CALGARY, ALBERTA–(Marketwired – April 11, 2017) – Traverse Energy Ltd. (“Traverse” or “the Company“) (TSX VENTURE:TVL) presents financial and operating results for the year ended December 31, 2016.
| Three Months Ended December 31 (unaudited) |
Year Ended December 31 | ||||||||
| Highlights | 2016 | 2015 | 2016 | 2015 | |||||
| Financial ($ thousands, except per share amounts) | |||||||||
| Petroleum and natural gas revenue | $ 1,828 | $ 3,172 | $ 7,220 | $ 12,882 | |||||
| Cash provided by operations | 238 | 1,642 | 2,247 | 7,598 | |||||
| Funds from operations (1) | 404 | 2,024 | 1,723 | 7,262 | |||||
| Per share – basic and diluted | 0.01 | 0.03 | 0.02 | 0.10 | |||||
| Net loss | (856 | ) | (3,720 | ) | (3,434 | ) | (2,762 | ) | |
| Per share – basic and diluted | (0.01 | ) | (0.05 | ) | (0.05 | ) | (0.04 | ) | |
| Capital expenditures, before dispositions | 2,874 | 3,913 | 6,613 | 11,444 | |||||
| Capital dispositions | – | – | – | (8,916 | ) | ||||
| Total assets | 41,610 | 38,786 | 41,610 | 38,786 | |||||
| Working capital | 1,717 | 767 | 1,717 | 767 | |||||
| Common shares | |||||||||
| Outstanding (millions) | 86.6 | 71.9 | 86.6 | 71.9 | |||||
| Weighted average (millions) | 80.1 | 71.6 | 76.3 | 70.9 | |||||
| Operations (Units as noted) | |||||||||
| Average production | |||||||||
| Natural gas (Mcf per day) | 2,075 | 2,951 | 2,107 | 2,865 | |||||
| Oil and NGL (bbls per day) | 259 | 563 | 339 | 534 | |||||
| Total (BOE per day) | 605 | 1,055 | 690 | 1,011 | |||||
| Average sales price | |||||||||
| Natural gas ($/Mcf) | 2.99 | 2.72 | 2.37 | 3.09 | |||||
| Oil and NGL ($/bbl) | 52.77 | 47.02 | 43.51 | 49.54 | |||||
| Netback ($/BOE) | |||||||||
| Petroleum and natural gas revenue | 32.86 | 32.69 | 28.60 | 34.90 | |||||
| Royalties | (0.84 | ) | (0.61 | ) | (0.80 | ) | (1.13 | ) | |
| Operating and transportation expenses | (20.04 | ) | (12.41 | ) | (16.83 | ) | (12.69 | ) | |
| Operating netback (2) | 11.98 | 19.67 | 10.97 | 21.08 | |||||
| General and administrative | (4.60 | ) | (2.25 | ) | (4.02 | ) | (2.91 | ) | |
| Net finance expense (3) | (0.12 | ) | (0.05 | ) | (0.13 | ) | (0.34 | ) | |
| Current income tax | – | 3.49 | – | 1.84 | |||||
| Funds from operations (1) | 7.26 | 20.86 | 6.82 | 19.67 | |||||
| (1) | Funds from operations represents net cash from operating activities prior to changes in non-cash working capital and settlement of decommissioning obligations. Funds from operations per BOE is funds from operations divided by barrels of oil equivalent production volumes for the applicable period. See Non-IFRS measures. |
| (2) | Operating netback represents revenue less royalties, operating and transportation expenses. Operating netback per BOE is the operating netback divided by barrels of oil equivalent production for the applicable period. See Non-IFRS measures. |
| (3) | Excludes non-cash accretion. |
Operations review
Traverse’s capital program in 2016 was reduced in response to the continuing weak commodity price environment. Two Banff test wells were drilled (100%) resulting in one oil well at Watts and one abandoned well in the west Coyote area. A water disposal facility at Coyote was completed and commissioned, reducing current water disposal costs and improving economics for future development. The Coyote battery tank vent piping system was also upgraded to allow for tank vapour recovery. Beginning in the second quarter of 2016, Traverse implemented a program of recompletions and workovers to optimize production.
In 2016 Traverse continued to maintain its acreage holdings in East Central Alberta, purchasing approximately 41,400 net undeveloped acres (100%) during the year. Undeveloped land holdings in Alberta at December 31, 2016 totalled 181,600 gross (180,700 net) acres. Traverse continues to evaluate existing and acquired lands for additional prospects. At December 31, 2016, the Corporation had working capital of $1.7 million and an undrawn credit facility of $7 million. The initial exploration and development program for 2017 has been approved at $14 million.
In the first quarter of 2017 Traverse drilled 3 wells (100%) resulting in one oil well at Coyote and 2 potential oil wells at Watts and west Coyote. The horizontal oil well at Coyote was tied into existing infrastructure in February and has averaged 300 BOE/day comprised of 250 bbls/day oil and 320 mcf/day sales gas in the first 40 days of production. The well is currently being equipped with artificial lift. The exploratory well at west Coyote is being production tested. Based on the initial production tests the well appears to be uneconomic as a single well tie in. Additional drilling in the area is planned later in the year. After break up, the potential oil well at Watts will be evaluated for productivity.
At Watts, an oil well drilled in 2016 was placed on production in early February 2017 and has averaged 125 BOE/day comprised of 85 bbls/day oil and 230 mcf/day sales gas in its first 60 days of production. A gas well tied in during the fourth quarter of 2016 was placed on production in early February. The well has since been recompleted in a Mannville zone and is waiting on services to fracture treat the zone after break up.
Forward-looking information
This news release contains forward-looking information which is not comprised of historical fact. Forward-looking information involves risks, uncertainties and other factors that could cause actual events, results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Forward-looking information in this news release includes: the Company’s statements with regards to additional drilling in the west Coyote area; evaluating the productivity of a potential oil well at Watts and the timing of fracture treatments at Watts. This forward looking information is subject to a variety of substantial known and unknown risks and uncertainties and other factors that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward looking information. The Company’s Annual Information Form filed on April 11, 2017 with securities regulatory authorities (accessible through the SEDAR website www.sedar.com) describes the risks, material assumptions and other factors that could influence actual results and which are incorporated herein by reference.
Although the Company believes that the material assumptions and factors used in preparing the forward-looking information in this news release are reasonable, undue reliance should not be placed on such information, which only applies as of the date of this news release, and no assurance can be given that such events will occur. The Company disclaims any intention or obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise, other than as required by law.
Non-IFRS measures
In this release references are made to certain financial measures (such as funds from operations and operating netback) which do not have standardized meanings prescribed by IFRS and therefore may not be comparable to the calculation of similar measures by other entities. Management uses certain industry benchmarks such as operating netback to analyze financial and operating performance. There are no comparable measures in accordance with IFRS for operating netback. Management believes that in addition to net income (loss), the non-IFRS measures set forth below are useful supplemental measures as they assist in the determination of the Company’s operating performance, leverage and liquidity. Investors should be cautioned however, that these measures should not be construed as an alternative to both net income (loss) and net cash from operating activities, which are determined in accordance with IFRS, as indicators of the Company’s performance.
Funds from operations
Funds from operations represents net cash from operating activities prior to changes in non-cash working capital and settlement of decommissioning obligations as detailed below:
| Three months ended December 31 (unaudited) | Year ended December 31 | |||||
| ($) | 2016 | 2015 | 2016 | 2015 | ||
| Net cash from operating activities | 238,406 | 1,641,785 | 2,247,464 | 7,598,188 | ||
| Decommissioning expenditures | 32,412 | 73,573 | 93,111 | 142,719 | ||
| Change in non-cash working capital | 133,350 | 308,662 | (617,242 | ) | (478,900 | ) |
| Funds from operations | 404,168 | 2,024,020 | 1,723,333 | 7,262,007 | ||
Funds from operations per BOE is funds from operations divided by barrels of oil equivalent production volumes for the applicable period. Funds from operations per share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net income (loss) per share.
Operating netback
Operating netback represents revenue less royalties, operating and transportation costs. Operating netback per BOE is the operating netback divided by barrels of oil equivalent production volume for the applicable period. The calculation of Traverse’s netback is detailed under the heading “Operating netback” within the Company’s management’s discussion and analysis for the year ended December 31, 2016.
BOE equivalent
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 upon an energy equivalency conversion method primarily applicable at the burner tip and does not represent 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.
Further details on the Company including the 2016 year end audited financial statements, the related management’s discussion and analysis and Annual Information Form are available on the Company’s website (www.traverseenergy.com) and SEDAR.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accept responsibility for the adequacy or accuracy of the content of this release.
Laurie Smith
President and CEO
(403) 264-9223