CALGARY, Nov. 7, 2013 /CNW/ - Longview Oil Corp. ("Longview" or the
"Corporation") (TSX: LNV) is pleased to announce the financial and operating
results for the quarter ended September 30, 2013.
Three months ended Nine months ended
September 30, September 30,
2013 2012 2013 2012
except as otherwise
realized hedging $ 41,591 $ 32,874 $ 113,965 $ 104,517
per share( (2)) $ 0.89 $ 0.70 $ 2.43 $ 2.23
per boe $ 77.16 $ 59.43 $ 69.58 $ 61.42
Funds from operations $ 17,959 $ 14,360 $ 49,455 $ 44,781
per share( (2)) $ 0.38 $ 0.31 $ 1.05 $ 0.96
per boe $ 33.32 $ 25.96 $ 30.20 $ 26.32
Net income and
comprehensive income $ 4,658 $ 1,473 $ 10,694 $ 13,198
per share( (2)) $ 0.10 $ 0.03 $ 0.23 $ 0.28
Dividends declared $ 7,039 $ 7,026 $ 21,100 $ 21,060
per share $ 0.15 $ 0.15 $ 0.45 $ 0.45
property, plant and
equipment $ 13,373 $ 8,822 $ 29,828 $ 32,728
Payout ratio 114% 110% 103% 120%
deficit $ 9,651 $ 5,784 $ 9,651 $ 5,784
Bank indebtedness $ 115,414 $ 114,671 $ 115,414 $ 114,671
Shares outstanding at
end of period (000) 46,928 46,837 46,928 46,837
average shares (000) 46,923 46,831 46,885 46,796
Crude oil (bbls/d) 4,122 3,938 4,227 4,126
NGLs (bbls/d) 511 551 527 572
Natural gas (mcf/d) 7,357 9,144 7,478 9,076
Total boe/d @ 6:1 5,859 6,013 6,000 6,211
Crude oil ($/bbl) $ 98.49 $ 77.20 $ 86.57 $ 79.73
NGLs ($/bbl) $ 53.17 $ 54.94 $ 52.26 $ 55.56
Natural gas ($/mcf) $ 2.58 $ 2.52 $ 3.21 $ 2.28
natural gas sales $ 77.16 $ 59.43 $ 69.58 $ 61.42
Royalties (13.06) (10.70) (12.14) (11.86)
Operating expense (20.48) (20.44) (20.92) (20.11)
Operating netback $ 43.62 $ 28.29 $ 36.52 $ 29.45
(1) Boe, funds from operations, payout ratio and working capital
deficit do not have a standardized meaning under GAAP.
Refer to "Non-GAAP Measures, Definitions and Abbreviations" in
this press release.
(2) Based on basic weighted average shares outstanding.
Message to Shareholders
-- Funds from operations increased by 25% in the third quarter of
2013 to $18.0 million from $14.4 million received in the third
quarter of 2012.
o On a per share basis, funds from operations for the third quarter
of 2013 was $0.38 per share versus $0.31 per share in Q3 2012, an
increase of 25%.
o The increase in funds from operations is attributable to higher
crude oil production and strengthening pricing for Canadian oil
-- The payout ratio for the first nine months of 2013 was 103%
versus 120% in the first nine months of 2012.
o Preservation of a sustainable payout ratio is the cornerstone of
our business strategy which is based on the maintenance of a solid
balance sheet while funding our dividend payments and capital
expenditure programs primarily with funds from operations.
Three months ended Nine months ended
September 30, September 30,
($000) % 2012 %
2013 2012 change 2013 change
by operating 77 17 %
activities $ 19,833 $ 11,226 % $ 50,784 $ 43,239
non-cash (110) (39) %
working capital (406) 4,240 % 2,745 4,517
bank 12 16 %
indebtedness (1,481) (1,328) % (4,187) (3,601)
decommissioning (94) (82) %
liability 13 222 % 113 626
Funds from 25 10 %
operations $ 17,959 $ 14,360 % $ 49,455 $ 44,781
Dividends - - %
declared 7,039 7,026 % 21,100 21,060
expenditures ( 52 (9) %
(1)) 13,373 8,822 % 29,828 32,728
Total funds 29 (5) %
outflow $ 20,412 $ 15,848 % $ 50,928 $ 53,788
Payout ratio (
(2)) 114% 110% 103% 120%
(1) Capital expenditures includes expenditures on property, plant and
equipment and expenditures on exploration and evaluation assets.
(2) Payout ratio is calculated as cash dividends declared and
capital expenditures divided by funds from operations.
-- Crude oil production increased by 5% in the third quarter of
2013 to 4,122 bbls/d from 3,938 bbls/d in Q3 2012.
o Extreme spring break-up conditions persisted well into the third
quarter of 2013 causing delays in our capital program. As a result,
Longview went four straight months (May through August 2013)
without being able to add any new production volumes.
o In spite of these delays in executing our 2013 drilling program,
our crude oil production volumes remained relatively stable when
compared to levels reported in Q2 and Q1 of 2013. Natural gas
liquids and natural gas production volumes also remained at stable
rates demonstrating the high quality, low decline nature of our
existing production base.
-- Crude oil revenue, which comprised 90% of total revenue in the
third quarter of 2013, increased by 34% to $37.3 million from
$28.0 million in Q3 2012.
o The WTI/Canadian oil price differential narrowed in the third
quarter of 2013 to $5.27/bbl as compared to $6.37/bbl in 2012.
o The price of WTI increased significantly in the third quarter of
2013 averaging US$105.77/bbl versus US$92.19/bbl last year.
-- Operating netbacks increased by 54% from $28.29/bbl in Q3 2012
to $43.62/bbl in the third quarter of 2013.
o Operating costs were held constant with prior year levels as
ongoing cost reduction efforts are offsetting inflationary
pressures seen throughout the Western Canadian sedimentary basin.
o Royalty expenses increased due to higher sales whereas royalties as
a percentage of sales decreased due to lower rates associated with
new production additions.
-- A total of six gross (5.6 net) wells were drilled during the
third quarter of 2013 resulting in five gross (4.8 net) oil
wells. At Northgate, Saskatchewan the Corporation drilled two
gross (two net) wells targeting the Mississippian Midale
formation. The initial well produced at a rate of 246 boe/d
during the initial 30 days of production, comprised of 204
bbls/d of 41(O) API light oil and 250 mcf/d of natural gas. The
second well has been on-stream for 14 days with production
averaging 437 boe/d comprised of 316 bbls/d of 41(O) API light
oil and 725 mcf/d of natural gas. A third well was drilled in
early October and will be on-stream by mid-November. Longview
has identified up to nine gross (nine net) additional locations
on this project.
-- On a year to date basis our capital expenditures program has
resulted in total production additions of 1,578 boe/d comprised
of 1,395 bbls/d of light oil and 1,100 mcf/d of natural gas.
o This represents a capital efficiency of $18,900 per boe/d with
light oil volumes comprising 88% of total production additions.
Commodity Hedging Program
-- Longview's hedging program for calendar 2013 and 2014 includes
crude oil hedges of 1,000 bbls/d at $90.29/bbl for January to
December 2013 and 1,000 bbls/d at $93.00/bbl for February to
December 2013 as well as 2,000 bbls/d at $94.84/bbl for January
to December 2014.
-- The Corporation will continue to hedge a portion of its
production in the future in order to provide stability to cash
flow in order to fund our dividend payments and capital
-- Longview's business strategy is based on providing shareholders
with attractive long term returns that combine both income and
moderate growth by exploiting our assets in a financially
disciplined manner and by acquiring additional long-life oil
and gas assets of a similar nature. Longview has a base decline
rate of approximately 19% which allows the Corporation to
maintain production with a modest level of capital
expenditures, as demonstrated during 2013 and 2012.
-- Our capital program is designed to maintain production at 2012
levels while maintaining a sustainable payout ratio. Our
planned capital program for the fourth quarter of 2013 is $7.0
million and will be focused on further development of the
Midale formation in Southeast Saskatchewan where we have an
extensive land base, high working interests and existing
infrastructure. In addition, we plan on continuing to advance
our waterflood projects in Alberta through further enhancement
of injection facilities in preparation for future in-fill
-- We are currently working on our 2014 operating and capital
budget and plan on releasing an update to our shareholders in
Director and Management Update
-- The Board of Directors of Longview announces that Mr. Kelly
Drader has been appointed to the board of the Corporation. The
board also announces that Mr. Andy Mah and Mr. Neil Bokenfohr
have submitted their resignations as officers of Longview and
will focus all of their energy on the ongoing management of
Advantage Oil & Gas Ltd. ("Advantage").
-- The management team of Longview will now consist of the
o Kelly Drader, President and Chief Executive Officer - Co-founder of
Advantage in 2001 with over 27 years experience in the oil & gas
industry. Prior thereto, Senior Vice President with the EnerPlus
Group of Companies.
o Pat Cairns, Senior Vice President - Co-founder of Advantage in 2001
with over 30 years experience in reservoir and operations
engineering. Prior thereto, Vice President, Evaluations with the
EnerPlus Group of Companies.
o Lionel Derochie, Vice President, Operations - Over 30 years
experience in reservoir engineering, production and enhanced oil
recovery operations management. Has been with Advantage for 7
years. Prior thereto, with Amoco Canada for 20 years focusing on
reservoir management and acting project manager for a variety of
enhanced oil recovery projects throughout Western Canada.
o Craig Blackwood, Chief Financial Officer - Has been with Advantage
for 9 years. Prior thereto, Controller with Calpine Canada Natural
Interim Financial Statements and MD&A
-- This press release should be read in conjunction with
Longview's unaudited interim financial statements for the three
and nine months ended September 30, 2013 together with the
notes thereto, and Management's Discussion and Analysis for the
three and nine months ended September 30, 2013 which have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") and posted on our website at
and filed under our profile on SEDAR at
Certain information regarding Longview set forth in this press release,
including management's assessment of the Corporation's future plans and
operations, contains forward-looking statements that involve substantial known
and unknown risks and uncertainties. The use of any of the words "anticipate",
"continue", "estimate", "expect", "may", "will", "project", "should",
"believe" and similar expressions are intended to identify forward looking
statements. Such statements represent Longview's internal projections,
estimates or beliefs concerning, among other things, an outlook on the
estimated amounts and timing of capital expenditures or other expectations,
beliefs, plans, objectives, assumptions, intentions or statements about future
events or performance. These statements are only predictions and actual events
or results may differ materially. Although Longview believes that the
expectations reflected in the forward-looking statements are reasonable, it
cannot guarantee future results, levels of activity, performance or
achievement since such expectations are inherently subject to significant
business, economic, competitive, political and social uncertainties and
contingencies. Many factors could cause Longview's actual results to differ
materially from those expressed or implied in any forward-looking statements
made by, or on behalf of, Longview.
In particular, forward-looking statements included in this press release
include, but are not limited to, statements with respect to Longview's
business strategy; the Corporation's hedging program and its plans to hedge a
portion of its production in the future; the Corporation's capital program for
the fourth quarter of 2013; the Corporation's anticipated drilling,
development and recompletion activities; the Corporation's plans to advance
its waterflood projects in Alberta; and anticipated timing of providing
shareholders with an update on the Corporation's 2014 operating and capital
budget. In addition, statements relating to "reserves" are deemed to be
forward looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described can be
profitably produced in the future.
These forward-looking statements are subject to numerous risks and
uncertainties, certain of which are beyond the Corporation's control,
including the impact of general economic conditions; volatility in market
prices for crude oil and natural gas; industry conditions; volatility of
commodity prices; currency fluctuation; imprecision of reserve estimates;
liabilities inherent in crude oil and natural gas operations; environmental
risks; incorrect assessments of the value of acquisitions and exploration and
development programs; competition from other producers; the lack of
availability of qualified personnel or management; changes in tax laws,
royalty regimes and incentive programs relating to the oil and gas industry;
changes to legislation and regulations and how they are interpreted and
enforced; hazards such as fire, explosion, blowouts, cratering, and spills,
each of which could result in substantial damage to wells, production
facilities, other property and the environment or in personal injury;
unexpected drilling results; changes or fluctuations in production levels;
delays in anticipated timing of drilling and completion of wells; stock market
volatility; ability to access sufficient capital from internal and external
sources and the other risks considered under "Risk Factors" in Longview's
Annual Information Form, which is available on www.sedar.com and
With respect to forward-looking statements contained in this press release,
Longview has made assumptions regarding: current commodity prices and royalty
regimes; availability of skilled labour; timing and amount of capital
expenditures; future exchange rates; the price of oil and natural gas; the
impact of increasing competition; conditions in general economic and financial
markets; availability of drilling and related equipment; effects of regulation
by governmental agencies; royalty rates; future operating costs; that the
Corporation will have sufficient cash flow, debt or equity sources or other
financial resources required to fund its capital and operating expenditures
and requirements as needed; that the Corporation's conduct and results of
operations will be consistent with its expectations; that the Corporation will
have the ability to develop the Corporation's properties in the manner
currently contemplated; current or, where applicable, proposed assumed
industry conditions, laws and regulations will continue in effect or as
anticipated; and the estimates of the Corporation's production and reserves
volumes and the assumptions related thereto (including commodity prices and
development costs) are accurate in all material respects.
Management has included the above summary of assumptions and risks related to
forward-looking information provided in this press release in order to provide
shareholders with a more complete perspective on Longview's future operations
and such information may not be appropriate for other purposes. Longview's
actual results, performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any of them do
so, what benefits that the Corporation will derive there from. Readers are
cautioned that the foregoing lists of factors are not exhaustive. These
forward-looking statements are made as of the date of this press release and
the Corporation disclaims any intent or obligation to update publicly any
forward-looking statements, whether as a result of new information, future
events or results or otherwise, other than as required by applicable
Any references in this news release to test rates or initial production rates
("IP"), including IP rates of 30 days or less, are useful in confirming the
presence of hydrocarbons, however, such rates are not necessarily indicative
of long-term performance or ultimate recovery and such rates are not
determinative of the rates at which such wells will continue production and
decline thereafter. 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 Corporation.
Non-GAAP Measures, Definitions and Abbreviations
The Corporation discloses several financial measures in this press release
that do not have any standardized meaning prescribed by International
Financial Reporting Standards ("IFRS" or "GAAP"), such as funds from
operations and payout ratio. Management believes that these financial measures
are useful supplemental information to analyze operating performance and
provide an indication of the results generated by the Corporation's principal
business activities. Longview's method of calculating these measures may
differ from other companies, and accordingly, they may not be comparable to
similar measures used by other companies. Please see the Corporation's most
recent management's discussion and analysis, which is available on
www.sedar.com for additional information about these financial measures.
"Boe" may be misleading, particularly if used in isolation. A boe conversion
ratio of six thousand cubic feet of natural gas to one barrel of oil
equivalent (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. Given that the value ratio based on the current
price of crude oil as compared to natural gas is significantly different from
the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be
misleading as an indication of value.
"Funds from operations" represents cash provided by operating activities,
adjusted for expenditures on decommissioning liability, changes in non-cash
working capital and interest on bank indebtedness.
"Payout ratio" is calculated as cash dividends declared and capital
expenditures divided by funds from operations.
"Working capital deficit" includes trade and other receivables, prepaid
expenses and deposits, trade and other accrued liabilities and due to parent.
The following abbreviations used in this press release have the meanings set
bbls barrels mcf thousand cubic feet
bbls/d barrels per day mcf/d thousand cubic feet per day
boe barrels of oil equivalent, on
the basis of 1 bbl of oil for
6 mcf of natural gas
boe/d barrels of oil equivalent per
SOURCE Longview Oil Corp.
Investor Relations Toll free: 1-855-813-0313
LONGVIEW OIL CORP. 700, 400 -3rd Avenue SW Calgary, Alberta T2P 4H2
Phone:(403) 718-8000 Fax:(403) 718-8300 Web Site:www.longviewoil.com
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CO: Longview Oil Corp.
NI: OIL ERN
-0- Nov/08/2013 02:21 GMT
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