Progress Announces Third Quarter Results

CALGARY, Nov. 1, 2012 /CNW/ - (TSX: PRQ) - Progress Energy Resources Corp. ("Progress" or the "Company") announces results for the third quarter of 2012 (the "Quarter").  Development of Progress' leading land base continued on pace during the Quarter with capital investment of $73.7 million, net to Progress, or $167.8 million, gross including the North Montney Joint Venture ("NMJV"). In the Quarter, capital expenditures were prioritized to the NMJV, and the Company's proprietary North Montney properties in British Columbia.

Agreement for Purchase by PETRONAS
On June 27, 2012 Progress entered into an arrangement agreement with PETRONAS International Corporation Ltd. and PETRONAS Carigali Canada Ltd. ("PETRONAS Canada") for the purchase by PETRONAS Canada of all of Progress' outstanding common shares and the purchase by Progress of its outstanding convertible unsecured debentures, by way of an arrangement under the Business Corporations Act (Alberta).  The completion of the arrangement remains subject to the satisfaction or waiver of applicable conditions with the sole remaining condition being receipt of a notice from the Minister of Industry (the "Minister") under the Investment Canada Act that the acquisition of Progress by PETRONAS Canada is likely to be of net benefit to Canada.  On October 19, 2012 the Minister advised PETRONAS Canada that the Minister was not satisfied that the proposed investment was likely to be of net benefit to Canada.  PETRONAS Canada has up to 30 days, or longer as mutually agreed to, to make any additional representations and submit any further undertakings.  PETRONAS Canada and Progress have agreed to work together to ensure that the Minister has the necessary information to determine that the proposed acquisition of Progress is likely to be of net benefit to Canada.  On October 27, PETRONAS Canada exercised its right under the arrangement agreement to extend the "Outside Date" under the agreement to November 30, 2012.


  • Generated cash flow of $22.7 million in the Quarter or $0.10 per share, diluted;
  • Produced an average of 43,045 barrels of oil equivalent ("boe") per day in the Quarter; volumes for the Quarter were impacted by the previously announced planned shut-ins and the deferral of tie-ins and completions representing approximately 10 to 15 percent of production;
  • Drilled a total of 11 Montney horizontal wells (6.3 net) during the Quarter;
  • Drilled a total of 3 Dunvegan horizontal oil wells (2.9 net) during the Quarter;
  • Constructed the 50 million cubic feet ("mmcf") per day Altares gas plant, set to start up in November;

North Montney Joint Venture
Progress, along with its joint venture partner PETRONAS Canada, has begun aggressively developing the NMJV properties at Altares, Lily and Kahta.  Gross capital spending on the NMJV in the Quarter was $107.5 million ($13.4 net to Progress) comprised principally of drilling and completions and facilities expenditures. Eight horizontal Montney wells (4.0 net) were drilled in the Quarter, with three horizontals at Altares (two lower, one upper), two at Lily (one lower and one upper) and three targeting the lower Montney at Kahta. There are currently seven rigs running on the NMJV, with a new 50 mmcf per day gas plant set to begin operation early in the fourth quarter at Altares.

As part of the total consideration of $1.07 billion that PETRONAS Canada paid to acquire a 50 percent working interest in the Altares, Lily and Kahta properties, $802.5 million will be paid in the form of a capital carry over the next three to five years.  At the end of the Quarter, the remaining capital carry balance was approximately $678 million.

Financial Strength
Cash flow for the Quarter was $22.7 million or $0.10 per share, diluted. Capital investment was $167.8 million gross ($73.7 million net).  As at September 30, 2012, the Company had drawn $75 million on its $650 million revolving credit facility.  Debt-to-total capitalization as at September 30, 2012 was nine percent.

Progress' average realized natural gas price in the Quarter was $2.27 per thousand cubic feet, excluding the impact of the Company's hedging program.  Royalty rates averaged 7.0 percent in the Quarter as a result of lower natural gas prices.  Progress expects royalties to average seven percent in 2012 based on current commodity prices.  Operating costs averaged $6.03 per boe in the Quarter reflecting the Company's continued focus on operational efficiencies and maximization of volumes through existing facilities.

Consolidated Financial Statements and MD&A
Consolidated Financial Statements for the Quarter and Notes to the Consolidated Financial Statements and Management's Discussion and Analysis for Progress have been filed on SEDAR ( under Progress' profile and can also be accessed on the Company's website at

Progress is a Calgary based energy company primarily focused on natural gas exploration, development and production in northeast British Columbia and northwest Alberta. The common shares of Progress are listed on the Toronto Stock Exchange under the symbol PRQ.

  Three Months Ended
September 30
Nine Months Ended
September 30
  2012 2011 2012 2011
Income Statement ($ thousands, except per share amounts)    
Petroleum and natural gas revenue 83,131 114,037 267,619 348,492
Cash flow1 22,721 51,563 91,808 169,503
      Per share - diluted 0.10 0.22 0.39 0.74
Cash dividends declared2 - 23,395 47,007 69,666
      Per share - 0.10 0.20 0.30
Balance Sheet ($ thousands)        
Working capital deficiency (surplus) 45,736 (89,702) 45,736 (89,702)
Bank debt 75,000 - 75,000 -
Convertible debentures 364,926 353,100 364,926 353,100
Total debt 485,662 263,398 485,662 263,398
Capital expenditures 73,690 113,759 211,114 300,136
Property dispositions (42) (77) (13,291) (35,421)
Average Daily Production        
Natural gas (mcf/d) 220,606 224,629 228,673 222,407
Crude oil (bbls/d) 2,308 2,037 2,468 2,064
Natural gas liquids (bbls/d) 3,969 3,462 4,231 3,539
Total daily production (boe/d) 43,045 42,937 44,811 42,671
Average Realized Prices        
Natural gas ($/mcf) 2.27 3.73 2.25 3.83
Crude oil ($/bbl) 83.41 89.99 85.68 90.85
Natural gas liquids ($/bbl) 50.93 61.27 57.97 65.23
Wells Drilled, Net 9.2 12.0 27.5 36.5

(1) Represents cash flow from operating activities before changes in non-cash working capital.
(2) The dividends declared include distributions and dividends that grantees are entitled to on the vesting of the Share Unit Plan, the Long Term Incentive Plan and the Performance Unit Incentive Plan.

Advisory Regarding Forward-Looking Statements
This press release and financial highlights table (collectively the "press release") contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements.  In particular, forward looking statements in this press release include, but are not limited to, expected timing of commencement of operations of the Altares gas plant; anticipated average royalty rates for 2012; and statements regarding regulatory approvals and completion of the Arrangement.

The forward-looking statements and information are based on certain key expectations and assumptions made by Progress, including, amoung other things, expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services and future operating costs; and the ability to obtain all required regulatory approvals for the transaction, including, but not limited regulatory approvals. Although Progress believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because Progress can give no assurance that they will prove to be correct.

Since forward-looking statements and information 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 risks associated with the oil and gas industry in general such as 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 and resource estimates; the uncertainty of estimates and projections relating to reserves, resources, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to tax laws, royalties and environmental regulations; risk that timing of commencement of operations of the Altares gas plant may be delayed; the risk that the transaction may not close when planned or at all or on the terms and conditions set forth in the arrangement agreement; and the failure to obtain the necessary regulatory approvals required in order to proceed with the transaction.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Progress are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (

Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on the Company's future operations and such information may not be appropriate for other purposes.  The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive there from.  Readers are cautioned that the foregoing lists of factors are not exhaustive.  These forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Barrels of Oil Equivalent
"Boe" means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.



SOURCE Progress Energy Resources Corp.

Copyright 2012 Canada NewsWire

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