From the Wires
Angle Announces 2012 Third Quarter Results
Nov. 7, 2012 05:05 PM
CALGARY, ALBERTA -- (Marketwire) -- 11/07/12 -- Angle Energy Inc. ("Angle" or the "Company") (TSX:NGL) is pleased to announce its financial and operating results for the three and nine months ended September 30, 2012.
The Company has filed its unaudited interim consolidated financial statements and related management's discussion and analysis (MD&A) for the period ended September 30, 2012 on www.sedar.com and www.angleenergy.com. Certain selected financial and operational information for the three and nine months ended September 30, 2012 and the 2011 comparatives are set out below and should be read in conjunction with Angle's interim consolidated financial statements for the period ended September 30, 2012 and related MD&A.
Angle is pleased to report our financial and operating results for the three and nine months ended September 30, 2012. The Company has demonstrated progress in its goal to add value on a per share basis, with an emphasis on growing light oil and condensate volumes and improving the quality of production reported in barrels of oil equivalent per day.
COMPANY HIGHLIGHTS
-- Production for the third quarter averaged 14,222 boe/d of which 21
percent was light oil and condensate, 24 percent was NGLs and 55 percent
was natural gas.
-- Funds from operations for the third quarter of $19.7 million or $0.24
per diluted share.
-- Light crude oil and condensate production increased 55 percent to 3,066
bbls/d, while total light crude oil and natural gas liquids production
increased by 6 percent to reach 6,441 bbls/d, all as compared to the
third quarter of 2011.
-- Continued focus on light crude oil and condensate production resulted in
a 39 percent increase in production to average 3,066 bbl/d in the
quarter when compared to January 2012 (approximately 2,200 boe/d).
Cardium oil volumes in Harmattan tied-in during October bring total
light crude oil and condensate production to approximately 3,465 bbl/d,
a 58 percent increase over January 2012.
-- Capital spending in the third quarter was $31.2 million which included
the drilling and rig release of 10 gross (7.1 net) horizontal wells in
the quarter, with 8 gross (5.1 net) wells targeting Cardium light oil.
-- Angle's corporate borrowing base has increased by 14 percent to $250
million as a result of the semi-annual review with the banking
syndication. Combined with the $60 million in outstanding convertible
debentures, the Company's total credit capacity is $310 million.
Financial
In the third quarter of 2012, oil and natural gas revenues were $41.7 million as compared to $47.7 million in the third quarter of 2011, due primarily to a 39 percent decline in natural gas prices and a 34 percent decline in NGL prices (ethane, propane, butane mixture).
The commodity mixture Angle produces has changed materially, with light oil and condensate at 21 percent of corporate production as compared to 14 percent of corporate production in the third quarter of 2011. This successful shift to a higher quality 6:1 barrel of oil equivalent (boe) has resulted in approximately $6.8 million of additional revenue in this quarter versus the revenue that would have resulted without a change in the commodity mixture. Illustrating this point another way, the additional 1,089 bbls/d of light oil and condensate the Company produced over last year's comparative quarter is the revenue equivalent of 31.2 mmcf/d (5,200 boe/d) of natural gas.
Funds from operations were $19.7 million or $0.24 per diluted share, and the Company recorded a net loss of $2.4 million or $0.03 per diluted share due to calculated unrealized derivative instrument losses.
Angle exited the quarter with bank debt, including working capital deficiency, of $174.5 million on a recently updated bank line of $250 million. In addition, the Company has $60 million of convertible debentures outstanding for total net debt of $234.5 million compared to total credit capacity of $310 million. The balance sheet shows healthy flexibility, with the bank line increase of 14 percent directly attributable to Angle's successful drilling efforts in the Harmattan Cardium light oil play.
Angle anticipates actual 2012 results will be materially consistent with our guidance, with the exception of capital and net debt. Capital expenditures are expected to be $161 to $163 million for the year due to the acceleration of projects based on favourable results from the Cardium plays in Harmattan and Edson. This capital allocated late in the fourth quarter is expected to mainly impact 2013 operating results. Total gross wells drilled in 2012 will be 48 (37.5 net) and year-end net debt will be between $237 and $242 million.
Operations
The third quarter of 2012 was primarily focused on drilling operations on our light oil Cardium projects in Harmattan and Edson with 8 gross (5.1 net) wells of the 10 gross (7.1 net) horizontal wells rig released in the quarter. To date in 2012, the Company has drilled 35 horizontal wells, 25 gross (19.9 net) horizontal wells targeted Cardium light oil projects and of those 25 wells, 17 net wells were in the Harmattan Cardium project. The third quarter operational activities were described in detail in Angle's October 16, 2012 press release. Subsequent to this release, Angle has completed the well tie-ins discussed, and is currently producing in excess of 15,000 boe/d (22 percent light oil and condensate, 27 percent NGLs, and 51 percent natural gas).
Outlook
The Cardium light oil play at Harmattan will continue to be the focus of Angle's capital investment, with rates of return over 50 percent per well in the current commodity environment. Importantly, in the third quarter, the Company successfully drilled and tested three Cardium oil wells which were several miles south and west from the earliest wells drilled in the northern area of the project, with results proving good productivity. The play is now producing 1,802 bbls/d of light oil, 182 bbls/d of NGLs and 178 boe/d of gas, for total production of 2,162 boe/d, from 19 wells. Total undrilled inventory in the play is over 176 wells at a four well per section development density. Angle is showing consistent success on a large, eight year drilling project.
In environments such as the past nine months of 2012, it is key to be a low cost operator. The Company has managed a marginal 3 percent increase in operating expenses per boe while achieving a 55 percent increase in light oil and condensate production. At $5.93/boe, Angle is in the top decile of its peers with a low cost structure. In order to continue this low cost advantage, the Company has continued in its plans to build a 4,000 bbl/d battery in Harmattan to handle future growth from the play. Angle has maintained or improved its controllable costs, with drilling costs down 8 percent per well from last year, and cash costs per barrel down 4 percent from last year.
The strategy the Company will continue to pursue is increasing value per share, and not solely chasing growth on a per barrel of oil equivalent basis without an attractive rate of return on capital. To this end, Angle plans to demonstrate the value in its portfolio of projects and maximize the return to shareholders. The Company looks forward to reporting the results of its 2012 fourth quarter activities, anticipated to be released early in 2013.
HIGHLIGHTS
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Three Months Ended Nine Months Ended
September 30 September 30
2012 2011 Change 2012 2011 Change
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(000s, except per share
data) ($) ($) (%) ($) ($) (%)
FINANCIAL
Oil and natural gas
revenues 41,678 47,698 (13) 133,510 140,362 (5)
Funds from operations
(1) 19,747 24,852 (21) 61,545 71,579 (14)
Per share - basic ($) 0.24 0.34 (29) 0.77 0.99 (22)
Per share - diluted
($) 0.24 0.34 (29) 0.77 0.97 (21)
Cash flow from
operating activities 20,201 25,949 (22) 60,453 74,931 (19)
Net income (loss) and
comprehensive income
(loss) (2,430) 5,040 (148) 558 15,411 (96)
Per share - basic ($) (0.03) 0.07 (143) 0.01 0.21 (95)
Per share - diluted
($) (0.03) 0.07 (143) 0.01 0.21 (95)
Capital expenditures
(2) 31,178 45,163 (31) 128,363 123,730 4
Total assets (end of
period) 670,358 609,819 10 670,358 609,819 10
Net debt (end of
period) (3) 234,467 202,043 16 234,467 202,043 16
Shareholders' equity
(end of period) 371,094 343,446 8 371,094 343,446 8
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(000s)
COMMON SHARE DATA
Shares outstanding
At end of period 81,052 72,821 11 81,052 72,821 11
Weighted average -
basic 80,974 72,706 11 79,858 72,423 10
Weighted average -
diluted 81,010 73,907 10 80,014 73,749 8
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OPERATING
Sales (000s)
Natural gas (mcf/d) 46,681 47,510 (2) 49,828 46,349 8
NGLs (bbls/d) 3,375 4,098 (18) 3,562 3,400 5
Light crude oil and
condensate (bbls/d) 3,066 1,977 55 3,083 2,116 46
Total oil equivalent
(boe/d) 14,222 13,993 2 14,950 13,241 13
Average wellhead prices
Natural gas ($/mcf) 2.38 3.88 (39) 2.24 3.93 (43)
NGLs ($/bbl) 22.64 34.11 (34) 26.89 35.58 (24)
Light crude oil and
condensate ($/bbl) 84.32 93.96 (10) 88.42 95.56 (7)
Combined average
($/boe) 31.36 36.45 (14) 32.09 38.18 (16)
Netbacks ($/boe)
Operating (4) 19.20 22.97 (16) 19.23 23.97 (20)
Funds from operations
(1) 15.09 19.31 (22) 15.02 19.80 (24)
Gross (net) wells
drilled (#)
Natural gas 2 6 -67 10 16 -38
(2.0) (6.0) (-67) (9.7) (16.0) (-39)
Oil 8 3 167 26 9 189
(5.1) (2.6) (96) (20.4) (8.6) (137)
Dry and abandoned - 1 -100 - 3 -100
(-) (1.0) (-100) (-) (3.0) (-100)
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Total 10 10 - 36 28 29
(7.1) (9.6) (-26) (30.1) (27.6) (9)
Average working
interest (%) 71 96 (26) 84 99 (15)
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(1) Funds from operations, funds from operations per share and funds from
operations per boe are not recognized measures under International
Financial Reporting Standards (IFRS). Refer to the Management's
Discussion and Analysis for further discussion.
(2) Total capital expenditures, including acquisitions.
(3) Current assets less current liabilities, bank debt and the face value of
the convertible debentures, excluding current derivative instruments.
(4) Operating netback equals oil and natural gas revenues including realized
gains and losses on derivative instruments less royalties, operating
costs and transportation costs calculated on a per boe basis. Operating
netback is not a recognized measure under IFRS and therefore may not be
comparable with the calculations of similar measures presented by other
companies.
(5) For a description of the boe conversion ratio, refer to "Boe
Conversions" in the Management's Discussion and Analysis.
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
September 30, December 31,
As at Note 2012 2011
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($000s of Canadian Dollars) (unaudited)
ASSETS
Accounts receivable 17,625 20,279
Deposits and prepaid expenses 4,356 3,564
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Total current assets 21,981 23,843
Exploration and evaluation 3 58,985 54,780
Property and equipment 4 589,392 517,068
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670,358 595,691
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LIABILITIES
Accounts payable and accrued liabilities 33,280 35,345
Derivative instruments 9 720 400
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Total current liabilities 34,000 35,745
Bank debt 5 163,168 144,990
Convertible debentures 6 54,410 53,188
Derivative instruments 9 549 -
Decommissioning liabilities 7 18,937 14,695
Deferred tax liabilities 28,200 28,362
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299,264 276,980
SHAREHOLDERS' EQUITY
Share capital 8 361,331 311,436
Equity component of convertible
debentures 4,105 4,105
Contributed surplus 14,280 12,350
Deficit (8,622) (9,180)
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Total equity 371,094 318,711
Commitments 11
----------------------------------------------------------------------------
670,358 595,691
----------------------------------------------------------------------------
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See accompanying notes to the interim consolidated financial statements.
INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended Nine Months Ended
September 30 September 30
Note 2012 2011 2012 2011
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($000s of Canadian dollars,
except per share amounts)
(unaudited)
REVENUE
Oil and natural gas
revenues 41,678 47,698 133,510 140,362
Royalties (8,394) (9,875) (28,501) (29,156)
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Oil and natural gas
revenues, net of royalties 33,284 37,823 105,009 111,206
Realized gain on derivative
instruments 887 558 1,019 637
Unrealized gain (loss) on
derivative instruments (3,209) 2,766 (869) 3,431
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30,962 41,147 105,159 115,274
EXPENSES
Operating 8,410 8,164 25,283 23,216
Transportation 644 649 1,970 1,967
General and administrative 3,412 3,833 11,212 11,884
Depletion and depreciation 18,125 18,598 56,479 48,156
Gain on disposition of
undeveloped land - - - (1,408)
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30,591 31,244 94,944 83,815
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Operating income 371 9,903 10,215 31,459
Interest expense 2,805 2,192 7,631 6,885
Accretion and financing
charges 492 515 1,474 1,483
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Net income (loss) before
income tax (2,926) 7,196 1,110 23,091
Deferred income tax expense
(recovery) (496) 2,156 552 7,680
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Net income (loss) and
comprehensive income (loss) (2,430) 5,040 558 15,411
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Net income (loss) per share
Basic 8 (0.03) 0.07 0.01 0.21
Diluted 8 (0.03) 0.07 0.01 0.21
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See accompanying notes to the interim consolidated financial statements.
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Convertible
debentures, Retained
Share equity Contributed earnings Total
capital component surplus (deficit) equity
----------------------------------------------------------------------------
----------------------------------------------------------------------------
($000s of Canadian
dollars)
(unaudited)
Balance at January
1, 2012 311,436 4,105 12,350 (9,180) 318,711
Issue of common
shares, net of
issue costs and
deferred income
taxes 48,974 - - - 48,974
Share-based
compensation
expensed - - 1,613 - 1,613
Share-based
compensation
capitalized - - 596 - 596
Options exercised 921 - (279) - 642
Net income for the
period - - - 558 558
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Balance at September
30, 2012 361,331 4,105 14,280 (8,622) 371,094
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Balance at January
1, 2011 306,742 - 7,843 1,591 316,176
Share-based
compensation
expensed - - 3,688 - 3,688
Share-based
compensation
capitalized - - 935 - 935
Options exercised 4,565 - (1,434) - 3,131
Issue of convertible
debentures, net of
issue costs and
deferred income
taxes - 4,105 - - 4,105
Net income for the
period - - - 15,411 15,411
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Balance at September
30, 2011 311,307 4,105 11,032 17,002 343,446
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See accompanying notes to the interim consolidated financial statements.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Nine Months Ended
September 30 September 30
Note 2012 2011 2012 2011
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($000s of Canadian dollars)
(unaudited)
OPERATING ACTIVITIES
Net income (loss) and
comprehensive income (loss) (2,430) 5,040 558 15,411
Adjustments for:
Depletion and depreciation 3, 4 18,125 18,598 56,479 48,156
Change in fair value of
derivative instruments 9 3,209 (2,766) 869 (3,431)
Accretion and financing
charges 7 492 515 1,474 1,483
Share-based compensation 8 847 1,309 1,613 3,688
Deferred income tax expense
(recovery) (496) 2,156 552 7,680
Gain on disposition of
undeveloped land - - - (1,408)
Settlement of decommissioning
liabilities 7 (53) (39) (59) (136)
Change in non-cash working
capital 507 1,136 (1,033) 3,488
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Net cash from operating
activities 20,201 25,949 60,453 74,931
FINANCING ACTIVITIES
Issue of common shares, net of
issue costs 8 507 870 48,902 3,131
Increase (decrease) in bank
debt 8,409 19,616 18,178 (11,635)
Issue of convertible
debentures, net of issue costs 6 - - - 57,171
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Net cash from financing
activities 8,916 20,486 67,080 48,667
INVESTING ACTIVITIES
Exploration and evaluation
expenditures 3 (7,684) (14,367) (34,727) (53,129)
Property and equipment
expenditures (23,494) (30,796) (93,636) (70,601)
Proceeds on disposition of
undeveloped land - - 2,320
Change in non-cash working
capital 2,061 (1,272) 830 (2,188)
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Net cash used in investing
activities (29,117) (46,435) (127,533) (123,598)
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Change in cash and cash
equivalents - - - -
Cash and cash equivalents,
beginning of period - - - -
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Cash and cash equivalents, end
of period - - - -
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See accompanying notes to the interim consolidated financial statements.
ABOUT ANGLE
Angle Energy Inc. is a Calgary-based publicly traded oil and natural gas exploration and development company that was incorporated in 2004 and commenced active oil and gas operations in 2005. Angle's goal is to grow its high-quality, focused asset base through a combination of drilling and strategic acquisitions. Angle started in 2004 as a "blind pool" and has grown production while maintaining top-decile operating costs, and finding costs. Angle's proven and dedicated team of industry specialists are focused on identifying and developing high quality assets in the Western Canada Sedimentary Basin, with an emphasis in west central Alberta. Common shares of Angle are listed for trading on the Toronto Stock Exchange under the symbol "NGL".
Basis of Presentation
Production information is commonly reported in units of barrel of oil equivalent ("boe"). For purposes of computing such units, natural gas is converted to equivalent barrels of crude oil using a conversion factor of six thousand cubic feet of gas to one barrel of oil. This conversion ratio of 6:1 is based on an energy equivalent conversion for the individual products, primarily applicable at the burner tip, and does not represent a value equivalency at the wellhead. Such disclosure of boe may be misleading, particularly if used in isolation.
Future Outlook and Forward-Looking Information
Information set forth in this press release may contain estimates and forward-looking statements regarding production levels and product mix for the 2012 year, the allocation of the capital program, impact of operating and royalty expense, expected well and reservoir performance, and drilling plans for the balance of 2012 including future development plans and drilling and operating costs. These estimates and statements are made as of November 7, 2012 and are based on assumptions and analysis as of this date, by Angle in light of its experience, current conditions and expected future development in the areas it is currently active and other factors it believes are appropriate in the circumstances. By their nature, these forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Angle's control, including mechanical failures or inability to access production facilities; the unanticipated encroachment of water or other fluids into the producing formation; unanticipated reservoir performance and, the inability to drill, complete and tie-in wells on schedule due to a lack of oilfield services being available on a cost efficient basis, poor weather, the inability to negotiate surface access or regulatory delays. The drilling plans and expected costs of drilling are subject to all the aforementioned risks and uncertainties, as well as those risk factors identified by Angle's MD&A for the three and nine months ended September 30, 2012, Annual Information Form and MD&A in the most recently complete financial year, all of which are on SEDAR at www.SEDAR.com and includes the impact of general economic conditions, industry conditions, volatility of commodity prices, environmental risks, competition from other industry participants, stock market volatility and ability to access sufficient capital from internal and external sources.
Readers are cautioned that the assumptions and factors discussed in this press release are not exhaustive and that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise, and as such, undue reliance should not be placed on forward-looking statements. Angle'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 Angle will derive there from. Unless required by law, Angle disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward looking statements are expressly qualified by these cautionary statements.
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