Trilogy Energy Corp. Announces Financial and Operating
Trilogy Energy Corp. Announces Financial and Operating Results for the Three and Nine Months-Ended September 30, 2012, Updates 2012 Guidance, and Provides 2013 Guidance
CALGARY, ALBERTA -- (Marketwire) -- 11/08/12 -- Trilogy Energy Corp. (TSX:TET) ("Trilogy") is pleased to announce its financial and operating results for the three and nine months-ended September 30, 2012. In addition, Trilogy is providing updates for 2012 guidance and issuing guidance for 2013.
FINANCIAL AND OPERATING HIGHLIGHTS
-- Year-to-date reported sales volumes for 2012 averaged 33,004 Boe/d compared to 27,919 Boe/d for the same period in 2011, representing an 18 percent increase in production. Reported sales volumes for the third quarter of 2012 averaged 33,412 Boe/d compared to 34,585 for the previous quarter, representing a 3 percent decrease in production. -- Year-to-date 2012 oil sales volumes increased 189 percent from 2,974 Bbl/d in 2011 to 8,606 Bbl/d in 2012 (decreased 18 percent quarter- over-quarter). Combined oil and natural gas liquids sales volumes represented 37 percent of total sales volumes for the quarter (39 percent year-to-date). -- Net capital expenditures totaled $60.9 million for the third quarter of 2012 compared to $33.0 million for the prior quarter (year-to- date 2012 - $274 million compared to $248 million in the same period in 2011). -- In total, 14 (8.2 net) wells were drilled in the quarter, as compared to 10 (6.0 net) wells in the prior quarter. Year-to-date, 55 (38.1 net) wells were drilled, as compared to 44 (30.2 net) wells for same period in 2011. -- Trilogy's realized natural gas price before financial instruments increased 21 percent from $1.99/Mcf to $2.42/Mcf quarter-over- quarter. -- Funds flow from operation for the quarter was $47.2 million ($0.40/share). -- Dividends to Shareholders for the third quarter of 2012 were $12.2 million or 26 percent of cash flow from operations (prior quarter - 22 percent). -- Subsequent to the end of the quarter, Trilogy's lenders increased their commitment by $50 million under the credit facility agree ment, totaling $650 million.
(1) Refer to Non-GAAP measures in this release and MD&A
FINANCIAL AND OPERATING HIGHLIGHTS TABLE
(In thousand Canadian dollars except per share amounts and where stated otherwise)
Nine Months Ended Three Months Ended September 30 September June 30, Change Change 30, 2012 2012 % 2012 2011 % ---------------------------------------------------------------------------- FINANCIAL Petroleum and natural gas sales 103,535 108,861 (5) 320,476 274,520 17 Funds flow From operations(1) 47,176 55,303 (15) 161,412 158,005 2 Per share - diluted 0.40 0.46 (15) 1.39 1.33 4 Earnings Earnings (loss) before tax (13,413) 447 (3,104) (15,567) 30,289 (151) Per share - diluted (0.12) NIL (100) (0.13) 0.26 (152) Earnings (loss) after tax (11,094) 282 (4,040) (13,815) 22,066 (163) Per share - diluted (0.10) NIL (100) (0.12) 0.19 (164) Dividends declared 12,242 12,242 0 36,701 36,456 1 Per share 0.105 0.105 0 0.315 0.315 0 Capital expenditures Exploration, development, land, and facility 61,824 30,699 101 272,749 250,019 9 Acquisitions (dispositions) and other - net (919) 2,259 (141) 1,528 (1,798) (185) Net capital expenditures 60,905 32,958 85 274,277 248,221 10 Total assets 1,364,815 1,355,818 1 1,364,815 1,209,487 13 Net debt(1) 628,692 603,276 4 628,692 424,604 48 Shareholders' equity 491,768 510,958 (4) 491,768 542,010 (9) Total shares outstanding (thousands) - As at end of period (2) 116,494 116,491 0 116,494 115,853 1 ---------------------------------------------------------------------------- OPERATING Production Natural gas (MMcf/d) 125 125 0 121 124 (2) Oil (Bbl/d) 8,014 9,788 (18) 8,606 2,974 189 Natural gas liquids (Boe/d) 4,517 3,948 14 4,235 4,351 (3) Total production (Boe/d @ 6:1) 33,412 34,585 (3) 33,004 27,919 18 ---------------------------------------------------------------------------- Average prices before financial instruments Natural gas ($/Mcf) 2.42 1.99 22 2.29 4.00 (43) Crude Oil ($/Bbl) 78.03 76.87 2 80.10 89.55 (11) Natural gas liquids ($/Bbl) 43.56 49.26 (12) 47.85 56.30 (15) ---------------------------------------------------------------------------- Average realized price 33.68 34.59 (3) 35.44 36.02 (2) Drilling activity (gross) Gas 1 4 (75) 22 28 (21) Oil 13 6 117 33 16 106 Total wells 14 10 40 55 44 25
(1) Funds flow from operations and net debt are non-GAAP terms. Please refer to the advisory on Non-GAAP measures below.
(2) Excluding shares held in trust for the benefit of Trilogy's officers and employees under the Company's Share Incentive Plan. Includes Common Shares and Non-voting Shares. Refer to the notes to the annual consolidated financia l statements for additional information.
Trilogy's revised 2012 annual guidance is as follows:
Average production 34,000 Boe/d (40% oil and NGLs) Average operating cost $8.00/Boe Capital expenditures $340 million
Trilogy is confident in its assets and its exploration strategy and will continue to develop them within its annual forecasted cash flow and credit facilities. In the coming year, Trilogy is forecasting that it will spend approximately $350 million to grow the existing asset base to an annual production of 40,000 to 42,000 Boe/d for 2013, representing approximately 18 to 23 percent year over year production growth. This includes approximately $150 million towards the drilling, completion, and tieing in of approximately 40 Montney oil wells, $25 million towards Dunvegan wells and the remaining $175 will be allocated to the Montney, Duvernay, and Nikanassin oil and liquids-rich gas plays in the Kaybob and Grande Prairie areas.
Trilogy's 2013 annual guidance is as follows:
Average production 40,000 - 42,000 Boe/d (45% oil and NGLs) Average operating cost $8.00/Boe Capital expenditures $350 million
A copy of Trilogy's September 30, 2012 quarterly report to the Shareholders, including the Management's Discussion and Analysis and unaudited interim consolidated financial statements and related notes can be obtained at http://media3.marketwire.com/docs/1108tet_report.pdf.This report will also be made available at a later date through Trilogy's website at www.trilogyenergy.com and SEDAR at www.sedar.com.
Trilogy is a growing petroleum and natural gas-focused Canadian energy corporation that actively develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy's geographically concentrated assets are primarily low-risk, high working interest properties that provide abundant infill drilling opportunities and good access to infrastructure and processing facilities, many of which are operated and controlled by Trilogy. Trilogy's common shares are listed on the Toronto Stock Exchange under the symbol "TET".
Certain measures used in this document, including "funds flow from operations", "operating income", "net debt", "finding and development costs", "operating netback" and "recycle ratio" collectively the "Non-GAAP measures" do not have any standardized meaning as prescribed by IFRS and previous GAAP and, therefore, are considered Non-GAAP measures. Non-GAAP measures are commonly used in the oil and gas industry and by Trilogy to provide shareholders and potential investors with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. However, given their lack of standardized meaning, such measurements are unlikely to be comparable to similar measures presented by other issuers.
"Funds flow from operations" refers to the cash flow from operating activities before net changes in operating working capital. The most directly comparable measure to "funds flow from operations" calculated in accordance with IFRS is the cash flow from operating activities. "Funds flow from operations" can be reconciled to cash flow from operating activities by adding (deducting) the net change in operating working capital as shown in the consolidated statements of cash flows.
"Operating income" is equal to petroleum and natural gas sales before financial instruments and bad debt expenses minus royalties, operating costs, and transportation costs. "Operating netback" refers to Operating income plus realized financial instrument gains and losses and other income minus actual decommissioning and restoration costs incurred. "Net debt" is calculated as current liabilities minus current assets plus long-term debt. The components described for "operating income", "operating netback" and "net debt" can be derived directly from Trilogy's consolidated financial statements.
"Finding and development costs" refers to all current year net capital expenditures, excluding property acquisitions and dispositions with associated reserves, and including changes in future development capital on a proved and proved plus probable basis. "Finding and development costs per Barrel of oil equivalent" ("F&D $/Boe") is calculated by dividing finding and development costs by the current year's reserve extensions, discoveries and revisions on a proved or proved plus probable reserve basis.
"Recycle ratio" is equal to "Operating netback" on a production barrel of oil equivalent for the year divided by "F&D $/Boe" (computed on a proved or proved plus probable reserve basis as applicable).
Investors are cautioned that the Non-GAAP measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with IFRS, as set forth above, or other measures of financial performance calculated in accordance with IFRS.
Certain information included in this news release constitutes forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "budget" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this news release pertain to, without limitation: expected average production volumes and the relative content of crude oil, natural gas, and natural gas liquids therein; average operating costs; capital expenditures and the relative allocation and timing thereof; planned drilling programs, well completions, well tie-ins and the anticipated costs and timing thereof; statements regarding sources of and plans for funding Trilogy's exploration, development, facilities and other expenditures; business strategies and objectives for 2012 and 2013 and beyond; among others. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Such assumptions include: current commodity price forecasts for petroleum, natural gas and natural gas liquids; current reserves estimates; current production forecasts and the relative mix of crude oil, NGLs and natural gas therein; geology applicable to Trilogy's land holdings; the extent and development potential of Trilogy's assets including, without limitation, Trilogy's Kaybob area Montney oil and gas assets, the Duvernay Shale Gas development program and the Dunvegan oil program; continuity of the mutually beneficial NGL recovery agreement with Aux Sable Canada LP and pricing thereunder; assumptions regarding royalties and expenses and the continuity of government incentive programs and their applicability to Trilogy; operating and other costs; expected timelines and budgets being met; budget allocations and capital spending flexibility; access to capital markets and other sources of funding for Trilogy's planned operations and expenditures; estimates of deferred tax amounts, tax assets and tax pools; the ability of Trilogy and its partners to achieve drilling, completion construction and other operational results consistent with our expectations; general business, economic, and market conditions; the ability of Trilogy to obtain equipment, services and supplies in a timely manner to carry out its activities; the ability of Trilogy to market oil and natural gas successfully to current and new customers; the timing and costs of pipeline, storage and facility construction and expansion facility run-times; the ability to secure adequate product processing, transmission and transportation and the timely receipt of required regulatory approvals: among others.
Although Trilogy believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Trilogy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Trilogy and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to: fluctuations of oil, natural gas and natural gas liquids prices, foreign currency, exchange rates and interest rates, volatile economic and business conditions, the ability of management to execute its business plan; the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil, natural gas and associated by-products and market demand; risks and uncertainties involving geology of oil and gas deposits; risks inherent in Trilogy's marketing operations, including credit risk; the uncertainty of reserves estimates and reserves life; the uncertainty of estimates and projections relating to future production, NGL yields, costs and expenses; uncertainty in amounts and timing of royalty payments and applicability of and change to royalty regimes and government incentive programs including, without limitation, the Natural Gas Deep Drilling Programs and the Drilling Royalty Credit Program; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the availability of financing; the ability to generate sufficient cash flow from operations and other sources of financing at an acceptable cost to fund Trilogy's exploration, development and construction plans and repay debt; Trilogy's ability to secure adequate product transmission and transportation on a timely basis or at all; Trilogy's ability to enter into or renew leases; health, safety and environmental risks; the ability of Trilogy to add production and reserves through development and exploration activities; weather conditions; the possibility that government policies, regulations or laws, including without limitation those relating to the environment and taxation, may change; imprecision in estimates of product sales, tax pools, tax shelters, tax deductions available to Trilogy, changes to and the interpretation of tax legislation and regulations applicable to Trilogy, and timing and amounts of reversals of temporary differences between assets and liabilities recognized for accounting and tax purpose; the possibility that regulatory approvals may be delayed or withheld; risks associated with existing and potential future lawsuits and regulatory actions against Trilogy; uncertainty regarding aboriginal land claims and co-existing local populations; hiring/maintaining staff; the impact of market competition; and other risks and uncertainties described elsewhere in this document or in Trilogy's other filings with Canadian securities authorities.
The forward-looking statements and information contained in this news release are made as of the date hereof and Trilogy 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.
Refer to Trilogy's Management's Discussion and Analysis for additional information on forward-looking information.
OIL AND GAS ADVISORY
This news release contains disclosure expressed as "Boe", "Boe/d", "Mcf/d", "MMcf/d", "Bbl" and "Bbl/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil 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.
For Q3 2012, the ratio between Trilogy's average realized oil price and the average realized natural gas price was approximately 32:1 ("Value Ratio"). The Value Ratio is obtained using the Q3 2012 average realized oil price of $78.03 (CAD$/Bbl) and the Q3 2012 average realized natural gas price of $2.42 (CAD$/mcf). This Value Ratio is significantly different from the energy equivalency ratio of 6:1 and using a 6:1 ratio would be misleading as an indication of value. Contacts: Trilogy Energy Corp. J.H.T. (Jim) Riddell Chief Executive Officer
Trilogy Energy Corp. J.B. (John) Williams President and Chief Operating Officer
Trilogy Energy Corp. M.G. (Michael) Kohut Chief Financial Officer
Trilogy Energy Corp. 1400 - 332 - 6th Avenue S.W. Calgary, Alberta T2P 0B2 (403) 290-2900 (403) 263-8915 (FAX)