CALGARY , Aug. 13, 2014 /CNW/ - Connacher Oil and Gas Limited (CLL - TSX;
"Connacher" or the "Company") announces its financial and operating
results for the quarter ended June 30, 2014 ("Q2 2014") (all amounts
are in Canadian dollars unless otherwise noted).
Q2 2014 Highlights
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Q2 2014 production increased 18% to 13,689 bbl/d (Q2 2013 - 11,572
bbl/d). Production increases were attributable to the Company's four
new well pairs at Pad 104 and four infill wells at Pod One drilled in
2013
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Revenue, net of royalties, increased 5% to $116.4 million in Q2 2014 (Q2
2013 - $110.6 million )
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Adjusted EBITDA decreased 5% to $23.3 million in Q2 2014 (Q2 2013 -
$24.4 million ) due to higher realized risk management losses, partially
offset by higher bitumen netbacks
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Operating costs increased 35% to $31.0 million in Q2 2014 (Q2 2013 -
$23.0 million ) due to higher natural gas prices, maintenance costs
associated with building repairs, and increased fluid disposal and
treating costs
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Improvements to the treating process allowed the Company to generate a
record low diluent blend ratio of 14.4%
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Net realized bitumen sales price increased 5% to $58.92 /bbl (Q2 2013 -
$56.38 /bbl)
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Q2 2014 capital expenditures totaled $25.9 million (Q2 2013 - $28.4
million ) and were focused primarily on the nine new infill wells at Pod
One
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A first lien term loan facility (the "Term Loan Facility") was closed on
May 23, 2014 for an aggregate principal amount of US$128.4 million
(equivalent of $140 million )
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Concurrent with the closing of the Term Loan Facility, unanimous consent
was received from the lenders under the credit facility to extend the
maturity date to December 31, 2016 and to reduce the borrowing base to
$30.0 million
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Connacher closed Q2 2014 with a cash balance of $134.4 million (Q4 2013
- $55.6 million ) and available credit facilities of $2.0 million (Q4
2013 - $76.7 million ), net of $28.1 million (Q4 2013 - $18.3 million )
of outstanding letters of credit
Q2 2014 Financial and Operational Summary
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FINANCIAL ($ 000 except per share amounts)
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Q2 2014
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Q2 2013
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%
Change
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YTD 2014
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YTD 2013
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%
Change
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Revenue, net of royalties
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$116,446
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$110,613
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5
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$221,398
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$211,933
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4
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Adjusted EBITDA (1) |
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23,267
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24,404
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(5)
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34,215
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35,086
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(2)
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Net loss
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(10,042)
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(32,117)
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(69)
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(72,655)
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(78,683)
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(8)
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Funds flow (used) (1) |
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1,068
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5,678
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(81)
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(9,117)
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(3,833)
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138
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Per share, basic and diluted (total)
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(0.02)
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(0.07)
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(71)
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(0.16)
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(0.18)
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(11)
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Capital expenditures
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25,937
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28,436
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(9)
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44,022
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48,687
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(10)
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Cash on hand
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134,422
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76,724
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75
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Working capital surplus (deficiency)
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88,898
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56,606
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57
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Long-term debt
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1,026,965
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881,396
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17
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Shareholders' equity
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149,688
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265,064
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(44)
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(1)
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Adjusted EBITDA and funds flow (used) are non-GAAP measures, which are
defined in the Advisory section of the
Company's management discussion and analysis for the period ending June
30, 2014
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OPERATIONAL
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Q2 2014
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Q2 2013
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%
Change
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YTD 2014
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YTD 2013
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%
Change
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Daily bitumen production (bbl/d)
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13,689
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11,572
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18
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13,562
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11,986
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13
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Daily bitumen sales (bbl/d)
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13,784
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11,742
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17
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13,078
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12,208
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7
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Operations and Marketing
Connacher's Great Divide production for Q2 2014 averaged 13,689 bbl/d,
an 18% increase over Q2 2013 production of 11,572 bbl/d and two per
cent higher than the prior quarter (Q1 2014 - 13,433 bbl/d).
Connacher drilled nine infill wells at Pod One in Q1 2014. Steaming
began on two of the infills in early July and these wells are on
production. Steaming on the next two wells will begin in August.
During the second quarter we achieved the lowest diluent blend ratio
("DBR") in the history of Great Divide at 14.4%. The DBR averaged 20%
for 2013 and 19% for the first quarter of 2014. The lower DBR is not
reflected in operating costs as it reduces the cost of diluent and
improves the bitumen netback.
Operating costs increased in Q2 2014 by 35% to $31 million over Q2 2013
( $23 million ). Natural gas prices contributed approximately $3 million
of the increase as prices increased to $4.43 /GJ in Q2 2014 versus
$3.36 /GJ in Q2 2013. Fluid handling and disposal costs increased due to
higher water and off spec volumes associated with the latest round of
infill drilling and unexpected operational issues with third-party
disposal facilities.
Connacher continues to demonstrate that having diversified market
options with solid logistics execution adds value to our barrels and
rail remains a very effective strategy for navigating market volatility
and optimizing realized bitumen prices. Allocations to rail
(approximately 37%) were reduced in Q2 2014 in response to strength in
intra- Alberta pricing.
Capital Projects
Following closing of the Term Loan Facility in May 2014 , the Company
finalized its 2014 growth capital plan of $113 million , excluding
maintenance capital. This includes the previously announced initial
2014 growth capital expenditures of $50 million (nine new infill wells
at Pod One). The remaining $63 million will be spent primarily on the
commercialization of the SAGD+® process at Algar and the mini‐steam expansion project at Pod One, both
of which are expected to start up in 2015. Funding for the 2014 growth
capital plan will come from cashflow and the Term Loan Facility.
2013 Corporate Responsibility Report
Connacher is pleased to announce that it has published its 2013
corporate responsibility report. This report represents a collection of
the Company's achievements in sustainability, which includes empowering
a committed workforce, engaging stakeholders by investing in local
communities; and protecting the environment and mitigating impacts.
Connacher's corporate responsibility report follows the Global Reporting
Initiative to determine the report content, and aligns its performance
metrics with the Canadian Association of Petroleum Producers
Responsible Canadian Energy™ program. The report was third-party
checked by Responsibility Matters Inc. To view the full report, please
visit www.connacheroil.com
Q2 2014 Conference Call Details
Connacher will host its quarterly conference call on August 14, 2014 at
8AM MDT . Interested participants can call in to (888) 231-8191. Please
use the Conference ID# 64220765. An audio webcast of the conference call will also be available through
the Company's website, or through the following link: http://event.on24.com/r.htm?e=812303&s=1&k=AA477C3F02CB9E9A4B496D821C0E46AF. Participants are encouraged to call in 5 minutes prior to commencement
of the call.
About Connacher
Connacher is a Calgary -based in-situ oil sands developer, producer and
marketer of bitumen. The Company holds a 100 per cent interest in
approximately 450 million barrels of proved and probable bitumen
reserves and operates two steam assisted gravity drainage facilities
located on the Company's Great Divide oil sands leases near Fort
McMurray, Alberta .
Forward Looking Information
This press release contains forward looking information, including but
not limited to, the expectations relating to the timing for bringing
the infill wells on production and the planned future capital
expenditures and the funding and timing thereof.
Forward looking information is based on management's expectations
regarding the Company's future financial position, the Company's future
growth, results of operations and production, future commodity prices
and foreign exchange rates, future capital and other expenditures
(including the amount, nature and sources of funding thereof), plans
for and results of drilling activity, environmental matters, business
prospects and opportunities and future economic conditions. Forward
looking information involves significant known and unknown risks and
uncertainties, which could cause actual results to differ materially
from those anticipated. These risks include, but are not limited to:
that cashflow and the Term Loan Facility may not provide adequate funds
to fund the Company's 2014 growth capital plan, the risks associated
with the oil and gas industry (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 and resource estimates, the uncertainty of
geological interpretations, the uncertainty of estimates and
projections relating to production, costs and expenses, and health,
safety and environmental risks), risk of commodity price and foreign
exchange rate fluctuations, risks associated with the impact of general
economic conditions, risks and uncertainties associated with
maintaining the necessary regulatory approvals and securing the
financing to proceed with the operation and continued expansion of the
Great Divide oil sands project.
In addition, reported average production levels may not be reflective of
sustainable production rates and future production rates may differ
materially from the production rates reflected in this press release
due to, among other factors, difficulties or interruptions encountered
during the production of bitumen.
Additional risks and uncertainties affecting Connacher and its business
and affairs are described in further detail in Connacher's Annual
Information Form for the year ended December 31, 2013 . Although
Connacher believes that the expectations in such forward looking
information are reasonable, there can be no assurance that such
expectations shall prove to be correct. The forward looking information
included in this press release is expressly qualified in its entirety
by this cautionary statement. The forward looking information included
herein is made as of the date of this press release and Connacher
assumes no obligation to update or revise any forward looking
information to reflect new events or circumstances, except as required
by law.
SOURCE Connacher Oil and Gas Limited