Wrangler West Reports 2011 First Quarter Operating and Financial Results
CALGARY, June 16, 2011 /CNW/ - Wrangler West Energy Corp. ("Wrangler West" or the "Company") (TSXV: WX) announces today's filing on SEDAR (www.sedar.com) of the Company's unaudited Financial Statements and related
Management's Discussion and Analysis ("MD&A") for the three months
ended March 31, 2011 with comparative data for the three months ended
March 31, 2010 and the year ended December 31, 2010. Effective January 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 www.sedar.com.
HIGHLIGHTS
Three months ended March 31 2011 2010% Change
OPERATIONAL HIGHLIGHTS
Production
Crude oil and NGL (bbls/d) 247 302 (18)
Natural gas (mcf/d) 4,704 3,980 18
Total (boe/d) 1,031 965 7
Prices
Crude oil and NGL ($/bbl) 78.39 74.21 6
Natural gas ($/mcf) 3.92 5.72 (31)
Per boe ($)
Petroleum and natural gas revenue 36.66 46.80 (22)
Royalties (5.39) (7.28) (26)
Operating expenses (15.38)(13.47) 14
Field netback 15.89 26.05 (39)
General and administrative (3.31) (3.22) 3
Interest (0.63) (1.12) (44)
Funds flow from operations 11.95 21.71 (45)
Depletion, depreciation, and amortization (16.09)(14.10) 14
Accretion (0.20) (0.25) (20)
Share-based payments - (0.71) (100)
Deferred income tax (benefit) 1.08 (2.26) (148)
Gain (loss) on sale of assets 0.02 (0.12) (117)
Net earnings (loss) (3.24) 4.27 (176)
FINANCIAL HIGHLIGHTS ($ thousand)
Petroleum and natural gas revenue 3,401 4,066 (16)
Royalties (500) (633) (21)
Operating expenses (1,427)(1,170) 22
General and administrative (307) (280) 10
Interest (59) (97) (39)
Funds flow from operations 1,108 1,886 (41)
Depletion, depreciation, and amortization (1,493)(1,225) 22
Accretion (18) (22) (18)
Share-based payments - (62) (100)
Deferred income tax (benefit) 101 (196) (152)
Gain (loss) on sale of assets 2 (11) (118)
Net earnings (loss) (300) 370 (181)
Outstanding shares (thousand)
Weighted average - basic 6,466 6,437 -
Weighted average - diluted 6,602 6,550 1
Funds flow from operations - basic and diluted ($/share) 0.17 0.29 (41)
Net earnings (loss) - basic and diluted ($/share) (0.05) 0.06 (183)
Total assets ($ thousand) 34,172 35,164 (3)
Wrangler West converts petroleum and natural gas reserves and volumes to
a common unit of measure on a basis of six thousand cubic feet ("mcf")
of natural gas equals one barrel ("bbl") of oil. Disclosure using
barrels of oil equivalent ("boe") may be misleading, particularly if
used in isolation. The basis for the boe conversion ratio of 6 mcf
equals one bbl is an energy equivalency conversion method, primarily
applicable at the burner tip. This conversion rate does not represent
a value equivalency at the wellhead. The Company calculates boe per day
based on total production for the period divided by the number of days
during the period.
Wrangler West Energy Corp. ("Wrangler West" or the "Company") presents
operating and financial results for 2011 first quarter. Wrangler West
is a Canadian junior oil and natural gas exploration company focused on
generating shareholder value by exploring for, developing and producing
natural gas and crude oil from properties located in the Province of
Alberta.
2011 First Quarter Highlights
-
$3.4 million in revenue
-
$1.1 million in funds flow from operations
-
$0.9 million 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 boe per day, higher by seven percent when compared to
the same period one year ago. However, our field netback fell
significantly as Wrangler West experienced a 31 percent decrease in the
natural gas price received. A six percent increase in crude oil price
slightly offset the 2011 first quarter lower netback. Operating costs
increased 14 percent on a per boe basis, somewhat higher than expected
as we battled to keep production moving through an unusually cold
winter. Funds flow from operations, at $1.1 million, declined
year-over-year and compared to 2010 fourth quarter which had funds flow
of $1.4 million.
Capital Expenditures
Wrangler West invested $0.9 million in capital expenditures during 2011
first quarter. The Company acquired land and conducted multiple
seismic programs prior to break-up. Seismic and land acquisitions
accounted for 72 percent of 2011 first quarter capital expenditures.
Wrangler West will continue to build quality, seismically-defined
drilling targets throughout 2011. Our 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, we
continue 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 we move 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 benchmark hovering
around $100 per bbl. World events influence the premium in crude oil
price although ongoing 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 we receive. As
the crude oil market is quite strong, we are investigating the
potential asset disposition of our Grand Forks oil producing
properties. If we complete this process, the proceeds would be applied
to bank indebtedness. We expect to invest most of our 2011 capital
expenditures budget of $8.0 million in crude oil exploration activity.
We have a growing inventory of opportunities that are approaching the
drill-ready stage and we expect to accelerate activity in the latter
half of 2011.
WRANGLER WEST ENERGY CORP.
STATEMENTS OF FINANCIAL POSITION
(Stated in thousands of dollars)
(Unaudited)
March 31,December 31,January 1,
2011 2010 2010
(note 17) (note 17)
Assets
Current assets
Accounts receivable (note 4 (b)) $ 1,307 $ 1,406 $ 1,409
Income tax receivable - 74 531
Prepaid expenses 184 144 371
Assets held for sale (note 9) - - 4,084
1,491 1,624 6,395
Exploration and evaluation (note 8) - - 44
Property, plant and equipment (note 7) 32,681 33,335 32,114
$ 34,172 $ 34,959 $ 38,553
Liabilities and shareholders' equity
Current liabilities
Bank indebtedness (note 13) $ 7,117 $ 6,354 $ 8,731
Accounts payable and accrued liabilities 2,093 3,260 3,358
Decommissioning obligations related to
assets held for sale (note 9) - - 573
9,210 9,614 12,662
Decommissioning obligations (note 15) 2,724 2,705 2,024
Deferred income tax 3,301 3,403 3,833
15,235 15,722 18,519
Shareholders' equity
Share capital (note 11) 12,402 12,402 12,194
Contributed surplus 4,538 4,538 4,313
Retained earnings 1,997 2,297 3,527
18,937 19,237 20,034
$ 34,172 $ 34,959 $ 38,553
WRANGLER WEST ENERGY CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Stated in thousands of dollars, except per share amounts)
(Unaudited)
Three months ended March 31
2011 2010
(note 17)
Revenue
Petroleum and natural gas sales $ 3,401 $ 4,066
Royalties (500) (633)
2,901 3,433
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
Finance
(Gain) loss on sale of assets (2) 11
Interest and accretion (note 5) 77 119
75 130
Earnings (loss) before income tax (401) 566
Deferred income tax (benefit) (101) 196
Net earnings (loss) and comprehensive income (loss) $ (300) $ 370
Net earnings (loss) per share (note 12)
Basic and diluted $ (0.05) $ 0.06
WRANGLER WEST ENERGY CORP.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Stated in thousands of dollars)
(Unaudited)
Number of Total
common ShareContributedRetainedshareholders'
shares capital surplusearnings equity
Balance at January 1, 2011 6,466 $ 12,402 $ 4,538 $ 2,297 $ 19,237
Options exercised - - - - -
Share-based payments - - - - -
Net earnings (loss) - - (300) (300)
Balance at March 31, 2011 6,466 $ 12,402 $ 4,538 $ 1,997 $ 18,937
Balance at January 1, 2010 6,416 $ 12,194 $ 4,313 $ 3,527 $ 20,034
Options exercised 25 112 (55) - 57
Share-based payments - - 89 - 89
Net earnings - - - 370 370
Balance at March 31, 2010 6,441 $ 12,306 $ 4,347 $ 3,897 $ 20,550
WRANGLER WEST ENERGY CORP.
STATEMENTS OF CASH FLOWS
(Stated in thousands of dollars)
(Unaudited)
Three months ended March 31
2011 2010
Cash provided by (used in):
Operating
Net earnings (loss) $ (300) $ 370
Items not involving cash:
Depletion, depreciation and amortization 1,493 1,225
Accretion 18 22
Share-based payments - 62
(Gain) loss on sale of assets (2) 11
Deferred income tax (benefit) (101) 196
1,108 1,886
Change in non-cash operating working capital (note 6) 179 (456)
1,287 1,430
Financing
Decrease in bank indebtedness, original credit facility - (3,492)
Increase in bank indebtedness, new credit facility 763 -
Issuance of common shares - 56
763 (3,436)
Investing
Property, plant and equipment expenditures (864) (1,880)
Proceeds on sale of property, plant and equipment 26 10
Proceeds on sale of assets held for sale (note 9) - 3,499
Change in non-cash investing working capital (note 6) (1,212) 377
(2,050) 2,006
Cash and cash equivalents, beginning and end of period $ - $ -
Supplementary cash flow information
Interest paid 57 79
Income tax paid (received) (74) 6
Reader Advisory
This news release contains forward-looking statements about potential
new crude oil and natural gas drilling, production operations, sources
and use of capital, potential asset purchases or dispositions and
expected future operations. Although Wrangler West believes the
expectations reflected in these forward-looking statements are
reasonable, undue reliance should not be placed on them because the
Company can give no assurance they will prove to be correct. Since
forward-looking statements address future events and conditions, by
their very nature they involve inherent risks and uncertainties. A more
detailed discussion of forward-looking statements is provided in
Wrangler West's Management's Discussion and Analysis for the three
months ended March 31, 2011 which is filed on SEDAR (www.sedar.com). The forward-looking statements contained in this news release are
made as of the date hereof and Wrangler West undertakes no obligation
to update publicly or revise any forward-looking statements or
information, whether as a result of new information, future events or
otherwise, unless so required by applicable securities laws.
Corporate Profile
Wrangler West is a Canadian junior crude oil and natural gas producer
which explores for and develops crude oil and natural gas production
assets in the Province of Alberta. Since inception, our mandate has
been to use the drill bit to add shareholder value. Disciplined
management of our operations and production portfolio creates
sufficient funds flow to support ongoing operations. Wrangler West
intends to continue to reinvest funds flow from operations and other
available capital to protect current and add future value. Wrangler
West trades on the TSX Venture Exchange under the symbol "WX".
Additional Information
Wrangler West files additional shareholder and public information on
SEDAR accessible at www.sedar.com. This includes the Statement of Reserves Data and Other Oil and Gas
Information Form NI 51-101 F1, F2 and F3 effective December 31, 2010.
Alternatively, to obtain copies of published corporate information,
contact Crista L. Ferguson, Chief Financial Officer, Wrangler West
Energy Corp., 1950, 444 Fifth Avenue SW, Calgary, Alberta, Canada T2P
2T8 (telephone +1 403 290 6800 or e-mail info@wranglerwest.ca).
The TSX Venture Exchange has not reviewed, and does not accept
responsibility for, the adequacy or accuracy of this news release.
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