Trilogy Energy Corp. Provides Update on Q4 2016 Operations, 2017 Hedging Program and 2017 Guidance
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 01/17/17 -- Trilogy Energy Corp. ("Trilogy" or the "Company") (TSX: TET) is pleased to provide an update on its fourth quarter 2016 Montney and Duvernay operations, report on its current hedging program and provide annual guidance for 2017.
Highlights
Q4 2016 Operating Update
Trilogy''s average production during the fourth quarter of 2016 is expected to be approximately 22,600 Boe/d, resulting in annual 2016 average production of approximately 21,800 Boe/d, with production in December 2016 being approximately 23,800 Boe/d. During the quarter, Trilogy recorded a $5.1 million provision for the Kaybob emulsion release reported in October 2016 and a $2.5 million provision for a third party downward revenue adjustment relating to prior year production allocations. Third party revenue adjustments negatively impacted full year 2016 average production by an estimated 115 Boe/d.
Funds flow from operations for the fourth quarter is approximately $22.4 million. Excluding one-time adjustments for the emulsion release ($5.1 million) and revenue allocation ($2.5 million), fourth quarter 2016 funds flow from operations was expected to be approximately $30 million.
Montney Update
Based on the encouraging completion results from its first quarter 2016 Montney horizontal oil wells, the Company elected to increase its Montney drilling activity in 2016 from the 2 wells that were initially planned to a total of 12 wells for the year. Nine of these wells were completed prior to the end of 2016 and the remaining 3 will be completed in 2017.
Improvements to Trilogy''s Montney oil well drilling and completion program resulted in well costs declining by approximately 30 percent while productivity generally increased. Cost savings were achieved in the drilling operations through the utilization of multi-well pads and high performance mud motor drilling. The change from hydrocarbon based fracture stimulations to water based fracture stimulations significantly reduced completion costs and allowed the Company to economically increase proppant volume and decrease stage spacing.
Trilogy varied sand volumes per stage from 10 tonnes per stage in its original horizontal Montney oil wells to as much as 20 tonnes per stage in recent wells. At the same time, stage spacing was reduced from 75 meters per stage in the original wells to 50 to 65 meters in the recent wells. Incorporating the efficiencies from its 2016 Montney drilling and completion program, Trilogy plans to drill 15 horizontal Montney oil wells and complete 18 wells in 2017.
The following table summarizes production results from the 9 horizontal Montney oil wells that were drilled, completed and brought on production in 2016. The variable results reflect the evolution of completion techniques described above.
Duvernay Update
Trilogy successfully drilled, completed and tied in 2 (2.0 net) horizontal Duvernay wells in 2016. Each well was drilled and completed on a single well pad at a cost of approximately $10.2 million per well. The significant reduction in costs relative to previous wells reflects improvements in efficiencies and operational performance during the drilling and completion operations.
The 02/16-17-61-19W5 well was placed on production November 10, 2016 and has produced for 63 days since that time, producing an aggregate of 17 MBbl of condensate and 194 MMcf of natural gas. Production is currently restricted through a downhole choke which will be pulled once surface flowing pressures stabilize. Liquids recovery from this well has been variable since coming on production relative to other Duvernay wells operated by Trilogy and other producers in the area. This well''s condensate gas ratio will be monitored closely over the next few months to confirm that it normalizes in the expected range of approximately 125 Bbl/MMcf.
The 12-21-63-17W5 well was brought on production December 21, 2016 and has produced an aggregate of 9.0 MBbls of crude oil/condensate (42 degree API, density of 814 kg/m3) and 8.9 MMcf of natural gas in the past 17 days. The well is expected to decline from current rates and Trilogy is forecasting the well to stabilize within the initial 6 to 12 producing months.
2017 Hedge Update
Trilogy has hedged approximately 31 percent of its forecast 2017 production to lock in expected returns from wells drilled in its 2017 capital spending program. Details of the hedges are as follows:
2017 Annual Guidance
Trilogy plans to execute a 2017 capital spending budget that is within anticipated 2017 cash flow based on Trilogy''s 2017 production expectations and forecasted pricing. Certain projects that were originally planned for 2017 were accelerated into December 2016 to improve efficiencies and take advantage of operational opportunities.
Based on the results from the Company''s 2016 Montney oil and gas drilling programs, Trilogy is budgeting capital expenditures of approximately $60 million to drill 15 horizontal Montney net oil wells, complete 18 net wells and develop additional infrastructure in the Kaybob Montney oil pool in 2017. Trilogy will also be allocating approximately $25 million in capital to drill 6 (5.25 net) wells into the Presley Montney gas pool, including 3 extended reach lateral wells and 3 one-mile laterals. The balance of the 2017 capital program will be allocated to Trilogy''s Duvernay assets, infrastructure and other projects designed to reduce operating costs. The level of capital to be allocated to Duvernay projects will be reflective of commodity prices and will be weighted to the second half of 2017.
Given the foregoing, Trilogy is providing 2017 annual guidance as follows:
About Trilogy
Trilogy is a petroleum and natural gas-focused Canadian energy corporation that actively develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy''s geographically concentrated assets are primarily high working interest properties that provide abundant low-risk infill drilling opportunities and good access to infrastructure and processing facilities, many of which are operated and controlled by Trilogy. Trilogy''s common shares are listed on the Toronto Stock Exchange under the symbol "TET".
Certain Financial Information and Non-GAAP Measures
All financial information presented in this press release in relation to fourth quarter and annual 2016 is based on estimates and is unaudited.
Certain measures used in this document, including "funds flow from operations", "the "Non-GAAP measures" do not have any standardized meaning as prescribed by IFRS and, therefore, are considered Non-GAAP measures. Non-GAAP measures are commonly used in the oil and gas industry and by Trilogy to provide Shareholders and potential investors with additional information regarding the Company''s liquidity and its ability to generate funds to finance its operations. However, given their lack of standardized meaning, such measurements are unlikely to be comparable to similar measures presented by other issuers. "Funds flow from operations" refers to the cash flow from operating activities before net changes in operating working capital as shown in the consolidated statements of cash flows. Management utilizes funds flow from operations as a key measure to assess the ability of the Company to finance dividends, operating activities, capital expenditures and debt repayments.
Financial data contained within this press release are reported in Canadian dollars, unless otherwise stated.
Forward-Looking Information
Certain information included in this news release constitutes forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "budget", "goal", "objective", "possible", "probable", "projected", scheduled", or state that certain actions, events or results "may", "could", should", "would," "might", or "will" be taken, occur or be achieved, or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this news release include, but are not limited to:
Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Such assumptions include:
Although Trilogy 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 Trilogy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Trilogy and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to:
The forward-looking statements and information contained in this news release are made as of the date hereof and Trilogy undertakes no obligation 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.
Oil and Gas Advisory
This document contains disclosure expressed as "Boe", "MBoe", "Boe/d", "Mcf", "Mcf/d", "MMcf", "MMcf/d", "Bcf", "Bbl", and "Bbl/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil (6:1). Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head. For Q3 2016, the ratio between Trilogy''s average realized oil price and the average realized natural gas price was approximately 21:1 ("Value Ratio"). The Value Ratio is obtained using the Q3 2016 average realized oil price of $52.03 (CAD$/Bbl) and the Q3 2016 average realized natural gas price of $2.47 (CAD$/mcf). This Value Ratio is significantly different from the energy equivalency ratio of 6:1 and using a 6:1 ratio would be misleading as an indication of value.
Contacts:
For further information, please contact:
J.H.T. (Jim) Riddell, Chief Executive Officer
J.B. (John) Williams, President and Chief Operating Officer
M.G. (Mike) Kohut, Chief Financial Officer
Trilogy Energy Corp.
#1400, 332 - 6th Avenue S.W.
Calgary, Alberta T2P 0B2
(403) 290-2900
(403) 263-8915 (FAX)
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Datum: 17.01.2017 - 06:59 Uhr
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News-ID 1480751
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