Manitok Energy Inc. Announces Financial Results for the First Quarter of 2014 and an Operational Update

Manitok Energy Inc. Announces Financial Results for the First Quarter of 2014 
and an Operational Update 
NEWS RELEASE TRANSMITTED BY Marketwired 
FOR: Manitok Energy Inc. 
TSX VENTURE SYMBOL:  MEI 
MAY 29, 2014 
Manitok Energy Inc. Announces Financial Results for the First Quarter of 2014
and an Operational Update 
CALGARY, ALBERTA--(Marketwired - May 29, 2014) -  
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES OF AMERICA. 
Manitok Energy Inc. (the "Corporation" or "Manitok") (TSX
VENTURE:MEI) announces its financial and operating results for the first
quarter of 2014. 
The full text of Manitok's first quarter report containing its unaudited
condensed interim financial statements as at and for the three months ended
March 31, 2014 and the related management's discussion and analysis are
available electronically on Manitok's profile on the System for Electronic
Document Analysis and Retrieval ("SEDAR") at www.sedar.com and also
on Manitok's website at www.manitokenergy.com. All dollar figures are in
Canadian dollars unless otherwise noted. 
First Quarter 2014 Operational & Financial Highlights: 
/T/ 
--  Record first quarter production averaged 5,351 boe/d (59% light oil and 
liquids) which is a 49% increase over production of 3,586 boe/d (50% 
light oil and liquids) in the first quarter of 2013. Production 
continued to increase over comparable quarters despite closing an asset 
divestiture of approximately 777 boe/d (34 % sweet natural gas and 60% 
sour natural gas) on February 28, 2014.  
--  Increased light oil production by 78% which increased Manitok's light 
oil production weighting to 57% of total production as compared to 47% 
of total production in the first quarter of 2013.  
--  Recorded average production per diluted share growth of 46% and funds 
from operations per diluted share growth of 91% when compared to the 
first quarter of 2013.  
--  Recorded funds from operations of $15.5 million ($0.21 per diluted 
share) which is a 97% increase over funds from operations of $7.9 
million ($0.11 per diluted share) in the first quarter of 2013.  
--  Operating netback (excluding the realized gain or loss on financial 
instruments) was $40.11/boe, which is a 44% increase over the operating 
netback of $27.78/boe in the first quarter of 2013. While the increase 
in netback was aided by increased production volume and stronger 
commodity prices, Manitok also improved its operating cost structure in 
the first quarter as a result of the divestiture of dry sweet and sour 
natural gas assets in the central Alberta foothills where the operating 
costs were higher than the Stolberg area on a per boe basis.  
--  Capital expenditures were approximately $24.1 million, before $21.9 
million in asset divestitures, which included drilling 9 (6.8 net) wells 
for about $19.8 million and $2.4 million on equipment and facilities. Of 
these 9 wells, 5 (2.8 net) were drilled in the Stolberg area and 4 (4.0 
net) were drilled in the Entice area.  
--  At March 31, 2014, net debt was approximately $26.6 million, which is 
0.4 times annualized first quarter funds from operations.  
--  Increased net undeveloped land to 293,197 acres as at March 31, 2014, a 
46% increase from 200,271 acres as at March 31, 2013.  
--  At March 31, 2014, there were 71,615,406 outstanding common shares of 
Manitok ("Manitok Shares"). Subsequent to the first quarter and up to 
May 27, 2014, a total of 1,881,800 Manitok Shares were purchased through 
the normal course issuer bid program, at an average price of $2.47 per 
Manitok Share and 543,668 Manitok Shares were issued through Manitok's 
stock option plan, at an average price of $1.45 per share, for a total 
net decrease in Manitok Shares of 1,338,132 since the first quarter of 
2014. The total outstanding Manitok Shares as at May 27, 2014 was 
70,277,274.  
/T/ 
OPERATIONAL AND FINANCIAL SUMMARY 
/T/ 
Three months ended March 31,                          2014             2013 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OPERATING                                                                   
Average daily production                                                    
  Light oil (bbls/d)                                 3,028            1,701 
  Natural gas (mcf/d)                               13,352           10,810 
  NGLs (bbls/d)                                         98               83 
----------------------------------------------------------------------------
  Total (boe/d)                                      5,351            3,586 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average realized sales price                                                
  Light oil ($/bbl)                                  96.92            89.09 
  Natural gas ($/mcf)                                 6.51             3.70 
  NGLs ($/bbl)                                       97.92            84.25 
----------------------------------------------------------------------------
  Total ($/boe)                                      72.88            55.39 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Undeveloped Land (end of period)                                            
  Gross (acres)                                    309,528          252,611 
  Net (acres)                                      293,197          200,271 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NETBACK AND COST ($ per boe)                                                
  Petroleum and natural gas sales                    72.88            55.39 
  Realized gain (loss) on financial                                          
instruments                                       (4.10)            0.86 
  Royalty income                                      0.02             0.44 
  Royalty expenses                                  (22.23)          (16.12)
  Operating expenses, net of recoveries              (7.35)           (9.14)
  Transportation and marketing expenses              (3.21)           (2.79)
----------------------------------------------------------------------------
Operating netback(1)                                 36.01            28.64 
  General and administrative expenses, net                                   
of recoveries                                     (3.51)           (4.11)
  Interest and financing expenses                    (0.41)           (0.29)
  Interest and other income                           0.01             0.11 
----------------------------------------------------------------------------
Funds from operations netback(1)                     32.10            24.35 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FINANCIAL                                                                   
Petroleum and natural gas revenue ($000)            35,112           18,021 
----------------------------------------------------------------------------
Funds from operations ($000)(1)                     15,461            7,861 
  Per share - basic ($)(1)                            0.21             0.11 
  Per share - diluted ($)(1)                          0.21             0.11 
----------------------------------------------------------------------------
Net income (loss) ($000)                               331             (135)
  Per share - basic ($)                                  -                - 
  Per share - diluted ($)(2)                             -                - 
----------------------------------------------------------------------------
Common shares outstanding                                                   
  End of period - basic                         71,615,406       70,357,180 
  End of period - diluted                       77,689,147       76,759,280 
  Weighted average for the period - basic       73,097,543       70,348,151 
  Weighted average for the period -                                          
diluted                                      74,334,096       72,758,478 
----------------------------------------------------------------------------
Capital expenditures, net of divestitures                                   
 ($000)                                              2,240           11,295 
Working capital deficit ($000)(1)                   19,947            6,354 
Drawn on credit facilities ($000)                    6,685            7,130 
Total net debt ($000) (1)                           26,632           13,484 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1)  Funds from operations, funds from operations per share, funds from      
operations netback, operating netback, working capital deficit and net  
debt do not have standardized meanings prescribed by generally accepted 
accounting principles ("GAAP") and therefore should not be considered   
in isolation. These reported amounts and their underlying calculations  
are not necessarily comparable or calculated in an identical manner to  
a similarly titled measure of other companies where similar terminology 
is used. Where these measures are used they should be given careful     
consideration by the reader. Refer to the Non-GAAP Financial Measures   
section of this press release.                                         
(2)  The basic and diluted weighted average shares outstanding are the same  
for periods in which the Corporation records a net loss.                
/T/ 
Operational Update 
Drilling and completions operations continue in Manitok's core areas
although spring break-up has limited operational activity particularly in
southern Alberta. Average production for the month of April 2014 was
approximately 4,900 boe/d (61% oil) based on field estimates. This reflects the
asset divestiture of 777 boe/d which closed on February 28, 2014. 
Entice 
To date, Manitok has successfully drilled and cased a total of 4 vertical wells
and 1 horizontal well in Entice. The wells were spaced across 4 of the 9
townships acquired through Encana Corporation ("Encana"), which are
now held in Prairie Sky Royalty Ltd., in an effort to test multiple hydrocarbon
bearing formations in the northern portion of the land base. All of the
vertical wells encountered multiple pay zones and Manitok is focusing on
several potential new pool discoveries in four different formations. The 4
vertical wells have proven that there is multi- zone potential across the land
base. The horizontal well which targeted the Basal Quartz (Ellerslie) formation
is being evaluated for deliverability and reservoir extent, through production
testing and pressure build-up. Completion activity has been hampered to date by
road bans associated with spring break-up and wet weather. Manitok anticipates
that its completion operations and initial tests to determine commerciality of
the potential new pools will be completed by mid-June and a more detailed
report of the results will be provided at that time, along with information
regarding the next phase of drilling at Entice which is scheduled to commence
immediately after spring break-up. The lease agreement with Encana includes a
$22.0 million capital commitment for 2014 and to date Manitok has spent
approximately $8.4 million. 
Cordel-Stolberg 
Of the last 4 (2.0 net) Cardium oil wells drilled (wells 23 to 26), 1 (0.3 net)
is currently on production through permanent facilities while 2 (1.4 net) are
currently on production through temporary facilities with tie-in to permanent
facilities expected in July 2014. These wells were drilled at the north end of
the field between producing wells in section 29 and a low rate well drilled in
2013 which defined the northern limits of the pool. The fourth well (0.3 net)
which was drilled to the deepest portion of the structure, about 800 meters
from the crest, encountered water with no oil cut. Manitok will use this well
as a water injector for its upcoming Stolberg waterflood program. The 3
producing wells, when producing through permanent facilities in the third
quarter of 2014, are expected to add about 450 boe/d (256 net) of initial light
oil production along with associated gas. 
Manitok is currently drilling 2 wells in Stolberg. The first well is targeting
Cardium oil in the back-limb of the Stolberg structure in the center of the
field, between the producing wells at the north and south ends of the field,
which is anticipated to be a highly fractured area of the field. It is the
first well of a 3 to 4 well pad where Manitok has a 30% working interest in
each well. As part of the drilling program for the first well, a pilot hole was
drilled to test for Cardium oil in the fore-limb of the Stolberg structure. The
pilot hole was designed to gather both pressure and phase data from the
fore-limb. The results showed the Cardium fore-limb's thickness is
consistent with that found in most of the back-limb, the formation is oil
bearing and at original reservoir pressure. This indicates that this part of
the structure is not communicating with any of the 3 previously drilled
fore-limb wells in the south end of the field or with the wells on the
back-limb. Manitok is adjusting its drilling schedule to accommodate drilling a
well into this newly discovered portion of the structure as soon as it is
feasible. If successful, the Corporation will add several follow up locations
to its current inventory. The current back-limb target will be production
tested once drilling operations are finished which is anticipated to be within
the next 2 weeks. The drilling rig will immediately move to the second well on
the pad once production testing is complete. 
The second well is a potential natural gas well targeting an upper formation in
the Mannville group. Currently the well is drilling the horizontal section and
it is anticipated to reach total depth in the next week. Early indications are
encouraging as pressure responses and gas detection during drilling have been
very positive. Once the drilling operation is finished, the well will be
production tested immediately. If successful, the well can be tied-in and
producing by early in the third quarter. The drilling rig will then move to a
pad at the south end of the field where it will begin the first of up to 3
Cardium oil wells on a pad. Manitok will be in a position to release more
information on the two wells mentioned above by mid-June. 
In addition, the Cordel waterflood pilot as approved by the Alberta Energy
Regulator is progressing. Manitok has successfully established water injection
capability in the injection well. Facility design for the injection plant is
complete and injection scheduled to commence in the next 30 days. 
Quirk Creek 
Activity in Quirk Creek has been limited due to spring break-up. A total of 2
wells have been drilled and 1 well was placed on production in early April
2014. Based on field estimates, the production rate has averaged approximately
30 boe/d (net). The completion of the second well was suspended when road bans
associated with spring break-up prohibited Manitok from moving in the drilling
rig required to complete the well. Manitok anticipates that it will commence
the completion on the second well in the next two weeks, weather permitting.
Additional capital will not be allocated to the area until the second well has
been properly evaluated. 
2014 Guidance 
The 2014 guidance remains unchanged from the Corporation's press release
dated February 27, 2014, a copy of which is available under Manitok's
profile on SEDAR at www.sedar.com. 
About Manitok 
Manitok is a public oil and gas exploration and development company focusing on
conventional oil and gas reservoirs in the Canadian foothills and southeast
Alberta. The Corporation will utilize its experience to develop the untapped
conventional oil and liquids-rich natural gas pools in both the foothills and
southeast Alberta areas of the Western Canadian Sedimentary Basin. 
Forward-looking Statements 
This press release contains forward-looking statements. More particularly, this
press release contains statements concerning planned exploration and
development activities, planned capital expenditures, the breakdown of planned
capital expenditures by area, the development and growth potential of
Manitok's properties and the anticipated increase in production from 3
producing wells in Cordel-Stolberg area due to producing through permanent
facilities. 
The forward-looking statements in this press release are based on certain key
expectations and assumptions made by Manitok, including expectations and
assumptions concerning the success of future drilling and development
activities, the performance of existing wells, the performance of new wells,
the successful application of technology, prevailing weather conditions,
commodity prices, royalty regimes and exchange rates and the availability of
capital, labour and services. 
Although Manitok believes that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance should not
be placed on the forward-looking statements because Manitok can give no
assurance that they will prove to be correct. Since forward-looking statements
address future events and conditions, by their very nature they involve
inherent risks and uncertainties. Actual results could differ materially from
those currently anticipated due to a number of factors and risks. These
include, but are not limited to, risks associated with the oil and gas industry
in general (e.g., operational risks in development, exploration and production;
delays or changes in plans with respect to exploration or development projects
or capital expenditures; the uncertainty of reserves estimates; the uncertainty
of estimates and projections relating to production, costs and expenses; and
health, safety and environmental risks), uncertainty as to the availability of
labour and services, commodity price and exchange rate fluctuations, unexpected
adverse weather conditions, general business, economic, competitive, political
and social uncertainties, capital market conditions and market prices for
securities and changes to existing laws and regulations. Certain of these risks
are set out in more detail in Manitok's current Annual Information Form,
which is available on Manitok's SEDAR profile at www.sedar.com. 
Forward-looking statements are based on estimates and opinions of management of
Manitok at the time the statements are presented. Manitok may, as considered
necessary in the circumstances, update or revise such forward-looking
statements, whether as a result of new information, future events or otherwise,
but Manitok undertakes no obligation to update or revise any forward-looking
statements, except as required by applicable securities laws. 
Non-GAAP Financial Measures 
This press release contains references to measures used in the oil and natural
gas industry such as "funds from operations", "funds from
operations netback", "funds from operations per share",
"operating netback", "working capital deficit", and
"net debt". These measures do not have standardized meanings
prescribed by GAAP and therefore should not be considered in isolation. These
reported amounts and their underlying calculations are not necessarily
comparable or calculated in an identical manner to a similarly titled measure
of other companies where similar terminology is used. Where these measures are
used they should be given careful consideration by the reader. These measures
have been described and presented in this press release in order to provide
shareholders and potential investors with additional information regarding the
Corporation's liquidity and its ability to generate funds to finance its
operations. 
Funds from operations should not be considered an alternative to, or more
meaningful than, cash provided by operating, investing and financing activities
or net income as determined in accordance with GAAP, as an indicator of
Manitok's performance or liquidity. Funds from operations is used by
Manitok to evaluate operating results and Manitok's ability to generate
cash flow to fund capital expenditures and repay indebtedness. Funds from
operations denotes cash flow from operating activities as it appears on the
Corporation's Statement of Cash Flows before decommissioning expenditures
and changes in non-cash operating working capital. Funds from operations is
also derived from net income (loss) plus non-cash items including deferred
income tax expense, depletion and depreciation expense, exploration and
evaluation expense, impairment expense, stock-based compensation expense,
accretion expense, unrealized gains or losses on financial instruments and
gains or losses on asset divestitures. Funds from operations netback is
calculated on a per boe basis and funds from operations per share is calculated
as funds from operations divided by the weighted average number of common
shares outstanding. Operating netback denotes petroleum and natural gas revenue
and realized gains or losses on financial instruments less royalty expenses,
operating expenses and transportation and marketing expenses calculated on a
per boe basis. Working capital deficit includes current assets less current
liabilities excluding the current portion of the amount drawn on the credit
facilities, the current portion of the fair value of financial instruments and
the deferred premium on financial instruments. Manitok uses net debt as a
measure to assess its financial position. Net debt includes current assets less
current liabilities excluding the current portion of the fair value of
financial instruments and the deferred premium on financial instruments. 
Barrels of Oil Equivalent 
The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. Per boe amounts have been calculated using a
conversion ratio of six thousand cubic feet (6 mcf) of natural gas to one
barrel (1 bbl) of crude oil. The 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. 
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release. 
-30-
FOR FURTHER INFORMATION PLEASE CONTACT: 
Manitok Energy Inc.
Massimo M. Geremia
President & Chief Executive Officer
403-984-1751
mass@manitok.com 
INDUSTRY:  Energy and Utilities - Oil and Gas  
SUBJECT:  ERN 
-0-
-0- May/29/2014 22:07 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.