14:14:44 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Virginia Hills Oil Corp
Symbol VHO
Shares Issued 2,172,125
Close 2015-05-21 C$ 0.27
Market Cap C$ 586,474
Recent Sedar Documents

Virginia Hills loses $4.23-million in fiscal Q1 2015

2015-05-22 08:37 ET - News Release

Mr. Colin Witwer reports

VIRGINIA HILLS OIL CORP. ANNOUNCES FIRST QUARTER RESULTS AND 2015 GUIDANCE

Virginia Hills Oil Corp. has filed on SEDAR its financial statements and related management's discussion and analysis for the three months ended March 31, 2015. The financial statements and MD&A are available for review at SEDAR or the company's website.

             FINANCIAL AND OPERATING RESULTS FOR Q1 2015
                                                                   
                                           Three months ended March 31,
                                                      2015        2014

Petroleum and natural gas sales                    $ 7,149     $18,229
Funds flow from operations                              32       7,237
Per share -- basic                                    0.00        0.03
Per share -- diluted                                  0.00        0.03
Net income (loss)                                   (4,233)        290
Per share -- basic                                   (0.02)       0.00
Per share -- diluted                                 (0.02)       0.00
Capital expenditures                                   981       1,008
Net debt                                           116,562     121,405
Operating
Number of days                                          90          90
Production
Crude oil (bbl/d)                                    1,556       2,033
Natural gas (mcf/d)                                    261         366
NGL (bbl/d)                                             51          49
Barrels of oil equivalent (boe/d -- 6:1)             1,650       2,143
Average realized price
Crude oil ($/bbl)                                    50.65       99.16
Natural gas ($/mcf)                                   0.43        0.43
NGL ($/bbl)                                          10.50       16.58
Netback per boe ($)
Petroleum and natural gas sales                      48.15       94.51
Royalties                                            (6.51)     (14.41)
Transportation and production expenses              (24.88)     (27.72)
Field netback                                        16.76       52.38
Realized (loss) on derivative financial
instruments                                              -       (2.64)
Operating netback                                    16.76       49.74

Operational results

Production for the first quarter of 2015 averaged 1,650 barrels of oil equivalent per day (97 per cent light oil and natural gas liquids), representing a 23-per-cent decline from first quarter 2014 levels due to reduced capital investment in the company's core Red Earth area. No new wells have been drilled since the first quarter of 2014. Operating revenue decreased in the first quarter of 2015 to approximately $7.1-million from $18.2-million realized in the first quarter of 2014 due to average production rate declines and a 49-per-cent decrease in realized oil prices. Royalties were approximately 13.5 per cent of operating revenue and decreased on a per-unit basis by 55 per cent on a year-over-year basis to approximately $6.51 per boe due to the significant decrease in realized commodity prices and lower production rates.

Production costs were $3.3-million ($21.91 per boe) for the first quarter and were lower by 32 per cent on a total basis and 12 per cent on a per-unit basis, compared with the same period in 2014. The decrease in production costs was directly related to reduced service pricing as a result of lower overall industry activity levels. Transportation costs were $500,000 ($2.97 per boe) in the first quarter and remained relatively static as compared with the first quarter of 2014. Operating netbacks in the quarter were $16.76 per boe, or 66 per cent, lower than 2014 levels due to the significant drop in light oil prices partially offset by lower royalty and operating costs.

Guidance for 2015

Virginia Hills is pleased to provide operational guidance for the remainder of 2015. Early in the second quarter, the company successfully completed both the arrangement, pursuant to which it acquired 90 per cent of the producing assets of Pinecrest and the acquisition of Dolomite Energy Inc., through its wholly owned subsidiary. Collectively, Virginia Hills has an asset base, which is currently producing approximately 1,550 boe per day, and is materially weighted to low-decline, light oil production, focused on the Slave Point formation in the greater Red Earth area of Alberta.

The company is concentrating its efforts and capital investments for the remainder of 2015 on improving its operating cost structure, optimizing its existing water floods and implementing acid fracturing techniques into a drilling program of up to four gross (four net) light oil Slave point horizontal wells. The company anticipates completing and bringing on production two gross (two net) of the horizontal light oil wells in 2015.

The company's board of directors has approved a capital budget of $9.3-million for the remainder of 2015 to be financed by operating cash flow, debt, proceeds from a completed private placement and the exercise of the arrangement rights issued under the arrangement. The company anticipates spending $7.5-million on drilling up to four gross (four net) horizontal light oil wells with two gross (two net) wells being completed and brought on production by year-end 2015, with the balance of the wells scheduled to be completed in 2016. Virginia Hills will direct $1.8-million in capital expenditures to optimizing existing water flood projects and various operational initiatives designed to reduce the operating cost structure, which includes: rental equipment buy outs, electrification of pumping oil wells and the installation of pump-off controllers.

Virginia Hills is forecasting average production for the remainder of 2015 to be approximately 1,635 boe per day (95 per cent light oil and NGLs) with fourth quarter exit production of approximately 1,640 boe per day (95 per cent light oil and NGLs). The company intends to implement various optimization projects on its existing water flood projects; however, it is not anticipating any material production gains from these projects until 2016.

The company's 2015 forecast is based on the assumptions shown in the table.

 
        2015 FORECAST ASSUMPTIONS

Average daily production (boe/d)    1,635
Revenues ($/boe)                    54.00
Royalties ($/boe)                  (11.00)
Operating costs ($/boe)            (23.00)
Operating netback ($/boe)           20.00
  

To backstop its cash flow expectations for the remainder of 2015, Virginia Hills has entered into a physical sales agreement covering approximately 1,116 barrels per day of oil (70 per cent of its forecast average oil production), at an average price of approximately $65.50 per bbl (U.S.-dollar to Canadian-dollar conversion at 0.82).

Virginia Hills has aggregate lending facilities of $108.0-million that are not due to be reviewed until September, 2016. Currently, there is an aggregate of approximately $100.4-million drawn on these facilities.

The board of directors of Virginia Hills approved the grant of an aggregate of 1,927,047 options under the company's stock option plan to certain directors, officers, employees and key service providers of the company, with an exercise price equal to the closing price of the common shares on May 25, 2015. The options have a term of five years, and vest equally on each of the first, second and third anniversary dates of the grant. Currently, Virginia Hills has a total of 19,724,155 common shares outstanding. On a fully diluted basis, before giving effect to the options, there is a total of 49,645,171 outstanding shares and warrants.

We seek Safe Harbor.

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