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. 
OUTLOOK 
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                                       

 
ADDITIONAL INFORMATION 
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. 
ABOUT TRILOGY 
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". 
NON-GAAP MEASURES 
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. 
FORWARD-LOOKING INFORMATION 
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)
 
 
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