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Mountainview Energy Ltd
Symbol MVW
Shares Issued 87,820,443
Close 2014-08-29 C$ 0.40
Market Cap C$ 35,128,177
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Mountainview loses $6.26-million in Q2

2014-08-29 19:51 ET - News Release

Mr. Patrick Montalban reports

MOUNTAINVIEW ENERGY LTD. ANNOUNCES 2014 SECOND QUARTER FINANCIAL RESULTS

Mountainview Energy Ltd. has released its operating and financial results for the quarter ended June 30, 2014. The company also announces that its reviewed financial statements and management's discussion and analysis for the quarter ended June 30, 2014, are available on SEDAR and on Mountainview's website.

Highlights of Mountainview's successful second quarter 2014 are as follows:

  • Optimized the downhole assembly for initial fluid production on new wells and completed a workover program on three existing wells to move them to Rotoflex pumping units more suited to the stabilized continuing production levels;
  • Despite production interruptions, average second quarter production of 915 barrels of oil equivalent per day, an increase of 30 per cent over the average of 703 boe per day for second quarter 2013;
  • Factoring in production outages, an average daily second quarter production rate per producing day of 1,056 boe per day;
  • Generated operating netbacks of $35.42 per boe in second quarter 2014, an increase of 42 per cent when compared with $24.98 per boe in second quarter 2013.

Certain selected quarterly financial and operational information is outlined herein and should be read in conjunction with Mountainview's reviewed financial statements for the three and six months ended June 30, 2014, and the audited financial statements for the years ended Dec. 31, 2013, and 2012, and the accompanying management's discussion and analysis, filed with the Canadian securities regulatory authorities, which may be accessed through the SEDAR website and also on the company's website.

                                        FINANCIAL HIGHLIGHTS
                               ($000s except per-share amounts)
    
                                    Q2 2014    Q1 2014   Q4 2013  Q3 2013   Q2 2013  Q1 2013   Q4 2012   Q3 2012

Average production (boe/d)              915        898     1,183      711       703      391       194       190
Petroleum and natural gas sales      $7,010     $6,108    $7,418   $5,993    $5,107   $2,009      $778      $933
Operating netback (per boe)           35.42      34.56     34.39    26.13     24.98    24.12     (0.66)    26.93
Funds flow from operations              (28)       310     2,085    2,156       766     (207)      150      (177)
Per share, basic                       0.00       0.00      0.02     0.02      0.01     0.00      0.00      0.00 
Per share, diluted                     0.00       0.00      0.02     0.02      0.01     0.00      0.00      0.00
Net income (loss)                    (6,267)    (1,561)   (3,141)    (387)   (1,065)  (1,381)   (7,344)     (428)
Per share, basic                      (0.07)     (0.02)    (0.00)   (0.01)    (0.02)   (0.02)    (0.08)    (0.00)
Per share, diluted                    (0.07)     (0.02)    (0.00)   (0.01)    (0.02)   (0.02)    (0.08)    (0.00)

Corporate

Mountainview exited the quarter with increased average production, offsetting production outages from seasonal road restrictions experienced in Divide county, North Dakota. In addition, optimizing the downhole pump resulted in less downtime and an increase in average production on a quarter-over-quarter basis, which produced a 2-per-cent increase in oil and natural gas sales. In addition, the company generated higher netbacks per boe in second quarter 2014 compared with the prior-period quarter. Lease expiries of $4.4-million in a non-core area and financing expenses of $2.1-million were main drivers in the overall net loss of $6.3-million. The continued optimization of the production operations is expected to continue to increase netbacks generated from the 12 Gage area, supporting the company's belief in the asset. Mountainview anticipates continuing the development of the infill drilling inventory, benefiting from capital efficiencies associated with pad drilling.

Mountainview's shift to drilling higher working interest wells in 2013 will continue in 2014.

Financial

At quarter-end, company net debt was $71.3-million, and the company had $46.5-million drawn on its available credit facility of $51.2-million. Funds flow from operations for second quarter 2014 decreased from second quarter 2013, mainly due to increased operating expenditures.

Exposure to volatility of differentials from WTI and industry concerns with respect to transportation restrictions in the Williston basin translated into realized prices ranging from $73.72 per barrel of oil in second quarter 2013 to $84.12 per barrel of oil in second quarter 2014. In response to this price volatility, the company has entered into a financial hedging program, which commenced in January, 2014. Mountainview had 32 per cent of its production hedged for second quarter 2014, with a floor of $85 and a ceiling of $97.70. The company plans to actively manage its hedging program as its production base grows.

Operations

The company's second quarter 2014 capital plan on its core 12 Gage asset in Divide county, North Dakota, was limited in second quarter 2014. The $6.3-million capital program in the quarter included finalizing the completion and cleanout of two wells (1.9 net), with a 100-per-cent success rate. At year-end 2013, these two wells (1.9 net) had been drilled and were awaiting completion. Production equipment was also installed in the second quarter. Mountainview has determined that an electronic submersible pump is the optimal pump to produce the higher fluid levels experienced in the initial six months of production in the 12 Gage area. Beyond the first six to eight months, the Rotoflex pump has proven to be the optimal pump for the expected long-term fluid levels. The company is changing pumps from ESP to Rotoflex as the ESP reaches the end of its useful life.

The company has selectively increased its working interest in its assets whenever appropriate as it has become more experienced operationally. This experience has resulted in decreased capital costs on a per-well basis from $8.3-million per well to $6.3-million per well.

Outlook

Mountainview has continued to deliver on its strategy of production and reserve growth. Utilizing funds flow from operations and available credit on its existing credit facility, Mountainview will continue to focus on the development of its core 12 Gage asset in Divide county, North Dakota.

The company will continue to pursue an aggressive growth strategy using a combination of cash flow and available credit. Continued strong oil pricing and WTI differentials, combined with the company's hedge position, allow Mountainview to remain confident in the long-term sustainability of the 2014 capital plan.

Mountainview is planning to drill three additional Three Forks (Torquay) wells in the third quarter of 2014. This drilling program will be financed through the sale of non-core, non-operated assets. Further development of the 12 Gage project may be accelerated through an equity financing and/or the refinancing of the existing line of credit. Any equity financing or debt refinancing would be dependent on capital requirements and market conditions and subject to management and board approval.

We seek Safe Harbor.

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