Parallel Energy Trust Announces First Quarter 2013 Financial Results; Operations Update and 2013 Outlook

Parallel Energy Trust Announces First Quarter 2013 Financial Results; 
Operations Update and 2013 Outlook 
CALGARY, ALBERTA -- (Marketwired) -- 05/09/13 -- Parallel Energy
Trust (TSX:PLT.UN) ("Parallel" or the "Trust") announces its
financial and operating results for the three months ended March 31,
2013. Parallel's unaudited interim financial statements and
accompanying Management's Discussion and Analysis ("MD&A") will be
filed shortly on the SEDAR website at www.sedar.com and on the
Trust's website at www.parallelenergy.ca. 
Summary of Financial and Operating Results 


 
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($000s, except were        Quarter Ended      Quarter Ended   Quarter Ended 
 indicated)               March 31, 2013  December 31, 2012  March 31, 2012 
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Production                                                                  
 Natural gas (mcf/day)            14,349             14,945           8,590 
 Condensate (bbls/day)             1,720              1,821           1,027 
 Natural Gas Liquids                                                        
 (bbls/day)                        2,692              2,684           1,511 
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 Total (@6:1) (boe/day)            6,803              6,996           3,969 
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Revenue, net of royalties         20,924             20,882          13,359 
Funds from operations(1)           8,589              7,847           8,144 
Net income                        (1,716)           (84,602)         (1,410)
Distributions                      7,906             10,920           9,019 
                                                                            
Capital expenditures               5,472              5,359           4,755 
Working capital                   (5,866)            (4,346)         (7,097)
Bank loan (C$ equivalent                                                    
 of US$ debt)                    156,830            148,651          62,907 
Convertible debentures            63,000             63,000               - 
Unitholder's equity              279,686            281,409         310,637 
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(1) Non-GAAP measure. Readers are referred to Advisories at the end of the  
    press release for additional information.                               

 
First Quarter Operations and Financial Summary 
During the first quarter of 2013, Parallel averaged 6,803 boe/day,
which was below the Trust's production forecast for the quarter of
approximately 7,200 boe/day. Production was impacted during the
quarter by significant weather related issues in January and February
which reduced production for those months to 6,600 boe/day, with
production returning to the forecasted range in March. Parallel's
production forecast includes a contingency for downtime due to winter
and summer weather; however, the impact on production due to the
January and February winter storms was well beyond normal
expectations. Production during the first quarter was also negatively
impacted by lower than forecasted drilling results as a new drilling
technique was attempted on four wells with limited success. The
average 30 day initial production rate from the six wells drilled and
completed in the Carson area in the first quarter was 16 boe/day, as
compared to the forecasted rate of 30 boe/day.  
Parallel's cash flow for the first quarter was also impacted by the
weather related issues, due to production being approximately 5% less
than forecast, but also because operating expenses were approximately
12% greater than forecast due to the cost to manage and restart
production and the cost of repairs to equipment damaged during the
winter storms. Parallel also incurred approximately $1.1 million of
one-time severance costs in the quarter, reducing cash flow for the
quarter, but resulting in lower general and administrative costs in
the future.  
Operations Update 
Since the end of the quarter, Parallel has drilled an additional
three wells in the Carson area. Not all of the wells have been on
production for 30 days, but the initial production from these wells
has been much higher than those drilled in the first quarter. Based
on the early indications from these wells, Parallel believes that the
average 30 day initial production rate for all of the wells drilled
in Carson in 2013 will be at least the expected rate of 30 boe/day.
Parallel also participated as a 20% interest owner in a well drilled
in the Garfield county area which was placed on production in April.
Results to date have exceeded the Trust's expectations. 
On May 8, 2013, Parallel closed the purchase of additional acreage in
the Hugoton basin, which currently produces approximately 200 boe/day
of liquids-rich natural gas. The purchase price was US$6.5 million,
or approximately $30,000 per flowing boe/day. The property has upside
potential through workovers of the existing wells and is located
adjacent to the Trust's Carson operating area which can be managed by
the Trust's existing personnel. The acquisition was made as it was
available at very attractive metrics and is in Parallel's existing
operating areas. 
Based on field data, Parallel's production in April averaged 7,100
boe/day and has averaged over 7,300 boe/day to date in May, with the
increase due primarily to the wells drilled in April coming on
stream. Average production in April and May does not include the
additional 200 boe/day expected from the acquisition which closed on
May 8. 
Capital Expenditure Program and 2013 Outlook 
Having completed the recent asset acqusition, Parallel plans not to
drill additional wells in the Carson area this year as the Trust
intends to limit its capital expenditures for the remainder of 2013
to forecasted cash flow less distributions. The Trust will continue
to perform workovers for the remainder of the year, which is
anticipated to reduce the decline rate of its existing assets. For
2013, Parallel will have drilled and completed 11 wells in the Carson
area. The Trust still plans to drill and complete up to an additional
two gross wells (0.4 net wells) in Garfiled county, Oklahoma during
the year. 
Based on actual results to date and the revised capital program,
Parallel's full year production is now expected to average 7,000
boe/day and its 2013 exit production is expected to be 7,100 boe/day.
Cash flow for the remaining three quarters of 2013 is estimated to be
$36 million based on current commodity prices and production. Capital
expenditures for the same period (including the US$6.5 million
acquisition) is estimated to be US$11.5 million which results in a
projected basic payout ratio of 70% and an all-in payout ratio
(defined as cash flow from operations divided by distributions and
capital expenditures) of less than 100%. With this profile, and
assuming a DRIP participation of 15%, Parallel's bank debt is
expected to be reduced to less than US$150 million by year end 2013.  
"While we are disappointed that the fi
rst quarter results did not
meet our expectations, recent drilling results and production levels
support our belief that we have a solid foundation for the rest of
the year," said Rick Alexander, President and CEO of Parallel. "Our
drilling results have been much better in the second quarter and we
made a very accretive acquisition of 200 boe/day of liquids-rich
natural gas with upside potential. While we are suspending our
drilling program in the Carson and Sneed operating areas for the
remainder of 2013 because of the acquisition, we will continue to
execute our workover program in those areas, which has demonstrated
the ability to significantly arrest our decline rates. Our all-in
payout ratio is forecasted to be below 100% for the rest of the year,
creating a sustainable business model and positioning us to resume
our drilling program in 2014. We look forward to providing periodic
updates on our operations throughout the year." 
ABOUT PARALLEL ENERGY TRUST 
Parallel's objectives are to create stable, consistent returns for
investors through the acquisition and development of conventional oil
and natural gas reserves and production with unexploited low risk
potential in certain regions of the United States, and to pay out a
portion of available cash to holders of trust units on a monthly
basis. The trust units of Parallel are listed on the Toronto Stock
Exchange ("TSX") under the symbol "PLT.UN" and the debentures are
listed on the TSX under the symbol "PLT.DB". 
Parallel is a "mutual fund trust" under the Income Tax Act (Canada)
(the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in
the Tax Act), provided that the Trust complies at all times with its
investment restriction which precludes the Trust from holding any
"non-portfolio property" (as defined in the Tax Act). Further
information relating to Parallel is set out in Parallel's annual
information form dated March 21, 2012, which may be obtained on the
SEDAR website at www.sedar.com under Parallel's profile. 
ADVISORIES 
Forward-Looking Information 
This news release contains forward-looking information that involves
substantial known and unknown risks and uncertainties, most of which
are beyond the control of Parallel, including, without limitation,
those listed under "Risk Factors" in Parallel's annual information
form dated March 25, 2013 (collectively, "forward-looking
information"). Forward-looking information in this news release
includes, but is not limited to, Parallel's objectives and status as
a mutual fund trust and not a SIFT trust and Parallel's expectations
and estimates regarding current and future production rates and
drilling results. Parallel cautions investors in Parallel's
securities about important factors that could cause Parallel's actual
results to differ materially from those projected in any
forward-looking statements included in this news release. Any
statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking and
may involve estimates, assumptions and uncertainties which could
cause actual results or outcomes to differ materially from those
expressed in such forward-looking statements. No assurance can be
given that the expectations set out in Parallel's final prospectus or
herein will prove to be correct and accordingly, prospective
investors should not place undue reliance on these forward-looking
statements. These statements speak only as of the date of this press
release and Parallel does not assume any obligation to update or
revise them to reflect new events or circumstances.  
In this news release, Parallel and its subsidiaries are referred to
collectively as the "Trust" or "Parallel" for purposes of
convenience. 
Non-GAAP Measures 
This press release contains the term "funds from operations". This
term is not a recognized measure under Canadian generally accepted
accounting principles (GAAP). Parallel believes that in addition to
net income, funds from operations is a useful supplemental
measurement. Funds from operations provides an indication of the
funds generated by the Trust's principal business activities and is
defined as "cash from operating activities" prior to workovers and
"change in non-cash working capital related to operating activities"
in the Statement of Cash Flows. 
Oil and Gas Measures and Definitions 
This press release contains disclosure expressed as "boe" and
"boe/day". 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. 
Contacts:
Parallel Energy Trust
Curtis Pelletier
Manager, Investor Relations
403-781-7888 or Toll-Free: 1-855-781-7888
investor@parallelenergy.ca
www.parallelenergy.ca
 
 
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