TRIOIL ANNOUNCES THIRD QUARTER 2010 OPERATIONAL AND FINANCIAL RESULTS
CALGARY, Nov. 25 /CNW/ - TriOil Resources Ltd. ("TriOil" or the "Company" -TSXV:TOL) is pleased to announce that it has filed its unaudited financial statements and related Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2010 on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with TriOil's unaudited financial statements and related MD&A, which are available for review at www.trioilresources.com and www.sedar.com.
Q3 2010 Highlights:
- Closed a $15.0 million bought deal financing of 3,125,000 flow-through Class A common shares at a price of $4.80 per share.
- Closed a strategic acquisition of Cardium focused assets at Lochend, including 22 gross (14 net) sections of prospective Cardium acreage with key operated production facilities and connected pipeline infrastructure. In its initial nine months of operations, TriOil has built a significant position in the Lochend Cardium light oil resource play with 80 gross (56 net) sections, strategic operated production facilities and a horizontal drilling inventory exceeding 150 net locations.
- Increased average production to 1,486 boe/d in the third quarter of 2010 from 517 boe/d in the third quarter of 2009 (187 percent increase). Despite being impacted by wet weather conditions and unanticipated third party plant turnarounds, TriOil's third quarter 2010 production volumes grew 3 percent from 1,439 boe/d in the second quarter of 2010.
- Increased funds from operations to $1,098,776 in the third quarter of 2010 from funds used in operations of $413,317 in the third quarter of 2009.
- Increased funds from operations per share (diluted) from ($0.14) in the third quarter of 2009 to $0.04 in the third quarter of 2010.
- Drilled 5 (2.3 net) wells, consisting of 2 (1.2 net) Cardium wells at Lochend, 2 (0.6 net) wells at Tableland and 1 (0.5 net) well at Milo with an 80 percent success rate.
- Increased undeveloped land holdings from 43,982 net acres at the end of the third quarter of 2009 to 131,906 net acres at the end of the third quarter of 2010 (200 percent increase).
Subsequent Events:
- On November 9, 2010, TriOil announced a $35 million bought-deal offering of 5,950,000 Class A common shares, plus an over-allotment option of 892,500 Class A common shares, at a price of $5.90 per Class A common share. Closing is anticipated to occur on November 30, 2010.
Financial and Operating Results (1) | |||||||
Three months ended September 30, | Nine months ended September 30, | ||||||
2010 | 2009 | % Change | 2010 | 2009 | % Change | ||
($, except share numbers) | |||||||
Financial | |||||||
Total revenue | 5,677,146 | 1,506,817 | 277 | 13,104,881 | 5,541,970 | 136 | |
Funds from (used in operations) (2) | 1,098,776 | (413,317) | - | 1,948,728 | (1,162,610) | - | |
Per share - diluted | 0.04 | (0.14) | - | 0.11 | (0.41) | - | |
Net (loss) | (3,466,027) | (2,267,090) | 53 | (7,842,128) | (6,284,253) | 25 | |
Per share - basic and diluted | (0.14) | (0.79) | (82) | (0.43) | (2.20) | (80) | |
Working capital (net debt) | (12,576,418) | (4,525,561) | 178 | (12,576,418) | (4,525,561) | 178 | |
Total assets | 158,113,076 | 44,023,950 | 259 | 158,113,076 | 44,023,950 | 259 | |
Capital expenditures(3) | 19,653,313 | (2,748,851) | - | 43,393,950 | (522,507) | - | |
Weighted average shares outstanding (#) (4) | |||||||
Basic | 24,484,574 | 2,855,336 | 758 | 18,040,537 | 2,855,015 | 532 | |
Diluted | 24,484,690 | 2,855,336 | 758 | 18,228,463 | 2,855,015 | 538 | |
Operating | |||||||
Average daily production | |||||||
Crude oil and NGLs (bbls/d) | 630 | 177 | 256 | 541 | 166 | 226 | |
Natural gas (mcf/d) | 5,133 | 2,036 | 152 | 4,307 | 2,816 | 53 | |
Total (boe/d) | 1,486 | 517 | 187 | 1,259 | 635 | 98 | |
Average sales prices | |||||||
Crude oil and NGLs ($/bbl) | 66.70 | 55.88 | 19 | 66.75 | 52.20 | 28 | |
Natural gas ($/mcf) | 3.93 | 3.17 | 24 | 4.13 | 1.13 | 265 | |
Total ($/boe) | 41.54 | 24.68 | 68 | 42.82 | 31.94 | 34 | |
Wells drilled - gross (net) | |||||||
Exploration | 3(1.4) | - | - | 6(2.4) | 2(1.0) | - | |
Development | 2(0.9) | - | - | 6(2.0) | - | - | |
Total | 5(2.3) | - | - | 12(4.4) | 2(1.0) | - | |
Drilling success rate (%) | 80 | - | - | 82 | 50 | - | |
Operating netback ($/boe) | |||||||
Oil and natural gas sales | 41.54 | 24.68 | 68 | 42.82 | 31.94 | 34 | |
Royalties | (6.66) | (1.87) | 256 | (5.25) | (3.13) | 68 | |
Operating costs | (16.97) | (16.31) | 4 | (18.12) | (20.09) | (10) | |
Transportation | (2.33) | (1.83) | 27 | (1.59) | (1.37) | 16 | |
Operating netback | 15.58 | 4.67 | 234 | 17.86 | 7.35 | 143 |
Notes: | ||
(1) | Results include Canext from the closing date of April 12, 2010. | |
(2) | Funds used in operations is calculated as cash flow from operating activities before the change in non-cash working capital and abandonment expenditures. | |
(3) | Capital expenditures include property acquisitions and are presented net of proceeds of disposals, but exclude corporate acquisitions. | |
(4) | On April 7, 2010, TriOil Resources Ltd. consolidated its outstanding class A common shares on a 20 to 1 basis as approved by shareholders. Comparative figures have been presented as if this share consolidation occurred on January 1, 2009. |
Operations
TriOil has focused a great deal of its efforts and capital in its first nine months of operations to capture significant positions on emerging light oil resource plays, with the goal of transforming the Company into a high growth, light oil weighted junior.
We continued these efforts in the third quarter with the closing of an $8.2 million acquisition, adding key Cardium acreage, facilities and infrastructure at Lochend. With this most recent acquisition, we have now assembled an 80 (56 net) section land position on the Lochend Cardium trend, expanded our operational presence with 99 percent ownership and operatorship of a strategic natural gas processing facility with connected pipeline infrastructure and increased our Lochend growth platform to 150+ net horizontal locations prospective for Cardium light oil.
Industry continues to de-risk the Lochend Cardium play with 16 horizontal Cardium wells drilled to date, 11 of which have been equipped for production and the balance at various stages of completion or equipping. We are encouraged by the increasing level of industry activity on the play and the publicly released Cardium results on the Lochend trend to date, but the pace of our Cardium program in the second half of the year has certainly been impacted by wet weather and availability of completion crews and equipment.
TriOil commenced an active drilling program at Lochend and has drilled 6 (3.15 net) horizontal Cardium wells to date. The 13-32-027-03 W5 Cardium horizontal well (TriOil 20 percent) has been on production for 3 months and continues to produce at expected rates with a 30 day average oil rate of 180 bbls/d, a 60 day average oil rate of 132 bbls/d and a 90 day average oil rate of 117 bbls/d. Associated natural gas from this well, which has averaged approximately 35 boe/d over the initial 90 day period, is not currently being captured, as is expected to be tied-in to TriOil's Lochend gas compression facility early in 2011.
In addition to the 13-32 producing Cardium oil well, TriOil currently has 3 (1.45 net) Cardium horizontal wells that are on production and at various stages of recovering completion load fluid, 1 (0.5 net) Cardium horizontal well that is completed and waiting to be equipped for production and 1 (1.0 net) Cardium horizontal well that is drilled and waiting on completion.
TriOil has also established a strong position on early stage Sanish and Middle Bakken light oil resource plays in the Tableland area of South East Saskatchewan. The Company operates the North Tableland area with 50-60 percent interests in approximately 24 contiguous sections and owns a non-operated 30 percent interest in approximately 50 (15 net) sections in the South Tableland area.
Our third quarter operations at Tableland were delayed significantly by wet weather and completion equipment availability. During the quarter, TriOil drilled 2 (0.6 net) horizontal Sanish wells in the South Tableland area. One (0.3 net) well has recently been completed using higher volume 20 ton fracture stimulations, compared to the 10 ton fracture stimulations in our initial 5 (1.5 net) Sanish horizontal wells, and we are encouraged by the early production results on this well. The second Sanish horizontal well (0.5 net) is currently awaiting completion and we plan to utilize 20 ton fracture stimulations in this horizontal well. TriOil also drilled 1 (0.6 net) Middle Bakken horizontal well in the North Tableland area during the quarter and this well is also awaiting completion.
Outlook
TriOil has assembled strong positions on early stage Cardium and Sanish/Bakken light oil resource plays at Lochend and Tableland. TriOil management is encouraged by our current drilling programs on both of these light oil resource plays. TriOil expects to close a $35 million financing on November 30, 2010. With a strong balance sheet and a multi-year development drilling inventory on high netback light oil projects, we are excited about the Company's growth prospects for 2011 and beyond. As new light oil production and reserves are added we also intend to dispose of non-core natural gas properties to accelerate the Company's transformation into a light oil weighted junior.
TriOil intends to provide an operational update of its Cardium activities at Lochend and details of its 2011 capital program and guidance in January 2011.
TriOil is a publicly traded junior oil resource player in Western Canada. Substantial land positions have been acquired on early stage light oil resource opportunities to capitalize on improvements in horizontal drilling and multi-stage fracture stimulation technologies, specifically targeting opportunities in the emerging Cardium oil trends in Alberta and the Bakken and Sanish oil trends in southeast Saskatchewan. TriOil has successfully executed its business plan thus far, rapidly growing its production, reserves and undeveloped land base over the early part of 2010 to position the Corporation for substantial future increases in production, reserves and shareholder value through exposure in these high quality resource plays.
TriOil trades on the TSX Venture Exchange under the symbol "TOL". As of November 25, 2010, there were approximately 25.4 million shares issued and outstanding (28.6 million fully diluted).
Forward Looking Statements
This news release contains forward-looking information and forward-looking statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "believe", "plans", "intends", "confident", "may", "objective", "ongoing", "will", "should", "project", and similar expressions are intended to identify forward-looking information. More particularly, this document contains forward looking statements which include, but are not limited to, expected future drilling and completion plans, expected production and reserves growth and the future operations of TriOil.
The forward-looking statements contained in this document are based on certain key expectations and assumptions made by TriOil, including with respect to the anticipated exploration and development opportunities and the outlook for the fiscal year ending December 31, 2010, expectations and assumptions concerning the success of future exploration and development activities, production guidance, the performance of new wells, prevailing commodity prices and the availability of additional capital if and when required by the Corporation.
Any references in this news release to initial and/or final raw test or production rates and/or "flush" production rates or 30, 60 and 90 day production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.
Although TriOil believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because TriOil can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, the failure to satisfy the conditions to closing the transaction, risks associated with the oil and gas industry in general (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 estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in TriOil's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com and TriOil's other public disclosure documents which have been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and TriOil undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Meaning of BOE
The term "boe" may be misleading, particularly if used in isolation. A boe conversion 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.
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.
For further information:
Russell J. Tripp, President & CEO, TriOil Resources Ltd., Phone: (403) 265-4115
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