Equal Energy Announces Its Results for the First Quarter Ended March 31, 2012
May 08 2012 - 6:36AM
PR Newswire (Canada)
CALGARY, Alberta, May 10, 2012 /CNW/ - Equal Energy Ltd. ("Equal",
"the Company", "We" or "Our") is pleased to announce its financial
and operating results for the first quarter ended March 31, 2012.
Don Klapko, President and Chief Executive Officer commented, "We
are pleased to deliver excellent results in the first quarter of
2012. It has been a very busy start to the year and I want to
highlight some of the key achievements so far." Strong Operating
Results Equal generated $1.8 million in net income in Q1 whilst
facing the headwinds of the lowest natural gas prices seen in ten
years. Production was up 20% year on year and averaged over
10,000 boe per day. Funds from operations were up 12% year on
year. Operating expenses, G&A and interest expenses were all
lower on a unit basis as a result of a continued focus on our cost
structure. Capital spending was less than cash flow for the
quarter. Improved Balance Sheet The Company successfully closed on
$9.7 million in non-core property dispositions undertaken to reduce
overall debt. This has been part of an ongoing balance sheet
re-structuring and a strategy of improving of our financial
flexibility that have been key goals since early 2011. I am
pleased to also announce that subsequent to the end of Q1, our
banking syndicate has confirmed the continuation of our $200
million credit facility. At this time our draw on this
facility is only US$103 million which includes proceeds from the
Mississippian oil venture and allows us significant latitude.
Mississippian Oil Venture We announced on April 4th the terms under
which Equal sold 50% of its working interest in Mississippian
undeveloped lands in Oklahoma to Atlas Energy Partners LP.
This deal was closed on April 26(th) with proceeds to Equal of
US$18 million. As part of this transaction Equal has agreed
with Atlas to jointly develop this acreage with Atlas operating the
drilling and completion phases and Equal operating the
production. The venture intends to drill a minimum of six
horizontal wells for the balance of 2012 starting in late Q2 or
early Q3. The immediate realization of these proceeds and the
securing of a quality joint venture partner underpin strong future
value growth for Equal. Successful Drilling Programs In Q1 Equal
drilled six successful wells. Four wells were put down in our
northern Oklahoma Hunton play. Two of these were on
production at quarter end, and the other two will be on in
Q2. All four wells also preserved substantial additional
Mississippian acreage. Two wells were drilled in our core
Twin Cities Central Dolomite (TCCD) play also in Oklahoma.
One was on production by the end of Q1 and the second was
substantially drilled and is awaiting tie-in. Subsequent to
the quarter end Equal was drilling its third TCCD well and had just
finished drilling its first Cardium oil well in Canada. Strategic
Review On May 3(rd), Equal's board of directors announced the
initiation of a strategic review process to be managed by a special
committee of independent board members with the assistance of
Scotiabank as strategic advisors. The board and management
are responding to a perceived significant gap between the value of
the Company's underlying assets, and the value being recognized in
the Company's stock price. The objective of the strategic
review is to explore ways to potentially close this gap and improve
the valuation of the Company. The following table is a summary of
selected financial and operational information for the three months
ended March 31, 2012 with comparative 2011 figures. Financial and
Operations Summary Three months ended March 31 (in thousands except
for volumes, percentages and per share andboe amounts) 2012 2011
Change FINANCIAL Oil, NGL and natural gas revenues including
realized hedging 33,062 35,078 (6%) Funds from operations 12,973
11,580 12% Per share - basic ($) 0.37 0.42 (12%) Per share -
diluted ($) 0.36 0.42 (14%) Net income / (loss) 1,837 (3,382) Per
share - basic and diluted ($) 0.05 (0.12) Total assets 441,503
386,376 Working capital (deficit) including long-term debt
(119,822) (72,791) Convertible debentures 41,534 80,336
Shareholders' equity 217,865 165,337 SHARES OUTSTANDING Shares
outstanding - basic (000s) 34,970 27,724 Shares outstanding -
diluted (000s) 36,129 27,724 Shares outstanding at period end
(000s) 34,992 27,733 OPERATIONS Average daily production Oil (bbls
per day) 1,353 2,567 (47%) NGL (bbls per day) 3,908 2,324 68% Gas
(mcf per day) 30,729 22,545 36% Total (boe per day) 10,383 8,649
20% Average sales price Oil ($ per bbl) 88.76 75.40 18% NGL ($ per
bbl) 39.03 47.52 (18%) Gas ($ per mcf) 2.95 3.80 (22%) Cash flow
netback ($ per boe) Revenue 34.99 45.06 (22%) Royalties 6.53 9.33
(30%) Production expenses 9.74 11.37 (14%) Transportation expenses
0.31 0.56 (45%) Operating netback 18.41 23.80 (23%) General and
administrative 2.60 5.46 (52%) Cash interest expense 2.24 3.83
(42%) Other cash costs (0.16) (0.37) (57%) Cash flow netback 13.73
14.88 (8%) Equal Energy Ltd.'s complete unaudited, consolidated
financial statements, accompanying notes and Management's
Discussion and Analysis for the quarter ended March 31, 2012 will
be available on Equal's website at www.equalenergy.ca, on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/degar.shtml. About Equal
Energy Ltd. Equal is an exploration and production oil and gas
company based in Calgary, Alberta, Canada with its United States
operations office located in Oklahoma City, Oklahoma. Equal's
shares and debentures are listed on the Toronto Stock Exchange
under the symbols (EQU, EQU.DB.B) and Equal's shares are listed on
the New York Stock Exchange under the symbol (EQU). The portfolio
of oil and gas properties is geographically diversified with
producing properties located in Alberta and Oklahoma. Current
production is comprised of approximately 13% crude oil, 38% NGLs
and 49 % natural gas. Equal has compiled a multi-year drilling
inventory for its properties including its new oil play
opportunities in the Cardium and Viking in central Alberta in
addition to its extensive inventory of drilling locations in the
Hunton liquids-rich, natural gas play and the Mississippian light
oil play in Oklahoma. Forward-Looking Statements Certain
information in this press release constitutes forward-looking
statements under applicable securities law including ongoing
drilling plans and cost of capital. Any statements that are
contained in this press release that are not statements of
historical fact may be deemed to be forward-looking statements.
Forward-looking statements are often identified by terms such as
"may," "should," "anticipate," "expects," "seeks" and similar
expressions. Forward-looking statements necessarily involve known
and unknown risks, including the closing of the sale of certain
Mississippian interests, the commencement and continuation of joint
venture operations on the Mississippian play with Atlas, the
repayment of debt, the availability of funds under Equal's credit
facility and the use of Equal; risks associated with oil and gas
production; marketing and transportation; loss of markets;
volatility of commodity prices; currency and interest rate
fluctuations; imprecision of reserve estimates; environmental
risks; competition; incorrect assessment of the value of
acquisitions; failure to realize the anticipated benefits of
acquisitions or dispositions; inability to access sufficient
capital from internal and external sources; changes in legislation,
including but not limited to income tax, environmental laws and
regulatory matters. Readers are cautioned that the foregoing list
of factors is not exhaustive. Readers are cautioned not to place
undue reliance on forward-looking statements as there can be no
assurance that the plans, intentions or expectations upon which
they are placed will occur. Such information, although considered
reasonable by management at the time of preparation, may prove to
be incorrect and actual results may differ materially from those
anticipated forward-looking statements contained in this press
release are expressly qualified by this cautionary statement.
Natural gas volumes recorded in thousand cubic feet ("mcf") are
converted to barrels of oil equivalent ("boe") using the ratio of
six (6) thousand cubic feet to one (1) barrel of oil ("bbl"). Boe's
may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 mcf: 1 bbl is based on an energy equivalent
conversion method primarily applicable at the burner tip and does
not represent a value equivalent at the wellhead. Additional
information on these and other factors that could affect Equal's
operations or financial results are included in Equal's reports on
file with Canadian and U.S. securities regulatory authorities and
may be accessed through the SEDAR website (www.sedar.com), the
SEC's website (www.sec.gov), Equal's website (www.equalenergy.ca)
or by contacting Equal. Furthermore, the forward looking statements
contained in this news release are made as of the date of this news
release, and Equal does not undertake any obligation to update
publicly or to revise any of the included forward-looking
statements, whether as a result of new information, future events
or otherwise, except as expressly required by securities law. Equal
Energy Ltd. CONTACT: Dell ChapmanChief Financial Officer(403)
538-3580 or (877) 263-0262Don KlapkoPresident & CEO(403)
536-8373 or (877) 263-0262
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