- ISIN SE0002060863
BlackPearl Resources Inc.
BLACKPEARL ANNOUNCES FOURTH QUARTER AND FULL YEAR 2014 FINANCIAL AND OPERATING RESULTS
DGAP-News: BlackPearl Resources Inc.
2015-02-26 / 23:01
---------------------------------------------------------------------
CALGARY, ALBERTA - BlackPearl Resources Inc. ('we', 'our', 'us', 'BlackPearl'
or the 'Company') (TSX: PXX) (NASDAQ OMX Stockholm: PXXS) is pleased to
announce its financial and operating results for the three and twelve months
ended December 31, 2014.
Highlights and accomplishments in 2014 included:
-- Q4 2014 oil and gas production was 9,639 boe/day and oil and gas production
for the year was 9,287 boe/day;
-- Q4 2014 revenue was $48 million and funds flow from operations (a non-GAAP
measure) in the fourth quarter was $20 million. For the year, oil and gas
revenue was $228 million and funds flow from operations was $90 million;
-- Q4 2014 net income was $16.3 million compared to $0.2 million in Q4 2013.
Net income for the year increased to $26.8 million in 2014 compared with
net income of $6.4 million in 2013;
-- Capital expenditures in 2014 were $235.4 million, up from $93.5 million in
2013;
-- As reported on January 29, 2015,
Sproule Unconventional Limited ('Sproule'), our independent reserves
evaluator, increased
BlackPearl's year-end 2014 oil and gas proved plus probable reserves to 296
million barrels of oil equivalent, before royalties. Contingent resources
(best estimate) for our three core properties totaled 616 million barrels
of oil equivalent, before royalties;
-- At Onion Lake, we focused our 2014 capital spending program on the
construction of the first phase of our thermal project. This phase of the
project is designed for productive capacity of 6,000 bbls/day. In addition
to steam, water and oil handling facilities, this phase of the project
includes 13 horizontal production wells and up to 35 vertical injection
wells. All of these wells were drilled by the end of the year and are
currently being completed. All of the modules of the central processing
facilities have been delivered and are being assembled on site.
Construction is approximately 80% complete and we are on target to commence
steam injection by mid-2015. We expect capital costs will be in line with
our budget of $220 million. In addition to thermal development at Onion
Lake we continued with our primary development program, drilling 20
successful wells in 2014;
-- At Blackrod, we continued to achieve positive results from our SAGD pilot
in 2014. The second well pair reached oil production rates of 400 bbls/day
during the fourth quarter with a steam oil ratio of near 3, and the well is
still in its ramp-up phase. Cumulatively, the well has produced in excess
of 80,000 barrels of oil. The regulatory approval process for our 80,000
bbls/day commercial development application has been an extensive process.
We have successfully responded to all of the regulators supplemental
requests for information and we have addressed all statements of concern
raised by area stakeholders. We expect formal approval of the project later
this spring;
-- At Mooney, in 2014 we completed drilling on phase two lands in preparation
for the expansion of our alkali, surfactant, polymer (ASP) flood to these
areas. Due to low oil prices we have elected to defer this expansion until
2016. We also commenced development drilling on phase 3 lands at Mooney,
drilling five wells. We anticipate expanding the ASP flood to these lands
in the future. The Alberta government implemented a new royalty structure
in 2014 for EOR projects, which includes our ASP flood at Mooney.
Generally, the new royalty structure is positive for new projects, such as
our Mooney ASP flood, during their initial years of production.
John Festival, President of BlackPearl, commenting on activities indicated that
'we achieved strong production and cash flow performance during the fourth
quarter of 2014. Unfortunately this has been overshadowed by global events in
the oil and gas sector as the industry is currently facing a very challenging
pricing environment. We have responded by scaling back much of our capital
spending until prices improve. However, we are continuing to move forward with
our Onion Lake thermal project. Production from our thermal project is expected
to be our most economic production in terms of operating netbacks, which is
critically important in a low price environment. The Onion Lake project is on
schedule and on budget and we are planning to start commissioning the
facilities during the second quarter of 2015.
We will continue to monitor the volatility in oil prices and will adjust our
plans as required, which may include altering our spending programs as well as
shutting-in some of our higher cost production until we see sustained
improvement in prices. We are also working closely with our service providers,
as well as conducting internal assessments to achieve cost savings wherever
possible. We have an exciting inventory of projects and as oil prices recover
we will look to aggressively develop these projects to expand our asset and
production base.'
Financial and Operating Highlights
----------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, December 31,
2014 2013 2014 2013
----------------------------------------------------------------------------
Daily sales volumes (1)
Oil (bbls/d) (2) 8,567 9,981 8,492 9,255
Bitumen (bbls/d) 523 262 380 236
9,090 10,243 8,872 9,491
Natural gas (mcf/d) 3,294 1,266 2,492 1,434
Combined (boe/d) 9,639 10,454 9,287 9,730
Product pricing ($)
Crude oil - per bbl 59.34 58.44 72.47 65.09
Natural gas - per mcf 3.39 3.50 4.12 3.16
Combined - per boe 57.00 57.67 70.24 64.11
($000s, except where noted)
Oil and natural gas revenue - gross 47,798 54,072 228,345 222,157
Net income for the period 16,254 226 26,825 6,449
Per share, basic ($) 0.05 0.00 0.08 0.02
Per share, diluted ($) 0.05 0.00 0.08 0.02
Funds flow from operations (3) 19,716 20,735 89,723 86,206
Capital expenditures 57,700 22,749 235,366 93,491
Property dispositions - (2,032) - (2,032)
Working capital, end of period (18,237) (8,782) (18,237) (8,782)
Long term debt 29,000 - 29,000 -
Shares outstanding, end of period (000s) 335,638 300,425 335,638 300,425
------------------------------------------------------------------------------
(1) Boe is based on a conversion ratio of 6 mcf of natural gas to 1 bbl of
oil. Boe may be misleading, particularly if used in isolation. A boe conversion
ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and is not intended to represent a value
equivalency at the wellhead.
(2) Includes production from the Blackrod SAGD pilot. All sales and expenses
from the Blackrod SAGD pilot are being recorded as an adjustment to the
capitalized costs of the project until the technical feasibility and commercial
viability of the project is established.
(3) Funds flow from operations is a non-GAAP measure (as defined herein) that
represents cash flow from operating activities before decommissioning costs
incurred and changes in non-cash working capital related to operations. Funds
flow from operations does not have standardized meanings prescribed by Canadian
generally accepted accounting principles ('GAAP') and therefore may not be
comparable to similar measures used by other companies. Management uses this
non-GAAP measurement for its own performance measures and to provide its
shareholders and investors with a measurement of the Company's efficiency and
its ability to fund a portion of its growth expenditures.
FOURTH QUARTER 2014 ACTIVITIES
Oil and gas revenues were $47.8 million in the fourth quarter of 2014 compared
to $54.1 million in the same quarter of 2013. The decrease in revenues is
attributable to an 11% decrease in oil and gas production partially offset by a
2% increase in realized average crude oil sales prices.
BlackPearl sold an average of 9,639 boe/day during the fourth quarter of 2014
compared with 10,454 boe/day during the fourth quarter of 2013. The decrease in
sales volumes was mostly attributable to natural production declines at Onion
Lake and from the phase two lands at Mooney. In addition, production was lower
in 2014 as a result of changing the focus of our 2014 capital spending program
from short-term production growth activities to the construction of the first
phase of the Onion Lake thermal project. Over 75% of our 2014 capital spending
was dedicated to the construction of the Onion Lake thermal project.
Tighter heavy oil differentials and a weaker Canadian dollar relative to the US
dollar contributed to a slight increase in our realized crude oil sales price
in the fourth quarter of 2014 compared with the fourth quarter of 2013. In Q4
2014 WTI prices averaged US$73.15 per barrel (Q4 2013 - US$97.46), heavy oil
differentials were US$14.39 per barrel (Q4 2013 - US$ 32.21) and the Canadian
dollar was $0.88 relative to the US dollar (Q4 2013 - $0.95). This resulted in
our wellhead price averaging $59.34 per barrel in the fourth quarter of 2014
compared with $58.44 per barrel in the fourth quarter of 2013.
Production costs were $21.1 million or $25.12 per boe in the fourth quarter of
2014 compared to $18.4 million, and $19.65 per boe in the fourth quarter of
2013. The increase in production costs is primarily due to the expensing of all
costs associated with the first phase of the ASP flood at Mooney. In prior
years these costs were being capitalized during the initial re-pressurization
of the reservoir. G&A expenses were $1.9 million in the fourth quarter of 2014
compared to $2.1 million in the fourth quarter of 2013.
Funds flow from operations in the fourth quarter of 2014 was $19.7 million
compared to $20.7 million in the fourth quarter of 2013. The decrease reflects
lower revenues in Q4 2014. Net income in the fourth quarter of 2014 was $16.2
million compared to a $0.2 million in the fourth quarter of 2013. Net income in
Q4 2014 included $20.7 million in unrealized gains on risk management contracts
(oil price hedging contracts) the Company had previously entered into.
Unrealized gains on these contracts represent the non-cash change in the
mark-to-market values of our outstanding risk management contracts.
Capital expenditures in the fourth quarter of 2014 were $57.7 million, a 154%
increase compared to the fourth quarter of 2013. The majority of expenditures
in Q4 2014 related to the on-going construction of the Onion Lake thermal
project.
Production
BlackPearl's Q4 2014 oil and gas sales volumes were 9,639 boe per day, a 4%
increase over production during the third quarter. The increase in fourth
quarter production is mainly attributable to additional primary development
drilling at Onion Lake. At Onion Lake, we drilled 11 conventional wells during
the third quarter of 2014 which began to contribute to production in the fourth
quarter.
Three months ended Twelve months ended
December 31, December 31,
-------------------------------------------------------------------
Production by Area (boe/d) 2014 2013 2014 2013
-------------------------------------------------------------------
---------------------------
Onion Lake 4,651 5,186 4,263 4,797
Mooney 3,236 3,837 3,469 3,685
John Lake 1,109 1,066 1,067 898
Blackrod SAGD Pilot 523 262 380 236
Other 120 103 108 114
--------------------------- ---------
9,639 10,454 9,287 9,730
-------------------------------------------------------------------
Operating Netback
Three months ended Twelve months ended
December 31, December 31,
--------------------------------------------------------------------------------
($/boe) 2014 2013 2014 2013
--------------------------------------------------------------------------------
Oil and natural gas revenue 57.00 57.67 70.24 64.11
Realized gains on risk management 6.97 - 0.58 -
contracts
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
63.97 57.67 70.82 64.11
Royalties 11.51 11.87 13.49 12.62
Transportation costs 1.48 1.77 1.89 2.77
Production costs 25.12 19.65 25.24 20.84
--------------------------------------------------------------------------------
Operating netback(1) 25.86 24.38 30.20 27.88
--------------------------------------------------------------------------------
(1) Operating netback is a non-GAAP measure. Operating netback does not have a
standardized meaning prescribed by GAAP and, therefore, may not be comparable
to similar measures used by other companies in the oil and gas industry.
Hedging Position
Periodically we will enter into risk management contracts in order to ensure a
certain level of cash flow to fund planned capital projects. The table below
summarizes the Company's current risk management contracts:
Subject of Volume Term Referenc Strike Option
Contract e Price Traded
--------------------------------------------------------------------------------
Oil 1,500 January 1, 2015 to CDN$ CDN$ Swap
bbls/d March 31, 2015 WCS(2) 80.20/bbl
Oil 2,500 January 1, 2015 to CDN$ CDN$ Swap
bbls/d June 30, 2015 WCS(2) 80.00/bbl
Oil 1,000 July 1, 2015 to CDN$ CDN$ Swap
bbls/d December 31, 2015 WCS(2) 64.45/bbl
Oil 1,000 January 1, 2016 to CDN$ CDN$ Call
bbls/d December 31, 2016 WTI(3) 80.00/bbl Swaption(
1)
--------------------------------------------------------------------------------
(1) The Company sold a European call option to a counterparty whereby the
counterparty can elect, on December 31, 2015, exercise the option to enter into
the oil swap.
(2)WCS refers to Western Canadian Select, a heavy oil reference price in Alberta
(3)WTI refers to West Texas Intermediate, a light oil reference price in
Cushing Oklahoma
Other
The Company's financial statements, notes to the financial statements,
management's discussion and analysis and Annual Information Form have been
filed on SEDAR (www.sedar.com) and are available on the Company's website
(www.blackpearlresources.ca). The Annual Information Form includes the
Company's reserves and resource data for the period ended December 31, 2014 as
evaluated by Sproule and other oil and natural gas information prepared in
accordance with National Instrument 51-101 Standards of Disclosure for Oil and
Gas Activities. BlackPearl's annual and special meeting of shareholders will be
held on May 7, 2015 in Calgary Alberta.
Forward-Looking Statements
This release contains certain forward-looking statements and forward-looking
information (collectively referred to as 'forward-looking statements') within
the meaning of applicable Canadian securities laws. All statements other than
statements of historic fact are forward-looking statements. Forward-looking
statements are typically identified by such words as 'seek', 'anticipate',
'plan', 'continue', 'estimate', 'expect', 'may', 'will', 'project',
'potential', 'targeting', 'intend', 'could', 'might', 'should', 'believe' or
similar words suggesting future events or future performance.
In particular, this release contains forward-looking statements pertaining to
the estimated volumes of BlackPearl's proved and probable reserves, the
estimated volumes of BlackPearl's contingent resources, the estimated 6,000
barrel per day productive capacity of the Onion Lake thermal project as well as
the estimated capital costs of $220 million of the project, the mid-2015 target
date for initial steam injection for the first phase of the Onion Lake thermal
project, potential production levels for the Blackrod SAGD project and the
expected timing for regulatory approval of our commercial development
application, and the expected timing for expansion of the Mooney ASP flood.
The forward-looking information is based on, among other things, expectations
and assumptions by management regarding its future growth, future production
levels, future oil and natural gas prices, continuation of existing tax,
royalty and regulatory regimes, foreign exchange rates, estimates of future
operating costs, timing and amount of capital expenditures, performance of
existing and future wells, recoverability of the Company's reserves and
contingent resources, the ability to obtain financing on acceptable terms,
availability of skilled labour and drilling and related equipment on a timely
and cost efficient basis, general economic and financial market conditions,
environment matters and the ability to market oil and natural gas successfully
to current and new customers. Although management considers these assumptions
to be reasonable based on information currently available to it, they may prove
to be incorrect.
By their nature, forward-looking statements involve numerous known and unknown
risks and uncertainties that contribute to the possibility that actual results
will differ from those anticipated in the forward looking statements. These
risks include, but are not limited to, risks associated with fluctuations in
market prices for crude oil, natural gas and diluent, general economic, market
and business conditions, volatility of commodity inputs, substantial capital
requirements, conditions including receipt of necessary regulatory and stock
exchange approvals with respect to the issuance of common shares, uncertainties
inherent in estimating quantities of reserves and resources, extent of, and
cost of compliance with, government laws and regulations and the effect of
changes in such laws and regulations from time to time, the need to obtain
regulatory approvals on projects before development commences, environmental
risks and hazards and the cost of compliance with environmental regulations,
aboriginal claims, inherent risks and hazards with operations such as fire,
explosion, blowouts, mechanical or pipe failure, cratering, oil spills,
vandalism and other dangerous conditions, financial loss associated with
derivative risk management contracts, potential cost overruns, variations in
foreign exchange rates, variations in interest rates, diluent and water supply
shortages, competition for capital, equipment, new leases, pipeline capacity
and skilled personnel, uncertainties inherent in the SAGD bitumen and ASP
recovery process, credit risks associated with counterparties, the failure of
the Company or the holder of licences, leases and permits to meet requirements
of such licences, leases and permits, reliance on third parties for pipelines
and other infrastructure, changes in royalty regimes, failure to accurately
estimate abandonment and reclamation costs, inaccurate estimates and
assumptions by management, effectiveness of internal controls, the potential
lack of available drilling equipment and other restrictions, failure to obtain
or keep key personnel, title deficiencies with the Company's assets,
geo-political risks, risks that the Company does not have adequate insurance
coverage, risk of litigation and risks arising from future acquisition
activities. Readers are also cautioned that the foregoing list of factors is
not exhaustive. Further information regarding these risk factors may be found
under 'Risk Factors' in the Annual Information Form.
Undue reliance should not be placed on these forward-looking statements. There
can be no assurance that the plans, intentions or expectations upon which
forward-looking statements are based will be realized. Actual results will
differ, and the differences may be material and adverse to the Company and its
shareholders. Furthermore, the forward-looking statements contained in this
release are made as of the date hereof, and the Company does not undertake any
obligation, except as required by applicable securities legislation, to update
publicly or to revise any of the included forward-looking statements, whether
as a result of new information, future events or otherwise. The forward-looking
statements contained herein are expressly qualified by this cautionary
statement.
Cautionary Statement on Contingent Resources
This news release makes reference to contingent resources. Contingent resources
are defined in the COGE Handbook as those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from known accumulations using
established technology or technology under development, but are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal, environmental,
political and regulatory matters or a lack of markets. In the case of the
contingent resources assigned to BlackPearl's three core projects the
contingencies include the requirement for more evaluation drilling to better
define the resource, the absence of submission of commercial SAGD development
applications (for future phases of development at Blackrod), the likelihood of
attaining regulatory approvals for commercial SAGD development (for our Onion
Lake SAGD project), further establishment of increased oil production response
from the ASP flood at Mooney and the uncertainty of the timing of production
and development. There is no certainty that it will be commercially viable to
produce any of the contingent resources. .These volumes are the arithmetic sums
of the Best Estimate Resources for Blackrod, Mooney and Onion Lake. Best
Estimate (P50) is a classification of estimated resources described in the COGE
Handbook as being considered to be the best estimate of the quantity that will
be actually recovered. It is equally likely that the actual remaining
quantities recovered will be greater or less than the best estimate. If
probabilistic methods are used, there should be at least a 50% probability that
the quantities actually recovered will equal or exceed the best estimate.
Please refer to our Annual Information Form for a more detailed discussion of
our contingent resources.
Non-GAAP Measures
'Funds flow from Operations' is a non-GAAP measure that represents cash flow
from operating activities before decommissioning costs incurred and changes in
non-cash working capital related to operations. Cash flow from operations does
not have a standardized meaning prescribed by Canadian GAAP and therefore may
not be comparable to similar measures used by other companies.
'Operating Netback' is a non-GAAP measure. Operating netback does not have a
standardized meaning prescribed by GAAP and, therefore, may not be comparable
to similar measures used by other companies in the oil and gas industry.
For further information, please contact:
John Festival - President and Chief Executive Don Cook - Chief Financial
Officer Officer
Tel.: 403-215-8313 Tel: 403-215-8313
---
For complete report see attached file.
News Source: NASDAQ OMX
---------------------------------------------------------------------
2015-02-26 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
---------------------------------------------------------------------
Language: English
Company: BlackPearl Resources Inc.
Sweden
ISIN: SE0002060863
End of News DGAP News-Service
---------------------------------------------------------------------
327571 2015-02-26
Latest News
Latest Reports
No Reports found
Upcoming Events
No Events found
Webcasts
No Webcasts found