Mountainview Energy Ltd. Announces 2015 Third Quarter Financials
CUT BANK, MT, Nov. 24, 2015 /CNW/ - Mountainview Energy Ltd. ("Mountainview" or the "Company") (TSX-V: MVW) announces its operating and financial results for the quarter ended September 30, 2015. The Company also announces that its financial statements and management's discussion and analysis for the quarter ended September 30, 2015, is available on SEDAR at www.sedar.com, and on Mountainview's website at www.mountainviewenergy.com.
Quarter End Financials
During the third quarter of 2015, Mountainview continued to face a depressed commodity price environment. The company reported a loss for the three and nine months ended September 30, 2015 despite quarter over prior year quarter and year over year decreases in both operating costs and general and administrative costs per barrel of oil equivalent ("boe"). The depressed commodity price environment, expiration of the Company's hedging contract along with non-cash costs such as impairment, lease expiration and depletion expenses factored into the Company's operating loss. The Company remains focused on reducing costs going forward, and is pleased to report that it has achieved its goal of reducing monthly general and administrative costs to less than $0.2 million per month for the year so far.
Highlights of Mountainview's performance in the third quarter of 2015 are as follows:
- Reduced operating costs per boe by $7.65 in comparison to the prior year quarter, a decrease of 25%.
- Reduced G&A expenses to an average of $100,000 per month for the quarter, down from $239,000 per month for the prior year quarter
Certain selected financial and operational information for the three and nine months ended September 30, 2015 and 2014, is outlined below and should be read in conjunction with Mountainview's financial statements for the quarters ended September 30, 2015 and 2014 and the accompanying management discussion and analysis filed with the Canadian securities regulatory authorities which may be accessed through the SEDAR website (www.sedar.com) and also on the Company's website: www.mountainviewenergy.com.
| Three months ended September 30 |
Nine months ended September 30 |
||||||
| 2015 |
2014 |
% Change |
2015 |
2014 |
% Change |
||
| Financial(US$ 000's, except per share amounts) |
|||||||
| Petroleum and natural gas sales |
897 |
5,883 |
(85%) |
4,569 |
19,000 |
(76%) |
|
| Funds flow from operations (1) |
(3,509) |
(332) |
957% |
(5,341) |
(50) |
10,582% |
|
| Per share basic |
(0.04) |
(0.00) |
957% |
(0.06) |
(0.00) |
10,582% |
|
| Per share diluted |
(0.04) |
(0.00) |
957% |
(0.06) |
(0.00) |
10,582% |
|
| Expiries |
- |
673 |
(100%) |
1,785 |
5,364 |
(67%) |
|
| Impairment(2) |
5,780 |
- |
N/A |
6,658 |
- |
N/A |
|
| Net loss |
(9,639) |
(1,638) |
488% |
(22,291) |
(9,448) |
136% |
|
| Per share basic |
(0.11) |
(0.02) |
488% |
(0.25) |
(0.11) |
136% |
|
| Per share diluted (3) |
(0.11) |
(0.02) |
488% |
(0.25) |
(0.11) |
136% |
|
| Capital expenditures (disposals)(4) |
688 |
7,132 |
(90%) |
1,076 |
21,250 |
(95%) |
|
| Net debt (5) |
93,286 |
75,911 |
23% |
93,286 |
75,911 |
23% |
|
| (1) |
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 International Financial Reporting Standards as an indicator of Mountainview's performance. Funds flow from operations represents cash flow from operating activities prior to changes in non-cash working capital, transaction costs and decommissioning provision expenditures incurred. Mountainview also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. |
| (2) |
The low commodity price environment led the Company to assess for indicators for impairment. Noting the existence of impairment indicators the Company performed an impairment analysis and concluded recoverable amounts for all cash generating units exceeded their respective carrying values, with the exception of the 12 Gage cash generating unit "CGU". An impairment expense was recognized in the current quarter on the 12 Gage CGU. |
| (3) |
Due to the anti-dilutive effect of Mountainview's net loss for the three and nine months and year ended September 30, 2015 and 2014, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts. |
| (4) |
Capital expenditures is a non-GAAP measure and is defined as the total cash consideration paid or received for property acquisitions and dispositions, plus development and exploration capital expenditures. |
| (5) |
Net debt is a non-GAAP measure representing the total of bank indebtedness, accounts payables and accrued liabilities and long term debt, less current assets. |
| (6) |
Operating netback is a non-GAAP measure calculated as the average per boe of the Company's oil and gas sales plus realized gains on derivatives, less royalties, production taxes, operating and transportation expenses. |
| Three months ended September 30 |
Nine months ended September 30 |
|||||||
| 2015 |
2014 |
% Change |
2015 |
2014 |
% Change |
|||
| Operating |
||||||||
| Average daily production |
||||||||
| Light crude oil (bbl per day) |
299 |
755 |
(60%) |
426 |
792 |
(46%) |
||
| Natural gas (mcf per day) |
220 |
227 |
(3%) |
222 |
232 |
(4%) |
||
| Natural gas liquids (boe per day) |
8 |
14 |
(43%) |
18 |
8 |
125% |
||
| Barrels of oil equivalent (boe per day, 6:1) |
345 |
806 |
(57%) |
481 |
839 |
(43%) |
||
| % oil production |
87% |
94% |
(7%) |
89% |
94% |
(6%) |
||
| % natural gas production |
13% |
6% |
110% |
11% |
6% |
105% |
||
| Average sales price |
||||||||
| Light crude oil ($ per bbl) |
30.87 |
84.33 |
(63%) |
37.82 |
86.63 |
(56%) |
||
| Natural gas ($ per mcf) |
2.27 |
3.06 |
(26%) |
2.20 |
3.69 |
(40%) |
||
| Natural gas liquids ($ per bbl) |
4.40 |
67.28 |
(93%) |
7.39 |
46.38 |
(84%) |
||
| Barrels of oil equivalent ($ per day, 6:1) |
28.39 |
82.40 |
(66%) |
34.81 |
84.06 |
(59%) |
||
| Operating netback ($ per boe)(6) |
||||||||
| Petroleum and natural gas sales |
28.39 |
82.40 |
(66%) |
34.81 |
84.06 |
(59%) |
||
| Realized gain (loss) on derivatives |
- |
(0.39) |
(100%) |
5.80 |
1.04 |
458% |
||
| Royalties |
(4.46) |
(16.84) |
(74%) |
(6.01) |
(15.61) |
(61%) |
||
| Operating expenses and production taxes |
(25.14) |
(36.73) |
(32%) |
(29.81) |
(34.07) |
(13%) |
||
| Operating netback |
(1.21) |
28.44 |
(104%) |
4.79 |
35.42 |
(86%) |
||
| Wells drilled |
||||||||
| Gross |
- |
2.0 |
0% |
- |
4.0 |
(100%) |
||
| Net |
- |
1.9 |
0% |
- |
1.9 |
(100%) |
||
| Success (%) |
N/A |
100% |
0% |
N/A |
100% |
0% |
||
Corporate Update
A sharp decline in oil prices was first felt in Q4 2014 and has continued through the current year. This price decline and the expiration of the Company's hedging in the current quarter has materially reduced the Company's operating cash flow. In response, the Company has taken steps to reduce field operating expenses and currently plans no new capital drilling and/or completions for the remainder of 2015 in efforts to maximize available cash during these difficult times. The Company has also reduced its G&A through layoffs, salary reductions and overall general efforts to conserve cash.
The Company continues to be faced with liquidity and debt challenges. At September 30, 2015 Mountainview has a working capital deficit of $93 million. The Company owes $50.7 million in principal and interest under its credit facility and $8.7 million on its term loan. The credit facility matured on July, 1 2015, the term loan matured on November 1, 2015. Both remain unpaid, triggering default events. Neither bank has enacted any of its remedies under the agreements at this time, however each bank has reserved all of its available rights and remedies. Management continues to negotiate a change in terms agreement/amendment with both banks, however the agreements have not been finalized and no assurances can be given that such negotiations will be successful.
Liens have been filed on certain of the Company's oil and gas assets totaling $8.1 million; however, agreements with certain lienholders have allowed for continued receipt of production revenues to fund critical ongoing operations and administration.
The Company is involved in active discussions with its banks and trade creditors to negotiate a comprehensive solution to resolve its financial challenges. In addition, the Company has short term debts consisting of $11.8 million pursuant to outstanding promissory notes with an officer/director and two major shareholders and $2.4 million in convertible debenture, a portion of which is with an officer and director. These debts mature July 1, 2016 and are in good standing. The Company is looking to include them in any comprehensive debt solution plan and is currently engaged in discussions to this end.
The Company plans to continue negotiations and discussions with creditors to resolve its liquidity and debt challenges. In parallel, the Company is actively considering debt and equity financing solutions, assets sales and corporate transactions among other available alternatives.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas company listed on the TSX Venture Exchange, with a primary focus on the exploration, production and development of the Bakken and Three Forks Shale in the Williston Basin and the South Alberta Bakken.
Forward Looking Statements
Statements in this press release contain forward-looking information and forward-looking statements within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, forward-looking information in this press release includes, without limitation, statements with respect to the liquidity and financial challenges facing the Company and its subsidiaries and matters related thereto..
Although we believe that the expectations and assumptions reflected in the forward-looking information are reasonable, there can be no assurance that such expectations or assumptions will prove to be correct. Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and is subject to a variety of risks and uncertainties and other factors (many of which are beyond the control of Mountainview) that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors could cause results to differ materially from those expressed in the forward-looking information include, but are not limited to: operational risks in exploration, development and production; delays or changes in plans; competition for and/or inability to retain drilling rigs and other services; competition for, among other things, capital, acquisitions of reserves, skilled personnel and supplies; risks associated to the uncertainty of reserve and resource estimates; governmental regulation of the oil and gas industry, including environmental regulation; geological, technical, drilling and processing problems and other difficulties in producing reserves; the uncertainty of estimates and projections of production, costs and expenses; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; incorrect assessments of the value of acquisitions; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; access to capital; the outcome and impact of litigation to which the Company or its subsidiaries may become party; turnover in management; uncertainty with respect to the various alternatives available to the Company and its subsidiaries and other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement. Mountainview does not undertake any obligation to update or revise any forward-looking statements to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
Meaning of Boe
The term "BOE" or barrels of oil equivalent may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (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. Additionally, given that the value ratio based on the current price of crude oil, as compared to natural gas, is significantly different from the energy equivalency of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an indication of value.
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.
SOURCE Mountainview Energy Ltd.
Patrick M. Montalban, President & Chief Executive Officer, E-Mail: [email protected]; Katherine Hylland, Interim Vice President Finance & Chief Financial Officer, E-Mail: [email protected]
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