Wild Stream Exploration Inc. (the "Company" or "Wild Stream") (TSX VENTURE:WSX)
is pleased to announce that it has filed on SEDAR its audited financial
statements and related Management's Discussion and Analysis ("MD&A") for the
three months and year ended December 31, 2010 and 2009. Certain selected
financial and operational information is set out below and should be read in
conjunction with Wild Stream's audited financial statements and related MD&A.
These filings will be available at www.wildsr.com and www.sedar.com.
2010 Financial and Operating Highlights
Three months ended Year ended
December 31, Percent December 31, Percent
2010 2009 Change 2010 2009 Change
----------------------------------------------------------
Financial
(thousands of
dollars except
share data)
Petroleum and
natural gas
revenue 16,135 3,796 325 45,447 11,264 303
Funds from
operations (1) 10,450 201 5,099 27,494 4,858 466
Per share
- basic 0.26 0.01 2,500 0.74 0.76 (3)
- diluted 0.22 0.01 2,100 0.64 0.49 31
Net earnings
(loss) 1,816 (629) 389 3,636 (2,638) 238
Per share
- basic 0.05 (0.03) 267 0.10 (0.41) 124
- diluted 0.05 (0.03) 267 0.09 (0.41) 122
Capital
expenditures,
net 45,736 36,127 27 118,910 33,334
Corporate
acquisitions 322 2,622 (88) 9,424 2,622 259
Working capital
deficiency
(surplus) (4) 28,621 (13,735) (308)
Weighted average
shares
(thousands)
Basic 37,323 6,366 486
Diluted 42,724 6,366 571
Shares
Outstanding, end
of period
(thousands)
Basic 42,589 26,414 61
Diluted 52,012 34,205 52
Operating (6:1
boe conversion)
Average daily
production
Liquids (bbls/d) 2,569 587 338 1,809 494 266
Natural gas
(mcf/d) 1,122 184 510 1,128 289 290
Barrels of oil
equivalent
(2)(boe/d) 2,756 618 346 1,997 542 268
Netbacks
Operating
Petroleum and
natural gas
revenue(4) 63.37 66.81 (5) 62.71 56.91 10
Royalties (6.73) (7.97) (16) (7.90) (5.63) 40
Operating
expenses (11.29) (19.22) (41) (12.52) (17.93) (30)
Transportation
expenses (1.93) (2.35) (18) (1.85) (2.12) (13)
---------------------- -------------------
Operating
netback ($/boe) 43.42 37.27 17 40.44 31.23 29
---------------------- -------------------
---------------------- -------------------
Corporate
netback(3)
($/boe) 41.23 3.54 1,065 37.72 24.55 54
Undeveloped Land
(net acres) 136,909 50,493 171
Reserves
Total Proven
(mboe) 10,123 3,155 221
Proven Plus
Probable (mboe) 15,706 4,811 226
(1) Management uses funds generated by operations to analyze operating
performance and leverage. Funds generated by operations as presented do
not have any standardized meaning prescribed by Canadian GAAP and
therefore it may not be comparable with the calculation of similar
measures for other entities. The reconciliation between funds flow from
operations and cash flow from operating activities can be found in the
MD & A.
(2) Boe conversion ratio for natural gas of 1 Boe: 6 Mcf has been used,
which is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not necessarily represent a value
equivalency at the wellhead.
(3) Corporate netbacks are calculated as the operating netback less general
and administrative expenses, financial charges asset retirement
obligations and in 2009, the reorganization costs.
(4) Excludes unrealized risk management contracts and related future income
taxes.
2010 Accomplishments
Year ended December 31, 2010
-- Increased net asset value by 92% to $8.87 per share (PVBT 10%) from
$4.61 per share at December 31, 2009.
-- Increased average daily production by 268 percent to 1,997 boe/d from
542 boe/d in 2009.
-- Increased proved plus probable reserves by 226 percent to 15.7 million
boe (97% liquids) from 4.8 million boe at December 31, 2009.
-- Increased funds from operations per diluted share by 31 percent to $0.64
in 2010 from $0.49 in 2009.
-- Continued an active drilling program and drilled 55 gross (51.4 net)
wells resulting in 54 crude oil wells for a success rate of 98 percent.
Incurred exploration and development capital expenditures of $117.6
million.
-- Increased our undeveloped lands by 171% to 136,909 resulting in a
significant increase to our drilling inventory.
-- Completed two financings raising a total of $63.5 million in common
share equity.
-- Completed corporate and net property acquisitions totaling $34.2
million.
2011 First quarter Operations Update
-- Based on field estimates, the Company's first quarter 2011 average
production increased 25% over the fourth quarter of 2010 to 3,450 boe/d
(95% crude oil).
-- Drilled 16 gross (14.8 net) oil wells with a 100% success rate including
12.4 net wells in Shaunavon, 2.0 net wells in Dodsland and 0.4 net wells
in Garrington.
-- Acquired Vertex Oil & Gas Ltd., adding 300 boe/d and 42 net drilling
locations in Dodsland.
-- Acquired 13.5 net sections of land in the Swan Hills oil fairway, with
the first 100% well anticipated in the second half of 2011.
-- Raised $83.5 million through the issuance of 7.7 million shares at a
price of $10.85 per share.
Reserves and Capital Efficiencies
The Company's reserves were evaluated as at December 31, 2010 by the independent
engineering firm of Sproule Associates Limited ("Sproule") in accordance with
the rules provided by National Instrument 51-101 ("NI 51-101"). The following
tables provide summary information presented in the Sproule report effective
December 31, 2010 and based on their January 1, 2011 price forecast.
The December 31, 2010 reserve reports were prepared by Sproule utilizing the
methodology and definitions as set out under NI 51-101. The year end working
interest reserves for 2010 include Wild Stream's working interests excluding
royalty interests received before royalties payable. Where amounts and volumes
are expressed on a barrel of oil equivalent basis ("boe"), gas volumes have been
converted to barrels of oil at 6,000 cubic feet per barrel (6 mcf/bbl).
Summary of Reserves (forecast prices)
December 31, December 31,
2010 2009
------------ ------------
Proved
Light and medium oil (mbbls) 9,593 2,885
Heavy oil (mbbls) 112 107
NGL's (mbbls) 83 19
Natural gas (mmcf) 2,009 858
------------ ------------
BOE (mboe) 10,123 3,155
Proved plus probable
Light and medium oil (mbbls) 14,858 4,384
Heavy oil (mbbls) 217 198
NGL's (mbbls) 125 29
Natural gas (mmcf) 3,036 1,209
------------ ------------
BOE (mboe) 15,706 4,811
Summary of Company Working Interest Oil and Gas Reserves - Forecast Prices
and Costs
Light
and Future(1)
Medium Natural Development
Crude Heavy Gas Natural Capital
December 31, Oil Oil Liquids Gas BOE Costs
2010 (mbbls) (mbbls) (mbbls) (mmcf) (mboe) ($000's)
--------- --------- --------- --------- ------ ------------
Proved
- Developed
Producing 4,758 112 68 1,708 5,223 891
- Developed Non-
Producing 48 - 1 28 54 126
- Undeveloped 4,787 - 14 273 4,846 98,364
--------- --------- --------- --------- ------ ------------
Total Proved
9,593 112 83 2,009 10,123 99,381
Probable 5,265 105 42 1,027 5,583 24,758
--------- --------- --------- --------- ------ ------------
Total Proved
Plus Probable 14,858 217 125 3,036 15,706 124,139
--------- --------- --------- --------- ------ ------------
--------- --------- --------- --------- ------ ------------
Note:
1. Future development costs are costs required by Wild Stream to convert
proved undeveloped reserves and probable reserves to proved developed
producing reserves.
Net Present Value of Reserves - Before Income Taxes (Forecast Prices and
Costs)
Discounted at
-----------------------------------
December 31, 2010(1) Undiscounted 5% 10% 15% 20%
(2) (M$) (M$) (M$) (M$) (M$)
----------------- -----------------------------------
Proved
- Developed Producing 236,625 190,418 163,056 144,866 131,732
- Developed Non- 2,906 2,370 2,011 1,757 1,569
Producing
- Undeveloped 174,488 132,113 104,165 84,321 69,488
----------------- -------- -------- -------- --------
Total Proved 414,019 324,901 269,233 230,944 202,789
Probable 293,786 175,321 119,642 88,768 69,460
----------------- -------- -------- -------- --------
Total Proved Plus
Probable 707,805 500,222 388,875 319,713 272,248
----------------- -------- -------- -------- --------
----------------- -------- -------- -------- --------
1. Utilizing Sproule January 1, 2011 price forecast per below.
2. As required by NI 51-101, undiscounted well abandonment costs of $14.2
million for total proved reserves and $16.9 million for total proved
plus probable reserves are included in the Net Present Value
determination.
3. It should not be assumed that the estimates of future net revenues
presented in the table represent the fair market value.
Net Present Value of Reserves - After Income Taxes (Forecast Prices and
Costs)
Discounted at
-----------------------------------
December 31, 2010(1) Undiscounted 5% 10% 15% 20%
(2) (M$) (M$) (M$) (M$) (M$)
----------------- -----------------------------------
Proved
- Developed Producing 223,098 181,467 156,330 139,400 127,067
- Developed Non-
Producing 2,113 1,716 1,450 1,262 1,122
- Undeveloped 125,878 92,590 70,567 54,940 43,295
----------------- -------- -------- -------- --------
Total Proved 351,090 275,773 228,347 195,602 171,485
Probable 212,312 126,434 85,507 62,685 48,359
----------------- -------- -------- -------- --------
Total Proved Plus
Probable 563,402 402,206 313,853 258,286 219,844
----------------- -------- -------- -------- --------
----------------- -------- -------- -------- --------
1. Utilizing Sproule January 1, 2011 price forecast per below.
2. As required by NI 51-101, undiscounted well abandonment costs of $14.2
million for total proved reserves and $16.9 million for total proved
plus probable reserves are included in the Net Present Value
determination.
3. It should not be assumed that the estimates of future net revenues
presented in the table represent the fair market value.
Summary of Pricing Assumptions as of December 31, 2010 - Forecast Prices
Heavy Crude
Oil
Foreign Western Proxy (12
WTI Exchange Edmonton AECO Canada API)
Oil Rate Oil Gas Select At Hardisty
(US$/bbl) (US$/Cdn$) (Cdn$/bbl)(Cdn$/mmbtu) (Cdn$/bbl) $CDN/bbl
--------------------------------------------------------------------
2011 88.40 0.932 93.08 4.04 80.04 74.46
2012 89.14 0.932 93.85 4.66 80.71 75.08
2013 88.77 0.932 93.43 4.99 78.48 72.87
2014 88.88 0.932 93.54 6.58 76.70 71.09
2015 90.22 0.932 94.95 6.69 77.86 72.16
2016 91.57 0.932 96.38 6.80 79.03 73.25
2017 92.94 0.932 97.84 6.91 80.23 74.36
2018 94.34 0.932 99.32 7.02 81.44 75.48
2019 95.75 0.932 100.81 7.14 82.67 76.62
2020 97.19 0.932 102.34 7.26 83.92 77.78
Annual escalation rate of 1.5%, thereafter
The following reconciliation of Company Interest (note 1) reserves compares
changes in the Company's reserves as at December 31, 2009 to the reserves as at
December 31, 2010, each evaluated using NI 51-101 definitions and using forecast
prices and cost estimates.
Total Total Total Proved
Proved Probable plus Probable
---------------------------------------------
(mboe) (mboe) (mboe)
Balance December 31, 2009 3,155 1,656 4,811
Technical revisions (461) (487) (948)
Exploration discoveries 43 28 71
Acquisitions 963 276 1,239
Dispositions (135) (74) (209)
Drilling extensions and
infill drilling 7,183 3,961 11,144
Economic factors 11 8 19
Improved recoveries 93 215 308
Production (729) - (729)
---------------------------------------------
Balance December 31, 2010(2) 10,123 5,583 15,706
---------------------------------------------
---------------------------------------------
Note:
1. Company Interest reserves means, our working interest (operating and
non-operating) share before deduction of royalties and including any
royalty interest of the Company.
2. May not add due to rounding.
Net Asset Value
At December 31, 2010, Wild Stream had a before tax net asset value of $8.87 per
diluted share at a 10 percent discount using total proved plus probable reserves
as evaluated by Sproule under the standards of NI 51-101 and an internal
assessment of undeveloped land value. The net asset value is a point in time
calculation and is based on various assumptions, including commodity prices and
foreign exchange rates that vary over time. It should not be assumed that the
net asset value represents the fair market value. Forecast prices used in this
assessment were the Sproule price forecast as of January 1, 2011. No value was
assigned for the Company's proprietary seismic.
The calculation of net asset value per diluted share is outlined in the
following table:
($ thousands) 5% 10% 15%
discount discount discount
----------------------------------------------------------------------------
Net present value of proved plus probable
reserves (1) 500,222 388,875 319,713
Undeveloped land (2) 75,000 75,000 75,000
Net (debt) surplus (28,621) (28,621) (28,621)
Proceeds from exercise of stock options &
warrants 26,337 26,337 26,337
----------------------------------------------------------------------------
Total 572,938 461,591 392,429
Fully diluted shares at December 31, 2010
(thousands) (3) 52,012 52,012 52,012
Net asset value per diluted share $11.02 $8.87 $7.54
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. Net present value of reserves evaluated by Sproule as of December 31,
2010, in accordance with the standards of NI 51-101 using forecasted
prices and costs, discounted at five, ten and fifteen percent before
taxes.
2. The undeveloped lands of 136,909 net acres were internally evaluated by
management in accordance with the standards of NI 51-101.
3. Fully diluted shares are calculated including outstanding warrants and
stock options.
Capital Program Efficiency
The efficiency of the Company's capital program for the year ended December
31, 2010 is summarized below:
December 31, 2010 December 31, 2009
------------------------- -------------------------
Proved plus Proved plus
Proved Probable Proved Probable
------------ ------------ ------------ ------------
Capital expenditures ($
thousands)
Exploration and
development(1) 117,628 117,628 5,625 5,625
Acquisitions - corporate
and property (2) 34,282 34,282 34,943 34,943
Change in future
development capital 85,767 99,882 8,499 9,860
------------ ------------ ------------ ------------
Total costs 237,677 251,792 49,067 50,428
------------ ------------ ------------ ------------
Reserve additions (mboe)
Exploration and
development 6,869 10,594 557 919
Acquisitions - corporate
and property, net 828 1,030 1,366 1,589
------------------------------------- ------------ ------------ ------------
------------------------------------- ------------ ------------ ------------
Finding and development
costs ($/boe)
Finding and development
costs without change in
future capital 17.12 11.10 10.10 6.12
Finding and development
costs with change in
future capital 29.61 20.53 25.36 16.85
Acquisition costs ($/boe)
Finding and development
costs 41.40 33.28 25.58 21.99
Finding, development and
acquisition costs
($/boe)(3)
Finding and development
costs without change in
future capital 19.74 13.07 21.10 16.18
Finding and development
costs with change in
future capital 30.88 21.66 25.52 20.11
------------------------------------- ------------ ------------ ------------
------------------------------------- ------------ ------------ ------------
Recycle Ratio
Operating netback
($/boe) 40.44 40.44 31.23 31.23
Finding and development
costs ($/boe) 30.88 21.66 25.52 20.11
Recycle ratio 1.31 1.87 1.22 1.55
------------------------------------- ------------ ------------ ------------
------------------------------------- ------------ ------------ ------------
Reserves
Reserves additions
including revisions
(mboe) 7,697 11,624 1,923 2,508
Total production 2010
(mboe) 729 729 198 198
Reserves replacement 10.6x 15.9x 9.7x 12.7x
------------------------------------- ------------ ------------ ------------
------------------------------------- ------------ ------------ ------------
Reserve Life Index
Total Company Interest
reserves (mboe) 10,123 15,706 3,155 4,811
December 2010 production
(mboe) 99 99 25 25
Annual 2010 production
(mboe) 729 729 198 198
------------------------------------- ------------ ------------ ------------
------------------------------------- ------------ ------------ ------------
RLI based on December
2010 annualized
production (years) 8.5 13.2 10.8 16.5
RLI based on 2010 annual
production (years) 13.9 21.5 15.9 24.3
1. Total capital expenditures exclude non-cash asset retirement
obligations, future income tax allocations and stock-based compensation.
2. Total capital expenditures included in corporate and property
acquisitions are net of the proceeds on property dispositions.
3. In all cases, the FD&A number is calculated by dividing the identified
capital expenditures by the applicable reserve additions.
Outlook
South West Saskatchewan experienced record snow pack over the first quarter
which will result in a prolonged breakup. As a result we are not anticipating
the re-start of our drilling activities in Shaunavon and Dodsland until early
June. Although second quarter production volumes may be nominally impacted we do
not expect any impact to our average 2011 guidance of 4,100 boepd.
Currently the company has $95 million of undrawn bank lines and positive working
capital which positions us well for executing an aggressive capital program this
year.
Wild Stream's multiyear inventory, proven execution abilities and commitment to
prudent fiscal management should allow your company to see meaningful per share
growth for the foreseeable future. We remain committed to increasing shareholder
value through a combination of exploration, strategic acquisitions and
subsequent exploitation while maintaining a conservative approach to balance
sheet management.
Additional corporate information can be found in our April corporate
presentation on our website at www.wildsr.com.
FORWARD LOOKING STATEMENTS: This press release contains forward-looking
statements. More particularly, this press release contains statements concerning
Wild Stream's drilling plans, future growth plans, reserves and values
attributable thereto, per share growth and Wild Stream's growth strategy. In
addition, the use of any of the words "guidance", "initial, "scheduled", "will",
"prior to", "estimate", "anticipate", "believe", "potential", "should",
"unaudited", "forecast", "future", "continue", "may", "expect", "project", and
similar expressions are intended to identify forward-looking statements. The
forward-looking statements contained herein are based on certain key
expectations and assumptions made by the Company, including expectations and
assumptions concerning the success of optimization and efficiency improvement
projects, the availability of capital, current legislation, the success of
future drilling and development activities, the performance of existing wells,
the performance of new wells, Wild Stream's growth strategy, general economic
conditions, availability of required equipment and services and prevailing
commodity prices. Although the Company believes that the expectations and
assumptions on which the forward-looking statements are based are reasonable,
undue reliance should not be placed on the forward-looking statements because
the Company can give no assurance that they will prove to be correct. Since
forward-looking statements 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, risks associated with the oil
and gas industry in general (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 fluctuations, changes in legislation affecting the oil and gas
industry and uncertainties resulting from potential delays or changes in plans
with respect to exploration or development projects or capital expenditures.
Certain of these risks are set out in more detail in the Company's Annual
Information Form which has been filed on SEDAR and can be accessed at
www.sedar.com or Wild Stream's website www.wildsr.com.
The forward-looking statements contained in this press release are made as of
the date hereof and the Company 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.
Meaning of Boe: When used in this press release, Boe means a barrel of oil
equivalent on the basis of 1 Boe to 6 thousand cubic feet of natural gas. Boe
per day means a barrel of oil equivalent per day. Boe's may be misleading,
particularly if used in isolation. A Boe conversion ratio of 1 Boe for 6
thousand 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.
This press release shall not constitute an offer to sell, nor the solicitation
of an offer to buy, any securities in the United States, nor shall there be any
sale of securities mentioned in this press release in any state in the United
States in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
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