Guide Exploration Ltd. Announces First Quarter 2012 Results
CALGARY, ALBERTA, May 7, 2012 (Menafn - Marketwire via COMTEX) --Guide Exploration Ltd. ("Guide" or the "Corporation") announces the financial results for the quarter ended March 31, 2012.
The unaudited consolidated financial statements of the Corporation for the periods ended March 31, 2012 and 2011 and the related management's discussion and analysis can be accessed on-line on SEDAR at www.sedar.com or on the Corporation's website at www.guidex.ca.
Highlights
--Revenue for the first quarter of 2012 (before realized financial
derivatives) was 47.4 million, a decrease of 1.3% from 48.0 million in
the first quarter of 2011. Funds flow from operations for the first
quarter of 2012 was 18.8 million (0.19 per share diluted) a decrease of
29.9% from the 26.8 million realized in the first quarter of 2011.
--Production for the first quarter of 2012 averaged 5,285 barrels per day
of crude oil and natural gas liquids and 54.6 Mmcf/d of natural gas.
This represents a 27.4% increase from crude oil and NGL production of
4,148 barrels per day in the first quarter of 2011. Production of
natural gas quarter over quarter increased by 2.2% from 53.4 Mmcf/d.
Production included two months of natural gas sales from the Boyer
property which was acquired on January 31, 2012. Including natural gas
sales from Boyer, March 2012 production averaged 15,699 BOE/d comprised
of 5,350 barrels per day of crude oil and NGLs and 62 Mmcf/d of natural
gas. This represents a 22% increase over the 12,819 BOE/d produced in
March 2011.
--Operating netbacks for the first quarter of 2012 averaged 16.68/BOE
before realized gain on financial derivatives and 20.01/BOE after
realized gain on financial derivatives.
--Funds flow was impacted by higher operating costs (12.18/BOE) in the
first quarter of 2012 as compared with 10.51/BOE in the first quarter
of 2011. Operating costs were impacted by our increased focus on oil
production and the corresponding higher operating costs for oil versus
natural gas.
--The Corporation drilled 17 (14.2 net) wells resulting in 14 (11.7 net)
oil wells and 1 (0.5 net) natural gas well and 2 (2.0 net) dry holes,
for a success rate of 86% (net) during the quarter.
--Capital of 54.4 million was invested in exploration and development
activities. In addition, 68.3 million was spent to acquire properties
and 16.2 million was received on the sale of properties for net
acquisitions of 52.1 million. Major areas of capital expenditure were
35.2 million in drilling and completions and 13.0 million in
facilities. In addition, Guide spent 5.2 million on land acquisition
and seismic in the first quarter of 2012.
--On January 24, 2012, 12,000,000 Class A Shares were issued at 3.05 per
share for gross proceeds of 36.6 million.
--On January 31, 2012, the Corporation completed the acquisition of
natural gas assets in the Boyer area of Alberta. Cash consideration of
62.0 million was paid including closing adjustments.
--At March 31, 2012 182.1 million was drawn on available bank credit
facilities of 250 million and the Corporation had a working capital
deficiency of 42.1 million.
--At March 31, 2012, Guide had outstanding 104,407,135 Class A Shares,
10,437,632 share options with an average exercise price of 3.47 and
2,300,000 warrants.
--A loss of 12.2 million (0.12) per basic share was recorded in first
quarter 2012 compared to a loss of 13.3 million (0.16 per share) in
the first quarter of 2011.
--Subsequent to the end of the quarter, Guide renewed the credit facility
of 250 million with a banking syndicate. The credit facility consists
of a 225 million extendible 366 day revolving term facility to May 28,
2013 and a 25 million non-revolving facility.
2012 Operational Update
Exit production for the first quarter of 2012 was approximately 16,000 BOE/day including 5,600 barrels per day of oil and NGLs (35% liquids weighting). Subsequent to the end of the quarter, Guide has shut-in certain gas properties and will curtail natural gas production in other areas in response to the current spot AECO gas price. These shut-ins will impact approximately 10 to 15 percent of our natural gas production or approximately 6 to 9 Mmcf per day. Guide has hedges in place for the remainder of 2012 for approximately 31 Mmcf per day of natural gas at an average price of 5.09 /mcf AECO, thus the bulk of our gas production is protected from the current low gas price environment. At this time, Guide is not modifying its production guidance for 2012.
In the first quarter of 2012, Guide drilled a total of 14.2 net wells. Our major area of focus was Montney oil in the Normandville/Girouxville area where we added 6 net wells and upgraded our Normandville oil facility to handle an additional 5,000 barrels of oil per day and associated gas.
During the remainder of 2012, Guide plans to drill an additional 24 wells (22 net) including 19 wells (19 net) planned in the Normandville/Girouxville Montney fairway. Plans also include the construction of a 5,000 barrels per day capacity oil facility at Girouxville.
Work is continuing on our Duvernay prospect near Grande Prairie, Alberta. We anticipate spudding this well in the third quarter of 2012.
Average production was 14,382 BOE/d during Q1 2012, 10% higher than the average production of 13,048 BOE/d in Q1 2011. By product, production volumes increased over Q1 2011 as follows: light oil production by 36%, heavy oil production by 4%, natural gas liquids production by 20% and natural gas production by 2%.
In the first quarter of 2012 crude oil and NGLs accounted for 37% of average daily production compared with 32% in Q1 2011.
The average production reflects an effective date for the Boyer natural gas acquisition of January 31, 2012. With Boyer included, Guide's average production for March was 15,699 BOE/d of which 5,350 barrels per day (34%) was crude oil and NGLs.
Prices realized in the first quarter of 2012 were lower for all products than those realized in the first quarter of 2011, with the exception of heavy oil, which increased by 9%. Light oil prices decreased by 5%, NGL prices decreased by 3%, and the average price received for natural gas decreased by 45%.
On January 31, 2012, Guide completed the acquisition of the Boyer gas property in Northwestern Alberta. This low decline dry shallow gas property added an average of 21.0 Mmcf/d of sales gas production in February and March 2012. Guide transacted a financial contract for the period March 1 through December 31, 2012 on 10,000 GJ/d at CDN 4.50/GJ.
During the three months ended March 31, 2012 differentials widened in Alberta and the average light oil price received by Guide was approximately 14.00/Bbl lower than the weighted average posted Edmonton light oil par price. By comparison, during Q1 2011, the average light oil prices received by the Corporation were approximately 5.00/Bbl lower than the weighted average posted Edmonton light oil par price. Heavy crude differentials were effectively flat at 23.00/Bbl in Q1 2012 as compared to 24.00/Bbl in Q1 2011.
Guide's policy to hedge a portion of its crude oil and natural gas production impacted funds flow in the first quarter of 2012 as follows. For natural gas, Guide's financial contracts increased the average realized price by 1.23/Mcf from 2.19/Mcf to 3.42/Mcf. Note that the 10,000 GJ/d hedge put in place for the Boyer acquisition was effective only during the final month of the quarter. This financial contract is expected to improve Guide's realized price for the remainder of 2012. Guide's crude oil hedges decreased the average realized price by 4.01/Bbl from 76.84 to 72.83 per barrel.
Crude Oil Prices
Three months ended March 3120122011
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000s/Bbl000s/Bbl
Crude oil33,86676.8426,67478.41
Realized financial contracts(1,769)(4.01)(1,154)(3.39)
Transportation(1,036)(2.35)(655)(1.93)
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Net crude oil31,06170.4824,86573.09
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Natural Gas Prices
Three months ended March 3120122011
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000s/Mcf000s/Mcf
Natural gas10,8752.1919,1213.98
Realized financial contracts6,1331.235,9151.23
Transportation(1,246)(0.25)(1,535)(0.32)
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Net natural gas15,7623.1723,5014.89
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NGL Prices
Three months
ended March 3120122011
------------------------------------------------------------
000s/Bbl000s/Bbl
NGL2,64365.712,24767.84
Transportation(30)(0.75)(10)(0.30)
------------------------------------------------------------
Net NGL2,61364.962,23767.54
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Production by Property
Three months ended March 31
20122011
----------------------------------------------------------------------------
Oil &Oil &
GasNGLsBOEGasNGLsBOE
Mmcf/dbbl/dBOE/d%Mmcf/dbbl/dBOE/d%
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Peace25.03,4497,6125330.32,2427,29856
Smoky11.24472,3191615.95753,22725
Boyer (Note 1)13.7-2,28716----
Cherhill2.36211,01172.16621,0178
Other Areas2.47681,15385.16691,50611
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Total54.65,28514,382 10053.44,14813,048 100
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Note 1 - Boyer was acquired on January 31, 2012. Monthly gas volume in February and March, 2012 averaged 21.0 Mmcf/d.
Peace Area - Includes Normandville, Girouxville, and Eaglesham
Peace Area production averaged 3,449 Bbl/d of oil and NGLs in the first quarter of 2012. This represents an increase of 54% in average daily oil and NGL production from 2,242 Bbl/d in the first quarter of 2011. During the same period, natural gas production decreased 17% from 30.3 Mmcf/d to 25 Mmcf/d. The area contributed 74% to total funds flow from operating activities in Q1 2012 based on 53% of production volumes.
Over the past 18 months, Guide confirmed the viability of oil in the Normandville/Girouxville Montney fairway and advanced this project into the development stage. During the first quarter of 2012, eight (8.0 net) wells were drilled in the Peace area and the Normandville oil facility was upgraded to handle an additional 5,000 barrels per day of oil and associated gas.
Up to a total of 19 (19.0 net) oil wells are planned in the Normandville/Girouxville Montney fairway during the remainder of the year. Plans also include the construction of a 5,000 barrels per day capacity oil facility at Girouxville.
Smoky Area - Includes Kakut
The Smoky area production averaged 447 Bbl/d of oil and NGLs and 11.2 Mmcf/d of natural gas during Q1 2012. During the same period in 2011, production averaged 575 Bbl/d of oil and NGLs and 15.9 Mmcf/d of natural gas. During the first quarter of 2012, the Smoky area contributed 12% of funds flow from operations and 16% of production volumes. Guide has suspended most of the short term development plans for the Smoky Area because of the current price of natural gas.
Two (1.5 net) wells were drilled within the Smoky area during the first quarter.
Boyer Area
On January 31, 2012, Guide completed the acquisition of the Boyer shallow gas property. This strategic acquisition provides Guide with a low decline dry gas property that can be further developed when gas prices recover. Guide commissioned a third party engineering firm to evaluate the Boyer assets effective December 31, 2011. The independent evaluator determined that the reserves attributable to the property were approximately 67.5 Bcf of proven gross natural gas reserves and 85.0 Bcf of proven plus probable gross natural gas reserves. In February and March, the Boyer property averaged gas production of 21.0 Mmcf/d, which is in line with both Guide's internal forecasts and the independent evaluation.
Cherhill Area - Includes Alexis and St Anne
Production in the Cherhill area averaged 621 Bbl/d of oil and NGLs and 2.3 Mmcf/d of natural gas during the first three months of 2012. During the same period in 2011, production averaged 662 Bbl/d of oil and NGLs and 2.1 Mmcf/d of natural gas. In Q1 2012, the Cherhill area contributed 10% of the funds flow from operations and 7% of production volumes.
Oil assets at Alexis and St. Anne continue to be exploited and optimized with two (0.4 net) wells drilled in this area during the first quarter.
Capital Expenditures
Exploration and evaluation assets, property and
equipment, net(000s)
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Balance at December 31, 2011617,543
Additions55,145
Acquisitions92,480
Disposals(17,970)
Derecognition expense(2,235)
Depletion and depreciation(23,328)
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Balance at March 31, 2012721,635
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Three months
ended March 3120122011
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(000s)%%
Land3,99778,05617
Geological and
geophysical1,17926471
Drilling and
completion35,2766534,01271
Plant and
facilities12,979244,86810
Inventory49315231
Other assets486115-
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Exploration &
evaluation
assets,
property &
equipment
investing
activity54,41010048,121100
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----------------------------------------------------------------------------
Capital expenditures during the first three months of 2012 were 54.4 million. Drilling and completions expenditures comprised 65% of capital activity. The Corporation drilled 17 (14.2 net) wells, resulting in 14 (11.7 net) oil wells, 1 (0.5 net) natural gas well, and 2 (2.0 net) dry & abandoned wells, for a success rate of 88% (85.9% net) during the quarter.
During the three months of 2012, the Corporation purchased interests in certain natural gas properties in the Boyer area of Alberta for cash consideration of 62.0 million, as well as interests in petroleum and natural gas properties in the Peace area of Alberta for cash consideration of 6.1 million.
On March 30, 2012, properties in the Senex area of Alberta were disposed of for net proceeds of 16.2 million, with no gain or loss recognized on disposal.
Liquidity and Capital Resources
As at March 3120122011
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(000s)
Bank debt182,073146,025
Working capital deficiency (1)42,07127,515
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Total net debt (2)224,144173,540
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(1) Excludes fair value of financial derivatives and other liability
(2)See "Non-GAAP Measurements"
Funding of Capital Program
Three months ended March 3120122011
----------------------------------------------------------------------------
(000s)
Acquisition of properties(68,282)(119)
Disposals of properties16,211800
Funds flow from operations (1)18,81826,842
Issuance of Class A shares, net of
costs34,545-
Repurchase of Class A shares(891)-
Change in bank debt43,82510,343
Change in working capital and
other10,18410,255
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Exploration & evaluation assets,
property & equipment investing
activity54,41048,121
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(1)See "Non-GAAP Measurements"
On January 24, 2012, the Corporation issued 12,000,000 Class A shares at 3.05 per share for gross proceeds of 36.6 million, or 34.5 million net of issuance costs.
During the quarter ended March 31, 2012, under the Normal Course Issuer Bid, the Corporation purchased 394,000 Class A shares for 891,000. The shares were cancelled subsequent to March 31, 2012.
As at March 31, 2012, the Corporation had 250 million in credit facilities available, consisting of a 225 million extendible 364 day revolving term facility and a 25 million non-revolving facility. The 25 million facility is available subject to mutual approval of the banking syndicate and the Corporation, including repayment terms. Collateral for the facilities consists of a demand debenture for 500 million collateralized by a first floating charge over all of the property, plant and equipment of the Corporation. At March 31, 2012, an amount of 182.1 million was drawn against the revolving credit facility (December 31, 2011 - 138.2 million).
The facilities bear interest at the bank's prime or banker's acceptance rates plus a rate margin. The margins ranged from 1.25% per annum to 5.25% per annum, based upon the Corporation's debt to cash flow ratio. For the three months ended March 31, 2012, the effective interest rate was 4.8% (March 31, 2011 - 5.2%).
The level of the borrowing base is determined by the bank syndicate based upon their review of, among other things, the Corporation's reserves and the value thereof, utilizing commodity prices determined by the bank syndicate which will be different than that utilized by the Corporation's independent reserve evaluator.
Subsequent to March 31, 2012, the Corporation renewed its credit facilities. The available amounts under the credit facilities were maintained at a 225 million extendible 366 day revolving term facility to May 28, 2013 and a 25 million non-revolving facility. The 25 million non-revolving facility is available subject to mutual approval of the banking syndicate and the Corporation, including repayment terms. The renewed facilities bear interest at the bank's prime or banker's acceptance rates plus a rate margin. The margins range from 1.25% per annum to 5.00% per annum, based upon the Corporation's debt to cash flow ratio.
GUIDE EXPLORATION LTD.
Consolidated Statements of Financial Position
December 31,
(000s) (unaudited)March 31, 20122011
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ASSETS
CURRENT
Accounts receivable23,04021,259
Deposits and prepaid expenses2,8169,258
Fair value of financial derivatives28,88122,997
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54,73753,514
Exploration and evaluation assets12,47610,145
Property and equipment709,159607,398
----------------------------------------------------------------------------
776,372671,057
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LIABILITIES
CURRENT
Accounts payable and accrued liabilities67,92762,163
Bank loan182,073138,248
Other liability1,7383,554
Fair value of financial derivatives14,2142,250
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265,952206,215
Decommissioning liabilities71,91348,055
Fair value of financial derivatives21,12521,797
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358,990276,067
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SHAREHOLDERS' EQUITY
Share capital638,380606,256
Contributed surplus51,16748,742
Retained earnings (deficit)(272,165)(260,008)
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417,382394,990
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776,372671,057
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GUIDE EXPLORATION LTD.
Consolidated Statements of Earnings (Loss) and Comprehensive Income (Loss)
Three months ended March 31
(000s, except per share amounts)
(unaudited)20122011
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INCOME
Petroleum and natural gas revenue47,38448,042
Royalties, net of gas cost
allowance(7,296)(6,139)
Realized gain on financial
derivatives4,3634,771
Unrealized loss on financial
derivatives(5,408)(18,959)
Other income-123
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39,04327,838
EXPENSES
Operating15,94612,342
Transportation2,3122,200
General and administration4,7913,156
Share-based compensation600599
Interest2,1051,857
Exploration expenses413215
Accretion1,220810
Derecognition expenses2,2353,400
Depletion and depreciation23,32820,746
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52,95045,325
Loss before taxes(13,907)(17,487)
Income taxes
Capital and other taxes6662
Deferred income tax recovery(1,816)(4,252)
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(1,750)(4,190)
NET LOSS AND COMPREHENSIVE LOSS(12,157)(13,297)
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NET LOSS AND COMPREHENSIVE
LOSS PER SHARE
Basic(0.12)(0.16)
Diluted(0.12)(0.16)
Weighted average Class A shares -
basic101,339,53183,980,083
- diluted101,339,53183,980,083
GUIDE EXPLORATION LTD.
Consolidated Statement of
Changes in Equity
Retained
ShareContributedEarnings
(000s) (unaudited)CapitalSurplus(Deficit)Total
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Balance, January 1, 2011586,62640,581(47,201)580,006
Share-based compensation-3,514-3,514
Tax deduction of share
issue costs(197)--(197)
Issue of common shares26,891--26,891
Shares purchased and
cancelled(7,064)4,647-(2,417)
Comprehensive loss--(212,807)(212,807)
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Balance, December 31, 2011606,25648,742(260,008)394,990
Share-based compensation-895-895
Issue of common shares34,545--34,545
Shares purchased for
cancellation(2,421)1,530-(891)
Comprehensive loss--(12,157)(12,157)
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Balance, March 31, 2012638,38051,167(272,165)417,382
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GUIDE EXPLORATION LTD.
Consolidated Statement of Changes in Equity
Retained
ShareContributedEarnings
(000s) (unaudited)CapitalSurplus(Deficit)Total
----------------------------------------------------------------------------
Balance, December 31, 2010586,62640,581(47,201)580,006
Share-based compensation-820-820
Comprehensive loss--(13,297)(13,297)
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Balance, March 31, 2011586,62641,401(60,498)567,529
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GUIDE EXPLORATION LTD.
Consolidated Statements of Cash Flows
Three months ended March 31
(000s) (unaudited)20122011
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Cash provided by (used in):
OPERATING ACTIVITIES
Net loss(12,157)(13,297)
Items not requiring cash:
Deferred income tax recovery(1,816)(4,252)
Depletion and depreciation23,32820,746
Derecognition expenses2,2353,400
Accretion1,220810
Share-based compensation600599
Other income-(123)
Unrealized loss on financial
derivatives5,40818,959
Abandonment costs(241)(81)
Change in non-cash working
capital2,2771,172
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20,85427,933
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FINANCING ACTIVITIES
Issue of common shares, net of
costs34,545-
Repurchase of common shares(891)-
Bank loan43,82510,343
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77,47910,343
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INVESTING ACTIVITIES
Exploration and evaluation
expenditures(6,430)-
Additions to property and
equipment(47,980)(48,121)
Acquisitions of oil and gas
properties(68,282)(119)
Disposals of oil and gas
properties16,211800
Change in non-cash working
capital8,1489,164
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(98,333)(38,276)
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CHANGE IN CASH--
CASH, BEGINNING AND END OF PERIOD--
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SUPPLEMENTAL INFORMATION
Cash interest paid2,0021,847
Cash taxes paid7562
Guide has approximately 102.6 million Class A shares issued and outstanding which trade on the Toronto Stock Exchange under the symbol "GO".
ADVISORIES
Forward Looking Statements:
Certain information regarding Guide Exploration Ltd. in this news release including management's assessment of future plans and operations, drilling plans, and facility construction plans, production estimates and commodity mix, plans to curtail production and expected impact, and capital expenditures are forward looking statements. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, capital expenditure costs, including drilling, completion and facilities costs, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.
Forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Corporation 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 the Corporation can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Corporation operates; the timely receipt of any required regulatory approvals; the ability of the Corporation to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration results; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Corporation to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Corporation operates; and the ability of the Corporation to successfully market its oil and natural gas products. Readers are cautioned that the foregoing list of factors and assumptions is not exhaustive. Additional information on these and other factors that could affect Guide's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), at Guide's website (www.guidex.ca). Furthermore, the forward looking statements contained in this news release are made as at the date of this news release and Guide 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.
Non-GAAP Measurements:
This news release contains terms commonly used in the oil and gas industry, such as funds flow from operations, funds flow from operations per share, and operating netback. These terms are not defined by Generally Accepted Accounting Principles ("GAAP") and should not be considered an alternative to, or more meaningful than, cash provided by operating activities or net earnings as determined in accordance with GAAP as an indicator of Guide's performance. Management believes that in addition to net earnings, funds flow from operations is a useful financial measurement which assists in demonstrating the Corporation's ability to fund capital expenditures necessary for future growth or to repay debt. Guide's determination of funds flow from operations may not be comparable to that reported by other companies. All references to funds flow from operations throughout this news release are based on cash flow from operating activities before changes in non-cash working capital and abandonment expenditures. The Corporation calculates funds flow from operations per share by dividing funds flow from operations by the weighted average number of Class A shares outstanding. Guide uses the term net debt. This measure does not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies.
BOES:
Disclosure provided herein in respect of barrels of oil equivalent (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 does not represent a value equivalency at the wellhead. 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 on a 6:1 basis may be misleading as an indication of value.
SOURCE: Guide Exploration Ltd.
Guide Exploration Ltd.
William E. Andrew
Chair, Chief Executive Officer
(403) 261-6012
Guide Exploration Ltd.
Dale A. Miller
President
(403) 261-6012
Guide Exploration Ltd.
Jennifer Livingston
Manager, Investor Relations
(403) 261-6012
www.guidex.ca
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