CALGARY, May 24, 2012 /CNW/ - TriOil Resources Ltd. ("TriOil" or the
"Company") (TSXV: TOL) is pleased to announce that it has filed its
interim financial statements and related Management's Discussion and
Analysis ("MD&A") for the three month period ended March 31, 2012.
Selected financial and operational information is outlined below and
should be read in conjunction with TriOil's unaudited interim financial
statements and related MD&A which are available for review at www.trioilresources.com and www.sedar.com.
Financial and Operational Highlights
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Increased average production volumes to 1,602 boe/d, up 25% from 1,286
boe/d from the same period in the prior year and up 14% from 1,408
boe/d in the fourth quarter of 2011.
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Current production exceeds 2,300 boe/d (75% oil and NGLs) based on field
estimates with an additional 3 (1.7 net) wells drilled, completed and
scheduled to be on production during the second quarter of 2012 and 3
(1.3 net) wells drilled and waiting on completion. TriOil confirms its
2012 exit guidance of 3,300-3,500 boe/d with average annual production
estimated at 2,400-2,600 boe/d.
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Increased oil and NGL weighting to 70% in the first quarter of 2012 from
47% in the same period of 2011 and from 60% in the fourth quarter of
2011.
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Funds from operations increased 174% to $4.2 million in the first
quarter of 2012 compared to $1.5 million in the first quarter of 2011.
On a diluted per share basis, funds from operations increased 86% to
$0.09 per share in the first quarter of 2012 from $0.05 per share in
the first quarter of 2011.
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Increased field netback (before hedges) by 84% to $38.85 per boe in the
first quarter of 2012 compared to $21.16 per boe in the same period in
2011. Field netbacks (before hedges) averaged $61.12 per boe at Kaybob
and $57.20 per boe at Lochend in the first quarter of 2012. Corporate
field netbacks are expected to increase steadily throughout the year
with 100% of TriOil's 2012 drilling program focused on our Kaybob and
Lochend light oil resource plays.
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Reduced operating expenses by 19% to $14.91 per boe in the first quarter
of 2012 compared to $18.34 per boe in the first quarter of 2011.
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Executed a very successful $32 million capital program, drilling 9 (5.5
net) horizontal light oil wells with a 100% success rate.
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On March 15, 2012, the Company closed a bought-deal equity financing of
10 million common shares at a price of $3.55 per share for gross
proceeds of $35.5 million.
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Maintained a strong balance sheet with positive working capital of $15.6
million and undrawn bank lines of $50 million at the end of the first
quarter.
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Financial and Operating Results
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Three months ended March 31,
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2012
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2011
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% Change
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($000s, except per share numbers)
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Financial
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Total petroleum and natural gas sales
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9,587
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5,839
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64
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Funds from operations (1)
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4,219
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1,539
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174
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Per share - diluted
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0.09
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0.05
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86
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Net loss
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(343)
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(2,707)
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(87)
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Per share - basic and diluted
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(0.01)
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(0.09)
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(92)
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Working capital (2)
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15,637
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1,567
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898
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Total assets
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209,515
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142,331
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47
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Capital expenditures(3)
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32,142
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6,256
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414
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Weighted average shares outstanding
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Basic
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45,090
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31,318
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44
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Diluted
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45,263
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31,374
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44
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Operating
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Average daily production
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Crude oil and NGLs (bbls/d)
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1,114
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600
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86
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Natural gas (mcf/d)
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2,926
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4,115
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(29)
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Total (boe/d)
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1,602
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1,286
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25
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Average sales prices
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Crude oil and NGLs ($/bbl)
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88.45
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79.80
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11
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Natural gas ($/mcf)
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2.32
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4.14
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(44)
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Total ($/boe)
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65.76
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50.47
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30
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Wells drilled - gross (net)
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9(5.5)
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5(2.6)
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-
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Drilling success rate (%)
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100
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80
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-
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Operating netback ($/boe)
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Oil and natural gas sales
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65.76
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50.47
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30
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Royalties
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(10.62)
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(9.33)
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14
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Operating costs
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(14.91)
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(18.34)
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(19)
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Transportation
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(1.38)
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(1.64)
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(16)
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Operating netback before hedging
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38.85
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21.16
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84
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Realized gain (loss) on derivative contracts
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(3.88)
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0.13
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-
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Operating netback
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34.97
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21.29
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64
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Notes:
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(1)
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Funds from (used in) operations is a non-GAAP measure and is calculated
as cash flow from operating activities before the change in non-cash
working capital, abandonment expenditures and transaction costs.
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(2)
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Working capital is a non-GAAP measure and excludes unrealized gains and
losses from financial derivative contracts and flow through share
liability.
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(3)
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Capital expenditures include property acquisitions and are presented net
of proceeds of disposals, but exclude corporate acquisitions.
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Three Impactful Light Oil Results
TriOil is very pleased to announce strong test results from 3 (1.95 net)
horizontal light oil wells completed in the second quarter of 2012 at
Kaybob and Lochend.
Two (1.6 net) of these wells are located in the Company's Dunvegan light
oil resource play at Kaybob. The first Kaybob well (TriOil 100%,
operated) tested at an average rate of 1,284 boe/d (93% oil) over a 4
day production test period and was brought on production in May 2012.
The second Kaybob well (TriOil 61.5%, operated) tested at an average
rate of 706 boe/d (93% oil) over a 4 day production test period and is
scheduled to commence production in June 2012.
The third well is located in the Company's core Cardium light oil
resource project at Lochend. This well (TriOil 34%, non-operated)
tested at an average rate of 877 boe/d (92% oil) over a 4 day
production test period and is scheduled to commence production prior to
the end of May.
Operational Update
TriOil executed an active drilling program during the first quarter of
2012, drilling 9 (5.5 net) horizontal, multi-stage frac wells in its
core light oil resource plays at Kaybob and Lochend. Of the 9 (5.5 net)
wells drilled during the first quarter of 2012, 5 (3.1 net) wells were
completed and brought on production during the first quarter, with the
remaining 4 (2.4 net) wells scheduled to be on production during the
second quarter of 2012.
During the first quarter of 2012, TriOil drilled 5 (3.2 net) horizontal
Dunvegan light oil wells at Kaybob, 2 (1.2 net) of which were completed
and brought on stream in the first quarter. At Lochend, early road bans
and wet field conditions limited our operated Cardium drilling program
to 4 (2.4 net) horizontal wells and delayed 3 (1.8 net) planned
horizontal wells (one operated and two non-operated). Of the 4 (2.4
net) wells drilled at Lochend during the first quarter of 2012, 3 (1.9
net) wells were completed and brought on production in the first
quarter of 2012.
Subsequent to the first quarter, TriOil was able to take advantage of
favorable field conditions at Kaybob and our Dunvegan horizontal
drilling program is currently ahead of schedule. To date in the second
quarter, TriOil drilled 4 (2.6 net) horizontal wells and completed 3
(2.2 net) wells, with an additional 1 (0.5 net) well scheduled for
completion in late May. Of the 4 (2.6 net) recently completed wells, 2
(1.5 net) wells were brought on production in May and the remaining 2
(1.1 net) wells are scheduled to be on production in June. TriOil
expects to resume its operated drilling program in June and plans to
drill continuously at Kaybob for the balance of the year.
At Lochend, despite the delays from an early spring breakup, operations
are moving ahead in the second quarter on 3 (1.1 net) non-operated
wells. To date in the second quarter, 1 (0.34 net) non-operated
horizontal well has already been drilled and completed and 1 (0.34 net)
non-operated horizontal well is currently drilling. TriOil expects to
resume its operated drilling program in June and plans to drill
continuously at Lochend for the remainder of the year.
Outlook and Confirmation of 2012 Guidance
TriOil is very well positioned to deliver strong per share growth in
production and reserves in 2012 and beyond. The Company has captured
significant land positions in two high-netback, light oil resource
plays at Lochend and Kaybob, both of which provide TriOil with
multi-year drilling inventories and a solid platform to deliver
material growth.
At year end 2011, the Company had an identified drilling inventory in
excess of 65 net Cardium horizontal wells at Lochend and 45 net
Dunvegan horizontal wells at Kaybob. The Company's 2011 year-end
independent reserve report included proven undeveloped assignments for
9.5 net locations at Lochend and 0.3 net locations at Kaybob. Year to
date, TriOil has drilled 6 (3.05 net) light oil wells at Lochend, all
of which were included in the Company's 2011 reserve report and 9 (6.0
net) light oil wells at Kaybob, none of which were included in the
Company's 2011 reserve report.
Field netbacks (before hedges) during the first quarter of 2012 averaged
$61.12 per boe at Kaybob and $57.20 per boe at Lochend. With 100% of
the Company's current 2012 drilling program focused on light oil
opportunities at Kaybob and Lochend, TriOil's average field netbacks
are expected to increase steadily throughout the year.
The Company's balance sheet is very healthy, with $15.6 million positive
working capital at the end of the first quarter of 2012 and $50 million
in undrawn bank lines.
Current production exceeds 2,300 boe/d (75% oil and NGLs) based on field
estimates, with additional behind pipe volumes from 3 (1.7 net)
recently completed wells scheduled to commence production in the second
quarter and an additional 3 (1.3 net) wells that are drilled and
waiting on completion.
TriOil re-affirms the previously announced capital program of $100
million and 2012 guidance for average production of 2,300-2,500 boe/d
and exit production of 3,400-3,600 boe/d. The Company's 2012 capital
budget utilizes commodity pricing assumptions of $85 Edmonton Par
Cdn/bbl, $95 WTI US/bbl and $2.00/gj AECO. Net debt at year end is
estimated at $33-35 million on current bank lines of $50 million, with
annualized fourth quarter 2012 cash flow estimated at $43 million,
resulting in year-end net debt of approximately 0.8 times annualized
fourth quarter cash flow.
Pricing for Canadian crude has experienced significant volatility in
recent months. Edmonton light crude has gone from trading at a premium
to West Texas intermediate ("WTI") in the fourth quarter of 2011 to a
discount in the first quarter of 2012. The volatility can be partially
explained by seasonal refinery turnarounds, however, pipeline takeaway
capacity and turnaround schedules in the light oil refining market have
also impacted short term pricing on Canadian crude. During the first
quarter of 2012, WTI pricing averaged US$102.86 per barrel and
differentials on Edmonton light crude averaged $10.23 per barrel.
TriOil realized an oil price of Cdn$88.53 per barrel during the first
quarter, above the Cdn$85.00 pricing assumptions utilized in our 2012
capital budget. The differential has since narrowed significantly,
closer to historic norms, however TriOil sees the potential for
volatility in Edmonton light crude pricing over the next 12 to 18
months. The Company will continue to monitor commodity prices in order
to retain the flexibility to adjust our capital program as necessary to
ensure that acceptable debt levels are maintained.
Spring breakup is drawing to a close with field conditions at Lochend
and Kaybob looking positive for TriOil to recommence drilling
operations in both areas in June. TriOil has an active operated capital
program planned for the balance of the year, entirely focused on light
oil opportunities, and we look forward to updating shareholders on our
progress and results throughout the year.
Annual General Meeting
The annual general and special meeting of the holders of class A shares
of the Company will be held at the Bow Valley Club 370, 250 - 6th
Avenue S.W. Calgary, Alberta, on Wednesday, June 6, 2012, at 2:30pm
(MST).
TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of
May 24, 2012, there were approximately 53.2 million shares issued and
outstanding (58.3 million diluted). TriOil executes a well-defined
resource capture growth strategy focused on large light oil
accumulations with high netback production, long-term growth potential
and the ability to increase recoveries by utilizing horizontal drilling
and multi-stage fracture stimulations.
Forward Looking Statements
This news release contains forward-looking information and
forward-looking statements within the meaning of applicable securities
laws. The use of any of the words "expect", "anticipate", "continue",
"estimate", "believe", "plans", "intends", "confident", "may",
"objective", "ongoing", "will", "should", "project", and similar
expressions are intended to identify forward-looking information. More
particularly, this document contains forward looking statements which
include, but are not limited to, expected future drilling and
completion plans, expected economics of future projects, expected
future operating costs, expected future commodity prices, expected
production and reserves growth, expected year end debt/working capital
levels and the future operations of TriOil.
The forward-looking statements contained in this document are based on
certain key expectations and assumptions made by TriOil, including with
respect to the anticipated exploration and development opportunities
and the outlook for the fiscal year ending December 31, 2012,
expectations and assumptions concerning the success of future
exploration and development activities, production guidance, the
performance of new wells, prevailing commodity prices and the
availability of additional capital if and when required by the
Corporation.
Any references in this news release to test rates, initial and/or final
test or production rates and/or "flush" production rates or 30, 60 and
90 day production rates are useful in confirming the presence of
hydrocarbons, however, such rates are not determinative of the rates at
which such wells will continue production and decline thereafter and
such rates are not necessarily indicative of long-term performance or
ultimate recovery. Additionally, such rates may also include recovered
"load oil" fluids used in well completion stimulation. While
encouraging, readers are cautioned not to place reliance on such rates
in calculating the aggregate production for the Company.
Although TriOil 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 TriOil
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,
the failure to satisfy the conditions to closing the transaction, 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 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 TriOil's Annual Information Form which has been filed on
SEDAR and can be accessed at www.sedar.com and TriOil's other public disclosure documents which have been filed on
SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made
as of the date hereof and TriOil 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
The term "boe" may be misleading, particularly if used in isolation. A
boe conversion of 6 Mcf:1 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.
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.
