THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED
STATES NEWS SERVICES.
Renegade Petroleum Ltd. ("Renegade" or the "Company") (TSX VENTURE:RPL) is
pleased to announce it has filed on SEDAR its audited consolidated financial
statements ("Financial Statements") and management's discussion and analysis
("MD&A") for the three months and year ended December 31, 2010. Selected
financial and operational information is outlined below and should be read in
conjunction with Renegade's Financial Statements, the related MD&A and the
annual information form ("AIF") which will be available shortly for review at
www.renegadepetroleum.com or www.sedar.com.
FINANCIAL & OPERATING HIGHLIGHTS
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Three months Ended December
31 Year Ended December 31
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% %
2010 2009 change 2010 2009 change
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Financial (000's
except per share
amounts)
Petroleum and natural
gas sales 10,536 700 1,405 29,201 2,747 963
Funds flow from (used
in) operations (1) 3,688 (680) 642 9,416 410 2,197
Per share - basic(2) 0.07 (0.09) 178 0.21 0.07 200
Per share -
diluted(2) 0.06 (0.09) 167 0.20 0.07 186
Net loss (2,678) (808) (231) (8,449) (827) (922)
Per share - basic
and diluted(3) (0.05) (0.10) 50 (0.19) (0.14) (36)
Capital expenditures 31,582 326 9,588 157,906 1,158 13,536
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Net debt (surplus) 45,782 (5,372) 952 45,782 (5,372) 952
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Weighted average
shares outstanding(2)
Basic 54,973 7,749 609 44,186 5,741 670
Diluted 57,369 7,842 632 46,199 5,835 692
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Shares outstanding,
end of period(2)
Basic 55,423 10,923 407
Diluted 62,576 14,495 332
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Operating
Average Daily
Production
Crude Oil (bbls/d) 1,450 88 1,548 1,043 103 913
Natural Gas (Mcf/d)
(4) 390 247 58 271 237 14
Natural gas liquids
(bbls/d) 2 2 - 2 2 -
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Total (boe/d) 1,517 132 1,049 1,090 145 652
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Average realized price
Crude oil and
Natural Gas Liquids
($/bbl) 76.32 74.55 2 74.05 64.91 14
Natural Gas ($/mcf)
(4) 2.20 3.27 (33) 2.80 2.91 (4)
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Total ($/boe) 75.49 57.56 31 73.40 51.97 41
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Netback ($/boe)(4)
Oil and Gas Sales 75.49 57.56 31 73.40 51.97 41
Royalties 16.09 8.72 85 13.24 7.79 70
Operating Expenses 16.83 6.93 143 18.13 5.81 212
Transportation 2.19 2.06 6 2.60 1.44 81
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Operating Netback 40.38 39.85 1 39.43 36.93 7
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(1) "Funds flow from operations" should not be considered an alternative
to, or more meaningful than, cash flow from operating activities as
determined in accordance with Canadian Generally Accepted Accounting
Principles as an indicator of Renegade's performance. "Funds flow from
operations" represents cash flow from operating activities prior to
changes in non-cash working capital and incurred asset retirement
expenditures. Renegade also presents funds flow from operations per
share whereby per share amounts are calculated using weighted average
shares outstanding consistent with the calculation of earnings per
share.
(2) All references to per share basic, per share diluted, outstanding
common share and weighted average common share amounts reflect the
consolidation on January 18, 2010 of all of Renegade's common shares on
a ten (10) to one (1) basis.
(3) Due to the anti-dilutive effect of Renegade's net loss for the three
months ended December 31, 2010 and 2009, and the year ended December
31, 2010 and 2009, the diluted number of shares is equal to the basic
number of shares. Therefore, diluted per share amounts of the net loss
are equivalent to basic per share amounts.
(4) A conversion ratio of 1 barrel of oil equivalent ("boe"): 6 Mcf has
been used, which is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not necessarily
represent a value equivalency at the wellhead. Boes may be misleading,
particularly if used in isolation.
2010 Accomplishments
-- Increased average daily production by 652% to 1,090 boe/d in 2010 from
145 boe/d in 2009. For the fourth quarter of 2010 Renegade achieved
record average production of 1,517 boe/d up 1,049% from 132 boe/d in the
fourth quarter of 2009. Production for the three months ended December
31, 2010 production consisted of 96% light oil and 4% natural gas and
natural gas liquids;
-- Reduced operating costs in the fourth quarter of 2010 by 41% to $16.83
per boe from $28.35 per boe in the third quarter of 2010; operating
costs for the year ended 2010 were $18.13 per boe;
-- Increased proved plus probable reserves by 1,173% to 8.1 million boe
(98% liquids) from 0.6 million boe in 2009 on a pro forma basis post-
acquisition of Petro Uno Resources Ltd. ("Petro Uno");
-- Increased funds flow from operations to $9.4 million or $0.20 per
diluted share in 2010 from $0.4 million or $0.07 per share in 2009; on a
per diluted share basis funds flow from operations grew 186% in 2010;
-- Drilled 58.0 gross (37.2 net) wells in 2010 with a 95% success rate;
-- Increased land position to 109,988 gross (74,296 net) undeveloped acres
in 2010 up from 14,595 gross (8,877 net) undeveloped acres in 2009 for a
737% increase in net undeveloped land;
-- Completed 4 equity financings for a total of $100 million;
-- Completed 7 acquisitions for a total of $115 million; and
-- Entered into a new banking facility for $40 million that was
subsequently increased to $45 million.
2011 Operations Update
-- Drilled 8.0 gross (7.1 net) wells since the beginning of 2011 with a
100% success rate including 4.0 gross (3.1 net) in Southeast
Saskatchewan and Manitoba and 4.0 gross (4.0 net) wells in the Viking in
west central Saskatchewan (on a pro forma basis post-acquisition of
Petro Uno);
-- Acquired Petro Uno in an all share deal in April 2011 through the
issuance of 11.8 million shares of Renegade;
-- Raised $44.6 million of equity through the issuance of 9.9 million
shares at a price of $4.50 per share;
-- Acquired 10,191 net acres of land in various core areas in Southeast
Saskatchewan including 640 net acres in the heart of the Bakken light
oil resource play; and
-- Is in discussions with National Bank to increase its operating facility
to $65 million; closing of the operating facility is expected to occur
at the end of May.
RESERVES
In 2010, Renegade replaced 1,731% of production on a proved plus probable basis,
including reserves added through acquisitions, and increased its year-end proved
plus probable reserves by 1,173% to 8.1 million boe on a pro forma basis
post-acquisition of Petro Uno. Comparable pro forma year-end 2009 reserves were
0.6 million boe proved plus probable.
Due to the fact that Renegade and Petro Uno each had a 50% working interest in
every well that Petro Uno drilled in the Viking formation in 2010, the reserve
information has been disclosed on a pro forma basis post-acquisition of Petro
Uno as at December 31, 2010 in order to provide a more meaningful analysis of
the Company.
Renegade's reserves ("Renegade Report") and Petro Uno's reserves ("Petro Uno
Report") were evaluated as at December 31, 2010 by the independent engineering
firm of Sproule Associates Limited ("Sproule") in accordance with the rules
provided by National Instrument 51-101 ("NI 51-101"). The following tables
provide summary information presented in the Renegade Report and Petro Uno
Report effective December 31, 2010 and based on their December 31, 2010 price
forecast. The tables provide a summary of the Renegade reserves as if the
acquisition of Petro Uno had occurred on January 1, 2010 on a pro forma basis.
The summary tables below should be read in conjunction with Renegade Report and
Petro Uno Report which will form part of the AIF which will be filed on Sedar.
The year end working interest reserves for 2010 include Renegade's and Petro
Uno's working interests excluding royalty interests received and before
royalties payable.
Summary of Company Working Interest Oil and Gas Reserves - Forecast Prices and
Costs
A summary of the Company working interest oil and gas reserves using forecast
pricing and costs on a pro forma basis including the acquisition Petro Uno are
as follows:
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Future
Oil Gas NGL Total Development
December 31, 2010 (mbbl) (mmcf) (mbbl) (mboe) Costs ($000's)
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Proved Producing 2,807 496 7 2,897 -
Proved Non-Producing 130 7 - 131 317
Proved Undeveloped 2,270 26 - 2,274 70,606
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Total Proved 5,207 529 7 5,302 70,923
Probable 2,800 191 2 2,834 11,015
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Total Proved plus
Probable 8,007 720 9 8,136 81,938
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Summary of Before and After Tax Net Present Values
A summary of the Company's pro forma Petro Uno acquisition basis before and
after tax net present value of reserves, as at December 31, 2010 are as follows:
The estimated future net revenue contained in the following table does not
necessarily represent the fair market value of the reserves. There is no
assurance that the forecast price and cost assumptions contained in the Renegade
Report or the Petro Uno Report will be attained and variations could be
material. The recovery and reserve estimates described herein are estimates
only. Actual reserves may be greater or less than those calculated.
--------------------------------------------------
Before Tax Net Present Value ($000's)
--------------------------------------------------
Discount Rate
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Description Undiscounted 5% 10% 15% 20%
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Proved Producing 128,326 103,283 88,490 78,327 70,785
Proved Non-Producing 7,226 6,372 5,721 5,210 4,800
Proved Undeveloped 65,123 47,580 35,182 26,026 19,035
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Total Proved 200,675 157,235 129,393 109,563 94,620
Probable 145,535 98,683 72,876 56,916 46,232
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Total Proved Plus Probable 346,210 255,918 202,269 166,482 140,852
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After Tax Net Present Value
--------------------------------------------------
Discount Rate
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Description Undiscounted 5% 10% 15% 20%
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Proved Producing 125,202 100,567 86,022 76,049 68,660
Proved Non-Producing 5,562 4,887 4,373 3,972 3,652
Proved Undeveloped 47,592 32,897 22,533 14,908 9,114
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Total Proved 178,356 138,351 112,928 94,929 81,426
Probable 106,012 71,705 52,676 40,872 32,951
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Total Proved Plus Probable 284,368 210,056 165,604 135,801 114,377
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Reserves Reconciliation
A summary of the reserves reconciliation for the year ended December 31, 2010 on
a pro forma Petro Uno acquisition basis is as follows:
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(mboe) Proved Probable Proved plus Probable
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Opening Balance, December 31, 2009 373 264 637
Infill Drilling 2,203 1,178 3,381
Extensions 623 366 989
Discoveries 21 5 26
Acquisitions 2,674 1,131 3,805
Economic Factors (1) (4) (5)
Dispositions (115) (59) (174)
Production (442) - (442)
Technical Revisions (33) (48) (81)
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Closing Balance December 31, 2010 5,303 2,833 8,136
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Capital Program Efficiency
The efficiency of the Company's capital program on a pro forma Petro Uno
acquisition basis for the year ended December 31, 2010 is summarized below:
----------------------------------------------------------------------------
December 31, 2010 December 31, 2009
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Proved Proved
Plus Plus
Proved Probable Proved Probable
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Capital Expenditures ($000's)
Exploration and Development 67,449 67,449 2,733 2,733
Acquisitions 115,605 115,094 - -
Facilities 10,917 10,917 - -
Change in future development costs
("FDC") 67,778 61,752 940 1,390
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Total Costs 261,749 255,212 3,673 4,123
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Reserve Additions (mboe)
Exploration and Development 2,403 3,948 133 201
Acquisitions - Corporate and
property, net 2,641 3,724 - -
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2010 Finding & Development Costs
($/boe)
Excluding FDC 32.61 19.85 20.55 13.60
Including FDC 60.82 35.49 27.62 20.51
Including FDC, excluding Facilities 56.27 32.73 27.62 20.51
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2010 Finding, Development and
Acquisition Costs ($/boe)
Excluding FDC 39.25 25.22 - -
Including FDC 52.69 33.27 - -
Including FDC, excluding Facilities 50.52 31.84 - -
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Recycle Ratio
Operating Netback ($/boe) 40.63 40.63 35.95 35.95
Finding and Development Costs,
excluding Facilities 50.52 31.84 27.62 27.62
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Recycle Ratio 0.8 1.3 1.3 1.8
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Reserves
Reserves additions including
revisions (mboe) 5,044 7,672 133 201
Production (mboe) 443 443 65 65
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Reserves Replacement 11.4 17.3 2.0 3.1
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Reserve Life Index
Total Company Interest Reserves
(mboe) 5,303 8,137 374 639
Annual 2010 Production (mboe) 443 443 65 65
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Reserve Life Index based on annual
2010 production 12.0 18.4 5.8 9.8
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OUTLOOK
During 2010, Renegade transitioned from a start-up at the beginning of the year
to a Company with multiple core areas by the end of the year. Renegade executed
drilling, work over and optimization programs in each of its core areas in
southeast Saskatchewan, in west central Saskatchewan in the Viking formation, in
North Dakota and in Manitoba in the Spearfish play. The Company continually
evaluates and assesses its asset base and is focusing on capital programs which
will provide the highest rates of return available to the Company in 2011.
Renegade has made the necessary investments in its core areas to ensure an
efficient and highly profitable production profile during 2011.
Renegade now has more than 296 gross (237 net) drilling locations in its
inventory. This depth of drilling inventory positions the Company well for
long-term sustainable growth in production, reserves and net asset value going
forward.
Renegade's 2011 capital expenditures budget has been set at $65 million of which
$57 million will be spent on drilling and completions. Due to the extended
break-up anticipated by management as a result of record snow pack in the first
quarter of 2011 in Southeast and West Central Saskatchewan, management is
budgeting to re-start the Company's drilling program in early July.
Execution of the 2011 the budget is expected to increase the Company's daily
production to an average between 2,400 and 2,600 boe/d for the year ending 2011.
Renegade's recent drilling results in the Lucky Hills area in the Viking light
oil resource play have exceeded management's expectations. Accordingly, Renegade
has accelerated the capex program in the Viking. Renegade expects to spend
approximately 60% of its 2011 drilling and completions budget in the Viking, 38%
in Southeast Saskatchewan and Manitoba, and 2% in North Dakota. In total,
Renegade expects to drill approximately 46.8 net wells in 2011.
Renegade's management believes that with the Company's high-quality reserve base
and development drilling inventory and excellent balance sheet, the Company is
well-positioned to continue generating strong operating and financial results
through 2011 and beyond.
SUBSEQUENT EVENTS
On February 16, 2011, the Company announced the proposed acquisition of all of
the issued and outstanding common shares of Petro Uno, a public junior oil and
gas exploration company which has interests in petroleum and natural gas
properties and undeveloped land in West Central Saskatchewan. Consideration
consisted of 11,811,248 common shares of the Company at a price of $4.06 per
share. On April 14, 2011, the Company announced the closing of the Petro Uno
acquisition.
On March 9, 2011, the Company closed a bought deal equity financing pursuant to
which the Company issued 9,300,000 Renegade common shares at a price of $4.50
per share for gross proceeds of approximately $41.9 million. On April 8, 2011
the Company closed the over-allotment option associated with the financing
pursuant to which the Company issued 604,700 common shares at a price of $4.50
per share for additional gross proceeds of approximately $2.7 million.
CORPORATE INFORMATION
Renegade's common shares trade on the TSX Venture Exchange under the symbol RPL.
Renegade currently has approximately 77.3 million shares outstanding and 84.2
million fully-diluted shares.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements. More particularly, this
press release contains statements concerning Renegade's capital expenditure
program, Renegade's drilling plans, the expected ability of Renegade to execute
on its exploration and development program and Renegade's anticipated production
(both in terms of quantity and raw attributes).
The forward-looking statements contained in this document are based on certain
key expectations and assumptions made by Renegade, including: (i) with respect
to capital expenditures, generally, and at particular locations, the
availability of adequate and secure sources of funding for Renegade's proposed
capital expenditure program and the availability of appropriate opportunities to
deploy capital; (ii) with respect to drilling plans, the availability of
drilling rigs, expectations and assumptions concerning the success of future
drilling and development activities and prevailing commodity prices; (iii) with
respect to Renegade's ability to execute on its exploration and development
program, the performance of Renegade's personnel, the availability of capital
and prevailing commodity prices; and (iv) with respect to anticipated
production, the ability to drill and operate wells on an economic basis, the
performance of new and existing wells and accounting risks typically associated
with oil and gas exploration and production.
Although Renegade believes that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance should not
be placed on the forward-looking statements because Renegade can give no
assurance that 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. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. These include, but
are not limited to, the failure to obtain necessary regulatory approvals, risks
associated with the oil and gas industry in general (e.g., operational risks in
development, exploration and production; delays or changes in plans with respect
to exploration or development projects or capital expenditures; the uncertainty
of reserve estimates; the uncertainty of estimates and projections relating to
production, costs and expenses; health, safety and environmental risks;
commodity price and exchange rate fluctuations; and uncertainties resulting from
potential delays or changes in plans with respect to exploration or development
projects or capital expenditures).
The forward-looking statements contained in this document are made as of the
date hereof and Renegade 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.
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