CALGARY,
Nov. 1, 2012 /CNW/ - (TSX:
PRQ) - Progress Energy Resources Corp. ("Progress" or the
"Company") announces results for the third quarter of 2012 (the
"Quarter"). Development of Progress' leading land base
continued on pace during the Quarter with capital investment of
$73.7 million, net to Progress, or
$167.8 million, gross including the
North Montney Joint Venture ("NMJV"). In the Quarter, capital
expenditures were prioritized to the NMJV, and the Company's
proprietary North Montney
properties in British
Columbia.
Agreement for Purchase by PETRONAS
On June 27, 2012 Progress entered
into an arrangement agreement with PETRONAS International
Corporation Ltd. and PETRONAS Carigali Canada Ltd. ("PETRONAS
Canada") for the purchase by PETRONAS Canada of all of Progress'
outstanding common shares and the purchase by Progress of its
outstanding convertible unsecured debentures, by way of an
arrangement under the Business Corporations Act (Alberta). The completion of the
arrangement remains subject to the satisfaction or waiver of
applicable conditions with the sole remaining condition being
receipt of a notice from the Minister of Industry (the "Minister")
under the Investment Canada Act that the acquisition of
Progress by PETRONAS Canada is likely to be of net benefit to
Canada. On October 19, 2012 the Minister advised PETRONAS
Canada that the Minister was not satisfied that the proposed
investment was likely to be of net benefit to Canada. PETRONAS Canada has up to 30
days, or longer as mutually agreed to, to make any additional
representations and submit any further undertakings. PETRONAS
Canada and Progress have agreed to work together to ensure that the
Minister has the necessary information to determine that the
proposed acquisition of Progress is likely to be of net benefit to
Canada. On October 27, PETRONAS Canada exercised its right
under the arrangement agreement to extend the "Outside Date" under
the agreement to November 30,
2012.
Highlights
- Generated cash flow of $22.7
million in the Quarter or $0.10 per share, diluted;
- Produced an average of 43,045 barrels of oil equivalent ("boe")
per day in the Quarter; volumes for the Quarter were impacted by
the previously announced planned shut-ins and the deferral of
tie-ins and completions representing approximately 10 to 15 percent
of production;
- Drilled a total of 11 Montney horizontal wells (6.3 net) during
the Quarter;
- Drilled a total of 3 Dunvegan horizontal oil wells (2.9 net)
during the Quarter;
- Constructed the 50 million cubic feet ("mmcf") per day Altares
gas plant, set to start up in November;
North Montney Joint Venture
Progress, along with its joint venture partner PETRONAS Canada, has
begun aggressively developing the NMJV properties at Altares, Lily
and Kahta. Gross capital spending on the NMJV in the Quarter
was $107.5 million ($13.4 net to Progress) comprised principally of
drilling and completions and facilities expenditures. Eight
horizontal Montney wells (4.0 net)
were drilled in the Quarter, with three horizontals at Altares (two
lower, one upper), two at Lily (one lower and one upper) and three
targeting the lower Montney at
Kahta. There are currently seven rigs running on the NMJV, with a
new 50 mmcf per day gas plant set to begin operation early in the
fourth quarter at Altares.
As part of the total consideration of
$1.07 billion that PETRONAS Canada
paid to acquire a 50 percent working interest in the Altares, Lily
and Kahta properties, $802.5 million
will be paid in the form of a capital carry over the next three to
five years. At the end of the Quarter, the remaining capital
carry balance was approximately $678
million.
Financial Strength
Cash flow for the Quarter was $22.7
million or $0.10 per share,
diluted. Capital investment was $167.8
million gross ($73.7 million
net). As at September 30, 2012,
the Company had drawn $75 million on
its $650 million revolving credit
facility. Debt-to-total capitalization as at September 30, 2012 was nine percent.
Progress' average realized natural gas price in
the Quarter was $2.27 per thousand
cubic feet, excluding the impact of the Company's hedging
program. Royalty rates averaged 7.0 percent in the Quarter as
a result of lower natural gas prices. Progress expects
royalties to average seven percent in 2012 based on current
commodity prices. Operating costs averaged $6.03 per boe in the Quarter reflecting the
Company's continued focus on operational efficiencies and
maximization of volumes through existing facilities.
Consolidated Financial Statements and
MD&A
Consolidated Financial Statements for the Quarter and Notes to the
Consolidated Financial Statements and Management's Discussion and
Analysis for Progress have been filed on SEDAR (www.sedar.com)
under Progress' profile and can also be accessed on the Company's
website at www.progressenergy.com.
Progress is a Calgary based energy company primarily focused
on natural gas exploration, development and production in northeast
British Columbia and northwest
Alberta. The common shares of
Progress are listed on the Toronto Stock Exchange under the symbol
PRQ.
|
Three Months Ended
September 30 |
Nine Months Ended
September 30 |
|
2012 |
2011 |
2012 |
2011 |
FINANCIAL HIGHLIGHTS |
|
|
|
|
Income Statement ($ thousands,
except per share amounts) |
|
|
Petroleum and natural gas revenue |
83,131 |
114,037 |
267,619 |
348,492 |
Cash flow1 |
22,721 |
51,563 |
91,808 |
169,503 |
Per share -
diluted |
0.10 |
0.22 |
0.39 |
0.74 |
Cash dividends declared2 |
- |
23,395 |
47,007 |
69,666 |
Per share |
- |
0.10 |
0.20 |
0.30 |
|
|
|
|
|
Balance Sheet ($ thousands) |
|
|
|
|
Working capital deficiency (surplus) |
45,736 |
(89,702) |
45,736 |
(89,702) |
Bank debt |
75,000 |
- |
75,000 |
- |
Convertible debentures |
364,926 |
353,100 |
364,926 |
353,100 |
Total debt |
485,662 |
263,398 |
485,662 |
263,398 |
|
|
|
|
|
Capital expenditures |
73,690 |
113,759 |
211,114 |
300,136 |
Property dispositions |
(42) |
(77) |
(13,291) |
(35,421) |
|
|
|
|
|
OPERATIONAL HIGHLIGHTS |
|
|
|
|
Average Daily Production |
|
|
|
|
Natural gas (mcf/d) |
220,606 |
224,629 |
228,673 |
222,407 |
Crude oil (bbls/d) |
2,308 |
2,037 |
2,468 |
2,064 |
Natural gas liquids (bbls/d) |
3,969 |
3,462 |
4,231 |
3,539 |
Total daily production (boe/d) |
43,045 |
42,937 |
44,811 |
42,671 |
Average Realized Prices |
|
|
|
|
Natural gas ($/mcf) |
2.27 |
3.73 |
2.25 |
3.83 |
Crude oil ($/bbl) |
83.41 |
89.99 |
85.68 |
90.85 |
Natural gas liquids ($/bbl) |
50.93 |
61.27 |
57.97 |
65.23 |
Wells Drilled, Net |
9.2 |
12.0 |
27.5 |
36.5 |
(1) |
Represents cash flow from operating activities before changes
in non-cash working capital. |
(2) |
The dividends declared include distributions and dividends that
grantees are entitled to on the vesting of the Share Unit Plan, the
Long Term Incentive Plan and the Performance Unit Incentive
Plan. |
Advisory Regarding Forward-Looking
Statements
This press release and financial highlights table (collectively
the "press release") contains forward-looking statements and
forward-looking information within the meaning of applicable
securities laws. The use of any of the words "expect",
"anticipate", "continue", "estimate", "objective", "ongoing",
"may", "will", "project", "should", "believe", "plans", "intends"
and similar expressions are intended to identify forward-looking
information or statements. In particular, forward looking
statements in this press release include, but are not limited to,
expected timing of commencement of operations of the Altares gas
plant; anticipated average royalty rates for 2012; and statements
regarding regulatory approvals and completion of the
Arrangement.
The forward-looking statements and
information are based on certain key expectations and assumptions
made by Progress, including, amoung other things, expectations and
assumptions concerning prevailing commodity prices and exchange
rates, applicable royalty rates and tax laws; future well
production rates; reserve and resource volumes; the performance of
existing wells; the success obtained in drilling new wells; the
sufficiency of budgeted capital expenditures in carrying out
planned activities; the availability and cost of labour and
services and future operating costs; and the ability to obtain all
required regulatory approvals for the transaction, including, but
not limited regulatory approvals. Although Progress believes that
the expectations and assumptions on which such forward-looking
statements and information are based are reasonable, undue reliance
should not be placed on the forward looking statements and
information because Progress can give no assurance that they will
prove to be correct.
Since forward-looking statements and
information 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 risks associated with the oil and gas industry in
general such as 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 and resource estimates; the uncertainty of estimates and
projections relating to reserves, resources, production, costs and
expenses; health, safety and environmental risks; commodity price
and exchange rate fluctuations; marketing and transportation; loss
of markets; environmental risks; competition; incorrect assessment
of the value of acquisitions; failure to realize the anticipated
benefits of acquisitions; ability to access sufficient capital from
internal and external sources; changes in legislation, including
but not limited to tax laws, royalties and environmental
regulations; risk that timing of commencement of operations of the
Altares gas plant may be delayed; the risk that the transaction may
not close when planned or at all or on the terms and conditions set
forth in the arrangement agreement; and the failure to obtain the
necessary regulatory approvals required in order to proceed with
the transaction.
Readers are cautioned that the foregoing list
of factors is not exhaustive. Additional information on these and
other factors that could affect the operations or financial results
of Progress are included in reports on file with applicable
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com).
Management has included the above summary of
assumptions and risks related to forward-looking information
provided in this press release in order to provide securityholders
with a more complete perspective on the Company's future operations
and such information may not be appropriate for other
purposes. The Company's actual results, performance or
achievement could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, no
assurance can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of
them do so, what benefits that the Company will derive there
from. Readers are cautioned that the foregoing lists of
factors are not exhaustive. These forward-looking statements
are made as of the date of this press release and the Company
disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or results or otherwise, other than as required by
applicable securities laws.
Barrels of Oil Equivalent
"Boe" means barrel of oil equivalent on the basis of 1 boe to
6,000 cubic feet of natural gas. Boe's may be misleading,
particularly if used in isolation. A boe conversion ratio of 1 boe
for 6,000 cubic feet of natural gas 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.
SOURCE Progress Energy Resources Corp.