Seaview Energy Inc. Releases Record Financial and Operating Results for the Period Ended June 30, 2008
August 19 2008 - 9:50PM
Marketwired Canada
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UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF U.S. SECURITIES LAWS.
Seaview Energy Inc. (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B) ("Seaview" or the
"Company") is pleased to announce its financial and operating results for the
three and six months ended June 30, 2008.
The financial results for the three and six month period ending June 30, 2008
reflect only five days of operations from the Southeast Saskatchewan properties
acquired from Progress Energy Trust on June 26, 2008, and do not reflect any
operations from the corporate acquisition of C3 Resources Ltd. as the
transaction closed on July 24, 2008 subsequent to the end of the quarter.
Both transactions were highly accretive to Seaview shareholders and
significantly grew the Company's production, cash flow, reserves and prospective
inventory. Combined with two successful bought deal financings, Seaview remains
well positioned to continue executing the Company's balanced growth strategy.
Selected financial and operating summary
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Financial Q2 2008(1) Q1 2008 % Change
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Petroleum and natural gas sales $ 5,151,800 $ 1,130,240 356%
Funds flow from operations(2) 2,626,583 352,418 645%
Basic and diluted per share(3) 0.09 0.01 800%
Net loss (599,364) (353,357) 70%
Basic and diluted per share(3) (0.01) (0.02) (50%)
Capital expenditures(4) 7,932,153 4,516,294 76%
Corporate acquisitions 29,323,480 - -
Net debt (working capital surplus) 14,204,306 (3,800,952) 421%
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Shares Outstanding
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Class A 38,214,257 19,073,007 100%
Class B 1,053,540 1,053,540 -
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Operations
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Daily production
Natural gas (mcf/d) 4,446 1,456 205%
Light oil and NGLs (bbl/d) 95 4 2275%
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Total production (boe/d) 836 246 240%
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Average realized sales price
Natural gas (per mcf) $ 10.83 $ 8.28 31%
Light oil and NGL (per bbl) 106.96 100.81 6%
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Netback per boe
Sales price (net of risk
management losses) $ 67.70 $ 50.43 34%
Royalties 13.79 11.83 17%
Operating expenses 10.93 11.23 (3%)
Transportation 0.98 1.25 (22%)
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Operating netback $ 42.00 $ 26.12 61%
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(1) Seaview acquired C3 Resources Ltd. ("C3") on July 24, 2008, subsequent
to the quarter end. Accordingly, the operating results of C3 are not
included in this information.
(2) The Company uses "funds flow from operations" and "funds flow from
operations per share" which do not have any standardized meaning
prescribed by Canadian GAAP. The term is used to analyze operating
performance and leverage.
(3) Weighted average diluted shares outstanding for the quarter does not
include the impact of the granted options or the conversion of the
Class B shares as these would have been anti-dilutive.
(4) Capital expenditures includes the cash additions for the period, the
cash paid on acquisitions, dispositions and capitalized G&A expense.
HIGHLIGHTS OF SECOND QUARTER OF 2008 AND SUBSEQUENT EVENTS
Seaview continued executing its balanced strategy of acquiring, exploiting and
exploring for high quality natural gas and light oil assets in Western Canada,
highlighted by two strategic acquisitions. During the second quarter the Company
closed an acquisition of 275 boe/d of long life, light oil reserves and
production establishing a new core area in southeast Saskatchewan. Subsequent to
the end of the quarter, Seaview closed the corporate acquisition of C3 Resources
Ltd. adding an additional 525 boe/d of production within the Company's Peace
River Arch core area.
Highlights of the second quarter include the following:
- Average production increased 240% to 836 boe/day, compared to the average
production for the first quarter of 2008 of 246 boe/ day. Production per share
increased 78% for the second quarter over the first quarter of 2008.
- Cash flow for the quarter increased 645% to $2.7 million from $352,418 in the
first quarter of 2008. Cash flow per share increased eightfold to $0.09.
- On April 1, 2008, Seaview closed the corporate acquisition of 1332915 Alberta
Ltd ("133Co") for total consideration of $25.8 million, comprised of the
assumption of 133Co's net debt position and the issuance of 8,049,250 Seaview
Class A shares at $0.87 per share. The acquisition of 133Co was highly accretive
on all measures to Seaview, and significantly expanded the Company's reserves,
production, cash flow, land and drilling inventory. Subsequent to the closing,
133Co's major shareholder joined Seaview's board of directors.
- On May 29, 2008, Seaview closed a bought-deal financing for gross proceeds of
$6 million through the issuance of 2,792,000 Class A shares issued on a
"flow-through basis" at a price of $2.15 per share.
- On June 26, 2008, Seaview acquired light oil properties from Progress Energy
Trust located in southeast Saskatchewan and issued 8.3 million Class A shares,
with an ascribed value of $2.12 per share, to Progress, as well as approximately
$5.0 million in cash, for total consideration of $22.5 million. Progress'
President & CEO joined Seaview's board of directors.
- On July 10, 2008, Seaview closed a bought-deal financing for gross proceeds of
$10 million through the issuance of 2,899,000 Class A shares at a price of $3.45
per share.
- On July 24, 2008, Seaview closed the corporate acquisition of C3 Resources
Ltd. ("C3") for total consideration of $38.2 million, comprised of the
assumption of C3's net debt position, the issuance of 5,891,925 Class A shares
of Seaview at $3.24 per share and approximately $6.3 million in cash. The
acquisition added approximately 525 boe/d of predominately natural gas
production in Seaview's Peace River Arch core area. C3's President and CEO
joined Seaview's board of directors.
- During the quarter Seaview announced an upward revision to guidance increasing
the Company's 2008 exit production estimate to more than 1550 boe/d, up from 900
boe/d exit target at the end of the first quarter of 2008.
OPERATIONS OVERVIEW
In addition to the material acquisitions completed in the quarter, management
focused on preparations for the balance of the 2008 capital program including
equip and tie-ins of the wells drilled in the first quarter of 2008.
In Clayhurst, the Montney gas well (1.0 net) has been placed on production at
current rates of 800 mcf/d (133 boe/d net). Subsequent to the end of the
quarter, Seaview acquired a 100% working interest in the compression facilities
and gas gathering system servicing the Clayhurst property allowing Seaview to
control and operate that infrastructure. Seaview also acquired an interest in 6
gross (5.8 net) sections of land in Clayhurst. The Company plans to drill an
offset location to the Clayhurst discovery on 100% lands in the fourth quarter
of 2008.
In Boundary Lake, the dual zone gas well (0.5 net) has been producing at a
restricted rate of 1.0 mmcf/d gross (83 boe/d net). Seaview, jointly with the
regional operator, will be commencing construction of a pipeline to
de-bottleneck the gas gathering system allowing for optimization of the Boundary
Lake well. This dual zone discovery well tested at combined rates of 3.2 mmcf/d
(1.6 mmcf/d or 265 boe/d net) and is expected to be online in the fourth quarter
of 2008 adding 150 - 200 boe/d net to Seaview. The Company plans to drill 2-3
locations in 2008 as follow-ups to the first quarter discovery well targeting
uphole zones identified in drilling the first well.
In Valhalla, the Company's multi-zone exploration discovery well is currently on
production from the Gething formation (0.47 net). Subsequent to quarter end,
Seaview has drilled and cased 4 gross (1.1 net) follow-up locations to the
initial Valhalla discovery well with completion operations currently underway.
The Valhalla property is prospective in several zones including the Gething,
Bluesky, Dunvegan and Doe Creek with several potential follow-up locations
remaining to be drilled to fully exploit the property. A second Valhalla well
(0.5 net) drilled in Q1-08 targeting Bluesky natural gas was successfully
completed and tested and is expected to produce 500 mcf/d (250 mcf/d net or 42
boe/d net) by the fourth quarter.
In Gordondale, the Company's Kiskatinaw discovery well (0.3 net) is currently
producing 4.3 mmcf/d (1.3 mmcf/d or 215 boe/d net). Seaview has an extensive
inventory of drillable prospects in Gordondale and is planning to drill 7 (2.1
net) wells in 2008 including offsets to the first quarter Kiskatinaw discovery.
In Pouce Coupe, Seaview is participating in the Company's first horizontal well
targeting the prolific Montney tight gas sand. Seaview is paying 29% to earn 24%
in this operation which is a re-entry of an existing suspended vertical well.
Drilling operations are expected to be completed by late August with a
completion and evaluation using mutli-frac technology to follow in September.
Management is eagerly anticipating the results of this operation as it will set
up development of the remainder of Seaview's land position which is now 3.9 net
sections of prospective lands in this exciting Montney resource fairway.
The Company currently has three drilling rigs active in the Peace River Arch
core area with plans to have one rig remain active throughout the balance of
2008. Management is also planning to drill 1-2 wells in the Southeast
Saskatchewan core area.
OUTLOOK; 2008 GUIDANCE
During the first three quarters of operations, Seaview's management has
aggressively positioned the Company for solid future growth through the
successful execution of a balanced business strategy of acquiring, exploiting
and exploring for high quality natural gas and light oil assets in Western
Canada.
Seaview is well positioned to meet or exceed its 2008 guidance.
With the execution of two strategic corporate acquisitions and a material
property acquisition adding the southeast Saskatchewan core area, combined with
an ongoing successful drilling program, Seaview has now has revised upward its
2008 average production rate and exit rate estimates two times this year. As a
result, Seaview now has the following corporate characteristics:
- Forecasted 2008 average daily production estimate of more than 1050 Boe/d, and
2008 production exit rate target of more than 1,550 Boe/d.
- Forecasted annualized cash flow for Seaview of $19.7 million ($0.42 per share)
based on fourth quarter annualized cash flow projection, assuming 2008 average
AECO gas prices of $8.10/GJ, and US$110/bbl crude oil pricing.
- Forecast debt to fourth quarter annualized cash flow ratio of 0.7 times.
- Expanding land position of 116,916 gross acres (48,143 net acres), including
24,008 net acres of undeveloped lands.
- Extensive drilling inventory of more than 90 locations, including over 70
prospects targeting multi-zone conventional prospects and an expanding inventory
of light oil targets in southeast Saskatchewan. Seaview's prospect inventory is
not currently reflected in the Company's independent reserve evaluation and
therefore provides for significant long term growth potential.
- Exposure to Montney resource play in Pouce Coupe with 3.9 net sections of land
in this exciting Montney tight gas play. Seaview is currently participating in
drilling the Company's first horizontal test with potentially 12 net horizontal
follow-up locations.
- Seaview's available bank line is currently $34 million, with the next review
period in May, 2009.
- 47.1 million Class A shares and 1.054 million Class B shares outstanding.
FILING OF SECOND QUARTER 2008 FINANCIALS
Seaview has filed its financial results for the three and six month period ended
June 30, 2008 including the unaudited interim consolidated financial statements
and related management's discussion and analysis ("MD&A").
These filings are available in their entirety at www.seaviewenergy.com and
www.sedar.com or by contacting the Company directly.
Barrels of oil equivalent (boe) may be misleading, particularly if used in
isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural
gas to one barrel (bbl) of oil is based on an energy conversion method primarily
applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead. All boe conversions in this press release are
derived by converting natural gas to oil in the ratio of six thousand cubic feet
of natural gas to one barrel of oil. Certain financial amounts are presented on
a per boe basis, such measurements may not be consistent with those used by
other companies.
This press release may contain forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements may include estimates,
plans, anticipations, expectations, opinions, forecasts, projections, guidance
or other similar statements that are not statements of fact. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. These statements are subject to certain risks and
uncertainties and may be based on assumptions that could cause actual results to
differ materially from those anticipated or implied in the forward-looking
statements. These risks include, but are not limited to: the risks associated
with the oil and gas industry (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 and health, safety and environmental risks),
commodity price and exchange rate fluctuation and uncertainties resulting from
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures. The Company's forward-looking statements are
expressly qualified in their entirety by this cautionary statement. The
forward-looking statements contained in this press release are made as of the
date hereof and the Company undertakes no obligations 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.
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