Invicta Energy Corp. Announces Financial and Operating Results for the Second Quarter of 2012
CALGARY, Aug. 23, 2012 /CNW/ - Invicta Energy Corp. ("Invicta" or the "Company") (TSXV: VCA) is pleased to report its financial and operating results for the three and six months ended June 30, 2012. Invicta's interim condensed financial statements and related management's discussion and analysis for three months and six months ended June 30, 2012 have been filed and are available on the SEDAR website at www.sedar.com and may also be obtained on Invicta's website at www.invictaenergy.ca.
HIGHLIGHTS
- Drilled 6.0 gross (3.3 net) horizontal oil wells at Kindersley, Saskatchewan. Two wells were brought on production by the end of the quarter and the other four wells were producing by the third week of July, 2012.
- Production results from the six well drilling program at Kindersley have once again exceeded the Company's expected Viking type curves.
- 133% increase in net light oil production year to date from 150 bbl/d, (the initial rate of 2012) to 350 bbl/d (current field estimate). Oil production is 85% of total corporate production and 96% of corporate revenue.
- Achieved operating costs for the quarter of $8.76/boe (11% decrease from Q1 2012 and 64% decrease from Q2 2011).
- Operating netback continues to be top quartile at $57.75/boe and $56.08/boe for three months and six months ended June 30, 2012 respectively.
- Achieved funds flow from operations of $972,138 ($0.01/share) and earnings of $159,353 ($0.00/share) for the quarter.
- Credit facility raised $3 million to $13 million August 15, 2012 based on the recent successful drilling program.
- Prepared for drilling a further 8 gross (4.4 net) horizontal wells at Kindersley during the remaining six months of 2012.
| HIGHLIGHTS | ||||||||||
| Three months ended | Six months ended | |||||||||
| June 30 | June 30 | |||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||
| (unaudited) | (unaudited) | |||||||||
| Operations | ||||||||||
| Drilling | ||||||||||
| Oil wells (net) | 6.0(3.3) | 4.0(2.2) | 11.0(6.0) | 5.0(2.8) | ||||||
| Undeveloped land holdings (net acres) | 48,260 | 29,870 | 48,260 | 29,870 | ||||||
| Average daily production | ||||||||||
| Crude oil (bbls/d) | 217 | 46 | 219 | 48 | ||||||
| Natural gas (mcf/d) | 331 | 264 | 391 | 311 | ||||||
| Total equivalent (boe/d) | 272 | 90 | 285 | 100 | ||||||
| Average product prices | ||||||||||
| Crude oil (Cdn $/bbl) | $ | 81.52 | $ | 94.85 | $ | 84.37 | $ | 90.70 | ||
| Natural gas (Cdn $/mcf) | $ | 1.73 | $ | 3.74 | $ | 1.86 | $ | 3.71 | ||
| Total equivalent (Cdn $/boe) | $ | 67.13 | $ | 59.54 | $ | 67.63 | $ | 55.11 | ||
| Royalties (Cdn $/boe) | $ | 0.62 | $ | 8.27 | $ | 2.21 | $ | 7.44 | ||
| Production and operating costs (Cdn $/boe) | $ | 8.76 | $ | 24.54 | $ | 9.34 | $ | 17.31 | ||
| Operating netback(1) (Cdn $/boe) | $ | 57.75 | $ | 26.73 | $ | 56.08 | $ | 30.36 | ||
| Financial | ||||||||||
| Petroleum and natural gas revenue | $ | 1,664,316 | $ | 489,673 | $ | 3,487,099 | $ | 995,850 | ||
| Funds flow from operations (1) | $ | 972,138 | $ | (252,202) | $ | 1,946,115 | $ | (528,324) | ||
| Per share - basic and diluted | $ | 0.01 | $ | (0.01) | $ | 0.03 | $ | (0.01) | ||
| Earnings (loss) | $ | 159,353 | $ | (346,624) | $ | 339,703 | $ | (843,984) | ||
| Per share - basic and diluted | $ | 0.00 | $ | (0.01) | $ | 0.00 | $ | (0.02) | ||
| Capital expenditures | $ | 2,734,731 | $ | 2,879,473 | $ | 5,817,685 | $ | 3,672,081 | ||
| Net debt (working capital) (1) | $ | 6,974,403 | $ | (476,891) | $ | 6,974,403 | $ | (476,891) | ||
| Shares outstanding (000) | 75,609 | 54,662 | 75,609 | 54,662 | ||||||
| Weighted average shares Outstanding (000) | 75,604 | 47,756 | 75,542 | 41,736 | ||||||
| (1)The term funds flow from operations should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with IFRS as an indicator of the Company's performance. Funds flow from operating activities is a non-IFRS measure that represents cash provided by operating activities before changes in non-cash working capital. Per share amounts are calculated using weighted average shares outstanding consistent with the calculation of loss per share. Other industry benchmarks and terms such as net debt and operating netback are not recognized measures under IFRS. Management believes these are useful supplemental measures of, firstly, the total amount of current and long-term debt the Company has, and secondly, the amount of revenues received after the royalties and operating costs. Net debt, which terms represent current assets less current liabilities is used to assess efficiency, liquidity and the general financial strength of the Company. Readers are cautioned, however, that these measures should not be construed as an alternative to other terms such as current debt or net earnings in accordance with IFRS as measures of performance. The Company's method of calculating these measures may differ from other companies, and accordingly, may not be comparable to measures used by other companies. |
OPERATIONS UPDATE
Kindersley, Saskatchewan
During the second quarter, the Company completed its six well drilling program at a 100% success rate. This program was hampered by wet spring conditions which delayed the timing and subsequent production startup of these wells. However, the Company is pleased to report that the initial production rates of the six wells have exceeded the forecasted Viking type curves. Five of the six wells have 30 day production rates ranging from 50-90 bbl/d. One well is still producing at 80 bbl/d after 70 days. All six wells are flowlined into existing Company infrastructure which allows conservation of the solution gas. Current net field production from the Kindersley property is 340 bbl/d and 350 mcf/d of solution gas.
Invicta acquired a section of petroleum and natural gas rights in the second quarter. At quarter end the Company's drilling inventory is in excess of 200 locations. The Company is preparing locations for the upcoming drilling programs with an expectation of drilling another 8 gross (4.3 net) wells by year end.
Central Alberta
The Company completed a 21 sq km 3D program over one of its Central Alberta properties. The 3D program is currently being interpreted for horizontally drillable locations for light oil. Nine additional sections of petroleum and natural gas rights, prospective for Viking & Mannville light oil, were acquired subsequent to the second quarter. The Company looks forward to initiating drilling activity on the Alberta prospects in early 2013.
GUIDANCE
The Company has successfully completed two drilling programs at Kindersley to date and looks forward to drilling the remaining 8 gross (4.3 net) wells of the forecasted 20 gross (11 net) well program for 2012. The capital expenditures for year remain forecasted at $14 million.
We are very pleased with our financial results to date, especially our top quartile net back of $56.08 year to date. Invicta is on track to achieving the previously forecasted $6.4 million funds flow ($0.09/share) and annualized fourth quarter funds flow of $10 million ($0.13/share). Volatility in realized oil prices and delays in bringing on the wells drilled in the second quarter, were offset by lower operating costs and royalty rates. The Company's exit oil production remains at 535 bbl/d. The exit production will be 625 -675 boe/d, approximately 7% lower than the previously forecasted 675 -725 boe/d as the Company has reduced the forecast for solution gas to reflect curtailments at third party processing facilities. It is important to note that solution gas volumes have a large impact on the BOE measure, but very little impact on financial results as oil production accounts for 96% of oil and natural gas revenues.
OUTLOOK
Invicta is positioned for growth with top quartile operating netbacks and a drilling inventory in excess of 200 development locations on its low risk light oil resource play at Kindersley. The Company continues to work on a number of light oil prospects in Central Alberta and looks forward to drilling and developing its next core area in 2013.
About the Company
Invicta is a Calgary based, emerging junior oil and gas company exploring and developing light oil opportunities in Saskatchewan and Alberta. The Company's current focus is the development of its Viking resource play in Kindersley, Saskatchewan.
Cautionary Statements:
This press release contains certain forward-looking statements (forecasts) under applicable securities laws relating to future events or future performance. Forward-looking statements are necessarily based upon assumptions and judgements with respect to the future including, but not limited to, the outlook for commodity markets and capital markets, the performance of producing wells and reservoirs, well development and operating performance, general economic and business conditions, weather, the regulatory and legal environment and other risks associated with oil and gas operations. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "projects", "plans", "anticipates" and similar expressions. These statements represent management's expectations or beliefs concerning, among other things, future operating results and various components thereof affecting the economic performance of Invicta. Undue reliance should not be placed on these forward-looking statements which are based upon management's assumptions and are subject to known and unknown risks and uncertainties, including the business risks discussed above, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Accordingly, readers are cautioned that events or circumstances could cause results to differ materially from those predicted.
In the interest of providing Invicta shareholders and potential investors with information regarding the Company, including management's assessment of Invicta's future plans and operation, certain statements throughout this press release constitute forward looking statements. All forward-looking statements are based on the Company's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward looking statements. By its nature, such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking statements. Invicta believes the expectations reflected in those forward looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward looking statements contained throughout this press release should not be unduly relied upon. These statements speak only as of the date specified in the statements.
In particular, this press release may contain forward looking statements pertaining to the following:
- the performance characteristics of the Company's oil and natural gas properties;
- oil and natural gas production levels;
- capital expenditure programs;
- the quantity of the Company's oil and natural gas reserves and anticipated future cash flows from such reserves;
- projections of commodity prices and costs;
- supply and demand for oil and natural gas;
- expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; and
- treatment under governmental regulatory regimes.
The material assumptions in making these forward-looking statements include certain assumptions disclosed in the Company's most recent management's discussion and analysis included in the material available on this press release.
The Company's actual results could differ materially from those anticipated in the forward looking statements contained throughout this press release as a result of the material risk factors set forth below, and elsewhere in this press release:
- volatility in market prices for oil and natural gas;
- liabilities inherent in oil and natural gas operations;
- uncertainties associated with estimating oil and natural gas reserves;
- competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel;
- incorrect assessments of the value of acquisitions and exploration and development programs;
- geological, technical, drilling and processing problems;
- fluctuations in foreign exchange or interest rates and stock market volatility;
- failure to realize the anticipated benefits of acquisitions;
- general business and market conditions; and
- changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry.
These factors should not be construed as exhaustive. Unless required by law, Invicta 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.
Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as the term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE: Invicta Energy Corp.
Gordon Reese
President & CEO
[email protected]
(403) 265-8890 ext 1
or
Carrie McLauchlin
Vice President, Finance & CFO
[email protected]
(403) 265-8890 ext 4
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