Mr. J.H.T. Riddell reports
TRILOGY ENERGY CORP. ANNOUNCES FINANCIAL AND OPERATING RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 2014, AND AN AGREEMENT WITH CANADA REVENUE AGENCY
Trilogy Energy Corp. has released its financial and operating results for the quarter and year ended Dec. 31, 2014, and has resolved its dispute with the Canada Revenue Agency regarding the tax consequences in connection with its conversion from a trust to a corporation in 2010.
Financial and operating highlights:
- Trilogy added 30.9 million barrels of oil equivalent of proved reserves (34 per cent oil and natural gas liquids)
and 47.4 million boe of proved plus probable reserves (35 per cent oil and
NGLs), including technical revisions.
- Trilogy replaced 241 per cent of 2014 produced reserves when compared with
total proven reserve additions, and 370 per cent when compared with proven
plus probable reserves.
- Two thousand fourteen reported sales volumes averaged 35,104 barrels of oil equivalent per day as compared with 34,509
boe per day for the previous year, representing a 2-per-cent increase in
production. Reported sales volumes for the fourth quarter of 2014 were
35,938 boe per day as compared with 35,125 boe per day for the previous quarter.
- Two thousand fourteen net capital expenditures totalled $440-million as compared with $396.9-million in 2013. The company spent $72.6-million in the fourth quarter of 2014
compared with $81.1-million in the prior quarter.
- Eighty-five (53.6 net) wells were drilled in 2014, as compared with 81 (57.2 net)
wells in 2013. Seventeen (5.6 net) wells drilled in the fourth quarter, as
compared with 17 (11.8) wells in the prior quarter.
- Finding and development costs were $24.82 per boe for total proved
reserves and $20.78 per boe for proved plus probable reserves.
- Two thousand fourteen funds flow from operations totalled $349.4-million as compared with $280.5-million in 2013, representing a 25-per-cent increase year over
year. Funds flow from operations decreased to $78-million for the
fourth quarter as compared with $88-million in the previous quarter in
conjunction with declining commodity prices in the quarter.
- Capacity under Trilogy's revolving credit facility as at Dec. 31,
2014, was estimated at $259.7-million.
FINANCIAL AND OPERATING HIGHLIGHTS
(in thousands Canadian dollars except per-share amounts and
where stated otherwise)
Three months ended
Dec. 31, Sept. 30,
2014 2014
Financial
Petroleum and natural gas sales $129,555 $153,860
Funds flow
From operations 78,011 87,933
Per share -- diluted 0.62 0.69
Earnings
Earnings (loss) before tax (54,464) 36,714
Per share -- diluted (0.43) 0.29
Earnings (loss) after tax (133,331) 26,700
Per share -- diluted (1.05) 0.21
Dividends declared 8,819 13,221
Per share 0.070 0.105
Operating
Production
Natural gas (MMcf/d) 130 128
Oil (bbl/d) 8,251 8,051
Natural gas liquids (boe/d) 6,058 5,794
Total production (boe/d at 6:1) 35,938 35,125
Average prices before
financial instruments
Natural gas ($/Mcf) 4.06 4.53
Crude oil ($/bbl) 70.95 93.14
Natural gas liquids ($/boe) 48.78 59.50
Average realized price 39.18 47.61
Drilling activity (gross)
Gas 7 3
Oil 10 14
Total wells 17 17
Year ended Dec. 31,
2014 2013
Financial
Petroleum and natural gas sales $618,949 $563,463
Funds flow
From operations 349,360 280,511
Per share -- diluted 2.75 2.32
Earnings
Earnings (loss) before tax 44,258 18,702
Per share -- diluted 0.35 0.15
Earnings (loss) after tax (61,011) 11,467
Per share -- diluted (0.49) 0.09
Dividends declared 48,417 50,188
Per share 0.385 0.420
Operating
Production
Natural gas (MMcf/d) 126 117
Oil (bbl/d) 8,326 10,175
Natural gas liquids (boe/d) 5,706 4,827
Total production (boe/d at 6:1) 35,104 34,509
Average prices before
financial instruments
Natural gas ($/Mcf) 4.98 3.55
Crude oil ($/bbl) 89.17 87.01
Natural gas liquids ($/boe) 56.69 50.27
Average realized price 48.31 44.73
Drilling activity (gross)
Gas 35 28
Oil 50 53
Total wells 85 81
Outlook
Trilogy continues to develop its land position and expand on its technical expertise in large, tight, liquids-rich gas and oil resource plays in the Deep basin. The company believes that it has accumulated a large inventory of high-quality horizontal drilling prospects that should provide the opportunity, in the long term, to increase annual production and replace produced reserves. Trilogy reiterates its 2015 guidance.
GUIDANCE FOR 2015
Average production 30,000 boe per day (approximately 35 per cent oil and natural
gas liquids)
Average operating costs $10 per boe
Capital expenditures $100-million
Trilogy is well positioned to alter its capital spending program to reflect further market instability and is committed to operating within cash flow in this volatile commodity price environment. Trilogy will be evaluating the opportunity to attract external capital in further advancing its Duvernay play in the near future.
Agreement with the CRA regarding its conversion from a trust to a corporation.
Trilogy also announces that it has resolved its dispute with the CRA relating to CRA's objection to the tax consequences in connection with the conversion of Trilogy in 2010 from an income trust structure to a corporation.
The agreement will result in:
- No cash tax outlay by Trilogy for the taxation years 2010 through 2014;
- An estimated charge to Trilogy's statement of comprehensive income for
the year ended Dec. 31, 2014, to write down a portion of Trilogy's
deferred tax asset;
- The elimination of potentially costly and time-consuming court
proceedings;
- Management being able to focus more fully on Trilogy's operations to
enhance shareholder value.
Trilogy's management expects that Trilogy will not be cash taxable in the foreseeable future given the tax pool balances remaining after the aforementioned tax adjustments and Trilogy's expectations of, among other things, future capital expenditure levels and funds flow from operations.
Additional information
Trilogy's financial and operating results for 2014, including the review of operations, management's discussion and analysis, and the company's audited annual consolidated financial statements as at and for the year ended Dec. 31, 2014, can be obtained at a later date through Trilogy's website and SEDAR.
We seek Safe Harbor.
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