Mr. Massimo Geremia reports
MANITOK ENERGY INC. ANNOUNCES UNAUDITED 2013 FINANCIAL AND OPERATING RESULTS, THE 2013 RESERVES EVALUATION, AND AN OPERATIONAL UPDATE
Manitok Energy Inc. has released its fourth quarter and year-end 2013 unaudited financial and operational results, has provided highlights from its 2013 independent reserves evaluation, and has provided an operational update. (All financial amounts referred to in this press release are management's best estimates, and the year-end financial statements have not yet been audited.)
The full text of Manitok's year-end report containing its audited financial statements as at and for the year ended Dec. 31, 2013, the related management's discussion and analysis, and Manitok's annual information form for the year ended Dec. 31, 2013, will be available electronically on Manitok's profile on the System for Electronic Document Analysis and Retrieval and also on Manitok's website on or before April 30, 2013.
Fourth quarter results (based on unaudited financial statements):
- Fourth quarter production averaged 4,989 barrels of oil equivalent per day (57 per cent light oil and
liquids), a 31-per-cent increase over production of 3,819 barrels of oil equivalent per day (49 per cent light oil
and liquids) in the third quarter of 2013 and a 62-per-cent increase over
production of 3,078 barrels of oil equivalent per day (55 per cent light oil and liquids) in the fourth
quarter of 2012.
- The company increased the oil and liquids weighting 16 per cent over the oil and liquids
weighting in third quarter of 2013.
- It recorded average production-per-share growth of 54 per cent and cash-flow-per-share growth of 75 per cent when compared with the fourth quarter of 2012.
- The company recorded funds from operations of $14.1-million (19 cents per share), a 71-per-cent
increase over funds from operations of $8.3-million (12 cents per share) in
the third quarter of 2013 and an 85-per-cent increase over funds from operations
of $7.7-million (11 cents per share) in the fourth quarter of 2012.
- Operating netback (excluding the realized gain or loss on financial
instruments) was $35.11 per barrel of oil equivalent, an 8-per-cent increase over the operating netback
of $32.57 per barrel of oil equivalent in the third quarter of 2013, and a 15-per-cent increase over the
operating netback of $30.55 per barrel of oil equivalent in the fourth quarter of 2012.
- Capital expenditures were approximately $44.2-million, which included
drilling five gross (3.9 net) wells for about $19.8-million and closing
a lease issuance and drilling commitment agreement with Encana
Corp. in the Entice area of southeast
Alberta, which accounted for $20.3-million, including capitalized
overhead.
Year-end results (based on unaudited financial statements):
- Production averaged 4,113 barrels of oil equivalent per day (52 per cent light oil and liquids), a 72-per-cent
increase over production of 2,389 barrels of oil equivalent per day (40 per cent light oil and liquids) in
2012.
- The company increased the oil and liquids weighting 30 per cent over the oil and liquids
weighting in 2012.
- It recorded average production-per-share growth of 54 per cent and cash-flow-per-share growth of 96 per cent in 2013 when compared with 2012.
- The company recorded funds from operations of $41.6-million (59 cents per share), a
118-per-cent increase over funds from operations of $19.1-million (30 cents per
share) in 2012.
- Operating netback (excluding the realized gain or loss on financial
instruments) was $33.07 per barrel of oil equivalent, a 29-per-cent increase over the operating netback
of $25.59 per barrel of oil equivalent in 2012.
- Capital expenditures including administrative assets and capitalized
overhead were approximately $79.4-million, net of $3.4-million in
dispositions. This included drilling 16 gross (9.8 net) wells for about
$46.5-million, $9.0-million on equipment and facilities, and closing the
Encana agreement, which accounted for $20.3-million including
capitalized overhead.
- At Dec. 31, 2013, net debt was approximately $32.5-million.
- At Dec. 31, 2013, there were 74,492,340 outstanding common shares of
Manitok. Subsequent to year-end and up to March 31,
2014, a total of 3,350,300 Manitok shares were purchased through the
normal course issuer bid program, at an average price of $2.39 per share,
and 473,366 Manitok shares were issued through Manitok's stock option
plan, at an average price of $1.50 per share, for a total net decrease
in Manitok shares of 2,876,934 in the first quarter of 2014. The total
outstanding Manitok shares as at March 31, 2014, was 71,615,406.
- The company increased undeveloped land to 323,907 net acres as at Dec. 31, 2013,
a 46-per-cent increase from 222,181 net acres as at Sept. 30, 2013, and an
81-per-cent increase from 178,938 net acres as at Dec. 31, 2012.
Independent reserves evaluation in 2013
Sproule Associates Ltd., Manitok's independent qualified reserves evaluator based in Calgary, Alta., prepared a reserves estimation and economic evaluation, effective Dec. 31, 2013, in respect of Manitok's oil and natural gas properties. Sproule also prepared the reserves estimation and economic evaluation, effective Dec. 31, 2012. The reserves estimates stated herein are as at Dec. 31, 2013, and 2012, and are extracted from the Sproule reports. The Sproule reports have been prepared in accordance with the definitions, standards and procedures contained in the Canadian oil and gas evaluation handbook and National Instrument 51-101 (standards of disclosure for oil and gas activities).
Year-end 2013 reserves highlights:
- The pretax net present value discounted at 10 per cent of proved
plus probable reserves amounted to approximately $304.4-million in 2013, which is an increase of 75 per cent from $173.6-million
in 2012. The net present value of total proved reserves amounted
to $182.8-million in 2013, which is an increase of 78 per cent from $102.9-million in 2012. Each of these amounts does not include any
additional value for Manitok's undeveloped land base, and there are no
reserves booked to the land associated with the Encana agreement in the
2013 Sproule report.
- Proved developed producing reserves increased 46 per cent from 3,985,500 barrels of oil equivalent in 2012 to 5,801,500 barrels of oil equivalent in 2013. TP reserves increased 18 per cent from
8,029,300 barrels of oil equivalent in 2012 to 9,457,000 barrels of oil equivalent in 2013, and proved plus probable reserves increased
12 per cent from 14,862,300 barrels of oil equivalent from 2012 to 16,719,500 barrels of oil equivalent in 2013 due to the
success of Manitok's Cardium oil drilling program in the Stolberg area.
- PDP oil reserves increased 101 per cent from 1,063,000 barrels in 2012 to 2,131,800 barrels in 2013. TP oil reserves increased 39 per cent from 2,738,100 barrels in 2012
to 3,812,700 barrels in 2013, and P+P oil reserves increased 43 per cent from
5,268,200 barrels in 2012 to 7,541,900 barrels in 2013.
- Based on the 2013 Sproule report, Manitok's P+P reserves are composed
of 45 per cent light oil on a barrel of oil equivalent basis and 82 per cent on a valuation basis.
- Finding and development costs consisted of $25.33 per barrel of oil equivalent for TP
reserves and $23.89 per barrel of oil equivalent for P+P reserves. These amounts include $20.1-million of capital expenditures associated with the Encana agreement
(which accounts for approximately 26 per cent of total 2013 capital
expenditures) and the change in future development capital from
2012. Recycle ratios consisted of 1.3 and 1.4 times for TP and P+P
reserves, respectively, based on a 2013 operating netback excluding the
realized loss on financial instruments of $33.07 per barrel of oil equivalent.
- Excluding the $20.1-million of capital expenditures related to the
Encana agreement, which has no associated reserves in the 2013 Sproule
report, the corporation achieved F&D costs including changes in FDC of
$18.48 per barrel of oil equivalent for TP reserves and $17.91 per barrel of oil equivalent for P+P reserves. This
represents a recycle ratio of 1.8 and 1.9 times for TP and P+P reserves,
respectively, based on a 2013 operating netback excluding the realized
loss on financial instruments of $33.07 per barrel of oil equivalent.
- The three-year average F&D costs, including the change in FDC for Manitok,
is $21.46 per barrel of oil equivalent for TP reserves and $14.86 per barrel of oil equivalent for P+P reserves. Recycle
ratios consisted of 1.5 and 2.2 times for TP and P+P reserves,
respectively, based on a 2013 operating netback excluding the realized
loss on financial instruments of $33.07 per barrel of oil equivalent.
The attached summary of oil and natural gas reserves table summarizes Manitok's working interest oil and natural gas reserves at Dec. 31, 2013, using the Sproule forecast price assumptions.
SUMMARY OF OIL AND NATURAL GAS RESERVES
Light and Natural Natural gas
medium oil gas liquids Total
Gross Net Gross Net Gross Net Gross Net
Reserve (Mbbl) (Mbbl) (MMcf) (MMcf) (Mbbl) (Mbbl) (Mboe) (Mboe)
category
Proved
Developed
producing 2,131.8 1,419.8 21,197 17,574 137.0 87.6 5,801.5 4,436.5
Developed
non-
producing 57.0 47.4 7,904 6,404 10.5 6.4 1,384.9 1,121.1
Undeveloped 1,623.9 1,103.4 3,616 2,947 44.0 31.1 2,270.6 1,625.7
Total proved 3,812.7 2,570.7 32,717 26,925 191.5 125.1 9,457.0 7,183.3
Probable 3,729.2 2,488.7 20,109 16,739 181.8 122.4 7,262.5 5,400.9
Total proved
plus
probable 7,541.9 5,059.4 52,826 43,664 373.3 247.5 16,719.5 12,584.2
The attached net present values table is a summary of the net present value of future net revenue associated with Manitok's reserves as at Dec. 31, 2013, before deducting future income tax expense and calculated at various discount rates.
NET PRESENT VALUES OF FUTURE NET REVENUE BEFORE INCOME TAXES
Before income taxes
discounted at (%/year)
0% 5% 10% 15% 20%
Reserve category (M$) (M$) (M$) (M$) (M$)
Proved
Developed producing $164,903 $140,417 $123,873 $111,932 $102,879
Developed non-producing 17,966 13,754 11,015 9,126 7,759
Undeveloped 66,262 55,779 47,943 41,867 37,012
Total proved 249,131 209,949 182,831 162,925 147,651
Probable 212,723 154,874 121,601 99,965 84,666
Total proved plus probable 461,853 364,823 304,432 262,890 232,317
The attached reserves reconciliation table is a reconciliation of Manitok's gross reserves as derived from the Sproule reports.
RESERVES RECONCILIATION OF GROSS RESERVES
Gross Gross Gross proved
proved probable plus probable
(Mboe) (Mboe) (Mboe)
Dec. 31, 2012 8,029.5 6,832.8 14,862.3
Discoveries, extensions and
infill drilling 2,202.5 2,634.9 4,837.3
Acquisitions (dispositions) -- -- --
Technical revisions 760.1 (2,192.4) (1,432.3)
Economic factors (34.0) (12.8) (46.7)
Production over the year (1,501.1) -- (1,501.1)
Dec. 31, 2013 9,457.0 7,262.5 16,719.5
Capital program efficiency
The attached capital program efficiency table outlines Manitok's estimate of its finding and development costs per boe and finding, development and acquisition costs per boe, excluding the change in FDC and including the change in FDC, recycle ratios, reserves replacement, and reserve life index on a TP and P+P basis.
CAPITAL PROGRAM EFFICIENCY
Three-year
weighted
2013 2012 average
Capital expenditures (M$)
Exploration and
development $80,598 $48,419 $160,290
Acquisitions/(dispositions) (3,412) (12,927) 26,070
Total capital expenditures 77,186 35,492 186,360
Change in FDC (M$)
Total proved (6,423) 24,046 26,285
Proved plus probable (377) 17,564 63,823
F&D and FD&A costs excluding
change in FDC
F&D -- TP $27.52 $10.20 $18.44
F&D -- P+P $24.00 $6.43 $10.63
FD&A -- TP $26.36 $8.13 $16.31
FD&A -- P+P $22.98 $5.13 $10.10
Recycle ratio -- TP 1.2 2.5 1.8
Recycle ratio -- P+P 1.4 4.0 3.1
F&D and FD&A costs including
change in FDC
F&D -- TP $25.33 $15.26 $21.46
F&D -- P+P $23.89 $8.77 $14.86
FD&A -- TP $24.16 $13.64 $18.61
FD&A -- P+P $22.87 $7.67 $13.56
Recycle ratio -- TP 1.3 1.7 1.5
Recycle ratio -- P+P 1.4 2.9 2.2
Reserve replacement
Total proved 195% 499% 435%
Proved plus probable 224% 791% 702%
Reserve life index (years)
Total proved 5.2 7.1
Proved plus probable 9.2 13.2
The attached costs table outlines Manitok's 2013 F&D and FD&A costs after removing $20.1-million of capital expenditures and excluding capitalized overhead related to the Encana agreement, which has no associated reserves in the 2013 Sproule report.
COSTS
Excluding the change in Including the change in
FDC FDC
F&D -- TP $20.67 $18.48
F&D -- P+P $18.03 $17.91
FD&A -- TP $19.51 $17.31
FD&A -- P+P $17.01 $16.90
Recycle ratio -- TP 1.6 1.8
Recycle ratio -- P+P 1.8 1.9
Production and operational update 2014
Based on field estimates as of April 13, 2014, Manitok's aggregate production is approximately 5,150 barrels of oil equivalent per day, which reflects the previously announced disposition of 777 barrels of oil equivalent per day of natural gas assets that was completed on Feb. 28, 2014. The production estimate found herein includes production from the first two Cardium wells drilled in 2014, referred to as Stolberg Cardium oil wells No. 21 and 22 in the previous press release dated Feb. 27, 2014. The estimated production does not include production from the last two Stolberg Cardium oil wells drilled and tested (wells 23 and 24) and the two that are at or nearing the completion of drilling operations (wells 25 and 26). Of the last four Cardium oil wells (2.0 net), it is anticipated that one oil well (0.3 net, well 23) will be added to production before the end of April, one oil well (0.7 net, well 24) will be on production in June, and the remaining two oil wells (1.0 net, wells 25 and 26) are or will be production tested shortly.
Of the first four Stolberg Cardium oil wells drilled and tested in 2014 (wells 21 to 24), three (1.7 net) are either producing or anticipated to produce at expected levels ranging between 280 to 300 barrels of oil equivalent per day per well (gross), and one well (1.0 net) is not producing commercial quantities of oil. This non-producing well was the first well drilled in 2014 (well 21) and was the only well drilled into the forelimb of the Stolberg Cardium structure in 2014, whereas the other five wells, including the two currently being tested, were drilled into the backlimb of the structure, where most of the wells in the field have been drilled to date. Manitok is evaluating the possibility of re-entering the non-producing wellbore (well 21) and drilling another horizontal leg deeper into the forelimb of the structure.
The first Quirk Creek Cardium oil well (0.7 net) was placed on production as of April 8, 2014. The well production will be optimized over the next few weeks and evaluated over the next several months. The second Quirk Creek Cardium oil well (0.7 net) encountered mechanical complications during the completion operations. Manitok has determined a solution to the issue, but due to spring breakup and current soft ground conditions, Manitok will not be able to execute the operation to correct the mechanical problem until ground conditions improve. Manitok anticipates being able to production test the well once the corrective operation is executed.
Manitok has drilled four vertical wells in the Entice area and is currently drilling the fifth well of the Entice program, which is its first horizontal well targeting the Basal Quartz (Ellerslie) formation. The completion activities on the four vertical wells have been delayed by road bans issued during breakup. The drilling lease for the horizontal well is located just off of a highway, where the road bans are not prohibiting Manitok from continuing drilling operations. Manitok will issue the results of the five-well Entice drilling program once all five wells have been completed and evaluated.
We seek Safe Harbor.
© 2024 Canjex Publishing Ltd. All rights reserved.