Novus Energy Inc. announces first quarter 2012 results and re-affirms guidance for 2012
May 15 2012 - 8:00AM
PR Newswire (Canada)
/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION
IN THE U.S./ CALGARY, May 15, 2012 /CNW/ - Novus Energy Inc.
("Novus" or the "Company") announces that it has filed its
unaudited condensed interim financial statements and management's
discussion and analysis ("MD&A") as at and for the three months
ended March 31, 2012. These documents may be accessed through the
SEDAR website www.sedar.com and at the Company's website
www.novusenergy.ca. FINANCIAL HIGHLIGHTS -- For the three months
ended March 31, 2012, Novus' gross revenue increased 109% to $18.54
million from $8.87 million recorded in the comparative period in
2011. -- Funds flow from operations increased 232% to $10.66
million in the first quarter of 2012, versus $3.21 million for the
comparative three month period of 2011. -- Net income for the three
months ended March 31, 2012, was $2.84 million, versus a loss of
$1.33 million in the comparative three month period of 2011. --
Novus' net capital program for the three months ended March 31,
2012, increased 51% to $18.13 million from $12.00 million in the
comparative period of 2011. -- At March 31, 2012, the Company had
net debt of $39.13 million and currently has credit facilities in
place of $65 million. -- Operating netbacks in the first quarter of
2012 were $51.73/boe up 52% from $34.11/boe for the comparative
three month period of 2011. -- Operating netbacks in the first
quarter of 2012 for the Company's Viking light oil production in
Dodsland were $63.00/boe, up 26% from $50.09/boe for the
comparative three month period of 2011. -- Novus continues to
maintain significant tax pool coverage, with an estimated balance
of $234 million at March 31, 2012. A summary of financial results
for the three month period ended March 31, 2012, along with the
comparative period, are outlined in the following table: Three
months ended March 31 2012 2011 % change Financial (000s, except
per share amounts) Revenue $ 18,542 $ 8,871 109 Funds flow from
operations 10,660 3,208 232 per share - basic and 0.06 0.02 200
diluted Net income (loss) 2,844 (1,332) n/a per share - basic and
0.02 (0.01) n/a diluted Capital expenditures, net 18,134 12,002 51
Working capital (deficiency) (39,132) (8,658) 352 Weighted average
shares outstanding basic 177,133 168,248 5 diluted 185,021 168,248
10 OPERATIONAL HIGHLIGHTS -- Average daily production for the first
quarter of 2012 increased 78% to 2,745 boe/d (comprised of 80% oil
and liquids) from the 1,544 boe/d recorded in the corresponding
period in 2011. -- Average crude oil and liquids production for the
first three months of the year was up 112% to 2,203 bbls/d versus
1,037 bbls/d in the comparative quarter. Natural gas production
averaged 3,254 mcf/d, a 7% increase from 3,040 mcf/d a year ago. --
The Company drilled 13 (13.0 net) Viking horizontal wells in the
first quarter of 2012. Eight of these wells were completed and
brought on production in the latter half of March and as a result
did not materially contribute to first quarter production volumes.
-- Results from the Company's Flaxcombe area continue to meet
expectations with wells exhibiting high pressures and shallow
decline rates. -- Corporate operating costs continued to materially
decrease, declining to $11.66/boe for the first quarter of 2012
from $18.20/boe in the first quarter of 2011. -- The Company's
first quarter 2012 operating costs for its Viking production were
$7.85/boe, down from $15.96/boe in the first quarter of 2011. A
summary of operational results for the three month period ended
March 31, 2012, along with the comparative period, are outlined in
the following table: Three months ended March 31 Operational 2012
2011 % change Production Oil & liquids (bbls/d) 2,203 1,037 112
Gas (mcf/d) 3,254 3,040 7 Oil equivalent (boe/d) 2,745 1,544 78
Average realized prices Oil & liquids ($/bbl) 88.92 83.44 7 Gas
($/mcf) 2.43 3.94 (38) Oil equivalent ($/boe) 74.23 63.83 16 The
full text of the March 31, 2012 condensed interim financial
statements and associated MD&A can be found on the Company's
website at www.novusenergy.ca and on SEDAR at www.sedar.com.
OUTLOOK The Company expects to show significant production growth
in the second half of the year and re-affirms its previously
presented capital program and exit rate guidance of 4,500 boe/d.
Approximately 85% of the Company's exit production volumes are
forecast to be comprised of oil and liquids. Novus has recommenced
drilling operations in Dodsland and will have two drilling rigs
working throughout the balance of the second quarter. The Company
continues to undertake innovative measures such as pad drilling to
maintain its low drilling and completion costs. Long term, the
Company expects it will be able to maintain its cost structure at
historically attractive levels. During the first quarter of 2012,
Novus continued to implement management's business strategy of
creating per share growth in reserves, production and funds flow
through acquiring, exploiting and drilling its core Dodsland Viking
light oil play. With recently completed land transactions, the
Company now has a total of 660 net high quality risked Viking oil
drilling locations on its 128.75 net sections of land in Dodsland
based on an eight well per section drilling density. This
already significant opportunity base does not reflect the ability
to down space from 8 wells to 16 wells per section or the future
potential to water flood the reservoir. Novus believes that
the development of the Viking resource is in its early stages and
that there is further significant upside to recovery factors by
applying secondary recovery methods. Novus will continue to
actively drill its existing land base and remain focused on
expanding its presence within this large oil resource play.
The Company's extensive Viking acreage position and the predictable
and highly economic nature of its production will allow Novus to
continue to drive production and funds flow growth through future
development of this repeatable resource play. With the exercise of
outstanding share purchase warrants in the first quarter, Novus had
net debt at March 31, 2012 of $39 million. The Company
recently expanded its credit facilities to $65 million and is
planning to have its credit facilities reviewed again by October 1,
2012, once its second and third quarter capital programs have been
completed. The Company continues to maintain a solid
financial position with strong funds flow generation that will
enable it to internally fund the balance of its 2012 capital
program. OPERATIONAL UPDATE Novus has finished running an emulsion
line and gathering system from its main battery at Whiteside to the
Flaxcombe field and a total of 29 wells in the southern portion of
the area have been tied-in and have their gas production conserved
in this new enclosed system. This line will be used to tie-in
all new wells drilled in the Flaxcombe area throughout 2012 and
will serve to reduce both downtime and future operating
costs. By the end of the second quarter, the Company will
have 13,000 boe/d of treating capacity available in the
Flaxcombe/Whiteside area. The significant network of
facilities the Company owns and controls in the area are expected
to provide an incremental revenue source from third party
processing opportunities. Novus' operating costs
have continued to materially decrease from $18.20/boe in the first
quarter of 2011, reaching $11.66/boe in the first quarter of
2012. The Company's first quarter 2012 operating costs for
its Viking production were $7.85/boe. With low operating
costs and highly economic operating netbacks from its Viking oil
assets, the Company is generating strong funds flow which will
provide it with the ability to internally fund an aggressive
drilling program in 2012 and beyond. Based upon the stable
production rates, highly economic netbacks, significant recoverable
reserves, and lower drilling and completion costs in the Dodsland
area the Company has experienced to date, Novus plans on
maintaining an aggressive drilling program on its current acreage
and will continue its efforts to further consolidate and expand its
position within the area through acquisitions. With a strong
technical team and continual evolution by industry and the Company
in lowering costs and improving production in the Viking light oil
play, Novus is once again poised to exhibit strong growth through
the balance of the year. The Company currently has 122
horizontal Viking oil wells licensed for drilling. Novus continues
to remain optimistic about its future prospects. The Company is
opportunity driven and is confident that it can continue to grow
its production base by building on its current large inventory of
development prospects. Novus is in the midst of a significant
level of development activity and is pleased with the progression
of its drilling and completion operations to date. The
Company expects to see material increases in its production levels
heading into the third quarter of the year. NON-IFRS FINANCIAL
MEASUREMENTS Included in this press release are references to
certain financial measures commonly used in the oil and natural gas
industry, such as funds flow from operations, operating netbacks
and net debt. These measures have no standardized meanings,
are not defined by International Financial Reporting Standards
("IFRS"), and accordingly are referred to as non-IFRS
measures. The determination of these measures may not be
comparable to the same as reported by other companies and should
not be considered an alternative to, or more meaningful than, cash
provided by operating, investing and financing activities or net
income as determined by IFRS as an indicator of the Company's
performance or liquidity. The Company considers funds flow from
operations to be a key measure as it demonstrates the Company's
ability to generate the cash necessary to repay debt and to fund
future growth through capital investment. Novus determines
funds flow from operations as cash provided by operating activities
prior to changes in non-cash working capital items and
decommissioning expenditures. Operating netbacks are used by
management to assess operating results between periods and between
peer companies as they provide an indication of results generated
by the Company's principal business activities before the
consideration of how these activities are financed or how the
results are taxed. Operating netbacks are calculated by
deducting royalties, field operations and transportation and
marketing expenses from production revenue. The Company monitors
net debt as part of its capital structure. Net debt is
calculated as current assets less all current liabilities,
including any bank debt. OTHER MEASUREMENTS Reported production
represents Novus' ownership share of sales before the deduction of
royalties. Where amounts are expressed on a barrel of oil
equivalent ("boe") basis, natural gas has been converted at a ratio
of six thousand cubic feet to one boe. This ratio is based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Boe's may be misleading, particularly if used in
isolation. References to natural gas liquids ("liquids")
include condensate, propane, butane and ethane and one barrel of
liquids is considered to be equivalent to one boe. Novus Energy
Inc. is a well positioned, junior oil and gas company with a proven
management team committed to aggressive, cost-effective growth of
high netback light oil reserves and production. Novus will continue
to grow through a targeted acquisition and consolidation strategy
coupled with development and exploration drilling. Novus Shares
trade on the TSX Venture Exchange under the symbol NVS. Novus
currently has 191.2 million common shares outstanding. Neither the
TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release. This news release will not constitute an offer to sell or
the solicitation of an offer to buy the securities in any
jurisdiction. Such securities have not been registered under the
United States Securities Act of 1933 and may not be offered or sold
in the United States, or to a U.S. person, absent registration, or
an applicable exemption therefrom. ADVISORY REGARDING FORWARD
LOOKING STATEMENTS Certain disclosures set forth in this press
release constitute forward-looking statements. Any statements
contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. Forward-looking
statements are often, but not always, identified by the use of
words such as "anticipate", "believes", "budget", "continue",
"could", "estimate", "forecast", "intends", "may", "plan",
"predicts", "projects", "should", "will" and other similar
expressions. All estimates and statements that describe the
Company's future, goals, or objectives, including Management's
assessment of future plans and operations, may constitute
forward-looking information under securities laws.
Forward-looking statements involve known and unknown risks and
uncertainties which include, but are not limited to: exploration,
development and production risks; assessments of acquisitions;
reserve measurements; availability of drilling equipment; access
restrictions; permits and licenses; aboriginal claims; title
defects; commodity prices; commodity markets; transportation and
marketing of crude oil, liquids and natural gas; reliance on
operators and key personnel; competition; corporate matters;
funding requirements; access to credit and capital markets; market
volatility; cost inflation; foreign exchanges rates; general
economic and industry conditions; environmental risks; and
government regulation and taxation. Forward-looking statements
relate to future events and/or performance and although considered
reasonable by Novus at the time of preparation, may prove to be
incorrect and actual results may differ materially from those
anticipated in the statements made. Novus does not undertake
any obligation to publicly update forward-looking information
except as required by applicable securities law. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Additional information on these and other factors that could affect
Novus operations or financial results are included in reports on
file with applicable securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com), and at Novus'
website (www.novusenergy.ca). The forward-looking statements and
information contained in this press release are made as of the date
hereof and Novus undertakes no obligation 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. Novus Energy Inc.
CONTACT: NOVUS ENERGY INC.Hugh G. RossPresident and CEO(403)
218-8895Ketan PanchmatiaChief Financial Officer(403) 218-8876Julian
DinVP Business Development(403) 218-8896
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