CUT BANK, MT, Dec. 1, 2014 /CNW/ - Mountainview Energy
Ltd. ("Mountainview" or the "Company") (TSXV: MVW) is pleased to
announce its operating and financial results for the quarter ended
September 30, 2014. The Company also
announces that its reviewed financial statements and management's
discussion and analysis for the quarter ended September 30, 2014, are available on SEDAR at
www.sedar.com, and on Mountainview's website at
www.mountainviewenergy.com.
Highlights of Mountainview's successful Q3 2014 are as
follows:
- Successfully drilled three wells (1.0 net) in the quarter. This
is the eleventh operated well drilled successfully, representing a
100% success rate in drilling operations. Initial production
results continue to improve, with capital expenditures decreasing.
The most recent well recorded a Company best IP30 rate of 552 boepd
(348 boe/d net) and a Company low capital expenditure of
$5.8 million ($3.7 million net). The remaining two wells
drilled in Q3 are awaiting completion operations.
- Continued the workover program with one well (0.3 net)
converted to a Rotoflex pump in the quarter. This makes a total of
five wells (2.6 net) converted to longer life, lower operating cost
Rotoflex pumps, out of the eight total (5.2 net) producing wells in
Divide County, N.D. The remaining
three wells will be converted when the current pumps reach the end
of their useful life.
- Despite production interruptions due to previously discussed
workovers, average production for the nine months ended
September 30, 2014 was 839 boe/d, an
increase of 44% over the average of 584 boe/d for nine months ended
September 30, 2013.
- Generated operating netbacks of $28.83 per boe in Q3 2014, an increase of 10%
when compared to $26.13 per boe in Q3
2013.
- Petroleum and natural gas sales for the nine months ended
September 30, 2014 were $19 million, a 45% increase over the $13.1 million for the nine months ended
September 30, 2013.
Certain selected quarterly financial and
operational information is outlined below and should be read in
conjunction with Mountainview's reviewed financial statements for
the three and nine months ended September
30, 2014 and the audited financial statements for the years
ended December 31, 2013 and 2012 and
the accompanying management discussion and analysis filed with the
Canadian securities regulatory authorities which may be accessed
through the SEDAR website (www.sedar.com) and also on the Company's
website: www.mountainviewenergy.com.
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($000's except per
share amounts)
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Q3
2014
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9 Months Ended
Sept. 30, 2014
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Q3
2013
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9 Months Ended
Sept. 30, 2013
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Average production
(boe/d)
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807
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839
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711
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584
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Petroleum and natural
gas sales
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5,883
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19,000
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5,993
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13,070
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Operating netback
(per boe)(1)
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28.83
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34.37
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26.13
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25.08
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Funds flow from
operations(2)
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(332)
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(50)
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3,830
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4,389
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Per share
basic
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(0.00)
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(0.00)
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0.02
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0.00
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Per share
diluted
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(0.00)
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(0.00)
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0.02
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0.00
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Net income
(loss)
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(1,638)
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(9,448)
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(387)
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(2,833)
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Per share
basic
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(0.02)
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(0.11)
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(0.01)
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(0.03)
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Per share
diluted(3)
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(0.02)
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(0.11)
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(0.01)
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(0.03)
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Capital
expenditures(4)
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7,403
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21,646
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7,262
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30,345
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Total
assets
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101,208
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101,208
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74,265
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74,265
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Net debt excluding
financial derivatives(5)
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75,911
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75,911
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46,883
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46,883
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(1)
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Operating netback is
a non-GAAP measure calculated as the average per boe of the
Company's oil and gas sales plus realized gains on derivatives,
less royalties, operating and transportation expenses.
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(2)
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Funds flow from
operations should not be considered an alternative to, or more
meaningful than, cash flow from operating activities as determined
in accordance with International Financial Reporting Standards as
an indicator of Mountainview's performance. Funds flow from
operations represents cash flow from operating activities prior to
changes in non-cash working capital, transaction costs and
decommissioning provision expenditures incurred. Mountainview also
presents funds flow from operations per share whereby per share
amounts are calculated using weighted average shares outstanding
consistent with the calculation of earnings per share.
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(3)
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Due to the
anti-dilutive effect of Mountainview's net loss for the three
months and year ended December 31, 2013 and 2012, the diluted
number of shares is equal to the basic number of shares. Therefore,
diluted per share amounts of the net loss are equivalent to basic
per share amounts.
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(4)
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Capital expenditures
are a non-GAAP measure, calculated as the purchase or sale price of
an asset, plus development capital expenditures added to PP&E.
Corporate acquisitions are excluded from this measure.
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(5)
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Net debt is a
non-GAAP measure representing the total of bank indebtedness,
accounts payables and accrued liabilities, less accounts
receivables, deposits and prepaid expenses.
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Corporate
Mountainview exited the quarter with increased
average production and operating netbacks when compared to the
prior period quarter. New wells brought online in 2014 have
offset intermittent production outages from ongoing workover
operations to optimize pumps in Divide
County, N.D. In addition, wells with the new Rotoflex
pump have experienced no downtime. Mountainview expects to
convert all wells to Rotoflex pumps once fluid levels naturally
decline to a level best managed by a Rotoflex pump, and when the
existing electronic submersible pumps reach the end of their useful
life. Going forward, this pump optimization is expected to
reduce operating costs and downtime, resulting in higher monthly
average production volumes and operating netbacks. The
workover operations impacted the lease operating costs for the
quarter, resulting in a lower quarter over quarter operating
netback per boe. Mountainview also experienced increased
financing costs as a result of increased debt in the quarter.
The net loss was further compounded by falling commodity prices in
the quarter. Mountainview anticipates continuing the
development of the infill drilling inventory, benefitting from
capital efficiencies associated with pad drilling.
Financial
At quarter-end, Company net debt was $75.9 million and the Company had $49.4 million drawn on its available credit
facility of $55.6 million.
Funds flow from operations for Q3 2014 decreased from Q3 2013,
mainly due to increased operating expenditures.
Exposure to volatility of differentials from WTI
and industry concerns with respect to transportation restrictions
in the Williston Basin translated
into realized prices ranging from $86.63 per barrel of oil in Q3 2013, to
$84.33 per barrel of oil in Q3,
2014. In response to this price volatility, the Company has
entered into a financial hedging program which commenced in
January, 2014. Mountainview had 10% of its production hedged
for Q3, 2014, with a floor of $85.00
and a ceiling of $97.70. The
Company plans to actively manage its hedging program as its
production base grows.
Operations
The Company's Q3 2014 capital plan on its core 12
Gage asset in Divide County, N.D.
included the drilling of three wells (1.0 net) and the installation
of a Rotoflex pump on one well (0.3 net). The capital program
in the quarter cost $7.4 million net
to the Company with a 100% success rate. At quarter-end, the
3 wells (1.0 net) had been drilled in the target zone and were
awaiting completion. Production equipment was also installed
in the third quarter.
The Company has selectively increased its working
interest in its assets whenever appropriate as it has become more
experienced operationally. This experience has resulted in
decreased capital costs on a per well basis from $8.3 million per well to $5.8 million per well.
Outlook
Mountainview has continued to deliver on its
strategy of production and reserve growth. Utilizing funds
flow from operations, available credit on its existing credit
facility, and equity financing as necessary, Mountainview will
continue to focus on the development of its core 12 Gage asset in
Divide County, N.D.
The Company will continue to pursue a growth
strategy using a combination of cash flow and available
credit. Mountainview continues to monitor the commodity price
environment and is actively pursuing a cost reduction strategy to
maximize returns on its production.
Further development of the 12 Gage project may be
accelerated through an equity financing and/or the refinancing of
the existing line of credit. Any equity financing or debt
refinancing would be dependent on capital requirements and market
conditions, and subject to management and board approval.
About Mountainview
Mountainview Energy Ltd. is a public oil and gas
company listed on the TSX Venture Exchange, with a primary focus on
the exploration, production and development of the Bakken and Three
Forks Shale in the Williston Basin
and the South Alberta Bakken.
Forward-Looking Statements
Certain information contained in this press
release constitutes forward-looking statements.
Statements relating to "reserves" are deemed to be
forward-looking statements as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and can be
profitably produced in the future. By their nature,
forward-looking statements are subject to numerous risks and
uncertainties, some of which are beyond the Company's control
including the impact of general economic conditions, industry
conditions, volatility of commodity prices, currency fluctuations,
environmental risks, competition from other industry participants,
the lack of availability of qualified service providers, personnel
or management, stock market volatility and ability to access
sufficient capital from internal and external sources, inability to
meet or continue to meet listing requirements, the inability to
obtain required consents, permits or approvals and the risk that
actual results will vary from the results forecasted and such
variations may be material. Readers are cautioned that the
assumptions used in the preparation of such information, although
considered reasonable at the time of preparation may prove to be
imprecise and, as such, undue reliance should not be placed on
forward-looking statements. The Company's actual results,
performance or achievement could differ materially from those
expressed in or implied by, these forward-looking statements and,
accordingly, no assurance 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 the Company will
derive therefrom.
The forward-looking statements contained in
this press release are made as of the date of this press
release. Mountainview disclaims any intention and assumes no
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable securities laws. Additionally,
Mountainview undertakes no obligation to comment on the
expectations of, or statements made by, third parties in respect of
the matters discussed above.
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may
be misleading, particularly if used in isolation. A boe conversion
ratio of six thousand cubic feet of natural gas to one barrel of
oil equivalent (6 mcf/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. All boe conversions in this report are
derived from converting gas to oil in the ratio of six
thousand cubic feet of gas to one barrel of oil.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
SOURCE Mountainview Energy Ltd.