Iteration Energy (ITX) announces first quarter ended March 31, 2010 results
(All amounts are in Canadian dollars, unless stated otherwise)
CALGARY, May 13 /CNW/ - Iteration Energy Ltd. (TSX-ITX) ("Iteration" or the "Company") announced today its unaudited financial and operating results as at and for the three months ended March 31, 2010. The unaudited financial statements, together with the associated Management's Discussion and Analysis (MD&A), have been filed on the Company's SEDAR profile at www.sedar.com and are available on the Company's website at www.iterationenergy.com.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
The highlights of the three months ended March 31, 2010 include:
- Average production for the quarter was 14,624 boed which includes
positive prior period adjustments of approximately 700 boed.
- Drilled 10.5 net wells with a 95% success record.
- Funds from operations for the quarter of $21.8 million, representing
a 46% increase from the same period of 2009. This increase was
primarily due to higher oil prices and lower production costs.
- Disposed of $5,900,000 of oil and gas properties representing
0.5 mmboe proved, and 0.6 mmboe proved plus probable reserves.
- Net debt at March 31, 2010 was $189.0 million.
SUBSEQUENT EVENTS
On February 4, 2010, Iteration announced that its board of directors had initiated a process to identify, examine and consider a range of strategic alternatives available to it, with a view to maximizing shareholder value, and that it had retained FirstEnergy Capital Corp. and Scotia Waterous Inc. to assist with this process. As a result of this process the Company has entered into a definitive arrangement agreement (the Arrangement Agreement) dated effective May 3, 2010 with Storm Ventures International Inc. ("SVI") pursuant to which the Company and SVI have agreed to complete a strategic business combination pursuant to a statutory plan of arrangement ("the Arrangement").
Under the terms of the Arrangement, Iteration shareholders may elect to receive:
1. $1.83 cash for each Iteration share held, subject to a minimum
aggregate cash payment of $50 million and a maximum aggregate payment
of $225 million, or
2. 0.5631 of a common share of SVI for each Iteration share held,
subject to pro ration, if required, based on cash elections described
above, or
3. Any combination of the foregoing, subject to the cash restrictions
set out above.
The Arrangement is subject to a number of customary conditions, as more particularly described in the Arrangement Agreement, including stock exchange, court and regulatory approvals and the requisite approval of the Arrangement by at least 66 2/3% of votes cast by Iteration Shareholders and Iteration Optionholders (collectively, the "Iteration Securityholders") voting together as a single class at a special meeting of the Iteration Securityholders (the "Special Meeting"). The information circular for the Special Meeting is expected to be mailed to Iteration Securityholders on or about May 31, 2010 and it is anticipated that the special meeting of Iteration's Securityholders will be held on or about June 28, 2010 with closing of the Arrangement to occur shortly thereafter. It is also a condition under the Arrangement Agreement that the Toronto Stock Exchange shall have approved, subject only to customary conditions, the listing of the outstanding SVI Shares and the SVI Shares issuable pursuant to the Arrangement, such that Chinook (new name of surviving entity) shall be a public company upon completion of the Arrangement.
The Arrangement Agreement prohibits Iteration from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains provisions enabling SVI to match competing, unsolicited proposals and, subject to certain conditions, provides for Iteration to pay a termination fee of $20 million to SVI in certain circumstances.
The borrowing base of the Company's $225 million credit facility was renewed with the same terms and extended to September 30, 2010.
CORPORATE SUMMARY
-------------------------------------------------------------------------
($thousands, except as noted) Three month ended March 31,
2010 2009
-------------------------------------------------------------------------
Production revenue before royalties 55,742 58,693
Funds from operations(1) 21,796 14,900
Per share ($) - basic and diluted $0.10 $0.09
Net earnings (loss) (9,043) (14,275)
Per share ($) - basic and diluted ($0.04) ($0.09)
Capital expenditures 20,098 35,722
Acquisitions (dispositions) (5,873) (227)
-------------------------------------------------------------------------
Net capital expenditures 14,225 35,495
-------------------------------------------------------------------------
As at March 31,
2010 2009
-------------------------------------------------------------------------
Total assets 885,854 1,022,497
Bank debt and working capital deficiency(2) 189,204 296,726
Common shares outstanding 211,112,100 166,020,384
Stock options outstanding 9,714,567 10,135,575
-------------------------------------------------------------------------
(1) "Funds from operations" and "funds from operations per share" are
financial measures that are not determined in accordance with GAAP.
See "Non-GAAP Measures" in the Company's MD&A.
(2) Working capital deficiency is the difference between current assets
and current liabilities excluding unrealized gains on derivatives.
OPERATING RESULTS
-------------------------------------------------------------------------
($thousands, except as noted) Three month ended March 31,
2010 2009
-------------------------------------------------------------------------
Production
Natural gas (mcf/d) 59,289 79,000
Light oil (bbl/d) 3,280 3,390
Heavy oil (bbl/d) 114 186
Natural gas liquids (bbl/d) 1,348 1,423
-------------------------------------------------------------------------
Total production (boe/d) 14,624 18,166
Prices
Natural gas ($/mcf) $5.16 $5.39
Light oil ($/bbl) $76.21 $50.15
Heavy oil ($/bbl) $66.11 $39.56
Natural gas liquids ($/bbl) $41.26 $35.24
-------------------------------------------------------------------------
Average price ($/boe) $42.35 $35.93
Operating netback ($/boe) $22.21 $12.39
Net undeveloped land (thousands of acres) 730 867
-------------------------------------------------------------------------
Iteration
Iteration is an Alberta based corporation engaged in the business of exploring for and developing oil and natural gas reserves in Western Canada and acquiring natural resource properties. Iteration's common shares are listed on the Toronto stock Exchange under the symbol "ITX".
Advisory
Natural gas is converted to crude oil equivalent at a ratio of six thousand cubic feet to one barrel of energy equivalent ("boe"). Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Forward-Looking Caution
This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should"," expects", "projects", "plans", "anticipates" and similar expressions. In particular, this press release contains forward-looking statements pertaining to the following: expectations of management regarding the proposed Arrangement, including the timing of completion of the Arrangement; mailing of an information circular approving the Arrangement; holding of the special meeting to approve the Arrangement; listing of the SVI Shares on the TSX and the terms and conditions of the Arrangement Agreement.
With respect to forward-looking statements contained in this press release, Iteration has made assumptions regarding, among other thing, the terms of the Arrangement Agreement, listing on the TSX and information provided by SVI, including in particular, the ability to secure financing. Although Iteration believes that the expectations reflected in the forward looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause Iteration's actual results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the following: that the Arrangement may not close when planned or at all or on the terms and conditions set forth herein; the failure of SVI and Iteration to obtain the necessary securityholder, court, regulatory and other third party approvals required in order to proceed with the Arrangement; failure to complete planned financing activities; and the other factors described under "Risk Factors" in Iteration's most recently filed Annual Information Form available in Canada at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this press release speak only as of the date hereof. Except as expressly required by applicable securities laws, Iteration does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
%SEDAR: 00002576E
For further information: Mr. Brian Illing, President and CEO, or Mr. Willie Dawidowski, Vice President & Controller at (403) 261-6883
Share this article