BlackPearl Announces Fourth Quarter and Full Year 2015 Financial and Operating Results and Year-End Reserves and Resources
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 02/25/16 -- BlackPearl Resources Inc. ("we", "our", "us", "BlackPearl" or the "Company") (TSX: PXX)(OMX: PXXS) is pleased to announce its financial and operating results for the three and twelve months ended December 31, 2015 as well as the results of its 2015 year-end oil and gas reserves and resources evaluations.
Highlights and accomplishments included:
John Festival, President of BlackPearl, commenting on activities indicated that "although 2015 was a challenging year for the oil and gas sector we still made significant progress in the development of our properties. This included successfully building, commissioning and commencing production of our first commercial thermal project at Onion Lake. Additionally, in 2015, we continued to receive positive results from our SAGD pilot at Blackrod; results that will set us up for commercial development of this large resource when economic conditions permit. We are managing in this low price environment by reducing our costs and limiting capital expenditures to maintain a strong financial position."
Financial and Operating Highlights
FOURTH QUARTER 2015 ACTIVITIES
Activities in the fourth quarter of 2015 continued to be impacted by lower oil prices. Oil and gas revenues were $22.6 million in the fourth quarter of 2015, 53% lower compared to the same quarter of 2014. The decrease in revenues is primarily attributable to a decrease in our average realized crude oil sales price in Q4 2015. WTI oil prices averaged US$42.18 per barrel in Q4 2015 compared to US$73.15 per barrel in Q4 2014. Lower WTI oil prices combined with comparable heavy oil differentials and a weaker Canadian dollar relative to the US dollar resulted in our wellhead price averaging $27.65 per barrel in the fourth quarter of 2015 compared with $59.34 per barrel in the fourth quarter of 2014.
BlackPearl sold an average of 9,521 boe/day during the fourth quarter of 2015 compared with 9,639 boe/day during the fourth quarter of 2014. Production in the fourth quarter of 2015 increased significantly from the first three quarters of the year (7,930 boe/day) as a result of first commercial production from our Onion Lake thermal project. During the fourth quarter the thermal project produced 3,010 barrels of oil per day.
Production costs were $14.6 million or $17.77 per boe in the fourth quarter of 2015 compared to $21.1million or $25.12 per boe in the fourth quarter of 2014. The decrease in production costs in 2015 is primarily due to on-going field optimization efforts in a low price environment, which included reduced well maintenance work, shutting in some of our high cost production, not re-starting wells that required servicing and lower chemical costs related to our ASP flood at Mooney. General and administrative expenses were $1.8 million in the fourth quarter of 2015 compared to $1.9 million in the fourth quarter of 2014.
Funds flow from operations in the fourth quarter of 2015 was $10.9 million compared to $19.7 million in the fourth quarter of 2014. The decrease reflects lower revenues in Q4 2015. Net loss in the fourth quarter of 2015 was $31.2 million compared to net income of $16.3 million in the fourth quarter of 2014. The net loss in Q4 2015 included a non-cash impairment write-down of $33.0 million related to our Mooney area assets. The write-down is attributable to the current low oil price environment. The net loss in Q4 2015 also includes realized gains on risk management contracts (oil price hedging contracts) of $10.3 million.
Capital expenditures were limited in the fourth quarter of 2015 due to low oil prices. Capital spending was $1.7 million during the quarter compared with $57.7 million in Q4 2014.
Production
BlackPearl''s Q4 2015 oil and gas sales volumes were 9,521 boe per day, a 27% increase over production during the third quarter. The increase in fourth quarter production is attributable to initial production from the star-up of our Onion Lake thermal project.
Operating Netback
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:
2016 Outlook - February Update
Our initial guidance for 2016 was released in December 2015 and as a result of the continued decrease in crude oil prices, we have updated our 2016 guidance. Our focus for the year will continue to be maintaining a strong balance sheet by limiting our capital spending until we see signs of a sustained price recovery. In 2016, we are planning to spend $10 to $15 million on capital projects down from our initial guidance which was to spend between $15 and $20 million. Budgeted capital spending includes preliminary planning for the second 6,000 bbl/d phase at the Onion Lake thermal EOR project, continuing to operate the Blackrod SAGD pilot throughout the year and maintenance capital in all our core areas. Expansion of the Mooney ASP flood has been deferred until oil prices improve. The Company continues to have the flexibility to expand or defer our capital program as economic conditions change.
The capital program is expected to be funded from our anticipated funds flow from operations and supplemented, if necessary, with our existing credit facilities. Funds flow from operations was initially budgeted to be between $35 and $40 million, but as a result of lower crude oil prices, we have updated our funds flow from operations to be between $5 and $10 million. This decrease in funds flow from operations resulted in our updated year end debt levels to be between $90 and $95 million, an increase from our initial guidance of $70 to $75 million. The updated guidance is based on a WTI oil price of US$35/bbl, a heavy oil differential of US$14/bbl and a Cdn/US dollar exchange rate of 0.71.
Our initial guidance for 2016 production was to average between 10,000 and 10,500 bbls/d. Due to the continued decrease in crude oil prices, the Company has decided to temporarily shut-in approximately 75% of the production from the first phase of the Mooney ASP flood (approximately 1,000 bbls/day) and defer the expansion of the Mooney ASP flood until oil prices improve. As a result, we have updated our 2016 production guidance to average between 9,000 and 10,000 bbls/d. We will continue to monitor crude oil prices and make changes to our capital spending programs and operations as we believe are required. This may include shutting-in some of our higher operating cost wells until oil prices improve.
Oil and Gas Reserves
The following tables summarize certain information contained in the independent reserves report prepared by Sproule Unconventional Limited ("Sproule") as of December 31, 2015. The report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Additional reserve information as required under NI 51-101 has been included in the Company''s Annual Information Form which has been filed on SEDAR. It should not be assumed that the net present value of reserves estimated by Sproule represents the fair market value of these reserves.
Summary of Oil and Gas Reserves
Net Present Value of Reserves
Estimated Future Development Capital
The following table summarizes the future development capital ("FDC") Sproule estimates is required to bring the proved, and proved plus probable reserves on production.
Reconciliation of Changes in Reserves
The following table summarizes the changes in Sproule''s evaluation of the Company''s share of oil and natural gas reserves (before royalties) from December 31, 2014 to December 31, 2015.
The pricing assumptions used in the Sproule evaluation are summarized below.
Pricing Assumptions
Definitions:
Contingent Resources
The following tables summarize certain information contained in the contingent resource evaluations prepared by Sproule as of December 31, 2015. The reports were independently prepared in accordance with definitions, standards and procedures contained in the COGE Handbook.
Amendments to NI 51-101 came into effect on July 1, 2015 and these amendments resulted in significant changes to the way contingent resources are disclosed compared to prior years. The most significant changes include:
It should not be assumed that the estimates of recovery, production, and net revenue presented in the tables below represent the fair market value of the Company''s contingent resources. There are certain contingencies which currently prevent the classification of these contingent resources as reserves. Information on these contingencies is provided in the footnotes to the tables below. There is no certainty that it will be commercially viable to produce any portion of the contingent resources. Please refer to our Annual Information Form for a more detailed discussion of our contingent resources.
An estimate of risked net present value of contingent resources is preliminary in nature and is provided to assist the reader in reaching an opinion on the merit and likelihood of the Company proceeding with the required investment. It includes contingent resources that are considered too uncertain with respect to the chance of development to be classified as reserves. There is uncertainty that the risked net present value of future net revenue will be realized.
Summary of Best Estimate (P50) Contingent Resource Volumes - By Property (1)(2)
NPV of Best Estimate (P50) Contingent Resource Volumes - By Property
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 () and are available on the Company''s website (). The Annual Information Form includes the Company''s reserves and resource data for the period ended December 31, 2015 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 meeting of shareholders will be held on May 5, 2016 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 and net present values of BlackPearl''s proved and probable reserves and contingent resources, the estimated 6,000 barrel per day productive capacity of the Onion Lake thermal project as well as the mid-2016 target date to reach that productive capacity and all the information under 2016 Outlook - February Update.
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.
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. Funds 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.
"Net debt" is a non-GAAP measure that represents long term debt less working capital.
The information in this release is subject to the disclosure requirements of BlackPearl Resources Inc. under the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. This information was publicly communicated on February 25, 2016 at 3:00 p.m. Mountain Time.
Contacts:
BlackPearl Resources Inc.
John Festival
President and Chief Executive Officer
(403) 215-8313
(403) 265-8324 (FAX)
BlackPearl Resources Inc.
Don Cook
Chief Financial Officer
(403) 215-8313
(403) 265-8324 (FAX)
Robert Eriksson
Investor Relations Sweden
+46 8 545 015 50
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Datum: 25.02.2016 - 16:00 Uhr
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