Published: August 02, 2011
Trilogy Energy Corp. Announces Financial and Operating Results for the Three and Six Months-Ended June 30, 2011
Trilogy Energy Corp. (TSX:TET) ("Trilogy" or the "Company") is pleased to announce its financial and operating results for the three and six months ended June 30, 2011.
FINANCIAL AND OPERATING HIGHLIGHTS
-- Sales volumes for the second quarter of 2011 averaged 29,320 Boe/d as
compared to 25,362 Boe/d for the previous quarter, representing a 16
percent increase quarter over quarter. Increased oil and natural gas
liquids production to 25 percent of total production.
-- Capital expenditures (excluding acquisitions and dispositions) totaled
$42.8 million for the second quarter of 2011 versus $136.1 million in
the prior quarter. In total, 9 (5.1 net) wells were drilled in the
quarter.
-- Funds flow from operations increased 14 percent to $52.1 million during
the second quarter of 2011 as compared to $45.6 million for the previous
quarter.
-- Dividends to Shareholders for the second quarter of 2011 were $12.2
million (25 percent of cash flow from operations) as compared to $12.1
million in the prior quarter (26 percent of cash flow from operations).
-- Income before tax for the second quarter was $11.0 million as compared
to the prior quarter's income of $0.3 million.
-- Completed the expansion of two oil satellites to accommodate growing oil
production from the new Montney oil play and commenced production from
three new Montney oil wells.
-- Initiated production from the Duvernay shale play with encouraging
results.
FINANCIAL AND OPERATING HIGHLIGHTS TABLE
(In thousand Canadian dollars except per share amounts and
where stated otherwise)
Three Months Ended
June 30, March 31, Six Months Ended June 30
2011 2011 Change % 2011 2010 Change %
----------------------------------------------------------------------------
FINANCIAL
Petroleum and
natural
gas sales 94,056 79,998 18 174,054 158,222 10
Funds flow
From
operations
(1) 52,107 45,586 14 97,692 85,939 14
Per
share -
diluted 0.44 0.39 13 0.83 0.75 11
Earnings
Earnings
(loss)
before tax 10,977 262 100 11,239 164,812 (93)
Per
share -
diluted 0.09 - 100 0.10 1.44 (93)
Earnings
(loss)
after
deferred
income
tax 7,872 (211) 100 7,661 193,567 (96)
Per
share -
diluted 0.07 - 100 0.07 1.69 (96)
Dividends
declared 12,172 12,105 1 24,275 25,663 (5)
Per share 0.105 0.105 - 0.210 0.225 (7)
Capital
expenditures
Exploration,
development
and land 42,715 135,826 (69) 178,541 76,079 135
Acquisitions,
(dispositions)
and other -
net 1,154 (3,050) 100 (1,896) 129 (100)
Net
capital
expenditures 43,869 132,776 (67) 176,645 76,208 132
Total
assets 1,188,179 1,175,054 1 1,188,179 1,044,016 14
Net
debt(1) 406,409 413,233 (2) 406,409 261,671 55
Shareholders'
equity 537,004 533,384 1 537,004 577,794 (7)
Total
shares
outstanding
(thousands)
- As at
end of
period(2) 115,776 114,925 1 115,776 114,706 1
----------------------------------------------------------------------------
OPERATING
Production
Natural
gas
(MMcf/d) 133 113 18 123 113 9
Oil
(Bbl/d) 2,744 2,273 21 2,510 1,826 37
Natural
gas
liquids
(Boe/d) 4,426 4,228 5 4,327 2,989 45
Total
production
(Boe/d
@ 6:1) 29,320 25,362 16 27,352 23,586 16
----------------------------------------------------------------------------
Average
prices
Natural gas
(before
financial
instruments) 3.93 4.03 (2) 3.98 4.79 (17)
($/Mcf)
Crude Oil
(before
financial
instruments) 96.65 87.34 11 92.45 80.23 15
($/Bbl)
Natural
gas
liquids
($/Bbl) 55.54 55.36 - 55.46 62.99 (12)
----------------------------------------------------------------------------
Drilling
activity
(gross)
Gas 6 19 (68) 25 21 19
Oil 3 2 50 5 2 150
D&A - - - - - -
Total wells 9 21 (57) 30 23 30
Success rate 100% 100% - 100% 100% -
----------------------------------------------------------------------------
(1) Funds flow from operations and net debt are Non-GAAP terms. Please
refer to the advisory on Non-GAAP measures below.
(2) Excluding shares held in trust for the benefit of Trilogy's officers
and employees under the Company's Share Incentive Plan. Includes Common
Shares and Non-voting Shares. Refer to the notes to the interim
consolidated financial statements for additional information.
OUTLOOK
Trilogy reaffirms its guidance for 2011 as follows:
Average production 30,000 Boe/d
Average operating costs $7.75 /Boe
Capital expenditures $285 million
ADDITIONAL INFORMATION
A copy of Trilogy's June 30, 2011 quarterly report to the Shareholders, including the Management's Discussion and Analysis and unaudited interim consolidated financial statements and related notes can be obtained athttp://media3.marketwire.com/docs/E802TET.pdf, through Trilogy's website at www.trilogyenergy.com and SEDAR at www.sedar.com.
ABOUT TRILOGY
Trilogy is a petroleum and natural gas-focused Canadian energy corporation that actively acquires, develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy's geographically concentrated assets are primarily low-risk, high working interest, lower-decline properties that provide abundant infill drilling opportunities and good access to infrastructure and processing facilities, many of which are operated and controlled by Trilogy. Trilogy's common shares are listed on the Toronto Stock Exchange under the symbol "TET".
NON-GAAP MEASURES
Certain measures used in this document, including "funds flow from operations", "operating income", "net debt", "finding and development costs", "operating netback" and "payout ratio" collectively the "Non-GAAP measures" do not have any standardized meaning as prescribed by IFRS and previous GAAP and, therefore, are considered Non-GAAP measures. Non-GAAP measures are commonly used in the oil and gas industry and by Trilogy to provide shareholders and potential investors with additional information regarding the Company's liquidity and its ability to generate funds to finance its operations. However, given their lack of standardized meaning, such measurements are unlikely to be comparable to similar measures presented by other issuers.
"Funds flow from operations" refers to the cash flow from operating activities before net changes in operating working capital. The most directly comparable measure to "funds flow from operations" calculated in accordance with IFRS is the cash flow from operating activities. "Funds flow from operations" can be reconciled to cash flow from operating activities by adding (deducting) the net change in working capital as shown in the consolidated statements of cash flows.
"Operating income" is equal to petroleum and natural gas sales before financial instruments and bad debt expenses minus royalties, operating costs, and transportation costs. "Operating netback" refers to petroleum and natural gas sales plus realized financial instrument gains and losses and other income minus royalties, operating costs, transportation costs and actual decommissioning and restoration costs incurred in the year. "Net debt" is calculated as current liabilities minus current assets plus long-term debt. The components described for "operating income", "operating netback" and "net debt" can be derived directly from Trilogy's consolidated financial statements.
"Finding and development costs" refers to all current year capital expenditures excluding property acquisitions, property dispositions and corporate office expenditures and including changes in future development capital on a proved and proved plus probable basis (as applicable). "Finding and development costs per Barrel of oil equivalent" ("F&D $/Boe") is calculated by dividing finding and development costs by the current year's reserve extensions, discoveries and revisions on a proved or proved plus probable reserve basis (as applicable).
"Recycle ratio" is equal to "Operating netback" on a production barrel of oil equivalent for the year divided by "F&D $/Boe" (computed on a proved or proved plus probable reserve basis as applicable).
Investors are cautioned that the Non-GAAP measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with IFRS, as set forth above, or other measures of financial performance calculated in accordance with IFRS.
FORWARD-LOOKING INFORMATION
Certain information included in this news release constitutes forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "budget" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this news release pertain to, without limitation: expected average production, average operating costs and capital expenditures for 2011; among others. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Such assumptions include: current commodity price forecasts for petroleum, natural gas and natural gas liquids; current reserves estimates; current production forecasts; geology regarding the extent and development potential of the Kaybob area Montney oil pool and Duvernay Shale Gas development program; the natural gas liquids content of Trilogy's natural gas; continuity of the mutually beneficial agreement with Aux Sable Canada LP; assumptions regarding royalties and expenses and the continuity of government incentive programs and their applicability to Trilogy; operating and other costs; estimates of future tax amounts, tax assets and tax pools; drilling results consistent with our expectations; the ability of Trilogy to obtain equipment, services and supplies in a timely manner to carry out its activities; geology applicable to Trilogy's land holdings; the ability of Trilogy and its partners to obtain drilling success consistent with expectations; the ability of Trilogy to market oil and natural gas successfully to current and new customers; the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product processing, transmission and transportation and the timely receipt of required regulatory approvals: among others.
Although Trilogy believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Trilogy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Trilogy and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to: fluctuations of oil, natural gas and natural gas liquids prices, foreign currency, exchange rates and interest rates, volatile economic and business conditions, the ability of management to execute its business plan; the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil, natural gas and associated by- products and market demand; risks and uncertainties involving geology of oil and gas deposits; risks inherent in Trilogy's marketing operations, including credit risk; the uncertainty of reserves estimates and reserves life; the uncertainty of estimates and projections relating to future production, costs and expenses; uncertainty in amounts and timing of royalty payments and applicability of and change to royalty regimes and government incentive programs including, without limitation, the Natural Gas Deep Drilling Programs and the Drilling Royalty Credit Program; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the availability of financing; Trilogy's ability to secure adequate product transmission and transportation; Trilogy's ability to enter into or renew leases; health, safety and environmental risks; the ability of Trilogy to add production and reserves through development and exploration activities; weather conditions; the possibility that government policies, regulations or laws, including without limitation those relating to the environment and taxation, may change or regulatory approvals may be delayed or withheld; risks associated with existing and potential future lawsuits and regulatory actions against Trilogy; uncertainty regarding aboriginal land claims and co-existing local populations; hiring/maintaining staff; the impact of market competition; and other risks and uncertainties described elsewhere in this document or in Trilogy's other filings with Canadian securities authorities.
The forward-looking statements and information contained in this news release are made as of the date hereof and Trilogy 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.
Refer to Trilogy's Management's Discussion and Analysis for additional information on forward-looking information.
OIL AND GAS ADVISORY
This news release contains disclosure expressed as "Boe", "Boe/d", "Mcf/d", "MMcf/d", "Bbl" and "Bbl/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
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