Seaview Energy Inc. Releases Record Financial and Operating Results for the Period Ended September 30, 2008
November 17 2008 - 7:38PM
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 nine months ended September 30, 2008.
The financial results for the three and nine month period ending September 30,
2008 reflect operations from the Southeast Saskatchewan properties acquired from
Progress Energy Trust only from June 26, 2008 and reflect operations from the
corporate acquisition of C3 Resources Ltd. ("C3") only from July 24, 2008
forward, being the respective dates of closing of the acquisitions. No
comparative information is provided for September 30, 2007 as the Company
commenced active operations on October 17, 2007.
Selected financial and operating summary
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Financial Q3 2008(1) Q2 2008 % Change
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Petroleum and natural gas sales $ 8,490,520 $ 5,150,800 64%
Funds flow from operations(2) 4,318,985 2,626,583 64%
Basic and diluted per share(3) 0.09 0.09 -
Net earnings (loss) 2,874,138 (599,364) 580%
Basic and diluted per share(3) 0.06 (0.02) 400%
Capital expenditures(4) 13,596,546 7,932,153 71%
Corporate acquisitions 37,204,709 24,380,248 53%
Net debt (working capital surplus) 22,671,894 14,204,306 60%
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Shares Outstanding (at end of period)
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Class A 47,005,185 38,214,257 23%
Class B 1,053,540 1,053,540 -
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Operations
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Daily production
Natural gas (mcf/d) 6,602 4,446 48%
Light oil and NGLs (bbl/d) 322 95 238%
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Total production (boe/d) 1,422 836 70%
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Average realized sales price
Natural gas (per mcf) $ 8.15 $ 10.83 (25%)
Light oil and NGL (per bbl) 117.96 106.96 10%
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Netback per boe
Sales price (net of risk management
gains/losses) $ 64.92 $ 67.70 (4%)
Royalties 16.85 13.79 22%
Operating expenses 7.78 10.93 (29%)
Transportation 1.32 0.98 35%
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Operating netback $ 38.97 $ 42.00 (7%)
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(1) Seaview acquired C3 on July 24, 2008. Accordingly, the operating results
of C3 are included only from the date of closing forward.
(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 include the
impact of the conversion of the Class B shares. The granted options have
been excluded as these would have been anti-dilutive.
(4) Capital expenditures include the cash additions for the period, the cash
paid on acquisitions, dispositions and capitalized G&A expense.
HIGHLIGHTS OF THIRD QUARTER OF 2008
Seaview continued to execute its balanced strategy of acquiring, exploiting and
exploring for high quality natural gas and light oil assets in Western Canada,
highlighted by closing the strategic acquisition of C3 which expanded our Peace
River Arch core area and added an additional 525 boe/d of production.
Highlights of the third quarter include the following:
- Average reported production increased 70% to 1,422 boe per day compared to
average production for the second quarter of 2008 of 836 boe per day. Production
per share increased 38% over the same period.
- Since commencing operations on October 17, 2007, record production levels in
the third quarter mark the Company's fourth consecutive quarter of growth.
- During the quarter Seaview announced an upward revision to reserves increasing
the Company's Total Proven reserves 899% (304% per share) since December 31,
2007 to 4,104 Mboe and increasing Total Proven plus Probable reserves by 710%
(227% per share) during the same period to 5,733 Mboe.
- Funds flow from operations for the quarter increased 64% to $4.3 million from
$2.7 million in the second quarter of 2008 while cash flow per share remained
unchanged for the quarter.
- The Company drilled and cased 10 (5.6 net) wells in the quarter with 100%
success rate.
- 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, the Company closed the corporate acquisition of 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 at $3.24 per share and
approximately $6.3 million in cash. The acquisition added 525 boe per day of
predominately natural gas production in Seaview's Peace River Arch core area.
- Increased credit facility to $34 million with the next review in May 2009.
OPERATIONS OVERVIEW
During the third quarter, the Company completed a material corporate acquisition
and drilled 10 wells (5.6 net) with a 100% success rate. Year to date, Seaview
has drilled and cased 16 wells (9.1 net) with a 94% success rate.
The Company has successfully evaluated four of the ten wells drilled to date,
with each project currently being tied in and expected to be producing prior to
year-end. Two additional wells are currently being completed and tested, with
the remaining 4 locations at various stages of testing and completion with
operations to be finalized during the first quarter of 2009.
In Pouce Coupe, the Company participated in the completion of its first
horizontal well targeting the prolific Montney tight gas sand. Seaview is paying
29% of capital costs to earn 24% in this operation which will set up numerous
follow-up locations on the Company's land position offsetting this test. The
well is currently flowing on clean-up following a successful six stage
multi-fracture treatment. Results from this operation are expected to be known
before year-end when a tie-in decision will be made. Seaview's land position in
the Pouce Coupe Montney play, which is now 3.9 net sections, is well positioned
offsetting numerous successful industry horizontal development wells drilled
during 2008.
In Boundary Lake, the Company's dual zone Kiskatinaw well (0.5 net) drilled in
the first quarter of 2008 will commence production from both zones by year-end.
This dual zone discovery well tested 3.2 mmcf/d (1.6 mmcf/d or 265 boe/d net)
but has been subject to take-away restrictions through the third party
processing facilities. Plans to drill additional wells in the Boundary Lake this
year were deferred until 2009 as a result of the pipeline restrictions limiting
production capacity. With the facilities optimization now completed, the Company
plans to drill 2-3 follow-up locations in 2009.
At Valhalla, the Company's drilling program included 4 wells (1.1 net) resulting
in one new pool Bluesky gas discovery and a potential multi-well drilling
program targeting the Doe Creek formation. Of the wells drilled in the third
quarter, 2 (0.54 net) are expected to be producing prior to year end. Completion
operations are ongoing on the remaining 2 wells (0.54 net). An additional
re-completion of one well (0.5 net) will be completed during the first quarter
of 2009.
In Gordondale, the Company's drilling efforts continue to deliver encouraging
results. To date, Seaview has drilled 3 successful wells (1.0 net) using
proprietary 3D seismic data shot in the fourth quarter of 2007. One well (0.6
net) is currently being completed as a dual zone Kiskatinaw and Gething gas
well. Subsequent to the end of the third quarter, Seaview drilled 1 well (0.15
net) targeting the Kiskatinaw Formation and it is expected to be online by
December 2008, adding 100 boe/d net.
During the fourth quarter, the Company's capital focus will be prioritized
towards bringing current behind pipe production online. Final preparations are
underway for an active 2009 capital program and the Company will release our
2009 Capital Program in mid December 2008.
As a result of the Company's continued successful execution of a balanced
business strategy of acquiring, exploiting and exploring for high quality
natural gas and light oil, Seaview is now revising upward its 2008 production
exit rate to more than 1,700 boe/d, and the 2008 average daily production
estimate to more than 1,050 boe/d.
OUTLOOK; 2008 GUIDANCE
During the first year 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.
With the execution of three strategic corporate acquisitions and a material
property acquisition adding the Southeast Saskatchewan core area, combined with
an ongoing successful drilling program, Seaview has the following corporate
characteristics:
- An upwardly revised 2008 average daily production forecast of more than 1,050
Boe/d, and 2008 production exit rate of more than 1,700 boe/d.
- Total Proven reserves of 4,104 Mboe, and Total Proven plus Probable reserves
of 5,733 Mboe, effective June 30, 2008 as evaluated by Sproule Associates
Limited.
- Drilling inventory of more than 85 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 the Montney resource play in Pouce Coupe with 3.9 net sections of
land in this exciting Montney tight gas play. Seaview's first Montney horizontal
well is currently testing, setting up a potential for 12 net horizontal
follow-up locations.
- Seaview's available bank line is currently $34 million, with the next review
in May, 2009.
- 47.0 million Class A shares and 1.054 million Class B shares outstanding.
FILING OF THIRD QUARTER 2008 FINANCIALS
Seaview has filed its financial results for the three and nine month period
ended September 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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