Mr. John Wright reports
PETROBANK REPORTS YEAR-END 2010 FINANCIAL AND OPERATING RESULTS
Petrobank Energy and Resources Ltd. has released its 2010 fourth quarter and year-end financial and operating results highlighted by funds flow from continuing operations of $1.46 per diluted share in the fourth quarter of 2010.
Petrobank's results include the financial and operating results of PetroBakken Energy Ltd., 59 per cent owned by Petrobank at Dec. 31, 2010. PetroBakken announced fourth quarter and 2010 year-end financial and operating results in Stockwatch news on March 8, 2011.
The results of Petrominerales Ltd., previously majority owned by Petrobank, have been separately disclosed as discontinued operations up until Dec. 31, 2010, the date this business unit was spun off to Petrobank shareholders. Petrominerales fourth quarter and 2010 year-end financial and operating results are set forth in the press release dated March 3, 2011, which can be found at the company's website.
Highlights from continuing operations
Fourth quarter 2010 highlights and significant transactions
- On Dec. 31, 2010, Petrobank and Petrominerales completed a corporate
reorganization which resulted in Petrobank shareholders receiving
Petrobank's proportionate interest in Petrominerales Ltd. Pursuant to
this spinoff, a new Alberta corporation was formed (New
Petrominerales) which acquired all the outstanding shares of
Petrominerales Ltd. Petrobank shareholders received 0.6142 shares of New
Petrominerales and one replacement common share of Petrobank for each
Petrobank common share held. There was no change in the total number of
shares outstanding for either Petrobank or Petrominerales.
- On Oct. 8, 2010, Petrobank acquired the remaining 50-per-cent interest
in the Dawson heavy oil project from Shell Canada Ltd. The company
received $2.8-million cash in January, 2011, upon regulatory approval of
the project.
PetroBakken
- Fourth quarter production decreased slightly to 41,333 barrels of oil
equivalent per day (boepd) compared with 45,621 boepd in the fourth
quarter of 2009, primarily due to natural production declines which more
than offset production additions as weather related delays restricted
PetroBakken's ability to access leases and bring on additional
production.
- Operating netbacks (excluding hedging activity) averaged $48.19 per boe
in the fourth quarter of 2010, an increase of 3 per cent compared with the fourth quarter of 2009, primarily due to higher benchmark oil
prices.
- PetroBakken drilled 77.4 net wells in the quarter, the majority of which
were drilled in southeast Saskatchewan, particularly the Bakken play;
however, activity levels increased in the Cardium play in the fourth
quarter as lease conditions improved.
2010 highlights and significant transactions
- On Sept. 30, 2010, Petrobank completed the acquisition of Baytex
Energy Ltd.'s 50-per-cent interest in the Kerrobert heavy oil project for
cash consideration of $18.1-million.
- On Jan. 8, 2010, Petrobank completed an early conversion offering
which resulted in $250.7-million (U.S.) principal amount of 5.125-per-cent
convertible debentures due July 10, 2015, being exercised prior to
maturity. Upon the conversion, a total of 7,452,099 Petrobank common
shares were issued. On April 23, 2010, the remaining $149.3-million
(U.S.) principal amount of Petrobank's 5.125-per-cent convertible debentures was early
converted. An aggregate of $27.4-million (U.S.) was paid, and 3,920,446 common
shares were issued. On May 10, 2010, the remaining $5.1-million
(U.S.) principal amount of Petrobank's 3-per-cent convertible debentures was early
converted into 179,009 common shares. As a result of these three events,
there are no longer any Petrobank convertible debentures outstanding.
- Funds flow from continuing operations increased 68 per cent to $636.8-million in 2010, primarily as a result of PetroBakken's increased
production and higher operating netbacks. On a per basic and diluted
share basis, funds flow from operations increased 42 per cent and 51
per cent, respectively.
- Net income from continuing operations decreased by 69 per cent to $21.3-million in 2010. The decrease is due mainly to the inclusion of a
foreign exchange gain of $57.8-million in 2009, which resulted from the
translation of Petrobank's U.S. dollar convertible debentures.
- Net income attributable to Petrobank shareholders decreased by 20
per cent to $115.8-million in 2010. The decrease is due mainly to the
recognition of a $70.1-million accumulated other comprehensive loss
resulting from the historic translations of Petrominerales U.S. dollar
amounts in the consolidated financial statements, recorded in net income
upon the spinoff of Petrominerales.
PetroBakken
-
Production increased 58 per cent to 41,688 boepd in 2010 from 26,333
boepd in 2009 primarily due to the acquisition of TriStar Oil and Gas
Ltd. on Oct. 1, 2009.
- On Jan. 25, 2010, PetroBakken issued $750-million (U.S.) of convertible
debentures. The debentures are convertible into common shares of
PetroBakken at a conversion price that is adjusted for dividends paid.
Based on dividends declared to February, 2011, the conversion price was
$37.74 per share. The convertible debentures have an annual coupon rate
of 3.125 per cent and mature in February, 2016.
- On Feb. 25, 2010, PetroBakken acquired all of the issued and
outstanding shares of Berens Energy Ltd. for cash consideration of
$252.8-million and the assumption of bank indebtedness of approximately
$74.9-million. There was a working capital deficiency of $16.6-million
at the acquisition date.
- On March 12, 2010, PetroBakken acquired all of the issued and
outstanding shares of Rondo Petroleum Inc. for cash consideration of
approximately $88.7-million, assumption of bank indebtedness of
approximately $16.0-million and the issuance of approximately 5.5
million PetroBakken common shares. There was a working capital
deficiency of $22.2-million at the acquisition date.
- On April 1, 2010, PetroBakken acquired all of the issued and outstanding
shares of Result Energy Inc. for cash consideration (net of cash
acquired) of $141.2-million and the issuance of approximately 11.2
million PetroBakken common shares. There was working capital of $2.7-million at the acquisition date.
- During the year ended Dec. 31, 2010, PetroBakken closed divestitures
representing approximately 3,800 boepd of production (50 per cent natural
gas) in Alberta for net proceeds of $133.6-million. Of this amount, $5.2-million was closed during the fourth quarter less $1.6-million of postclosing adjustments related to prior period dispositions.
- On May 17, 2010, PetroBakken commenced a normal course issuer bid
(NCIB) pursuant to which PetroBakken is authorized to purchase up to
9,431,255 common shares. The NCIB will end on May 18, 2011, or an earlier
time if the NCIB is completed or terminated at PetroBakken's election.
As of March 7, 2011, 1,680,400 common shares have been repurchased under
the NCIB for $36.4-million.
Subsequent events
- On Jan. 4, 2011, Petrobank entered into a new three-year $200-million
credit agreement with a syndicate of lenders.
Summary of financial and operating results
The associated table provides a summary of Petrobank's financial and operating results for the three- and 12-month periods ended Dec. 31, 2010, Dec. 31, and 2009. Consolidated financial statements with management's discussion and analysis (MD&A) will be available on the company's website and on the SEDAR website.
FINANCIAL RESULTS
(In thousands except where indicated)
Three months ended Dec. 31, Years ended Dec. 31,
Q4 2010 Q4 2009 2010 2009
Financial (1)
Oil and
natural gas
revenue from
continuing
operations $258,359 $276,334 $1,008,556 $575,588
Funds flow
from
continuing
operations
(2) 155,344 166,833 636,754 380,016
Per share
Basic ($) 1.46 1.80 6.10 4.29
Diluted ($) 1.46 1.59 5.96 3.94
Net income
from
continuing
operations 1,315 20,740 21,308 68,559
Per share
Basic ($) 0.01 0.22 0.20 0.77
Diluted ($) 0.01 0.22 0.20 0.73
Net income
(loss)
attributable
to Petrobank
shareholders (3) (35,612) 57,108 115,785 145,079
Per share
Basic ($) (loss) (0.34) 0.61 1.11 1.64
Diluted ($) (loss) (0.34) 0.56 1.03 1.52
Capital
expenditures
PetroBakken 262,758 177,278 811,871 394,023
HBU 37,521 15,554 121,492 76,019
Total capital
expenditures
from
continuing
operations 300,279 192,832 933,363 470,042
Total assets 6,402,586 5,766,568 6,402,5865,766,568
OPERATING RESULTS
(In dollars per barrel of oil equivalent except where noted)(2)(5)
Three months ended Dec. 31, Years ended Dec. 31,
Q4 2010 Q4 2009 2010 2009
PetroBakken
operating
netback
Oil and NGL
revenue
($/bbl) (6) 75.19 71.63 72.77 64.27
Natural gas
revenue
($/Mcf) (6) 3.96 4.61 4.22 4.40
Oil and
natural gas
revenue (6) 67.00 65.05 65.28 58.97
Royalties 9.84 10.14 9.34 8.55
Production
expenses 8.97 8.23 8.18 7.38
Operating
netback (2)
(5)(7) 48.19 46.68 47.76 43.04
Average daily
production
PetroBakken
oil and
NGL (bbl) 34,754 38,796 35,109 22,648
PetroBakken
natural
gas (Mcf) 39,474 40,951 39,473 22,110
Total
conventional
(boe) (5)(8) 41,333 45,621 41,688 26,333
(1) Petrominerales has been accounted for as discontinued operations for the
years ended Dec. 31, 2010, and Dec. 31, 2009, as this business unit was
spun off to Petrobank shareholders at Dec. 31, 2010.
(2) Non-GAAP (generally accepted accounting principles) measure.
(3) Includes the operating results of Petrominerales until the business
unit was spun off on Dec. 31, 2010, and a $70.1-million accumulated
other comprehensive loss resulting from the historic translations of
Petrominerales U.S. dollar amounts recorded in net income upon the
spinoff of Petrominerales.
(4) Consists of common shares, stock options, directors deferred common
shares, deferred common shares, and incentive shares as at the period
end date.
(5) 6,000 cubic feet of natural gas is equivalent to one barrel of oil
equivalent (boe).
(6) Net of transportation expenses.
(7) Excludes hedging activities.
(8) HBU bitumen volumes are excluded from average daily production as
Conklin and Kerrobert operations are considered to be in the
preoperating stage and accordingly are capitalized.
Petrobank's liquidity and capital resources
Petrobank and PetroBakken manage their capital structure independently and generate their own cash flows, and have the ability to finance their operations through the issuance of secured and unsecured debt as well as equity financing. Petrobank's capital resources are focused on financing corporate and heavy oil business unit expenditures. At Dec. 31, 2010, independent of PetroBakken, Petrobank on a stand-alone basis had no bank debt outstanding and a working capital surplus of $1.9-million.
Based on Petrobank's current ownership and PetroBakken's intentions of paying an annual dividend of 96 cents per PetroBakken share, Petrobank expects to receive $105-million of dividends annually from PetroBakken, paid monthly. Petrobank can also raise funds by selling a portion of its ownership in PetroBakken or by issuing additional debt secured by this interest.
Petrobank expects to sufficiently finance its HBU capital expenditure program with existing cash, available credit, cash from operations and dividends received from PetroBakken.
Heavy oil business unit operational update
Conklin pilot project
As an update to its March 10, 2011, press release in Stockwatch news, the company has now decided to permanently abandon P2B due to downhole problems associated with the instrument and long strings. At the same time, the company intends to use the service rig to abandon P1, which was previously suspended. These wells were originally drilled using an earlier well configuration which the company does not intend to use in the future.
Investor conference call
Management of Petrobank will be holding a conference call for investors, financial analysts, media and any interested persons on Wednesday, March 16, 2011, at 8 a.m. (Mountain Standard Time) (10 a.m. Eastern Standard Time) to discuss Petrobank's 2010 year-end financial and operating results. The investor conference call details are as follows:
Live call dial-in numbers: 416-340-8527/877-440-9795
Replay dial-in numbers: 905-694-9451/800-408-3053
Replay pass code: 7468252
The live audio webcast is available on the company's website.
We seek Safe Harbor.
© 2026 Canjex Publishing Ltd. All rights reserved.