Equal Energy Announces Its Results for the Third Quarter Ended
September 30, 2012
CALGARY, Alberta, Nov. 8, 2012 /CNW/ - Equal Energy Ltd. ("Equal",
"the Company", "We" or "Our") (TSX: EQU) (NYSE: EQU) is pleased to
announce its financial and operating results for the third quarter
ended September 30, 2012.
Don Klapko,
President and Chief Executive Officer commented, "Management placed
significant attention on our Strategic Review process during Q3 and
subsequent to the end of the quarter, culminating in a number of
announcements including:
1. Sale of Northern Oklahoma |
$40.0 million |
2. Sale of Halkirk/Alliance/Wainwright/Clair |
$15.4 million |
3. Sale of Lochend Cardium |
$62.0 million |
Total |
$117.4 million |
4. Elimination of amounts
outstanding on our bank credit facility with an estimated revised
bank credit facility of $110.0 million. |
5. Net debt including convertible debentures of
approximately $35.0 million subsequent to the Lochend Cardium
sale. |
6. Continued commitment to development of our
Central Oklahoma liquids-rich gas assets. |
During this time, the base business at Equal
continued to deliver strong results in the areas of cost control,
drilling success and production. During the quarter, we
focused on our Lochend Cardium oil play in Alberta and brought on production two strong
Lochend Cardium wells in the quarter which no doubt contributed to
an excellent outcome for Equal on the sale of the Lochend Cardium
announced on November 2."
Strong Operating Results
Production was down four percent year on year,
averaging over 10,800 boe per day due to asset sales late in 2011
and earlier this year. Operating costs were lower on a unit
basis as a result of a continued focus on our cost structure and a
more cost advantage asset mix. Interest costs were also down
with lower debt levels. Capital spending has approximated
cash flow for the first nine months of the year as we continue to
be disciplined on matching spending to cash flow and using the
proceeds of asset sales to further improve our balance sheet.
Funds from operations were down 38 percent in the third quarter of
2012 compared to the third quarter of 2011 mainly due to weak
natural gas and natural gas liquids prices.
Successful Drilling Programs
In the first nine months of 2012, Equal drilled
11 (9.2 net) wells which were all successful. Nine of these
wells were drilled in Oklahoma;
six of which were sold with the Northern
Oklahoma sale in late September and the remaining three
wells were drilled in our core Twin
Cities Central Dolomite (TCCD) play in Central Oklahoma. Our first 2012 Lochend
Cardium horizontal oil well was drilled late in the second quarter
and brought on stream early in the third quarter and a second
Lochend Cardium well was drilled and placed on stream in the third
quarter.
Strategic Review
Our remaining Canadian asset is represented by a
royalty stream of payments from producing wells in Western Canada. Equal will continue to
operate its Central Oklahoma
assets consisting of approximately 7,800 boe/d of liquids-rich
natural gas where we've had strong historical drilling
success. We have identified a strong inventory of future
drilling locations and have staff of experienced people in
Oklahoma to manage these
assets. Management believes that in addition to successful
drilling, there is significant additional upside from natural gas
and NGL commodity price recovery. We are currently planning
to commence drilling in the Hunton early in the new year.
The Company is still conducting its Strategic
Review process and is evaluating proposals for the sale of the
remaining royalty assets which, if sold, will represent an exit
from all Canadian operations. Equal's Special Committee of
the Board of Directors and management are moving to the final step
in the Strategic Review Process to finalize the go forward strategy
for the Company. A Canadian Trust, U.S. Master Limited
Partnership and an Exploration and Production Corporation are all
being considered. The make-up of the Board of Directors and
Executive Management team as well as an overall go forward manpower
plan will follow the Company structure decision. Equal
expects to conclude the Strategic Review process shortly after the
conclusion of the evaluation of the royalty proposals, likely by
late November 2012.
The following table is a summary of selected
financial and operational information for the three and nine months
ended September 30, 2012 with
comparative 2011 figures.
|
|
|
|
|
|
Financial and Operations Summary
(in thousands except for volumes, percentages and per
share and boe amounts) |
Three months ended
September 30 |
|
Nine months ended
September 30 |
|
2012 |
2011 |
Change |
2012 |
2011 |
Change |
FINANCIAL |
|
|
|
|
|
|
NGL, natural gas and oil revenues
including realized hedging |
29,129 |
44,452 |
(34%) |
88,333 |
121,354 |
(27%) |
Funds from operations |
10,900 |
17,435 |
(37%) |
31,867 |
45,617 |
(30%) |
|
Per share - basic ($) |
0.31 |
0.50 |
(38%) |
0.91 |
1.47 |
(38%) |
|
Per share - diluted ($) |
0.28 |
0.50 |
(44%) |
0.82 |
1.43 |
(43%) |
Net income |
14,006 |
(2,642) |
630% |
18,183 |
468 |
3785% |
|
Per share - basic ($) |
0.40 |
(0.08) |
600% |
0.52 |
0.02 |
2500% |
|
Per share - diluted ($) |
0.35 |
(0.08) |
538% |
0.49 |
0.01 |
4800% |
Total assets |
399,253 |
536,232 |
|
399,253 |
536,232 |
|
Working capital (deficit) including
long-term debt |
(63,855) |
(141,864) |
|
(63,855) |
(141,864) |
|
Convertible debentures |
41,952 |
80,332 |
|
41,952 |
80,332 |
|
Shareholders' equity |
232,218 |
243,810 |
|
232,218 |
243,810 |
|
SHARES OUTSTANDING |
|
|
|
|
|
|
Shares outstanding - basic (000s) |
35,077 |
34,667 |
|
35,031 |
31,124 |
|
Shares outstanding - diluted
(000s) |
41,653 |
34,667 |
|
41,399 |
31,849 |
|
Shares outstanding at period end
(000s) |
35,080 |
34,736 |
|
35,080 |
34,736 |
|
OPERATIONS |
|
|
|
|
|
|
Average daily production |
|
|
|
|
|
|
|
NGL (bbls per day) |
4,278 |
3,580 |
19% |
4,101 |
2,869 |
43% |
|
Gas (mcf per day) |
31,200 |
32,264 |
(3%) |
30,928 |
26,767 |
16% |
|
Oil (bbls per day) |
1,349 |
2,306 |
(42%) |
1,266 |
2,472 |
(49%) |
Total (boe per day) |
10,827 |
11,263 |
(4%) |
10,522 |
9,802 |
7% |
Average sales price |
|
|
|
|
|
|
|
NGL ($ per bbl) |
27.71 |
48.40 |
(43%) |
31.39 |
49.04 |
(36%) |
|
Gas ($ per mcf) |
2.67 |
3.73 |
(28%) |
2.72 |
3.80 |
(28%) |
|
Oil ($ per bbl) |
85.71 |
82.24 |
4% |
86.54 |
81.70 |
6% |
Cash flow netback ($ per
boe) |
|
|
|
|
|
|
|
Revenue |
29.24 |
42.90 |
(32%) |
30.64 |
45.35 |
(32%) |
|
Royalties |
5.90 |
8.82 |
(33%) |
5.91 |
9.17 |
(36%) |
|
Production expenses |
7.72 |
11.11 |
(31%) |
8.63 |
11.63 |
(26%) |
|
Transportation expenses |
0.18 |
0.39 |
(54%) |
0.22 |
0.49 |
(55%) |
|
Operating netback |
15.44 |
22.58 |
(32%) |
15.88 |
24.06 |
(34%) |
|
General and administrative |
2.87 |
2.67 |
7% |
2.91 |
3.62 |
(20%) |
|
Cash interest expense |
1.61 |
2.81 |
(43%) |
1.93 |
3.19 |
(39%) |
|
Other cash costs |
0.02 |
0.27 |
(93%) |
(0.01) |
0.20 |
(105%) |
|
Cash flow netback |
10.94 |
16.83 |
(35%) |
11.05 |
17.05 |
(35%) |
Equal Energy Ltd.'s complete unaudited,
consolidated financial statements, accompanying notes and
Management's Discussion and Analysis for the quarter ended
September 30, 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/edgar.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
convertible 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 oil and gas
properties are Oklahoma. Equal has
compiled a multi-year drilling inventory for its Hunton liquids
rich natural gas property in Oklahoma.
Forward-Looking Statements
Certain information in this press release
constitutes forward-looking statements under applicable securities
law including the timing or uncertainty of the sale of Equal's
royalty interests, the repayment of the bank facility, the outcome
of the lenders review of the limit of the credit facility and the
timing and certainty of any further action in relation to the
Company's strategic review process. 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, such as risks associated with
closing the Royalties sale, repayment of the bank credit facility,
the future amount of the bank credit facility, 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
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.
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.
Conversion: Natural gas volumes recorded in
thousand cubic feet ("mcf") are converted to barrels of oil
equivalent ("boe") using the ratio of six (6) mcf to one (1) barrel
of oil ("bbl"). Boe's may be misleading, particularly if used in
isolation. A boe conversion ratio of 6 mcf: 1bbl is based on an
energy equivalent conversion method primarily applicable at the
burner tip and does not represent a value equivalent at the
wellhead. All dollar values are in Canadian dollars unless
otherwise stated.
SOURCE Equal Energy Ltd.