Mountainview Energy Ltd. Announces 2014 First Quarter Financial Results
CUT BANK, MT, May 30, 2014 /PRNewswire/ - Mountainview Energy Ltd. ("Mountainview" or the "Company") (TSXV: MVW) is pleased to announce its operating and financial results for the three months ended March 31, 2014.
Certain selected quarterly financial and operational information is outlined below and should be read in conjunction with Mountainview's reviewed unaudited interim consolidated financial statements and management's discussion and analysis ("MD&A") for the three months ended March 31, 2014 and the audited financial statements for the years ended December 31, 2013 and 2012 and the accompanying management discussion and analysis, which have been filed with the Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) and also on the Company's website: www.mountainviewenergy.com.
Highlights
During the first quarter of 2014, Mountainview continued to build its production base by completing the two wells drilled at year end, 2013, which resulted in an increase in revenue.
Highlights of Mountainview's successful Q1 2014 are as follows:
- Completed a capital program of $7.9 million, completing 2 gross (1.9 net) wells at a 100% success rate.
- Average Q1 production of 898 boe/d, an increase of 230% over the average of 390 boe/d for Q1 2013.
- Exited Q1 with 1,284 boe/d of production with oil weighting of 87%, compared to 510 boe/d with 79% oil weighting for the prior period quarter.
- Funds flow from operations increased by 619% over the prior period quarter, with $.3 million for the quarter ended March 31, 2014, as compared to ($0.2) for the quarter ended March 31, 2013.
- Generated operating netbacks of $33.87 per boe in Q1 2014, an increase of 40% when compared to $24.12 per boe in Q1 2013.
| ($000's except per share amounts) | Q1 2014 | Q4 2013 | Q3 2013 | Q2 2013 | Q1 2013 | Q4 2012 | Q3 2012 | Q2 2012 | |||||||||
| Average production (boe/d) | 898 | 1,183 | 711 | 703 | 391 | 194 | 190 | 157 | |||||||||
| Petroleum and natural gas sales | 6,108 | 7,418 | 5,993 | 5,107 | 2,009 | 778 | 933 | 739 | |||||||||
| Operating netback (per boe) | 33.87 | 34.39 | 26.13 | 24.98 | 24.12 | (0.66) | 26.93 | 22.25 | |||||||||
| Funds flow from operations | 310 | 2,085 | 2,156 | 2,419 | (207) | 150 | (177) | (72) | |||||||||
| Per share basic | 0.00 | 0.02 | 0.02 | 0.03 | nil | nil | nil | nil | |||||||||
| Per share diluted | 0.01 | 0.02 | 0.02 | 0.02 | nil | nil | nil | nil | |||||||||
| Net income (loss) | (1,561) | (3,141) | (387) | (1,065) | (1,381) | (7,344) | (428) | (362) | |||||||||
| Per share basic | (0.02) | (0.00) | (0.01) | (0.02) | (0.02) | (0.08) | (0.00) | (0.01) | |||||||||
| Per share diluted | (0.02) | (0.00) | (0.01) | (0.02) | (0.02) | (0.08) | (0.00) | (0.01) | |||||||||
| Capital expenditures | 7,910 | 16,584 | 7,262 | 1,682 | 21,401 | 6,489 | 1,137 | 2,814 | |||||||||
| Total assets |
90,214 | 84,744 | 74,265 | 67,253 | 65,131 | 49,056 | 49,360 | 47,945 | |||||||||
| Net debt excluding financial derivatives | 65,314 | 59,244 | 46,883 | 35,772 | 33,287 | 19,804 | 18,605 | 15,619 | |||||||||
| (1) | Operating netback is a non-GAAP measure calculated as the average per boe of the Company's oil and gas sales plus realized gains on derivatives, less royalties, operating and transportation expenses. | |
| (2) | Funds flow from operations should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with International Financial Reporting Standards as an indicator of Mountainview's performance. Funds flow from operations represents cash flow from operating activities prior to changes in non-cash working capital, transaction costs and decommissioning provision expenditures incurred. Mountainview also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. | |
| (3) | Due to the anti-dilutive effect of Mountainview's net loss for the three months ended March 31, 2014 and 2013, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts. | |
| (4) | Capital expenditures are a non-GAAP measure, calculated as the purchase or sale price of an asset, plus development capital expenditures added to PP&E. Corporate acquisitions are excluded from this measure. | |
| (5) | Net debt is a non-GAAP measure representing the total of bank indebtedness, accounts payables and accrued liabilities, less accounts receivables, deposits and prepaid expenses. |
Corporate
As highlighted by the Company's quarter-end financial and operational results, Mountainview exited the quarter with increased production, offsetting natural declines from initial production from wells drilled in the fourth quarter of 2013. These declines resulted in lower average production on a quarter over quarter basis which produced a 18% decrease in oil and natural gas sales, while also showing a decrease in funds flow from operations and per boe netbacks when compared to the fourth quarter of 2013. The addition of production in late Q1 2014 is the result of Mountainview's continued focus and successful implementation of its capital plan in Divide County, ND. Operationally, the Company continues to improve on its completion technique and downhole assembly which is expected to increase initial production rates and recoverable reserves while lowering operating expenses. The results of the Q1 2014 capital plan further de-risked the southern extent of the 12 Gage asset, adding an additional infill drilling inventory with capital efficiencies associated with pad drilling.
Mountainview expects to continue its strategic shift to drilling higher working interest wells in 2014.
Financial
At quarter-end, Company net debt was $65.3 million and the Company had $46.1 million drawn on its available credit facility of $51.2 million. Funds flow from operations for Q1 2014 increased significantly from Q1 2013, reaching $0.3 million.
In response to exposure to volatility of differentials from WTI and industry concerns with respect to transportation restrictions in the Williston Basin, which translated into realized prices ranging from $69.40 per barrel of oil in Q1 2013, to $85.28 per barrel of oil in Q1, 2014, the Company has entered into a financial hedging program commencing in January, 2014. Mountainview had 50% of its production hedged for Q1, 2014, with a floor of $85.00 and a ceiling of $97.70. The Company plans to actively manage its hedging program as its production base grows.
Operations
The Company's Q1 2014 capital plan, including all drilling operations, was focused on its core 12 Gage asset in Divide County, N.D. The $7.9 million capital program in the quarter included the completion of 2 wells (1.9 net), with a 100% success rate. At year end 2013, these 2 wells (1.9 net) that had been drilled and were awaiting completion. The Company has selectively increased its working interest in its assets whenever appropriate as it has become more experienced operationally. This experience has resulted in decreased capital costs on a per well basis from $8.3 million per well to $6.3 million per well.
Outlook
Mountainview has continued to deliver on its strategy of production and reserve growth. With anticipated 2014 funds flow from operations in excess of $8 million, and available credit on its existing credit facility, Mountainview will continue to focus on the development of its core 12 Gage asset in Divide County, N.D.
The Company will continue to pursue an aggressive growth strategy using a combination of cash flow and available credit. Recent positive movement in both oil pricing and the WTI oil differentials, combined with the Company's new hedge position, allows Mountainview to remain confident in the long term sustainability of the 2014 capital plan.
With the de-risking of the 12 Gage drilling inventory, Mountainview has identified 72 infill Three Forks/Torquay locations. Adding Bakken potential, management believes that there are an additional 80 drilling locations, all on the 12 Gage acreage. With 152 potential drilling locations on the 12 Gage acreage, Mountainview is strongly positioned to organically grow production and reserves while being able to review acquisition opportunities to further diversify and enhance the Company's commodity and play type risk.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas company listed on the TSX Venture Exchange, with a primary focus on the exploration, production and development of the Bakken and Three Forks Shale in the Williston Basin and the South Alberta Bakken.
Forward-Looking Statements
Certain information contained in this press release constitutes forward-looking statements. Statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond the Company's control including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, the lack of availability of qualified service providers, personnel or management, stock market volatility and ability to access sufficient capital from internal and external sources, inability to meet or continue to meet listing requirements, the inability to obtain required consents, permits or approvals and the risk that actual results will vary from the results forecasted and such variations may be material. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. 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 the Company will derive therefrom.
The forward-looking statements contained in this press release are made as of the date of this press release. Mountainview disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Additionally, Mountainview undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf/bbl) 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. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Mountainview Energy Ltd.
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