 Million Capital Budget
Targeting $77 Million in Funds from Operations
CALGARY, ALBERTA--(Marketwired - Feb 4, 2014) - Renegade
Petroleum Ltd. ("Renegade" or the "Company") (TSX-VENTURE:RPL)
announced today that its Board of Directors has approved a $57.7
million capital budget for 2014 directed at exploitation of its
high quality light-oil assets in southeast and west central
Saskatchewan. This capital program is consistent with the Company's
long-term objectives of drilling low-risk, high impact wells while
maintaining a strong focus on cost reduction in all areas and
safe-guarding the dividend.
2014 CAPITAL BUDGET STRATEGIC OBJECTIVES
Profitability |
- 97%
light-oil with top tier operating netbacks |
Sustainability |
- 25%
corporate declines - Strong capital efficiencies in core areas |
Cost
Reduction |
-
Renewed focus on reduction of G&A and operating costs |
Sustainable Dividend |
- 27%
dividend payout ratio - 102% all-in payout ratio |
Long-Term Growth |
-
260+ net light-oil development drilling locations |
2014 GUIDANCE
The 2014 capital program is designed to position Renegade for
long-term sustainable production, reserve replacement and funds
flow from operations with a focus on sustainable dividend
payments.
The $57.7 million capital program and the expected dividend
payment of $20.6 million are forecasted to be substantially funded
through the Company's funds flow from operations with an all-in
annual payout ratio estimated at 102%.
Management is pleased to provide the following estimated 2014
guidance:(1)(2)
Average Production (boe/d) |
5,700 - 5,900 |
Percentage Light-Oil and NGL Weighting (%) |
97 |
Funds Flow From Operations ($000) |
76.6 |
Funds Flow From Operations Per Diluted Share ($)(3) |
0.36 |
Exit Net Debt ($000) |
150.8 |
Bank Line ($000)(2) |
250.0 |
Total Capital Expenditures ($000) |
57.7 |
Annual Cash Dividends ($000) |
20.6 |
Annual Cash Dividends Per Basic Share ($) |
0.10 |
Total All-In Payout Ratio (%) |
102 |
(1) |
Based
on a WTI USD$95/bbl, CAD/USD exchange rate of 0.94, Edmonton Par
price of C$92/bbl and an AECO gas price of C$2.00 with 4,000 bbl/d
of 2014 production hedged at an average price of C$92.46 |
(2) |
Pending the successful closing of the previously announced $109
million asset disposition |
(3) |
Based
on 209.9 million fully diluted shares currently outstanding |
The Company maintains a disciplined hedging program in order to
provide certainty over the funds flow from operations used to fund
the capital program and protect the long-term viability of its
dividend payments. Renegade has 4,000 bbl/d of 2014 production
hedged at WTI C$92.46 per barrel.
2014 Capital Forecast
In southeast Saskatchewan, Renegade plans to drill 18 gross
(16.0 net) wells across the Company's recently high-graded land
position which represents approximately 54% of the Company's 2014
development budget. In the west central Saskatchewan Viking play,
Renegade plans to drill 21 gross (20.0 net) wells which represent
approximately 46% of the Company's 2014 development budget.
The breakdown of the 2014 capital expenditures program is set
forth below:
|
2014 |
Development Capital ($000) |
43,106 |
Maintenance Capital ($000) |
10,133 |
Land
and Seismic ($000) |
3,000 |
Corporate ($000) |
1,444 |
Total
Capital Expenditures ($000) |
57,680 |
OPERATIONS UPDATE
Based on field estimates, Renegade's annualized 2013 production
average was 7,450 boe/d which is within the Company's previously
disclosed guidance of 7,400 to 7,700 boe/d. During the fourth
quarter of 2013, the key operational focus was managing the capital
program in areas that provided strong capital efficiencies, defined
additional low risk drilling inventory and completed the company's
flow through commitment.
Renegade drilled a total of 5 gross (3.5 net) development wells
in the fourth quarter of 2013, bringing the 2014 development total
to 53 gross (46.8 net) wells of which 17 gross (11.3 net) were in
drilled in southeast Saskatchewan and 36 gross (35.5 net) were
drilled in west central Saskatchewan.
Strategically, as part of the companies flow through
obligations, Renegade completed the acquisition of over 190 sq kms
of 3D seismic and an additional 4 gross (4.0 net) vertical test
wells were drilled on the asset base during the fourth quarter of
2013. The vertical delineation wells and the acquisition of seismic
data will be used to further de-risk the existing land base and
provide support for future drilling inventory with a focus on the
Frobisher and Alida trends in southeast Saskatchewan.
To date in 2014, the Company has been actively drilling in both
fields with 2 gross (1.6 net) wells drilled in southeast
Saskatchewan and 9 gross (9.0 net) in the Viking, all of which are
in various stages of completion and being brought on production.
For the remainder of the quarter, Renegade will be active with one
drilling rig in southeast Saskatchewan.
CORPORATE INFORMATION
Renegade is a light oil focused development and production
company with assets located in Saskatchewan, Alberta, Manitoba and
North Dakota. Renegade's common shares trade on the TSX Venture
Exchange under the symbol RPL.
Renegade is also pleased to announce that it has updated its
corporate presentation which is available at
www.renegadepetroleum.com.
READER ADVISORIES
Forward-Looking Statements
This press release contains forward-looking statements. More
particularly, this press release contains statements concerning,
but not limited to, Renegade's long-term objectives, Renegade's
plans to continue to create value for shareholders by investing in
low-risk, high rate of return projects, Renegade's capital
expenditure program, Renegade's capital budget strategic objectives
(including projected commodity mix, corporate declines, capital
efficiencies, focus on reduction of G&A and operating costs,
dividend payout ratio, all-in payout ratio and number of
development drilling locations), Renegade's drilling plans, the
expected ability of Renegade to execute on its exploration and
development program, anticipated dividend payments, expected
sources of funding for capital program and dividend payments,
potential drilling locations and drilling plans, expected well
economics, commodity pricing and Renegade's anticipated production
(both in terms of quantity and raw attributes), funds flow from
operations, operating net backs, pay-out ratio net debt, dividends
and capital expenditures for 2014, anticipated use of vertical
delineation wells and the acquisition of seismic date on Renegade's
land base and drilling inventory and other similar
matters.
The forward-looking statements contained in this document
are based on certain key expectations and assumptions made by
Renegade, including: (i) with respect to capital expenditures,
generally, and at particular locations, the availability of
adequate and secure sources of funding for Renegade's proposed
capital expenditure program and the availability of appropriate
opportunities to deploy capital; (ii) with respect to drilling
plans, the availability of drilling rigs, expectations and
assumptions concerning the success of future drilling and
development activities and prevailing commodity prices; (iii) with
respect to Renegade's ability to execute on its exploration and
development program, the performance of Renegade's personnel, the
availability of capital and prevailing commodity prices; (iv) with
respect to anticipated production, the ability to drill and operate
wells on an economic basis, the performance of new and existing
wells and risks typically associated with oil and gas exploration
and production and that the Company's production volumes and
assumptions related thereto are accurate in all material respects;
(v) oil prices; (vi) currency exchange rates; (vii) royalty rates;
(viii) operating costs; and (ix) transportation costs.
Although Renegade believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because Renegade can give no assurance
that they will prove to be correct. Since forward-looking
statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, the failure to obtain necessary regulatory approvals,
risks associated with the oil and gas industry in general (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; health, safety and
environmental risks; commodity price and exchange rate
fluctuations; and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures), changes in general economic,
market and business conditions; actions by governmental or
regulatory authorities including increasing taxes and changes in
investment or other regulations; Renegade's success at acquisition,
exploitation and development of reserves; unexpected drilling
results; individual well productivity; the lack of availability of
qualified personnel or management; competition for, among other
things, capital, acquisitions of reserves, undeveloped lands and
skilled personnel; incorrect assessments of the value of
acquisitions; and ability to access sufficient capital from
internal and external sources.
Management has included the above summary of assumptions and
risks related to forward-looking information provided in this press
release in order to provide shareholders with a more complete
perspective on Renegade's future operations and such information
may not be appropriate for other purposes. Readers are cautioned
that the foregoing lists of factors are not exhaustive. The
forward-looking statements contained in this document are made as
of the date hereof and Renegade is not under any obligation 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.
Please refer to Renegade's Annual Information Form dated April 29,
2013 for additional risk factors relating to Renegade, which is
available for viewing on www.sedar.com.
This news release shall not constitute an offer to sell or
the solicitation of an offer to buy any securities nor shall there
be any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful. The securities issued
pursuant to the plan of arrangement and financing described herein
have not been and will not be registered under the United States
Securities Act of 1933 and may not be offered or sold in the United
States except in transactions exempt from such
registration.
Dividends
The payment and the amount of dividends declared in any
month will be subject to the discretion of the board of directors
and will depend on the board of director's assessment of Renegade's
outlook for growth, capital expenditure requirements, funds from
operations, potential acquisition opportunities, debt position and
other conditions that the board of directors may consider relevant
at such future time. The amount of future cash dividends, if any,
may also vary depending on a variety of factors, including
fluctuations in commodity prices and differentials, production
levels, capital expenditure requirements, debt service
requirements, operating costs, royalty burdens and foreign exchange
rates.
Conversion
The term "boe" may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet of
natural gas to one boe (6 mcf/bbl) is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead. All
boe conversions in this report are derived from converting gas to
oil in the ratio of six thousand cubic feet of gas to one barrel of
oil. 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.
Non-IFRS Measures
The Company discloses several financial measures that do not
have any standardized meaning prescribed under International
Financial Reporting Standards ("IFRS"). These financial measures
include funds from operations and funds flow from operations per
diluted share. Management believes that these financial measures
are useful supplemental information to analyze operating
performance and provide an indication of the results generated by
the Company's principal business activities. Investors should be
cautioned that these measures should not be construed as an
alternative to net income, cash provided by operating activities or
other measures of financial performance as determined in accordance
with IFRS. The Company's method of calculating these measures may
differ from other companies, and accordingly, they may not be
comparable to similar measures used by other companies. Please see
the Company's most recent Management's Discussion and Analysis,
which is available at www.sedar.com for additional information
about these financial measures.
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 release.
Renegade Petroleum Ltd.Andrew GreensladeInterim Chief Financial
Officer (403) 930-1102Renegade Petroleum Ltd.Mark LobelloInterim
Chief Financial Officer(403) 355-8921www.renegadepetroleum.com
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