Wrangler West Reports 2012 Nine Months Operating and Financial Results
CALGARY, Nov. 21, 2012 /CNW/ - Wrangler West Energy Corp. ("Wrangler West" or the "Company") (TSX-V "WX") announces today's filing on SEDAR (www.sedar.com) of the Company's unaudited Financial Statements and related Management's Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2012 with comparative data for the three and nine months ended September 30, 2011 and the year ended December 31, 2011. All referenced documents may be viewed at www.sedar.com.
| Three months ended September 30 | Nine months ended September 30 | ||||||
| 2012 | 2011 | % Change | 2012 | 2011 | % Change | ||
| OPERATIONAL HIGHLIGHTS | |||||||
| Production | |||||||
| Crude oil and NGL (bbls/d) | 103 | 146 | (29) | 122 | 210 | (42) | |
| Natural gas (mcf/d) | 2,792 | 4,058 | (31) | 3,516 | 4,354 | (19) | |
| Total production (boe/d) | 568 | 822 | (31) | 708 | 936 | (24) | |
| Prices | |||||||
| Crude oil and NGL ($/bbl) | 77.42 | 86.48 | (10) | 80.80 | 85.61 | (6) | |
| Natural gas ($/mcf) | 2.40 | 3.85 | (38) | 2.21 | 3.92 | (44) | |
| Per boe ($) | |||||||
| Petroleum and natural gas revenue | 25.82 | 34.34 | (25) | 24.90 | 37.44 | (33) | |
| Royalties | (3.69) | (7.34) | (50) | (2.57) | (6.50) | (60) | |
| Operating expenses | (13.09) | (11.02) | 19 | (13.07) | (13.70) | (5) | |
| Netback | 9.04 | 15.98 | (43) | 9.26 | 17.24 | (46) | |
| General and administrative | (4.44) | (4.88) | (9) | (3.84) | (3.96) | (3) | |
| Interest | (0.78) | (0.21) | 271 | (0.58) | (0.56) | 4 | |
| Other income | - | - | - | 0.61 | - | - | |
| Funds flow from operations | 3.82 | 10.89 | (65) | 5.45 | 12.72 | (57) | |
| Share-based payments | (0.42) | (1.08) | (61) | (0.38) | (0.32) | 19 | |
| Depletion and depreciation | (16.27) | (15.21) | 7 | (16.22) | (14.82) | 9 | |
| Gain (loss) on sale of assets | - | 1.43 | (100) | - | (3.65) | (100) | |
| Accretion | (0.25) | (0.17) | 47 | (0.20) | (0.20) | - | |
| Deferred income tax benefit | 3.08 | 1.10 | 180 | 2.70 | 1.60 | 69 | |
| Net loss | (10.04) | (3.04) | 230 | (8.65) | (4.67) | 85 | |
| FINANCIAL HIGHLIGHTS ($ thousand) | |||||||
| Petroleum and natural gas revenue | 1,349 | 2,596 | (48) | 4,831 | 9,562 | (49) | |
| Royalties | (193) | (555) | (65) | (498) | (1,660) | (70) | |
| Operating expenses | (684) | (833) | (18) | (2,536) | (3,500) | (28) | |
| General and administrative | (232) | (369) | (37) | (744) | (1,011) | (26) | |
| Interest | (41) | (16) | 156 | (112) | (143) | (22) | |
| Other income | - | - | - | 118 | - | - | |
| Funds flow from operations | 199 | 823 | (76) | 1,059 | 3,248 | (67) | |
| Share-based payments | (22) | (82) | (73) | (73) | (82) | (11) | |
| Depletion and depreciation | (850) | (1,150) | (26) | (3,146) | (3,784) | (17) | |
| Gain (loss) on sale of assets | - | 108 | (100) | - | (932) | (100) | |
| Accretion | (13) | (13) | - | (39) | (50) | (22) | |
| Deferred income tax benefit | 161 | 83 | 94 | 523 | 409 | 28 | |
| Net loss | (525) | (231) | 127 | (1,676) | (1,191) | 41 | |
| Funds flow from operations - basic ($/share) basic and diluted ($/share) | 0.03 | 0.13 | (77) | 0.16 | 0.50 | (68) | |
| Net loss - basic and diluted ($/share) | (0.08) | (0.04) | 100 | (0.26) | (0.18) | 44 | |
| Total assets ($ thousand) | 26,440 | 27,322 | (3) | ||||
Wrangler West converts petroleum and natural gas reserves and volumes to a common unit of measure on a basis of six thousand cubic feet ("mcf") of natural gas equals one barrel ("bbl") of oil. Disclosure using barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. The basis for the boe conversion ratio of 6 mcf equals one bbl is an energy equivalency conversion method, primarily applicable at the burner tip. This conversion rate does not represent a value equivalency at the wellhead. The Company calculates boe per day based on total production for the period divided by the number of days during the period.
Wrangler West Energy Corp. ("Wrangler West" or the "Company") presents operating and financial results for the three and nine months ended September 30, 2012. Wrangler West is a Canadian junior oil and natural gas exploration company focused on generating shareholder value by exploring for, developing and producing natural gas and crude oil from properties located in the Province of Alberta.
Nine Month Highlights
- $4.8 million of revenue
- $1.1 million of funds flow from operations
- $1.9 million in capital expenditures
Review of 2012 Nine Months
For the nine months ended September 30, 2012, Wrangler West produced 708 barrels of oil equivalent ("boe") per day, a 24 percent decrease compared to the same period one year ago. The decrease in production relates to the prior year's asset dispositions as well as expected production declines from the corporate reserves base.
Wrangler West is 80 percent-weighted toward natural gas. During the nine months, the Company received natural gas prices that averaged $2.21 per Mcf. This persistent weak price environment lowered cash flows and reduced available capital for undertaking new projects. In spite of the challenge of being primarily a dry natural gas producer, Wrangler West conducted a modest level of activity in 2012 third quarter.
Late in 2012 third quarter, the operator of the pipeline which transports natural gas from our Riviere core area notified producers in the region their services would be temporarily interrupted to undertake line maintenance. This resulted in an unplanned shut-in of all our Riviere production. During the shut-in period, Wrangler West undertook a plant turnaround, as well as maintenance and pressure work to prepare for 2012-13 winter operations.
In 2012 third quarter, Wrangler West completed the activities required to implement expansion of the Riviere waterflood project. A new injection well commenced operation and continues to operate without interruption. We anticipate the waterflood project will improve recovery of reserves by increasing pressure in a large portion of the Wabamun A oil pool.
Also in 2012 third quarter, Wrangler West drilled, cased and completed a test well at Mellowdale. It tested commercial quantities of natural gas of approximately 5 Mmcf per day. The Company has since secured an additional three sections of crown land to enhance our acreage position. We expect the newly-drilled well will be tied-in and commence production in late November.
Industry Conditions
These continue to be trying times for junior conventional oil and natural gas companies like Wrangler West. Economic instability and volatility persist in markets worldwide. Following the United States ("US") election, we are awaiting potential political solutions for dealing with the "fiscal cliff" faced by that nation. The long-term solution for addressing US debt will have a significant effect on North American financial markets. Until there is clear direction, equity markets remain cautious.
Canadian capital markets currently favour resource plays where land and drilling costs exceed the budgets of most junior producers. Recently, some major oil and natural gas producers have completed new equity issues. This is a positive trend as strengthened equity markets and investor confidence are required to provide capital to the oil and natural gas industry.
Natural gas prices are trending upwards which may attract new capital. The US natural gas rig count has been in steady decline throughout 2012. Canadian natural gas storage is almost full and, once again, winter weather will primarily determine early 2013 natural gas prices.
Recent volatility in crude oil prices has lowered near-term expectations for this commodity. Canadian crude oil trades at a discount to world prices. The differential between world oil prices and North American prices has resulted in significant lost revenue for Canadian producers and, ultimately, both federal and provincial treasuries. Oil price differentials will persist until Canadians accept the importance of access to new markets and support the construction of new oil export facilities.
Outlook
As a micro-cap oil and natural gas company, Wrangler West has viewed 2012 as a year of survival. We have managed through this difficult period when the natural gas price continued to fall and appears to have touched bottom earlier this year. As we complete our 2012 activity, natural gas prices appear to be strengthening. Higher natural gas prices and drilling success will improve cash flows and provide needed capital and increased flexibility moving forward into 2013.
WRANGLER WEST ENERGY CORP.
STATEMENTS OF FINANCIAL POSITION
(Stated in thousands of dollars)
(Unaudited)
| September 30, | December 31, | |||||
| 2012 | 2011 | |||||
| Assets | ||||||
| Current assets | ||||||
| Accounts receivable | $ | 463 | $ | 756 | ||
| Prepaid expenses | 150 | 212 | ||||
| 613 | 968 | |||||
| Property, plant and equipment (note 3) | 25,827 | 26,995 | ||||
| $ | 26,440 | $ | 27,963 | |||
| Liabilities and shareholders' equity | ||||||
| Current liabilities | ||||||
| Bank indebtedness (note 4) | $ | 4,477 | $ | 3,156 | ||
| Accounts payable and accrued liabilities | 1,121 | 1,999 | ||||
| 5,598 | 5,155 | |||||
| Decommissioning obligations | 2,465 | 2,369 | ||||
| Deferred income tax | 2,281 | 2,804 | ||||
| 10,344 | 10,328 | |||||
| Shareholders' equity | ||||||
| Common shares | 12,402 | 12,402 | ||||
| Contributed surplus | 4,877 | 4,740 | ||||
| Retained earnings (deficit) | (1,183) | 493 | ||||
| 16,096 | 17,635 | |||||
| $ | 26,440 | $ | 27,963 | |||
See accompanying notes to the condensed interim financial statements
WRANGLER WEST ENERGY CORP.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Stated in thousands of dollars, except per share amounts)
(Unaudited)
| Three months ended | Nine months ended | ||||||||
| September 30 | September 30 | ||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||
| Revenue | |||||||||
| Petroleum and natural gas sales | $ | 1,349 | $ | 2,596 | $ | 4,831 | $ | 9,562 | |
| Royalties | (193) | (555) | (498) | (1,660) | |||||
| 1,156 | 2,041 | 4,333 | 7,902 | ||||||
| Expenses | |||||||||
| Operating | 684 | 833 | 2,536 | 3,500 | |||||
| General and administrative | 232 | 369 | 744 | 1,011 | |||||
| Share-based payments | 22 | 82 | 73 | 82 | |||||
| Depletion and depreciation | 850 | 1,150 | 3,146 | 3,784 | |||||
| Loss (gain) on sale of assets | - | (108) | - | 932 | |||||
| Results from operating activities | (632) | (285) | (2,166) | (1,407) | |||||
| Finance expense | |||||||||
| Interest and accretion (note 7) | 54 | 29 | 151 | 193 | |||||
| Other income | - | - | (118) | - | |||||
| Loss before income tax | (686) | (314) | (2,199) | (1,600) | |||||
| Deferred income tax benefit | (161) | (83) | (523) | (409) | |||||
| Net loss and comprehensive loss | $ | (525) | $ | (231) | $ | (1,676) | $ | (1,191) | |
| Net loss per share (note 6) | |||||||||
| Basic and diluted | $ | (0.08) | $ | (0.04) | $ | (0.26) | $ | (0.18) | |
See accompanying notes to the condensed interim financial statements
| WRANGLER WEST ENERGY CORP. | |||||
| STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY | |||||
| (Stated in thousands of dollars and shares) | |||||
| (Unaudited) | |||||
| |
Number of common shares |
Common shares |
Contributed surplus |
Retained earnings (deficit) |
Total shareholders' equity |
||||||
| Balance at January 1, 2012 | 6,466 | $ | 12,402 | $ | 4,740 | $ | 493 | $ | 17,635 | ||
| Share-based payments | - | - | 137 | - | 137 | ||||||
| Net loss | - | - | - | (1,676) | (1,676) | ||||||
| Balance at September 30, 2012 | 6,466 | $ | 12,402 | $ | 4,877 | $ | (1,183) | $ | 16,096 | ||
| Balance at January 1, 2011 | 6,466 | $ | 12,402 | $ | 4,538 | $ | 2,297 | $ | 19,237 | ||
| Share-based payments | - | - | 153 | - | 153 | ||||||
| Net loss | - | - | - | (1,191) | (1,191) | ||||||
| Balance at September 30, 2011 | 6,466 | $ | 12,402 | $ | 4,691 | $ | 1,106 | $ | 18,199 | ||
See accompanying notes to the condensed interim financial statements
WRANGLER WEST ENERGY CORP.
STATEMENTS OF CASH FLOWS
(Stated in thousands of dollars)
(Unaudited)
| Three months ended | Nine months ended | ||||||||
| September 30 | September 30 | ||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||
| Cash provided by (used in): | |||||||||
| Operating | |||||||||
| Net loss | $ | (525) | $ | (231) | $ | (1,676) | $ | (1,191) | |
| Items not involving cash: | |||||||||
| Depletion and depreciation | 850 | 1,150 | 3,146 | 3,784 | |||||
| Accretion | 13 | 13 | 39 | 50 | |||||
| Share-based payments | 22 | 82 | 73 | 82 | |||||
| Loss (gain) on sale of assets | - | (108) | - | 932 | |||||
| Deferred income tax benefit | (161) | (83) | (523) | (409) | |||||
| 199 | 823 | 1,059 | 3,248 | ||||||
| Change in non-cash operating working capital (note 8) | 121 | (58) | (197) | 111 | |||||
| 320 | 765 | 862 | 3,359 | ||||||
| Financing | |||||||||
| Increase (decrease) in bank indebtedness | 300 | (270) | 1,322 | (4,628) | |||||
| Investing | |||||||||
| Property, plant and equipment expenditures | (862) | (1,527) | (1,858) | (3,203) | |||||
| Proceeds on sale of assets | - | 105 | - | 5,064 | |||||
| Change in non-cash investing working capital (note 8) | 242 | 927 | (326) | (592) | |||||
| (620) | (495) | (2,184) | 1,269 | ||||||
| Cash and cash equivalents, beginning and end of period | $ | - | $ | - | $ | - | $ | - | |
| Supplementary cash flow information | |||||||||
| Interest paid | (40) | (33) | (108) | (157) | |||||
| Income tax refund | - | - | - | 74 | |||||
See accompanying notes to the condensed interim financial statements
Additional Information
Wrangler West files additional shareholder and public information on SEDAR accessible at www.sedar.com. This includes the Statement of Reserves Data and Other Oil and Gas Information Form NI 51-101 F1, F2, F3 and F4 effective December 31, 2011. Alternatively, to obtain copies of published corporate information, contact Crista L. Ferguson, Chief Financial Officer, Wrangler West Energy Corp., 1950, 444 Fifth Avenue SW, Calgary, Alberta, Canada T2P 2T8 (telephone +1 403 290 6800 or e-mail [email protected]).
Reader Advisory
This news release may contain forward-looking statements ("FLS") related to potential new crude oil and natural gas drilling, tie-ins, production operations, sources and use of capital, asset purchases or dispositions and expected future operations. Although Wrangler West believes the expectations reflected in FLS are reasonable, undue reliance should not be placed on FLS because the Company can give no assurance they will prove to be correct. Since FLS address future events and conditions, by their very nature, they involve inherent risks and uncertainties. A more detailed discussion of FLS is provided in Wrangler West's Management's Discussion and Analysis for the year ended December 31, 2011 which is filed on SEDAR (www.sedar.com). The FLS contained in this news release are made as of the date hereof. Unless so required by applicable securities laws, Wrangler West undertakes no obligation to update publicly or revise any FLS or information, whether as a result of new information, future events or otherwise.
Corporate Profile
Wrangler West is a Canadian junior crude oil and natural gas producer which explores for and develops natural gas and crude oil production assets in the Province of Alberta. Since inception, the Company's mandate has been to use the drill bit to add shareholder value. Disciplined management of operations and the production portfolio creates sufficient funds flow to support ongoing operations. Wrangler West intends to continue to reinvest funds flow from operations and other available capital to protect current, and add future, value. Wrangler West common shares trade on the TSX Venture Exchange under the symbol "WX".
Neither the TSX Venture Exchange nor its Regulation Services Provider (as defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
SOURCE: Wrangler West Energy Corp.
Wrangler West Energy Corp.
Steven F. Johnson
President and Chief Executive Officer
[email protected]
telephone: (403) 290-6800
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