Winstar releases Q2 2010 Financial and Operational results
CALGARY, Aug. 12 /CNW/ - Winstar Resources Ltd. ("Winstar" or "Company") is pleased to announce its financial and operating results for the three and six month periods ended June 30, 2010 (all dollar values are expressed in Canadian dollars unless otherwise stated).
Q2 2010 financial and operating results as compared to Q2 2009.
---------------------------------------------------------------
The financial and operating results for Q2 2010, as compared to continuing operations reported during Q2 2009, show a marked improvement reflecting stronger commodity prices and increased production.
- Funds from continuing operations were 68% higher at $5.8 million
($0.17 per share) as compared to $3.5 million reported in Q2 2009.
- Production was up 10% to 1,716 boepd as compared with 1,553 boepd
during Q2 2009.
- Field operating netback in Tunisia increased 42% to $53.65 per boe as
compared with Q2 2009.
Funds from continuing operations during Q2 2010 were $5.8 million, which are a significant improvement relative to Q2 2009 of $3.5 million. Due to the timing of tanker sales, 23,000 bbls of crude oil remain in inventory as at June 30, 2010. This inventory was sold in mid-July and generated $1.6 million of additional funds from operations, which will be recorded in Q3 2010.
Production from Tunisia continues to improve quarter over quarter and is currently between 2,100 - 2,300 boepd without the benefit of the new CS No. 8S and constrained gas sales. Workover operations on CS No. 8S are underway to re-perforate the zones originally tested and if the current operations are successful, CS No. 8S should be on production in the near future. Events during Q2 2010 which affected production are as follows:
- The constraints on third party gas transportation capacity negatively
affected the sale of solution gas from the Company's 100% working
interest Chouech Essaida concession. Gas sales for the Q2 2010 were
66 boepd as compared to 96 boepd in Q1 2010. Winstar continues to
look for resolution of the local gas transportation bottleneck, but
at present, there is no clear path forward. Current gas sales in the
third quarter from Chouech Essaida are approximately 70 - 90 boepd.
- Workovers at Chouech Essaida to upgrade or replace electrical
submersible pumps resulted in a total of 140 bpd of oil production
being shut in during the quarter.
- The CS No. 8S well contributed a small amount of production during
the testing periods in Q2 2010 but the completion operations at
CS No. 8S were ongoing as at June 30, 2010. CS No. 11 was on
production only during June.
Operational and Financial Highlights - from continuing operations
-----------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30 June 30
-------------------------------------------------------------------------
Financial 2010 2009 Change 2010 2009 Change
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Oil and gas sales 10,830 7,265 49 21,359 13,953 53
-------------------------------------------------------------------------
Net royalty (1,378) (698) 97 (2,420) (1,346) 80
-------------------------------------------------------------------------
Operating expense (2,010) (1,903) 6 (4,181) (4,114) 2
-------------------------------------------------------------------------
General and
administrative
(excludes non-cash
stock based
compensation) (1,442) (1,170) 23 (2,790) (2,392) 17
-------------------------------------------------------------------------
Depreciation,
depreciation and
accretion 3,661 4,663 (21) 6,713 8,341 (20)
-------------------------------------------------------------------------
Current income tax - (485) - (697)
-------------------------------------------------------------------------
Funds from operations 5,824 3,471 68 11,662 5,831 89
-------------------------------------------------------------------------
Basic and diluted
per share 0.17 0.10 68 0.35 0.18 89
-------------------------------------------------------------------------
Net income (loss) (444) (94) (26) (868)
-------------------------------------------------------------------------
Basic and diluted
per share (0.01) 0.00 0.00 0.00 -
-------------------------------------------------------------------------
Capital expenditures 8,634 2,291 276 16,317 12,677 28
-------------------------------------------------------------------------
Common shares
outstanding
-------------------------------------------------------------------------
Basic (weighted
average) 34,345 34,223 - 34,292 34,133 -
-------------------------------------------------------------------------
Diluted (weighted
average) 34,549 34,223 1 34,465 34,133 -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Production (boepd) 1,716 1,265 35 1,611 1,279 26
-------------------------------------------------------------------------
Sales (boepd) 1,536 1,265 21 1,525 1,279 19
-------------------------------------------------------------------------
Oil (bopd) 1,338 1,014 32 1,325 1,078 23
-------------------------------------------------------------------------
Average price
($ per bbl) 79.43 64.98 22 79.86 59.93 33
-------------------------------------------------------------------------
Gas (mcfpd) 1,189 1,507 (21) 1,201 1,202 -
-------------------------------------------------------------------------
Average price
($ per mcf) 10.72 9.25 6 10.14 10.41 (3)
-------------------------------------------------------------------------
Operating expense
($ per boe) 14.38 16.53 (3) 15.14 17.79 (15)
-------------------------------------------------------------------------
Outlook
During the remainder of Q3 2010, the Company will focus on increasing production and preparing for Winstar's fall drilling program expected to commence in September. It is anticipated that Winstar's contracted rig will be released from another operator and moving directly to Winstar's 100% working interest and operated southern concessions next month. The Company is very pleased to have contracted this rig, as it had been fully dedicated to drilling Silurian wells in nearby exploration permits and production concessions during the last four years. In addition, the Company has opened a drilling operations office in Sfax (in central Tunisia) to be led by our new drilling manager who has considerable drilling experience including the Silurian, specific to the Ghadames basin in Tunisia.
Technical and operational success in proving hydrocarbons from the Silurian Acacus aged formation could increase the Company's confidence in the other 10 Silurian prospects identified in the Ech Chouech and Chouech Essaida. An announcement on the specific drilling program for the balance of this year will be released shortly.
BOE
---
References herein to boe mean barrels of oil equivalent derived by converting gas to oil in the ratio of 6,000 cubic feet (mcf) of gas to one barrel (bbl) of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based upon an energy conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead.
Non-GAAP Measures
-----------------
Funds from operations are a non-GAAP measure, defined by the Company as cash flow from operating activities excluding:
- The change in non-cash working capital related to continuing and
discontinued operations, which is eliminated to show the net cash
effect on income;
- Geological and geophysical expenses from continuing and discontinued
operations, which are costs incurred for the purpose of generating
future investment opportunities and are therefore not indicative of
operational performance; and
- Expenditures on asset retirement obligations and reclamation, which
are also not indicative of operational performance.
Management uses funds from operations to analyze performance and considers it to be a key measure as they demonstrate the Company's ability to generate the cash necessary to fund future capital investments. Winstar's determination of funds from operations may not be comparable to that reported by other companies nor should they be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with Canadian GAAP.
Field operating netback is a non-GAAP measure defined by the Company as revenue, plus international royalty income less royalty, operating expense and current income tax. Management considers field operating netbacks an important measure as they demonstrate the Company's profitability from field operations, before general and administrative costs, relative to current commodity prices.
Forward-looking Statements
--------------------------
This press release contains certain forward-looking statements. These statements relate to future events or future performance of the Company. When used in this press release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "predict", "seek", "propose", "expect", "potential", "continue", and similar expressions, are intended to identify forward-looking statements. These statements involve 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. Such statements reflect the Company's current views with respect to certain events, and are subject to a number of risks, uncertainties and assumptions. Many factors could cause Winstar's actual results, performance, or achievements to materially differ from those described in this press release. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in other public disclosures made by the Company or this press release as intended, planned, anticipated, believed, estimated, or expected. Specific forward-looking statements in this press release include, among others, statements pertaining to the following: factors upon which Winstar will decide whether or not to undertake a specific course of action; and estimated volumes and timing of future production; business plans for drilling, exploration and development; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. The risks to which the Company is subject include those of the oil and gas industry in general, including operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas fields and deposits; volatility in global market prices for oil and natural gas; general economic conditions; competition; liabilities and risks, including environmental liability and risks inherent in oil and gas operations; uncertainties as to the availability and cost of financing and changes in capital markets; alternatives to and changing demand for petroleum products; and changes in legislation and the regulatory environment, including uncertainties with respect to the Kyoto Protocol. Furthermore, statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the resources and reserves described can be produced profitably in the future. The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary declaration. These statements speak only as of the date of this press release. The Company does not intend and does not assume any obligation, to update these forward-looking statements to reflect new information, subsequent events or otherwise, except as required by law.
Winstar Resources Ltd. is a Calgary-based junior oil and gas company, which explores for, develops, produces, and sells crude oil, natural gas liquids and natural gas in Tunisia, Hungary and Romania. Winstar's common shares trade on the Toronto Stock Exchange under the symbol WIX.
Winstar's interim financial statements and management discussion and analysis for the three and six month periods ended June 30, 2010 can be obtained at www.winstar.ca
For further information: Mr. David Monachello, President, Phone: +1 403 513 4200, E-mail: [email protected]; Or Mr. Bradley Giblin, Chief Financial Officer, Phone: +1 403 513 4207, E-mail: [email protected]; Or Mr. Charles de Mestral, Chief Executive Officer, Phone: +41 22 361 14 45, E-mail: [email protected]
Share this article