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Share Name | Share Symbol | Market | Type |
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Seaview Energy Inc. Class B | TSXV:CVU.B | TSX Venture | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS. Seaview Energy Inc. ("Seaview" or the "Company") (TSX VENTURE:CVU.A) (TSX VENTURE:CVU.B) is pleased to provide shareholders with an update on corporate developments and the Company's third quarter 2010 financial and operational results. ---------------------------------------------------------------------------- SELECTED INFORMATION ---------------------------------------------------------------------------- Financial ($000's except per Q3 Q3 % YTD YTD % share amounts) 2010 2009 Change 2010 2009 Change ---------------------------------------------------------------------------- Petroleum and natural gas sales $7,213 $8,664 (17%) $27,529 $23,127 19% Funds flow from operations (1) 4,451 4,110 8% 13,333 10,096 32% Basic and diluted per share (2) 0.07 0.06 17% 0.20 0.18 11% Net loss (634) (2,907) 78% (2,139) (7,241) 70% Basic and diluted per share (2) (0.01) (0.04) 75% (0.03) (0.13) 77% Capital expenditures (3) 5,619 3,931 43% 18,515 37,814 (51%) Property disposition - - - (33,090) - 100% Net debt to funds flow from operations ratio 0.70 2.71 (74%) 0.70 2.71 (74%) ---------------------------------------------------------------------------- Shares Outstanding at period end (000's) ---------------------------------------------------------------------------- Class A 65,489 65,419 - 65,489 65,419 - Class B 1,054 1,054 - 1,054 1,054 - ---------------------------------------------------------------------------- Operations ---------------------------------------------------------------------------- Daily production Natural gas (mcf/d) 13,299 12,486 7% 15,630 10,653 47% Light oil and NGLs (bbl/d) 322 432 (25%) 391 408 (4%) ---------------------------------------------------------------------------- Total production (boe/d) 2,538 2,513 1% 2,996 2,183 37% ---------------------------------------------------------------------------- Average realized sales price (net of risk management gains) Natural gas (per mcf) $ 4.34 $ 5.43 (20%) $ 4.70 $ 5.81 (19%) Light oil and NGL (per bbl) 64.46 61.03 6% 69.92 55.98 25% ---------------------------------------------------------------------------- Netback per boe (1) Sales price $27.77 $27.83 - $32.32 $30.59 6% Realized risk management gains 3.12 9.64 (68%) 1.34 8.21 (84%) Sales price (net of realized risk management gains) 30.89 37.47 (18%) 33.66 38.80 (13%) Royalties 2.14 3.50 (39%) 4.45 5.06 (12%) Operating expenses 5.12 11.34 (55%) 8.31 11.48 (28%) Transportation 1.48 1.35 10% 1.38 1.50 (8%) ---------------------------------------------------------------------------- Operating netback (1) $22.15 $21.28 4% $19.52 $20.76 (6%) ---------------------------------------------------------------------------- 1. The Company uses "funds flow from operations" and "funds flow from operations per share" which do not have any standardized meaning prescribed by Canadian GAAP. The terms are used to analyze operating performance and leverage. The Company uses "Netback per boe" and "Operating Netback" which do not have any standardized meaning prescribed by Canadian GAAP. The terms are used to evaluate performance and in capital allocation decisions. 2. Weighted average diluted shares outstanding for all periods exclude both the impact of the conversion of the Class B shares and the effect of the granted options as they would have been anti-dilutive. 3. Capital expenditures include only the cash additions for the period and capitalized G&A expense. HIGHLIGHTS OF THE THIRD QUARTER 2010 -- Funds flow from operations for Q3 2010 increased 8% to $4.5 million from $4.1 million in Q3 2009. Funds flow from operations increased 17% per basic weighted average share over the same period; -- Funds flow from operations for the first nine months of 2010 increased 32% to $13.3 million from $10.1 million over the same nine month period in 2009. Funds flow from operations increased 11% per basic weighted average share over the same period; -- Average production for Q3 2010 of 2,538 boe/d was negatively impacted by approximately 200 boe/d for the quarter due to unscheduled plant maintenance and 150 boe/d due to delayed project start-ups as a result of wet weather conditions; -- Seaview's current production capacity, based on field estimates, is 2,800 boe/d with an additional 350 boe/d behind pipe production currently being tied in at Wapiti and Boundary Lake; -- Achieved operating costs of $5.12 per boe in Q3 2010 representing a 55% reduction in operating costs per boe compared to Q3 2009. The significant reduction is a result of selling the high operating cost Saskatchewan assets as well as high grading the current production base to high deliverability, low operating cost assets in the Peace River Arch. In addition, in Q3 2010, the Company received a 13th month recovery related to non-operated working interest facilities amounting to $2.60 per boe in the quarter; -- Net debt at the end of Q3 2010 was $12.4 million, compared to $36.1 million at Q3 2009 representing a 66% reduction over the past year. Seaview expects 2010 year end net debt to be approximately $18 - $19 million; -- Seaview's credit facility has been confirmed, by the lenders, at $52 million with the next interim review set for February 2011, providing for approximately $40 million of available credit facilities at quarter end to fund the Company's capital program in the Wapiti Cardium light oil resource play; -- Achieved operating net backs of $22.15 per boe representing a 21% increase compared to Q2 2010 netbacks of $18.29 per boe while natural gas prices declined by 9% over the same period; -- Results to date in the Wapiti area continue to support the Company's strategic focus on accumulating a large, contiguous position targeting light oil in the Wapiti Cardium fairway. Seaview continues to show positive preliminary results highlighted by the following achievements: -- The successful drilling and completion of three multi stage fracture stimulated horizontal wells each testing light oil (41 degree API) from the Cardium formation at rates of more than 200 boe/d; -- Increased initial well productivity through continued enhancement of completion techniques; -- Achieved operational efficiencies on the 1-9-66-7W6 discovery well during its initial three month production period; -- Subsequent to quarter end, Seaview's second horizontal well at 4-17- 66-7W6 was placed on production averaging over 260 bbl/d of crude oil (producing day average basis) over the first 7 days on production; -- Increased land position to 42.5 sections (22.8 net) of prospective Cardium light oil rights; and -- Subsequent to quarter end, Seaview initiated a 6 well (3.5 net) drilling program to further define the resource potential, earn additional land and delineate the initial discovery. To date, 2 of the Cardium wells (1.1 net) have been successfully drilled and cased with completions expected to commence in early December. OPERATIONS UPDATE As at the end of Q3 2010, Seaview had drilled 3 Cardium horizontal wells (2.2 net) to date, with a 100% success rate, all completed with multi-stage fracturing technology. In addition, the Company has recently commenced its winter drilling program which will include up to 6 Cardium horizontal wells (3.5 net) to be drilled over the next two quarters, with 3 wells (1.6 net) to be drilled prior to the end of 2010. Subsequent to the end of Q3 2010, the Company has successfully drilled and cased 2 Cardium horizontal wells (1.1 net) with completion expected to commence in early December. Seaview's second horizontal well at 100/04-17-066-07-W6 (78.3% WI) ("the 4-17 well") and third horizontal well 100/04-22-066-08W6 (76% WI) ("the 4-22 well") have been successfully completed using multi-stage fracturing technology. Based on experience from the Company's first completion at 100/01-09-066-08W6 ("the 1-9 well"), the inter-fracture spacing was reduced to 75 meters from 100 meters and the sand tonnage per stage was increased from 15 to 20 tonnes per interval. Following an initial clean-up period, the 4-17 well tested at an average flow rate of 220 bbl/d of crude plus an estimated 100 mcf/d of solution gas (235 boe/d gross) over the last 7 days of the test period. The 4-17 well was placed on production on November 10, 2010 and over the first 7 days has averaged 260 bbl/d on a producing day average basis, with minimal solution gas at this point. Following an initial clean-up period, the 4-22 well tested at an average flow rate of 192 bbl/d of crude plus an estimated 140 mcf/d of solution gas (215 boe/d gross) over the last 7 days of the test period. The 4-22 well is expected to be on production before the end of November, with anticipated initial production rates to be in the range of 125 - 150 bbl/d of crude oil plus solution gas per well (170 boe/d). The 4-17 and 4-22 wells qualify for the Alberta Government's Horizontal Oil New Well Royalty Rate of 5% for 24 months, to a maximum of 60,000 barrels of production. The 1-9 well was drilled prior to the announcement of the Horizontal Oil New Well Royalty Rate program and qualifies for the 5% royalty rate for 12 months to a maximum of 50,000 barrels of production. Seaview's first horizontal well, the 1-9 well (at 68.0% WI, drilled during the first quarter of 2010) has been on production since early August. The 1-9 well has averaged 133 boe/d (68% oil and liquids) on a producing day average basis over the first 3 months of production. Subsequent to the end of the quarter, 2 wells (1.1 net) have been drilled and cased. Seaview plans to drill 1 additional horizontal well (0.5 net) in Wapiti prior to year end. Additionally, the Company successfully closed an acquisition of 1.5 sections of prospective land in Wapiti at a cost of $0.90 million. Wapiti Exploration Program The successful Cardium oil tests at these three locations validate the presence of a significant light oil resource play in the Wapiti area. Seaview has successfully extended this play area 8 kilometres to the southwest and 2 kilometres to the southeast from the existing conventional Cardium A pool. Management is encouraged by the initial oil rates and is confident that the Wapiti Cardium light oil resource play offers a sizeable and repeatable opportunity. Management also expects that economics of the play and initial production rates will continue to improve through the optimization of completion technology during this initial phase of exploration. Industry activity in Wapiti continues to rapidly accelerate with a total of 9 locations licensed in 2010 with 7 being drilled to date and 5 wells on production. Seaview's opportunity base within the prospective Wapiti Cardium light oil resource fairway now has the following characteristics: -- Exposure to earn up to 42.5 sections (22.8 net) of prospective Cardium light oil rights; -- An extensive drilling inventory with over 170 horizontal development locations (91 net); and -- Excellent operational focus featuring a large contiguous land position directly offsetting the Company's recent successful Cardium exploration activities. Seaview believes the Wapiti Cardium light oil resource play contains the essential elements of a profitable resource play including: -- Large areal extent, supported by numerous logs and tests validating the reservoir continuity; -- Contiguous resource potential including an average of 10 m of vertical pay exceeding 6% porosity providing for significant accumulation of light oil, and a high degree of repeatability; -- Ability to improve drilling and completion techniques leading to lower capital costs and higher productivity over time; and -- Scalable project targeting high quality light oil (41 degree API). Continued success in developing the Wapiti Cardium light oil play could add significant incremental upside to Seaview's current asset base. The Company will continue to focus capital towards proving up the commerciality of this play, and begin moving towards development, offsetting the initial exploration successes. Given the extensive inventory of Cardium horizontal well targets, Wapiti will remain a focus for the Company over the balance of 2010 and into 2011. Peace River Arch Due to low commodity prices for natural gas, the Company has elected to defer drilling gas projects originally planned for Q3 and Q4 2010, with capital re-allocated to higher net back, oil focused drilling in Wapiti and optimization projects in the Peace River Arch. Capital expenditures in the Peace River Arch will be limited to high net-back, low risk production additions. Risked capital directed towards drilling has been deferred contingent on a recovery in natural gas prices. Boundary Lake is Seaview's largest producing region which features high deliverability wells with operating costs of less than $6.00 per boe. For September 2010, Seaview realized field level netbacks of over $23.00 per boe in the Boundary Lake area despite the current low prices for natural gas. The Company recently completed the tie-in of 1 gas well (1.0 net) in the Boundary Lake area, which added over 250 boe/d net sales average for October 2010. Activity for the balance of 2010 includes the tie-in of 1 additional gas well (1.0 net) and installation of a compressor to further optimize production in Boundary Lake. The Company expects to add over 200 boe/d before year end from these projects. STRATEGICLY POSITIONED FOR LONG-TERM GROWTH Management has successfully completed several strategic initiatives during 2010 to position the Company for long term sustainability and growth. The combined impacts of significantly reducing debt, high grading operations towards higher net back production and a continued strong hedging program has provided for a solid financial footing for the Company. During 2010, the Company has dramatically improved the balance sheet flexibility with the strategic disposition of the Southeast Saskatchewan assets for $33 million, which closed in Q2 2010. With current unutilized credit facilities of approximately $40 million, Seaview is well positioned to finance its capital program, targeting further exploration and development of the Wapiti Cardium light oil resource play. In addition, the Company continues to dramatically improve operating netbacks through a focused effort on reducing operating costs and improving operating efficiency of its core assets. Operating costs of $7.72 per boe in Q3 2010 (excluding the impact of the one time 13th month recovery) represents a 4% reduction relative to Q2 2010 costs of $8.07 per boe, and a 30% reduction compared to Q1 2010 operating expenses of $11.10 per boe. Seaview has achieved significant improvements in operating netbacks with Q3 2010 netbacks of $22.15 per boe representing a 21% increase over Q2 2010, despite natural gas prices having declined by 9% over the same period. In comparison to Q3 2009, Seaview has successfully improved the financial flexibility of the Company and established early exploration success in the Wapiti Cardium light oil resource play. As a result Seaview is poised to capitalize on its strong asset base and financial flexibility to deliver long term growth for shareholders over the remainder of 2010 and into 2011. GUIDANCE Similar to most operators working in Western Canada, unseasonably wet weather conditions led to delays in timely completion of all operations including drilling, completions and construction of production facilities. While the delays impacted the start-up dates of projects and the quarterly average production, Seaview continues to work on completing several planned capital projects with potential to add over 350 boe/d (net) of new production by year end. Overall, the Company now plans to reduce field capital spending by $2.7 million in 2010, which will result in 2010 capital spending of $25.6 million compared to previous capital guidance of $28.3 million. Deferral of the scheduled gas projects will impact the forecasted exit rate by 200 boe/d. Seaview now expects 2010 year end net debt to be approximately $18 - $19 million. Due to a combination of deferred capital projects, weather related project delays, and unscheduled plant maintenance, management has revised production guidance for 2010. Average production for 2010 is expected to be approximately 3,000 boe/d. Forecast exit rate production is anticipated to be 3,100 - 3,300 boe/d, contingent on completion of recently drilled Wapiti Cardium oil wells. With the recent drilling success in Wapiti, the Company plans to continue focusing on its Wapiti Cardium light oil resource play. Seaview has accumulated a sizeable land position with exposure to 42.5 sections of highly prospective lands (22.5 net) with over 170 potential Cardium horizontal drilling locations (91 net). Management is pleased with the results in Wapiti to date including continuous improvements in both reducing capital costs and improving well productivity with each subsequent operation. To date, Seaview has drilled 5 Cardium horizontal light oil wells (3.3 net), with 100% success, resulting in 3 producing oil wells (2.2 net) and 2 potential oil wells (1.1 net) awaiting completion in early December. Following completion results on the latest 2 Wapiti Cardium wells (1.1 net), the Company plans to provide 2011 capital and production guidance in the short term. COMMODITY PRICE RISK MANAGEMENT A key component to Seaview's balance sheet management is the Company's commodity price risk program. The price risk management program is intended to reduce price volatility in order to support cash flow, protect acquisition economics and finance ongoing capital expenditures. Seaview currently has approximately 1,359 boe/d (approximately 45% of estimated current production) hedged for the remainder of 2010, as follows: -- 7,337 GJ/d of natural gas hedged in puts and fixed contracts providing for a "net of cost" floor of $4.69/GJ ($4.95/mcf), which is a 46% premium to the current AECO 2010 strip of $3.48/GJ; -- 200 bbl/d of crude oil hedged in put contracts for 2010 with a "net of cost" floor of CDN$75.00/bbl; -- On a combined basis, Seaview has 8,152 mcfe/d, hedged at a "net of cost" floor price of $6.06/mcfe, which will provide for minimum revenue of $4.5 million for the fourth quarter of 2010. In addition, Seaview currently has approximately 1,485 boe/d hedged for 2011, as follows: -- 8,140 GJ/d of natural gas hedged in put contracts providing for a "net of cost" floor of $4.18/GJ ($4.42/mcf), which is a 17% premium to the current calendar AECO 2011 futures strip of $3.56/GJ, and a 20% premium to the current AECO strip price of $3.48/GJ; -- 200 bbl/d of crude oil hedged in put contracts for 2011 with a "net of cost" floor of CDN$75.00/bbl; -- On a combined basis, Seaview has 8,913 mcfe/d, hedged at a "net of cost" floor price of $5.50/mcfe, which will provide for minimum revenue of $17.9 million for 2011. OUTLOOK AND 2010 GUIDANCE Including the impact of the recent Wapiti oil success, Seaview is well positioned to continue its growth strategy for 2010 and 2011. Seaview's Peace River Arch core area, featuring high quality, long-life reserves, combined with the emerging Cardium light oil resource play, provide the Company with a significant drilling inventory. As a result of recent corporate successes, Seaview provides the following guidance for 2010: -- Forecast 2010 average daily production estimate of approximately 3,000 boe/d compared to 2009 annual average production of 2,321 boe/d resulting in an estimated forecast production growth of 29% per share (based on 65.49 million Class A shares outstanding); -- 2010 estimated exit production of 3,100 - 3,300 boe/d, contingent on completion of recently drilled Wapiti Cardium oil wells; -- Forecasted 2010 capital budget of $25.6 million, resulting in 2010 year end net debt of approximately $18 - $19 million; -- Seaview's credit facility has been confirmed by the lenders at $52 million. The next interim review is set for February 2011. As at quarter end, Seaview had approximately $40 million of available credit capacity to pursue strategic opportunities; -- Seaview has established significant positions in resource plays providing for longer-term growth potential in a diverse portfolio of assets targeting both light oil and natural gas plays, including: -- In Wapiti, the Company has assembled a sizable land position with exposure to 42.5 sections of land (22.8 net) targeting a Cardium light oil resource play. Seaview plans to spend $17.6 million total in 2010 to drill a total of 6 horizontal multi-fracture wells (4.4 net). -- In Pouce Coupe, the Company holds interests in 21 sections of land (4.5 net) targeting a Doig-Montney natural gas resource play. Seaview's land position is on trend with successful industry development activities further reducing the risk of full development when economics are more viable; and -- In Harlech, Seaview holds a 25% working interest in 9 contiguous sections of land (2.25 net) targeting multi-zone Cretaceous and Nordegg gas resource potential. The Harlech area offers exposure to liquids rich natural gas reservoirs. -- Strong commodity hedging program providing for downside protection on 45% of 2010 forecasted average production generating a minimum $4.5 million gross revenue for the fourth quarter of 2010, and $17.9 million gross revenue in 2011; -- 65.49 million Class A shares and 1.0 million Class B shares outstanding; and -- Following completion results on the latest 2 Wapiti Cardium wells (1.1 net), the Company plans to provide 2011 capital and production guidance in the short term. RELEASE OF THIRD QUARTER FINANCIALS Seaview has filed its financial results for the period ended September 30, 2010 including the unaudited interim consolidated financial statements and related management's discussion and analysis ("MD&A"). These filings will be available in their entirety at www.seaviewenergy.com and www.sedar.com or by contacting the Company directly. Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis, such measurements may not be consistent with those used by other companies. Estimated values contained in this press release do not represent fair market value. This press release may contain forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, anticipations, expectations, opinions, forecasts, projections, guidance or other similar statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g. operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental risks), commodity price and exchange rate fluctuation and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligations 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.
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