Mr. Steven Johnson reports
WRANGLER WEST REPORTS 2011 FIRST QUARTER OPERATING AND FINANCIAL RESULTS
Wrangler West Energy Corp. has filed on SEDAR the company's unaudited financial statements and related
management's discussion and analysis for the three months
ended March 31, 2011, with comparative data for the three months ended
March 31, 2010, and the year ended Dec. 31, 2010. Effective Jan. 1, 2011, Wrangler West has prepared interim financial
statements and comparative information according to international
financial reporting standards. Previously, the company prepared
financial statements according to Canadian generally accepted
accounting principles. All documents may be viewed at SEDAR.
OPERATIONAL HIGHLIGHTS
Three months ended March 31
2011 2010
Production
Crude oil and NGL (b/d) 247 302
Natural gas (mcf/d) 4,704 3,980
Total (boe/d) 1,031 965
Prices
Crude oil and NGL ($/bbl) $78.39 $74.21
Natural gas ($/mcf) 3.92 5.72
2011 first quarter highlights:
-
$1.1-million in funds flow from operations;
-
$900,000 in capital expenditures;
-
Potential asset disposition of Grand Forks oil pool.
Review of first quarter
For the three months ended March 31, 2011, Wrangler West produced an
average of 1,031 barrels of oil equivalent per day, higher by 7 per cent when compared with the same period one year ago. However, the company's field netback fell
significantly as Wrangler West experienced a 31-per-cent decrease in the
natural gas price received. A 6-per-cent increase in crude oil price
slightly offset the 2011 first quarter lower netback. Operating costs
increased 14 per cent on a per boe basis, somewhat higher than expected
as it battled to keep production moving through an unusually cold
winter. Funds flow from operations, at $1.1-million, declined
year over year and compared with 2010 fourth quarter which had funds flow
of $1.4-million.
Capital expenditures
Wrangler West invested $900,000 in capital expenditures during 2011
first quarter. The company acquired land and conducted multiple
seismic programs prior to breakup. Seismic and land acquisitions
accounted for 72 per cent of 2011 first quarter capital expenditures.
Wrangler West will continue to build quality, seismically defined
drilling targets throughout 2011. The company's capital expenditures forecast is
$8.0-million for the current fiscal year.
Commodity prices
During 2011 first quarter, natural gas prices demonstrated unexpected
seasonal weakness. Although a long, cold winter persisted throughout
most of North America, natural gas prices remained weak throughout the
heating season, a period when, typically, natural gas experiences some
strength as storage volumes are depleted.
During the winter of 2010-2011, natural gas storage volumes were
slightly below the five-year average and injection into storage was
below expectations. It is likely the lower injection rate is a result
of the drilling rig fleet being kept busy pursuing crude oil
exploration and development opportunities. Drilling for natural gas
appears to have dropped significantly as much of the drilling to
maintain land assets in the United States was completed.
The natural gas business remains volatile. In the near term, the company continues to expect natural gas prices will remain somewhat range-bound
between $4.00 and $5.00. North American natural gas markets are
showing some signs of life as the company moves into the summer. A few
well-respected analysts are suggesting the bottom may have occurred and
are indicating positive price projections moving forward.
Crude oil prices continue to be robust with the WTI (West Texas Intermediate) benchmark hovering
around $100 per barrel. World events influence the premium in crude oil
price although continuing consumption is relatively stable. As
consumption in Asia and other developing economies improves demand,
prices can be expected to remain strong. Economic recovery throughout
North America is still tentative and high energy costs are deemed a
threat to any potential recovery. The energy producing countries will
carefully monitor supply and demand to maximize crude oil prices while
avoiding the potential destruction of purchasing power. Their
objective is to ensure production of adequate volumes to sustain a
healthy balance in crude oil supply and demand. This scenario has
played out many times in recent history as global issues impact world
energy markets.
Outlook for 2011
Once again, Wrangler West is focused on finding economic crude oil and
natural gas within the context of the commodity prices it receives. As
the crude oil market is quite strong, the company is investigating the
potential asset disposition of its Grand Forks oil producing
properties. If the company completes this process, the proceeds would be applied
to bank indebtedness. It expects to invest most of its 2011 capital
expenditures budget of $8.0-million in crude oil exploration activity.
It has a growing inventory of opportunities that are approaching the
drill-ready stage and it expects to accelerate activity in the latter
half of 2011.
STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Three months ended March 31
(in thousands of dollars, except per share amounts)
2011 2010
Revenue
Petroleum and natural gas sales $3,401 $4,066
Royalties (500) (633)
------ ------
2,901 3,433
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Expenses
Operating 1,427 1,170
General and administrative 307 280
Share-based payments - 62
Depletion, depreciation and amortization 1,493 1,225
------ ------
Results from operating activities (326) 696
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Finance
(Gain) loss on sale of assets (2) 11
Interest and accretion 77 119
------ ------
75 130
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Earnings (loss) before income tax (401) 566
Deferred income tax (benefit) (101) 196
------ ------
Net earnings (loss) and comprehensive income (loss) $ (300) $ 370
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Net earnings (loss) per share
Basic and diluted (0.05) 0.06
We seek Safe Harbor.
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