PetroShale Announces First Quarter 2014 Results
30 Mai 2014 - 2:00AM
Marketwired Canada
PetroShale Inc. ("PetroShale" or the "Company") (TSX VENTURE:PSH)(OTCQX:PSHIF)
is pleased to announce its financial and operating results for the quarter ended
March 31, 2014. The Company's unaudited consolidated financial statements and
corresponding Management's Discussion and Analysis (MD&A) for the three month
period ended March 31, 2014, will be available on SEDAR at www.sedar.com, on the
OTCQX website at www.otcqx.com, and on PetroShale's website at
www.petroshaleinc.com. Copies of the materials can also be obtained upon request
without charge by contacting the Company directly.
Operating Highlights:
-- Reported production for the quarter of 166 boe/d (Company interest,
gross of royalty - 127 boe/d net of royalty interest), weighted 95% to
light crude oil and liquids, a 34% increase over the same period in
2013.
-- Including incremental production volumes from four (gross) new wells
that came on-stream in February 2014 in the Company's Stockyard Creek
asset, confirmed run-rate production through early May of approximately
300 boe/d (gross of royalty);
-- In addition to the four (0.2 net) new wells brought onto production
during the quarter, the Company drilled and is in various stages of
completing an additional four (0.4 net) wells subsequent to the end of
the quarter;
-- Realized strong operating netbacks of $54.22 per boe (Company interest,
gross of royalty, and excluding the impact of hedging - $71.14 per boe
net of royalty interest and excluding hedging), which reflects the
Company's high quality production, combined with a strong pricing
environment and low operating expenses; and
-- Continued to successfully execute on its aggressive acquisition strategy
in North Dakota, closing three separate transactions during the period.
These include an 18.75% Working Interest ("WI") in a proposed drilling
unit in McKenzie County, an approximate 19% WI in a drilling unit in
Williams County, as well as the acquisition of additional undeveloped
land in Mountrail County through a Federal land sale. Subsequent to the
end of the quarter, the Company closed on the acquisition of an
additional 9.5% interest in two of its existing wells in Stockyard
Creek, and acquired two additional acreage parcels in McKenzie County.
Financial Highlights:
-- Generated $1.1 million in revenue net of royalties during the period, an
increase of 47% over the same period in 2013, reflecting the substantial
growth in the Company's assets;
-- Enhanced ongoing financial flexibility to fund further acquisitions and
capital programs by securing a subordinated loan facility provided by
the Company's two largest shareholders. The facility was recently
increased from $20 million to $30 million in capacity; and
-- Subsequent to the end of the period, announced a private placement of up
to 5 million common voting shares at a price of $1.30 per share, for
total gross proceeds of up to $6.5 million. Proceeds will be used
initially to repay outstanding debt. Completion of the private placement
is subject to the approval of the TSX Venture Exchange.
Results of Oil and Gas Activities
March 31, March 31,
For the three months ended 2014 2013
----------------------------------------------------------------------------
Sales volumes
Oil and natural gas liquids (Bbl/d) 159 117
Natural gas (Mcf/d) 41 41
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Barrel of oil equivalent (Boe/d) 166 124
Barrel of oil equivalent, net of royalty (Boe/d) 127 96
Operating Netbacks ($/Boe)
Revenue $ 92.57 $ 82.38
Royalties (22.02) (18.50)
Realized hedge loss (0.54) -
Operating costs (10.84) (18.50)
Production taxes (5.49) (2.23)
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Operating netback $ 53.68 $ 43.15
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Operating netback prior to hedging $ 54.22 $ 43.15
----------------------------------------------------------------------------
Operating netback prior to hedging, on a net of
royalty basis $ 71.14 $ 55.65
----------------------------------------------------------------------------
Earnings before interest, taxes, depreciation and amortization (EBITDA) was
$204,000 for the three month period ended March 31, 2014 compared to $141,000
for the quarter ended March 31, 2013. For the first quarter ended March 31, 2014
the Company reported a net loss of $554,000 ($0.02 per share), compared to a
loss of $17.4 million ($0.60 per share) for the three month period ended March
31, 2013 (primarily due to an impairment charge taken in the prior period).
Letter to shareholders:
The first three months of calendar 2014 coincide with PetroShale's first
quarterly reporting period since changing our year end to December 31.
Through the first quarter, we continued to execute on our strategy of acquiring
and consolidating working interests ("WI") in the most prolific and proven areas
of the Williston Basin. In January 2014, we successfully acquired an 18.75% WI
in a proposed drilling unit within the highly productive McKenzie County. This
drilling unit has been spaced for 8 wells and will be operated by EOG Resources,
Inc., a leading and technically skilled operator in the North Dakota Bakken.
In February 2014, we followed up on that transaction with the purchase of
acreage in Williams County, consisting of an approximately 19% WI in a drilling
unit. Finally, through our participation in a Federal land sale, we successfully
acquired additional prospective but undeveloped land in Mountrail County for
US$1.8 million. Subsequent to the end of the quarter, we purchased an additional
working interest of approximately 9.5% in two of our existing wells in Stockyard
Creek, and also acquired an interest in two additional acreage parcels in
McKenzie County.
In May, 2014, we announced a private placement of up to 5 million common voting
shares at a price of $1.30 per share, to generate gross proceeds of up to $6.5
million. Upon closing, which is anticipated in early June 2014, net proceeds
will be used to repay a portion of outstanding debt. This, along with the
extension of our subordinated loan facility, will provide PetroShale with
enhanced financial flexibility as we continue to pursue acquisitions that add to
our growing asset base in the North Dakota Bakken.
With our financial strength coupled with our business alliance with premier
operator, Slawson Exploration Company Inc., we are well positioned to continue
seeking strategic asset acquisitions in the Williston Basin that offer us the
ability to grow organically through a high quality asset base. As drilling
activity continues across our asset base through the balance of 2014, we expect
to benefit from resulting increases in production, cash flow and booked
reserves.
Thank you again for your interest in PetroShale, and we look forward to keeping
our shareholders updated on our ongoing growth and expansion.
M. Bruce Chernoff
Executive Chairman and CEO
About PetroShale
PetroShale is a growing oil company engaged in the acquisition and consolidation
of interests in the most prolific and proven areas of the Williston Basin in
North Dakota and Montana.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
Note Regarding Forward-Looking Statements and Other Advisories
Company interest means, in relation to the Company's interest in production and
reserves, the Company's working interest (operating and non-operating) before
the deduction of royalties payable and including such entity's royalty interest
in production and reserves. Where volumes of reserves and production have been
presented, they have been presented as company working interest, gross of
royalties, except where otherwise noted. All operating netbacks referenced in
this press release are Company working interest, except where otherwise noted.
All dollar figures included herein are presented in Canadian dollars, unless
otherwise noted.
Within this press release, references are made to terms commonly used in the oil
and natural gas industry. The terms "netback", "operating netback" or "EBITDA"
in this press release are not recognized measures under generally accepted
accounting principles in Canada. PetroShale uses "netback" as a key performance
indicator and it is used by the Company to evaluate the operating performance of
its petroleum and natural gas assets and is determined by deducting royalties
and production and operating expenses from petroleum and natural gas revenue.
EBITDA means earnings before interest, taxes, depletion and depreciation,
impairments, finance expense, foreign exchange gain or loss, share-based
compensation and other non-cash charges to income. Management believes that in
addition to net income (loss), operating netback and EBITDA are useful
supplemental measures as they assist in the determination of the Company's
operating performance, leverage and liquidity. Readers are cautioned, however,
that these measures should not be construed as an alternative to net income
(loss) or cash flow from (used in) operating activities determined in accordance
with IFRS as an indication of our performance.
This press release contains forward-looking statements and forward-looking
information (collectively "forward-looking information") within the meaning of
applicable securities laws relating to aspects of management focus, objectives,
strategies and business opportunities. Forward-looking information typically
uses words such as "anticipate", "believe", "project", "expect", "goal", "plan",
"intend" or similar words suggesting future outcomes, statements that actions,
events or conditions "may", "would", "could" or "will" be taken or occur in the
future. The forward-looking information is based on certain key expectations and
assumptions made by the Company's management, including expectations and
assumptions concerning prevailing commodity prices, exchange rates, interest
rates, applicable royalty rates and tax laws; future production rates and
estimates of operating costs; performance of existing and future wells; reserve
and resource volumes; anticipated timing and results of capital expenditures;
anticipated timing of the closing and the size of the private placement, and the
use of proceeds therefrom; the success obtained in drilling new wells; the
sufficiency of budgeted capital expenditures in carrying out planned activities;
the timing, location and extent of future drilling operations; the state of the
economy and the exploration and production business; results of operations;
performance; business prospects and opportunities; the availability and cost of
financing, labor and services; the impact of increasing competition; ability to
market oil and natural gas successfully; the Company's ability to access
capital, and obtaining the necessary regulatory approvals, including the
approval of the TSX Venture Exchange.
Although the Company believes that the expectations and assumptions on which
such forward-looking information is based are reasonable, undue reliance should
not be placed on the forward-looking information because the Company can give no
assurance that they will prove to be correct. Since forward-looking information
addresses future events and conditions, by its very nature they involve inherent
risks and uncertainties. The Company's actual results, performance or
achievement could differ materially from those expressed in, or implied by, the
forward-looking information and, accordingly, no assurance can be given that any
of the events anticipated by the forward-looking information will transpire or
occur, or if any of them do so, what benefits that the Company will derive
therefrom. Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press release in order
to provide security holders with a more complete perspective on the Company's
future operations and such information may not be appropriate for other
purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive.
Additional information on these and other factors that could affect our
operations or financial results are included in reports on file with applicable
securities regulatory authorities and may be accessed through the SEDAR website
(www.sedar.com). 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 information, whether as a result of new
information, future events or results or otherwise, other than as required by
applicable securities laws.
Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural
gas volumes have been converted to boe using a ratio of 6,000 cubic feet of
natural gas to one barrel of oil (6 Mcf: 1 Bbl). This boe conversion ratio 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 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 Mcf: 1 Bbl,
utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication
of value.
FOR FURTHER INFORMATION PLEASE CONTACT:
PetroShale Inc.
Attention: Executive Chairman and CEO
Email: Info@PetroShaleInc.com
Phone: +1.303.297.1407
www.petroshaleinc.com
Cindy Gray
5 Quarters Investor Relations, Inc.
403.828.0146
cgray@5qir.com
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