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Santonia Announces 2013 Fourth Quarter Summary and Year End Results

Santonia Announces 2013 Fourth Quarter Summary and Year End Results 
CALGARY, ALBERTA -- (Marketwired) -- 03/12/14 -- Santonia (TSX:STE)
is pleased to provide this summary of its financial and operating
results for the 2013 year. A complete copy of the Company's
consolidated financial statements for the years ended December 31,
2013 and 2012, along with management's discussion and analysis in
respect thereof will be filed on SEDAR and is available on the
Company's website at www.santoniaenergy.com. 


 
HIGHLIGHTS                                                                  
                                                        2013           2012 
----------------------------------------------------------------------------
Financial ($thousands, except per share                                     
 amounts)                                                                   
Petroleum and natural gas revenue                     54,958        110,530 
Funds generated from operations (1)                   19,694         45,442 
  Per share - basic                              $      0.19    $      0.44 
  Per share - diluted                            $      0.19    $      0.44 
Loss (2)                                             (25,790)      (185,116)
  Per share - basic                              $     (0.25)   $     (1.80)
  Per share - diluted                            $     (0.25)   $     (1.80)
Exploration and development expenditures              45,320         63,843 
Proceeds from the sale of petroleum and                                     
 natural gas properties                               17,242        272,201 
Working capital deficit                                1,751          6,885 
Bank indebtedness                                     23,454         10,103 
----------------------------------------------------------------------------
Operations                                                                  
Average production                                                          
  Natural gas (Mcf per day)                           19,344         58,987 
  Crude oil (bbls per day)                               714          1,243 
  Natural gas liquids (bbls per day)                     313            776 
  Sulphur (tonnes per day) (3)                            42             30 
----------------------------------------------------------------------------
  Total (BOE per day)                                  4,293         11,880 
----------------------------------------------------------------------------
Proved and probable reserves                                                
  Natural gas (Bcf)                                    117.1          110.0 
  Crude oil (Mbbls)                                      160          2,153 
  Natural gas liquids (Mbbls)                          4,532          4,790 
----------------------------------------------------------------------------
  BOE (MBOE)                                          24,212         25,269 
----------------------------------------------------------------------------
Netback per BOE ($ per BOE)                                                 
  Petroleum and natural gas sales  (4)                 35.07          25.43 
  Royalties                                            (4.89)         (2.16)
  Operating expenses                                  (11.11)         (7.69)
  Transportation                                       (1.12)         (1.03)
----------------------------------------------------------------------------
  Operating netback                                    17.95          14.55 
----------------------------------------------------------------------------
Wells drilled (gross)                                      7             15 
Undeveloped land (net acres)                          96,868        132,056 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) The calculation of funds generated from operations for the year ended   
    December 31, 2013 excludes $1.3 million (2012 - $8.1 million) of        
    interest expense which is classified as finance expense.                
(2) Included in the loss for the year ended December 31, 2012 is an after   
    tax impairment loss of $153.2 million.                                  
(3) A BOE conversion ratio has been calculated using a conversion rate of   
    one tonne of sulphur to one barrel.                                     
(4) Excludes the change in fair value of derivatives.                       
                                                                            
2013 FINANCIAL AND OPERATING HIGHLIGHTS                                     
 
--  Santonia's reorganization continued in 2013 with the successful
    disposition of the Company's Clive property as well as other non-core
    property dispositions which generated proceeds of $17.2 million; 
 
--  Capital expenditures of $45.3 million were concentrated on the Harlech
    property, including drilling seven (5.7 net) natural gas wells and
    acquiring additional undeveloped acreage; 
 
--  Average 2013 production of 4,293 BOE per day (2012 - 11,880 BOE per day)
    reflected property dispositions completed over the past two years offset
    by incremental production from new wells on the Company's core Harlech
    property; 
 
--  Funds generated from operations for the year were $19.7 million ($0.19
    per share) before interest ($18.4 million after deducting $1.3 million
    of interest expense); 
 
--  Operating netbacks of $17.95 per BOE were 23% higher than the prior
    year, reflecting stronger natural gas prices; 
 
--  Net debt of $25.2 million was outstanding at December 31, 2013 (2012 -
    $17.0 million) on an available credit facility of $80 million. 
 
2013 FOURTH QUARTER HIGHLIGHTS                                              
 
--  Average fourth quarter production of 3,948 BOE per day, (17% Oil and
    NGL's); 
 
--  Operating costs of $9.51 per BOE were 14% lower than the preceding third
    quarter; 
 
--  Funds generated from operations of $3.0 million,($2.8 million after
    deducting interest expense) resulting in an operating netback of $13.94
    per BOE; 
 
--  Net capital expenditures totaled $4.4 million which focused on the
    completion and tie in of two (1.3 net) wells on the Company's Harlech
    core property. 
 
2013 YEAR END RESERVES                                                      
 
--  Proved producing reserves at December 31, 2013 were 10.0 MMBOE; total
    proved reserves were 16.3 MMBOE and proved plus probable reserves
    totaled 24.2 MMBOE; 
 
--  Proved developed producing reserves represent 62% of proved reserves on
    a volume basis; 
 
--  Reserve additions for continuing properties were 2.5 MMBOE on a proved
    basis and 2.7 MMBOE on a proved plus probable basis; 
 
--  Santonia replaced 170% of production from continuing properties on a
    proved basis and 187% of production on a proved plus probable basis; 
 
--  On a continuing property basis, proved producing reserves decreased
    2.4%, while total proved reserves increased 6.7% and proven plus
    probable reserves increased 5.6%; 
 
--  Reserve life index of 7.0 years on a proved producing basis, 11.3 years
    on a total proved basis and 16.8 years on a proved plus probable basis
    (based on fourth quarter of 2013 average production of 3,948 BOE per
    day). 

 
The following tables s
ummarize Santonia's year end 2013 reserves as
evaluated by GLJ Petroleum Consultants Ltd. ("GLJ") in accordance
with the definitions set out under National Instrument 51-101
Standards of Disclosure for Oil and Gas Activities ("NI51-101"). 


 
Summary of Oil and Gas Reserves - Working Interest (1) Reserves (Forecast   
Prices)                                                                     
                                Crude      Natural      Natural          Oil
                                  Oil          Gas  Gas Liquids   Equivalent
                              (Mbbls)       (MMcf)      (Mbbls)       (MBOE)
----------------------------------------------------------------------------
Proved reserves                                                             
  Developed producing             104       49,702        1,654       10,042
  Developed non-producing           3        1,299          100          319
  Undeveloped                       -       28,306        1,242        5,960
----------------------------------------------------------------------------
Total Proved                      107       79,307        2,996       16,321
  Probable                         54       37,812        1,535        7,891
----------------------------------------------------------------------------
Total Proved plus                                                           
 Probable                         160      117,119        4,532       24,212
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 

 
NOTE: May not add due to rounding.                                          
(1) "Working interest" reserves means "gross" reserves or Santonia's working
    interest (operating and non-operating) share before deduction of        
    royalties payable to others and without including any royalty interest  
    of Santonia.                                                            
                                                                            
Net Present Value of Future Net Revenue, before income taxes (4) at December
31, 2013 (1)(2)(3)                                                          
                                                     Discounted at:         
(thousands)                    Undiscounted         5%        10%        15%
----------------------------------------------------------------------------
Proved reserves                                                             
  Developed producing           $   224,706  $ 165,020  $ 131,479  $ 110,077
  Developed non-producing             9,945      7,673      6,236      5,263
  Undeveloped                        92,264     47,026     23,258      9,384
----------------------------------------------------------------------------
Total Proved                    $   326,916  $ 219,718  $ 160,973  $ 124,723
  Probable                          183,327     96,134     57,672     37,489
----------------------------------------------------------------------------
Total Proved plus Probable      $   510,242  $ 315,853  $ 218,646  $ 162,212
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                       
                                     
Note: May not add due to rounding.                                          
(1) Based on forecast prices and costs utilizing the GLJ January 1, 2014    
    price forecast.                                                         
(2) As required by NI 51-101, undiscounted well abandonment costs of $4.3   
    million for total proved reserves and $5.5 million for total proved plus
    probable reserves are included in the Net Present Value determination.  
(3) Prior to provision of income taxes, interest, debt service charges and  
    general and administrative expenses. Net present value of future net    
    revenue does not represent the fair market value of the reserves.       
(4) Net present value after income taxes for total proved reserves is $160.9
    million and for total proved plus probable reserves is $209.8 million   
    based on a discount factor of 10%.                                      

 
Additional information relating to the Company's year-end reserve
evaluation will be available in the Company's Annual Information Form
for the year ended December 31, 2013 which will be filed on SEDAR on
or before March 31, 2014. 
PROPOSED TRANSACTION 
On March 4, 2014 the Company announced it entered into an arrangement
agreement ("Arrangement Agreement") with Tourmaline Oil Corp
("Tourmaline") pursuant to which Tourmaline, has agreed to acquire
all the issued and outstanding common shares of Santonia on the basis
of 0.03012 of a Tourmaline common share for each outstanding common
share of Santonia. The transaction is to be completed by way of a
plan of arrangement under the Business Corporations Act (Alberta).
The Arrangement is subject to customary conditions for a transaction
of this nature, which include court and regulatory approvals
(including the TSX), the approval of 66 2/3% of the votes cast by
Santonia shareholders represented in person or by proxy at a meeting
of Santonia shareholders to be called to consider the Arrangement. An
information circular regarding the Arrangement is expected to be
mailed to shareholders of Santonia in late March 2014 for a special
meeting of the holders of common shares scheduled to take place in
April 2014. Closing of the Arrangement is expected to occur shortly
thereafter. 
Santonia is a crude oil and natural gas exploration, development and
production company headquartered in Calgary, Alberta, Canada.
Santonia's shares trade on the Toronto Stock Exchange under the
symbol "STE". 
FORWARD-LOOKING STATEMENTS 
Certain information set forth in this press release, contain
forward-looking statements including management's assessment of
future plans and operations, drilling plans, expected activity
levels, timing of mailing of the information circular, shareholder
meetings and closing of the proposed transaction, and timing of
filing of the Annual Information Form. By their nature,
forward-looking statements are subject to numerous risks and
uncertainties, some of which are beyond Santonia's control, including
the impact of general economic conditions, industry conditions,
volatility of commodity prices, risks associated with oil and gas
exploration, development, exploitation, production, marketing and
transportation, loss of markets, delays resulting from or the
inability to obtain required regulatory approvals, inability to
retain and delays in retaining drilling rigs and other services,
currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other industry participants,
the lack of availability of qualified personnel or management, stock
market volatility, incorrect assessment of the value of acquisitions,
failure to realize the anticipated benefits of acquisitions and
ability to access sufficient capital from internal and external
sources. The foregoing list is not exhaustive. Additional information
on these and other risks that could affect Santonia's operations and
financial results are included in reports on file with Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), or at Santonia's website
(www.santoniaenergy.com). Readers are cautioned that the assumptions
used in the preparation of such information, although considered
reasonable at the time of preparation, may prove to be imprecise and,
as such, undue reliance should not be placed on forward-looking
statements. The actual results, performance or achievement of
Santonia 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 Santonia will derive therefrom. Santonia
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
securities laws. 
BARRELS OF OIL EQUIVALENCY 
Natural gas volumes are converted to barrels of oil equivalent (BOE)
on the basis of 6,000 cubic feet (Mcf) of gas for 1 barrel (Bbl) of
oil. The term "barrels of oil equivalent" may be misleading,
particularly if used in isolation. A BOE conversion ratio of 6 Mcf to
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. 
NON-GAAP AND ADDITIONAL GAAP MEASURES: 
This document contains funds generated from operations which is an
additional GAAP measure presented in the consolidated financial
statements. The Company uses funds generated from operations as a key
measure to demonstrate the Company's ability to generate funds to
repay debt and fund future capital investment. This document contains
the terms "funds generated from operations per share", "cash flow
from operations per share", "net debt" and "netbacks" which are
non-GAAP financial measures. The Company uses these measures to help
evaluate its performance. These non-GAAP financial measures do not
have any standardized meaning prescribed by GAAP and are therefore
unlikely to be comparable to similar measures presented by other
issuers. The Company uses net debt (bank indebtedness plus negative
working capital or less positive working capital, excluding
convertible debentures) as an alternative measure of outstanding
debt. The Company considers corporate netbacks a key measure as it
demonstrates its profitability relative to current commodity prices.
Netbacks which have no GAAP equivalent are calculated on a BOE basis
by deducting royalties, operating costs, and transportation from
petroleum and natural gas sales. Santonia also presents funds
generated from operations per share and cash flow from operations per
share and such per share amounts are calculated using weighted
average shares outstanding consistent with the calculation of profit
(loss) per share.
Contacts:
Santonia Energy Ltd.
Steven R. VanSickle
President and Chief Executive Officer
(403) 290-7759
(403) 290-7724 (FAX)
svansickle@santoniaenergy.com
www.santoniaenergy.com 
Santonia Energy Ltd.
Aaron G. Grandberg
Chief Financial Officer
(403) 290-3217
(403) 290-7724 (FAX)
agrandberg@santoniaenergy.com
www.santoniaenergy.com
 
 
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