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Share Name | Share Symbol | Market | Type |
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Redcliffe Exploration Inc. | TSXV:RXP.A | 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 | - |
THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO U.S. PERSONS. Redcliffe Exploration Inc. ("Redcliffe" or the "Company") (TSX VENTURE:RXP.A) (TSX VENTURE:RXP.B) is pleased to announce that it has filed its audited consolidated financial statements and related Management's Discussion and Analysis as of and for the year ended December 31, 2009 with Canadian securities regulatory authorities. Redcliffe has also filed its Annual Information Form, which includes the Company's reserve data and other oil and gas information for the year ended December 31, 2009 as required by National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities. These filings are available for review at www.sedar.com. Highlights - Production decreased 17% to 862 boe/d for Q4 2009 and increased 1% to 952 boe/d for 2009 compared to the corresponding periods in 2008. Q4 2009 production of 862 boe/d held steady compared to Q3 2009 production of 864 boe/d. - Petroleum and natural gas sales decreased 40% to $2,903,000 for Q4 2009 and 44% to $12,127,000 for 2009 compared to the corresponding periods in 2008. Lower commodity prices in 2009 compared to 2008, and especially lower natural gas prices which were down 51% from 2008 average levels, were the primary contributing factors to lower petroleum and natural gas sales and have had a corresponding impact on cash flows from operations in 2009. - Net debt decreased 53% to $6,386,000 at December 31, 2009, compared to $13,472,000 at December 31, 2008. - Net capital expenditures totaled $3,192,000 for Q4 2009 and $8,462,000 for 2009. During Q4 2009, the Company drilled 2 (1.25 net) wells, which resulted in 1 (0.25 net) oil well and 1 (1.00 net) natural gas well, for an overall success rate of 100% (100% net). For 2009, the Company drilled 5 (3.06 net) wells, which resulted in 1 (0.25 net) oil well, 3 (2.38 net) natural gas wells and 1 (0.43 net) dry and abandoned well, for an overall success rate of 80% (86% net). - Proved plus probable reserves decreased 18% to 3,350 Mboe at December 31, 2009 compared to December 31, 2008. The Company further added 371 Mboe of proved plus probable reserves as a result of its Q1 2010 drilling activities. The reduction in reserves from 2008 to 2009 was primarily the result of technical revisions with respect to certain of the Company's wells drilled in previous years, while production and minor dispositions also contributed to the decrease. Reserve extensions for the year ended December 31, 2009 were 860 Mboe, replacing 2009 production 2.5 times. As a result of the reduction in reserves, the Company has not prepared a calculation of finding and development costs since such a calculation does not provide a meaningful metric. Nevertheless, based on the results of the 2009 / 2010 winter drilling program, the Company believes it has established significant reserve potential on a number of its lands that is not currently reflected in its reserve evaluations under National Instrument 51-101 (see discussion below under "Outlook"). Three Months Ended Year Ended December 31 December 31 ------------------------------------------ Financial 2009 2008 2009 2008 ---------------------------------------------------------------------------- ($ thousands, except per share amounts) Petroleum and natural gas sales 2,903 4,824 12,127 21,517 Funds from operations (1) 738 1,761 3,694 8,782 Per basic and diluted share 0.01 0.02 0.03 0.11 Cash provided by operating activities 826 2,952 2,952 8,875 Per basic and diluted share 0.01 0.03 0.03 0.11 Net loss 2,058 706 6,633 74 Per basic and diluted share 0.02 0.01 0.06 - Capital expenditures, net 3,192 5,634 8,462 18,730 Weighted-average shares (thousands) Basic and diluted 126,494 86,475 108,136 78,295 Capital Structure December 31, 2009 December 31, 2008 ---------------------------------------------------------------------------- ($ thousands, except share amounts) Working capital deficiency (2) 1,798 4,885 Bank debt 4,588 8,587 Net debt (3) 6,386 13,472 Total assets 62,283 66,683 Shares outstanding (thousands) Class A 118,508 74,235 Class B 1,494 1,494 ---------------------------------------------------------------------------- (1) Funds from operations is calculated as cash provided by operating activities and adding changes in non-cash working capital and asset retirement expenditures, if any. Funds from operations per share is calculated using the basic and diluted weighted-average number of shares for the period. Funds from operations and funds from operations per share are used to analyze the Company's operating performance and leverage. Funds from operations and funds from operations per share do not have standardized measures prescribed by GAAP and, therefore, may not be comparable with calculations of similar measures for other companies. (2) Working capital deficiency includes only accounts receivable, prepaid expenses and deposits, and accounts payable and accrued liabilities. (3) Net debt represents the sum of working capital deficiency and bank debt. Three Months Ended Year Ended December 31 December 31 ------------------------------------------ Operations 2009 2008 2009 2008 ---------------------------------------------------------------------------- Daily production Crude oil and condensate (bbl/d) 155 284 173 203 Natural gas liquids (bbl/d) 111 97 123 106 Natural gas (Mcf/d) 3,577 3,943 3,936 3,791 Oil equivalent (boe/d @ 6:1) 862 1,038 952 941 Per million diluted shares 6.8 12.0 8.8 12.0 Average prices (4) Crude oil and condensate ($/bbl) 73.05 60.96 61.82 96.61 Natural gas liquids ($/bbl) 33.43 29.90 26.23 49.24 Natural gas ($/Mcf) 4.62 8.11 4.81 8.90 Oil equivalent ($/boe) 36.57 50.50 34.89 62.48 Netback Operating netback ($/boe) (5) 15.39 23.02 16.48 34.41 Realized gain (loss) on financial derivatives ($/boe) - 1.21 0.51 (1.10) General and administrative ($/boe) (5.43) (4.96) (5.36) (6.41) Interest ($/boe) (0.66) (0.84) (1.00) (1.39) Funds from operations ($/boe) 9.30 18.44 10.63 25.50 Drilling activity Gross wells 2.00 3.00 5.00 8.00 Net wells 1.25 0.83 3.06 4.35 Success rate, net wells 100% 100% 86% 100% Undeveloped Land December 31, 2009 December 31, 2008 ---------------------------------------------------------------------------- Undeveloped land - gross (acres) 115,443 105,769 Undeveloped land - net (acres) (6) 79,386 71,709 Undeveloped land value - net ($ thousands) (7) 18,106 13,329 ---------------------------------------------------------------------------- (4) Average prices are before the deduction of transportation costs; oil equivalent includes sulphur sales. (5) Operating netback equals petroleum and natural gas sales less royalties, operating expenses and transportation costs, calculated on a boe basis. Operating netback does not have a standardized measure prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other companies. (6) Includes Company share of option lands held through Redcliffe Land Fund, LLC. (7) Internally evaluated Company share of undeveloped land value, including estimate of Company share of option lands held through Redcliffe Land Fund, LLC. Reserve Data and Other Oil and Gas Information The Company's reserves were evaluated at December 31, 2009 by McDaniel & Associates Consultants Ltd. ("McDaniel") using their January 1, 2010 forecasted price and cost assumptions. The Company undertook a significant 2009 / 2010 winter drilling program that extended into Q1 2010 and three wells of the winter drilling program were not captured in the December 31, 2009 reserve evaluation due to their timing. To provide more meaningful information with respect to the Company's reserves and net present value of future net revenues, at the request of the Company, McDaniel evaluated the three wells drilled in Q1 2010 on the same basis and using the same forecasted price and cost assumptions as contained in the December 31, 2009 year-end reserve evaluation. McDaniel prepared an addendum to their December 31, 2009 reserve evaluation and the Company has disclosed information below related to the three wells drilled in Q1 2010 as supplemental information to its December 31, 2009 reserve disclosures. Such supplemental disclosure has not been included in the Company's Annual Information Form for the year ended December 31, 2009. The estimates of reserves and net present value and future net revenues for individual properties may not reflect the same confidence level as estimates of reserves and net present value and future net revenues for all properties due to the effects of aggregation. Further, at the date of preparation of the Q1 2010 supplemental information, one well had been completed and tested while the remaining two wells were awaiting completion. Consequently, preparation of estimates of reserves and net present value and future net revenues for Q1 2010 activity was limited by available information. Reserves The following table summarizes the Company's gross (working interest before royalties) and net (working interest after royalties) interests in proved and probable reserves at December 31, 2009, as assessed by McDaniel using their January 1, 2010 forecasted price and cost assumptions. Supplemental disclosure is provided for Q1 2010 drilling activity. Summary of Reserves at December 31, 2009(1) ----------------------------------------------- Light/Medium Oil Natural Gas(4) Gross(2) Net(3) Gross(2) Net(3) ---------------------------------------------------------------------------- (Mbbl) (Mbbl) (MMcf) (MMcf) Proved Producing 284.5 244.7 4,422.4 3,614.5 Non-Producing 29.2 23.4 874.4 763.3 Undeveloped 35.1 28.1 11.2 9.0 ---------------------------------------------------------------------------- Total Proved 348.8 296.2 5,308.0 4,386.8 Probable 241.8 200.2 6,999.8 5,904.1 ---------------------------------------------------------------------------- Total Proved plus Probable 590.6 496.4 12,307.8 10,290.9 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Summary of Reserves at December 31, 2009(1) ----------------------------------------------- Natural Gas Liquids Total Oil Equivalent(5) Gross(2) Net(3) Gross(2) Net(3) ---------------------------------------------------------------------------- (Mbbl) (Mbbl) (Mboe) (Mboe) Proved Producing 255.9 153.3 1,277.4 1,000.4 Non-Producing 29.1 19.7 204.0 170.4 Undeveloped 0.3 0.2 37.3 29.8 ---------------------------------------------------------------------------- Total Proved 285.2 173.3 1,518.7 1,200.6 Probable 422.6 273.5 1,831.0 1,457.7 ---------------------------------------------------------------------------- Total Proved plus Probable 707.8 446.8 3,349.7 2,658.3 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Addendum: Summary of Reserves Attributable to Q1 2010 Drilling Activity(1) --------------------------------------------------------------------------- Light/Medium Oil Natural Gas(4) Gross(2) Net(3) Gross(2) Net(3) ---------------------------------------------------------------------------- (Mbbl) (Mbbl) (MMcf) (MMcf) Proved Non-Producing - - 97.0 91.7 ---------------------------------------------------------------------------- Total Proved - - 97.0 91.7 Probable - - 1,664.6 1,552.0 ---------------------------------------------------------------------------- Total Proved plus Probable - - 1,761.6 1,643.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Addendum: Summary of Reserves Attributable to Q1 2010 Drilling Activity(1) --------------------------------------------------------------------------- Natural Gas Liquids Total Oil Equivalent(5) Gross(2) Net(3) Gross(2) Net(3) ---------------------------------------------------------------------------- (Mbbl) (Mbbl) (Mboe) (Mboe) Proved Non-Producing 12.1 9.6 28.3 24.9 ---------------------------------------------------------------------------- Total Proved 12.1 9.6 28.3 24.9 Probable 65.3 50.9 342.7 309.6 ---------------------------------------------------------------------------- Total Proved plus Probable 77.4 60.5 371.0 334.5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Numbers in this table are subject to rounding error. (2) "Gross" means Redcliffe's total working interest reserves before royalties owned by others and without including any royalty interest owned by Redcliffe. (3) "Net" means Redcliffe's total working interest reserves and/or royalty interest share after deducting the amounts attributable to royalties owned by others. (4) Natural gas volumes include solution gas volumes associated with Redcliffe's light and medium crude oil reserves. (5) Natural gas is converted to barrels of oil equivalent ("boe") at a ratio of 6 Mcf of natural gas to 1 barrel of oil. Net Present Value of Future Net Revenues The following table summarizes Redcliffe's share of the net present value of its reserves, prior to provision for income taxes, interest and general and administrative expenses, at December 31, 2009 as determined by McDaniel using their January 1, 2010 forecasted price and cost assumptions. Supplemental disclosure is provided for Q1 2010 drilling activity. Net Present Value of Future Net Revenues, Before Income Taxes, at December 31, 2009(1)(2)(3) ---------------------------------------------------------------------------- ($ thousands) 0% 5% 10% 15% Proved Producing 30,422.7 25,005.6 21,376.2 18,786.6 Non-Producing 4,859.9 3,054.2 2,159.5 1,673.3 Undeveloped 936.1 564.4 322.5 159.0 ---------------------------------------------------------------------------- Total Proved 36,218.7 28,624.3 23,858.1 20,619.0 Probable 42,971.2 29,745.6 22,022.2 16,995.6 ---------------------------------------------------------------------------- Total Proved plus Probable 79,189.9 58,369.9 45,880.4 37,614.6 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Addendum: Net Present Value of Future Net Revenues, Before Income Taxes, Attributable to Q1 2010 Drilling Activity(1)(2)(3) ---------------------------------------------------------------------------- ($ thousands) 0% 5% 10% 15% Proved Non-Producing 575.9 532.9 494.4 460.1 ---------------------------------------------------------------------------- Total Proved 575.9 532.9 494.4 460.1 Probable 6,772.5 5,145.5 4,016.7 3,195.2 ---------------------------------------------------------------------------- Total Proved plus Probable 7,348.4 5,678.4 4,511.0 3,655.3 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Numbers in this table are subject to rounding error. (2) Values are net of abandonment liabilities. (3) The net present values of future net revenues may not represent fair market value. Price Forecasts The following table summarizes price forecasts used to determine future revenues from the Company's reserves. Edmonton Alberta AECO WTI Light Spot Price Exchange Year Crude Oil Crude Oil Natural Gas Inflation Rate ---------------------------------------------------------------------------- (US$/bbl) (C$/bbl) (C$/MMBtu) (%/year) (US$/C$) 2010 80.00 83.20 6.05 2.0 0.95 2011 83.60 87.00 6.75 2.0 0.95 2012 87.40 91.00 7.15 2.0 0.95 2013 91.30 95.00 7.45 2.0 0.95 2014 95.30 99.20 7.80 2.0 0.95 2015 99.40 103.50 8.15 2.0 0.95 2016 101.40 105.60 8.40 2.0 0.95 2017 103.40 107.70 8.55 2.0 0.95 2018 105.40 109.80 8.70 2.0 0.95 2019 107.60 112.10 8.90 2.0 0.95 2020 109.70 114.30 9.05 2.0 0.95 2021 111.90 116.50 9.25 2.0 0.95 2022 114.10 118.80 9.45 2.0 0.95 2023 116.40 121.20 9.65 2.0 0.95 2024 118.80 123.70 9.85 2.0 0.95 Thereafter +2%/year +2%/year +2%/year 2.0 0.95 Outlook Over the past several years, Redcliffe has established a significant acreage position in the Gold Creek / Wapiti / Karr areas of the Peace River Arch, specifically targeting liquids-rich multi-zone gas in water-free environments. As a result, in addition to the stacked multi-zone potential of its acreage, the Company has assembled a major exposure to two broad resource plays: the Montney turbidite sand at Karr and Montney siltstone across the majority of its Peace River Arch lands; and the Nikanassin Formation, also across the majority of its Peace River Arch lands. The Company undertook its Q4 2009 / Q1 2010 winter drilling program with the intention of establishing the reserve potential of its Peace River Arch acreage. Based on the results of this winter drilling program, the Company believes it has established significant reserve potential on a number of its lands that is not currently reflected in its reserve evaluations under National Instrument 51-101. This resource potential is extensive and is estimated by Redcliffe to be well in excess of 200 bcf of gas in place. However, capital requirements to establish and develop this potential will also be extensive, with vertical wells costing approximately $2.5 million and horizontal wells costing approximately $5 million to drill and complete. A contingent drilling program for the remainder of 2010 has been developed by the Company to further quantify, test and provide initial development of these resource gas plays. A total of 9 wells have been tentatively planned for the remainder of 2010. Of this total, 6 are expected to be gas wells in the Company's core Peace River Arch areas, although this drilling program may be impacted by the current low natural gas pricing and our outlook for future pricing trends as we move through 2010. Most significant to the capital program, the Company expects to drill or participate in the drilling of 2 horizontal wells including drilling its first horizontal well at Karr targeting the Montney turbidite sand. This Karr horizontal well is close to existing infrastructure and, if successful, is expected to commence production shortly after completion. Redcliffe believes that the Karr area represents significant reserve and production upside for the Company, with an intermediate gas producer having already established the Montney potential through horizontal drilling on adjacent acreage; such wells have reported test rates of over 5 MMcf/d with 40 bbls/MMcf of associated liquids. Further, due to their depth, Redcliffe expects the economics of its Karr horizontal wells to be positively affected by the Alberta Government's Natural Gas Deep Drilling Program. The Company estimates that up to 2 horizontal wells per section can be drilled on its existing Karr acreage in several phases targeting the Montney turbidite sand. Redcliffe maintains an approximate 91% working interest in 15 sections of land over this prospect. In addition to the Montney turbidite sand, Redcliffe has exposure to Montney siltstone potential in approximately 94 sections across its Gold Creek / Wapiti / Karr core areas at an average controlled working interest of approximately 73%. A horizontal well (WI 20%) is also proposed to test this siltstone potential in 2010. The Company plans to drill up to 4 vertical wells in its Gold Creek / Wapiti core areas targeting multiple zones, including Nikanassin gas. These wells were specifically identified to provide lower-risk and immediate reserve and production additions to the Company, while continuing to establish Nikanassin potential on the Company's acreage. Like the Montney Formation at Karr, the Nikanassin Formation represents a resource-style play that offers upside with the predictable nature of a large gas deposit development utilizing horizontal drilling and multi-stage stimulation techniques. Natural gas liquid content of the gas varies between 30 and 40 bbls/MMcf, which is expected to greatly enhance the economic return of each well. Vertical wells drilled to the north and utilizing optimized fracture completion techniques have achieved initial rates in the 3 to 5 MMcf/d range and other operators in the area have recently drilled horizontal Nikanassin wells. Redcliffe estimates that it has exposure to Nikanassin potential in approximately 88 sections in its Gold Creek / Wapiti / Karr core areas at an average controlled working interest of approximately 65%. The Company does not plan on drilling its first Nikanassin horizontal well until 2011. In addition to its Peace River Arch activities, the Company plans to drill up to 2 horizontal wells at Pembina targeting Cardium oil, and up to 1 vertical well in another west central Alberta property, targeting oil. Redcliffe has 12 (7.7 net) sections of land with Cardium rights and continues to monitor its position with respect to this play in order to monetize its potential most effectively. The planned remaining 2010 drilling program is discretionary and, as of the date hereof, the Company estimates that it has already fulfilled its outstanding flow-through expenditure obligations for 2010. Funding for the planned remaining 2010 capital program is currently being established, and may include a number of sources, including equity, debt, proceeds from the sale of assets, and cash flows from operations. The Company's bank has extended the review date of the $14.1 million bank facility to July 31, 2010. The bank has indicated, however, that based on current reserves and commodity price forecasts, it expects the bank facility to be reduced, subject to the review of available information prior to the July 31, 2010 review date. The Company further closed the sale of certain undeveloped lands in April 2010 for proceeds of approximately $700,000. Cash flows from operations will be supported through any natural gas price weakness in 2010 with already established forward sales contracts, averaging $5.41/GJ ($5.70/Mcf) on 3,000 GJ/d for the period from April 1, 2010 to October 31, 2010. Reader Advisories Forward-Looking Statements: This news release contains certain forward-looking statements, including management's assessment of future plans and operations, expected royalty rates and government incentive programs, sources of funding, and capital expenditures and the timing thereof, that involve substantial known and unknown risks, uncertainties and assumptions, certain of which are beyond the Company's control. Such risks, uncertainties and assumptions include, without limitation, those associated with oil and gas exploration, development, exploitation, production, marketing, processing and transportation, loss of markets, volatility of commodity prices, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in reports, including the Company's annual information form for the financial year ended December 31, 2009, on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. BOE may be misleading, particularly if used in isolation. A BOE conversion of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
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