Canada NewsWire
CALGARY, Aug. 9, 2018
CALGARY, Aug. 9, 2018 /CNW/ - (TSX: EGL): Eagle Energy Inc. ("Eagle") is pleased to report its financial and operating results for the second quarter ended June 30, 2018, as well as to reiterate the previously announced sale of its Twining assets.
When reflecting on Eagle's second quarter and the Twining asset sale announcement, Wayne Wisniewski, President and Chief Executive Officer, stated, "Eagle continues to execute its previously announced plan to reduce debt and corporate costs. To the end of June, and excluding one-time costs associated with the Salt Flat disposition, our year to date general and administrative expenses are 34% lower than 2017. In addition, when compared to 2017 year end, we have reduced our term loan by 34% and intend to use the net proceeds from our Twining asset sale closing in August 2018 to further reduce debt."
Mr. Wisniewski continued, "We are pleased to report that we plan to drill our third North Texas horizontal well late in the third quarter. The well location is approximately one mile from our initial horizontal well, a well which has exceeded production expectations. Although our second North Texas horizontal well (which is located 13 miles from our initial well) did not meet our budget expectations with a 30 day initial production rate of 70 barrels of oil equivalent per day, technical work is ongoing to better understand the lower than expected oil cut."
Second Quarter 2018 Financial Results
Eagle's unaudited condensed consolidated interim financial statements and accompanying notes for the three and six months ended June 30, 2018 and related management's discussion and analysis have been filed with the securities regulators and are available online under Eagle's issuer profile at www.sedar.com and on Eagle's website at www.EagleEnergy.com.
This news release contains non-IFRS financial measures and statements that are forward-looking. Investors should read "Non-IFRS Financial Measures" and "Note about Forward-looking Statements" near the end of this news release. Figures within this news release are presented in Canadian dollars unless otherwise indicated.
Highlights for the Three Months ended June 30, 2018
Sale of Twining Assets
On July 20, 2018, and further to Eagle's previously announced strategy of reducing debt and interest charges, Eagle announced that it has signed an agreement to sell its entire interest in its oil and gas properties near Twining, Alberta to a third party for cash consideration of $13,820,000 before customary post-closing adjustments (the "Sale").
2018 Outlook
For 2018, Eagle plans to:
Summary of Quarterly Results
Q2/2018 |
Q1/2018 |
Q4/2017 |
Q3/2017 |
Q2/2017 |
Q1/2017 |
Q4/2016 |
Q3/2016 | ||
($000's except for boe/d and per share amounts) |
|||||||||
Sales volumes – boe/d |
2,262 |
2,974 |
3,804 |
3,749 |
3,966 |
3,767 |
3,803 |
4,085 | |
Revenue, net of royalties |
10,228 |
12,461 |
14,725 |
12,459 |
14,167 |
14,218 |
13,891 |
12,854 | |
per boe |
49.69 |
46.57 |
42.08 |
36.12 |
39.25 |
41.95 |
39.72 |
34.20 | |
Operating, transportation and marketing expenses |
4,206 |
5,109 |
6,864 |
6,301 |
5,885 |
7,165 |
6,799 |
6,564 | |
per boe |
20.43 |
19.10 |
19.61 |
18.27 |
16.31 |
21.14 |
19.44 |
17.46 | |
Field netback |
6,022 |
7,352 |
7,861 |
6,158 |
8,282 |
7,053 |
7,092 |
6,290 | |
per boe |
29.26 |
27.47 |
22.47 |
17.85 |
22.94 |
20.81 |
20.28 |
16.74 | |
Funds flow from operations |
1,932 |
1,718(2) |
3,488 |
3,346 |
4,272 |
1,589 |
3,901 |
4,582 | |
per boe |
9.39 |
6.42 |
9.98 |
9.70 |
11.84 |
4.69 |
11.15 |
12.19 | |
per share – basic |
0.04 |
0.04 |
0.08 |
0.08 |
0.10 |
0.04 |
0.09 |
0.11 | |
per share – diluted |
0.04 |
0.04 |
0.08 |
0.07 |
0.10 |
0.04 |
0.09 |
0.11 | |
(Loss) earnings |
(15,093) |
(2,568) |
(14,293) |
(4,711) |
675 |
1,303 |
30,508 |
52 | |
per share – basic |
(0.34) |
(0.06) |
(0.34) |
(0.11) |
0.02 |
0.03 |
0.72 |
0.00 | |
per share - diluted |
(0.34) |
(0.06) |
(0.34) |
(0.11) |
0.02 |
0.03 |
0.72 |
0.00 | |
Cash dividends declared |
- |
- |
- |
- |
- |
425 |
637 |
636 | |
per issued share |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
0.01 |
0.015 |
0.015 | |
Current assets |
10,920(1) |
14,941 |
13,869 |
11,122 |
11,847 |
18,819 |
9,302 |
9,787 | |
Current liabilities |
5,762(1) |
7,528 |
13,715 |
8,042 |
6,599 |
11,474 |
74,758 |
72,387 | |
Total assets |
159,935 |
174,877 |
207,314 |
213,867 |
222,155 |
233,951 |
218,199 |
190,945 | |
Total non-current liabilities |
62,427 |
70,870 |
94,312 |
92,367 |
97,086 |
104,359 |
26,202 |
31,690 | |
Shareholders' equity |
81,709 |
96,479 |
99,287 |
113,458 |
118,470 |
118,118 |
117,239 |
86,868 | |
Shares issued |
43,750 |
43,750 |
43,302 |
43,302 |
42,857 |
42,857 |
42,452 |
42,452 |
(1) |
Figures exclude amounts related to assets classified as held for sale. |
(2) |
Includes one-time disposition costs of $3.4 million relating to the Salt Flat disposition. |
For the three months ended June 30, 2018, sales volumes were lower than the previous quarters, primarily due to the effect of the February 2018 Salt Flat disposition being only partially offset by additional production from wells drilled in Eagle's Twining and North Texas areas.
Second quarter 2018 field netback on a per boe basis increased 7% from the first quarter of 2018 due to higher commodity prices and narrower oil price differentials on Canadian production. "Field netback" is a non-IFRS financial measure. See "Non-IFRS Financial Measures", below.
Second quarter 2018 funds flow from operations increased 12% from the first quarter of 2018 due to higher realized prices and lower second quarter administrative and financing expenses because of one-time Salt Flat disposition costs that occurred in the first quarter. A higher realized risk management loss partially offset this increase.
Total non-current liabilities decreased as a result of debt repayment from Salt Flat disposition proceeds.
Changes in (loss) earnings from one quarter to the next often do not move directionally or by the same amount as quarterly changes in funds flow from operations. This is due to items of a non-cash nature that factor into the calculation of (loss) earnings, and those that are required to be fair valued at each quarter end. Second quarter 2018 funds flow from operations was 6% higher than the first quarter of 2018, yet the second quarter 2018 loss was 488% more than the first quarter of 2018 due to a non-cash impairment expense relating to the Twining oil and gas properties based on the sale agreement signed July 19, 2018.
Advisories
Non-IFRS Financial Measures
Statements throughout this news release make reference to the term "field netback", which is a non-IFRS financial measure that does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers.
"Field netback" is calculated by subtracting royalties, operating expenses, and transportation and marketing expenses from revenues. This method of calculating field netback is in accordance with the standards set out in the Canadian Oil and Gas Evaluation Handbook maintained by the Society of Petroleum Evaluation Engineers (Calgary Chapter). Management believes that field netback provides useful information to investors and management because such a measure reflects the quality of production and the level of profitability.
Oil and Gas Advisories
The 30 day initial production rate is preliminary in nature and may not be indicative of stabilized on-stream production rates. Initial production results are not necessarily indicative of long-term performance or of ultimate well recovery rates.
Note about Forward-Looking Statements
Certain of the statements made and information contained in this news release are forward-looking statements and forward-looking information (collectively referred to as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historic fact are forward-looking statements. Eagle cautions investors that important factors could cause Eagle's actual results to differ materially from those projected, or set out, in any forward-looking statements included in this news release.
In particular, and without limitation, this news release contains forward-looking statements pertaining to the following:
With respect to forward-looking statements contained in this news release, assumptions have been made regarding, among other things:
Eagle's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and those in Eagle's Annual Information Form dated March 20, 2018 (the "AIF"):
Additional risks and uncertainties affecting Eagle are contained in the AIF under the heading "Risk Factors".
As a result of these risks, actual performance and financial results in 2018 may differ materially from any projections of future performance or results expressed or implied by these forward‐looking statements. The Sale, Eagle's production rates, operating and general and administrative costs, field netbacks, drilling program, capital budget, reserves and potential transactions are subject to change in light of ongoing results, prevailing economic circumstances, obtaining regulatory approvals, commodity prices, exchange rates, financing terms, and industry conditions and regulations. New factors emerge from time to time, and it is not possible for management to predict all of these factors or to assess, in advance, the impact of each such factor on Eagle's business, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. Although management believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date the forward-looking statements were made, there can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to Eagle and its shareholders. These statements speak only as of the date of this news release and may not be appropriate for other purposes. Eagle does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.
Note Regarding Barrel of Oil Equivalency
This news release contains disclosure expressed as "boe" or "boe/d". All oil and natural gas equivalency volumes have been derived using the conversion ratio of six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio 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 well head. In addition, given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalent of six to one, utilizing a boe conversion ratio of 6 Mcf:1 bbl would be misleading as an indication of value.
About Eagle Energy Inc.
Eagle is an oil and gas corporation with shares listed for trading on the Toronto Stock Exchange under the symbol "EGL".
All material information about Eagle may be found on its website at www.EagleEnergy.com or under Eagle's issuer profile at www.sedar.com.
SOURCE Eagle Energy Inc.
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