ENP Newswire -
Release date- 30052014 -
The full text of Manitok's first quarter report containing its unaudited condensed interim financial statements as at and for the three months ended
First Quarter 2014 Operational & Financial Highlights:
Record first quarter production averaged 5,351 boe/d (59% light oil and liquids) which is a 49% increase over production of 3,586 boe/d (50% light oil and liquids) in the first quarter of 2013. Production continued to increase over comparable quarters despite closing an asset divestiture of approximately 777 boe/d (34 % sweet natural gas and 60% sour natural gas) on
Increased light oil production by 78% which increased Manitok's light oil production weighting to 57% of total production as compared to 47% of total production in the first quarter of 2013.
Recorded average production per diluted share growth of 46% and funds from operations per diluted share growth of 91% when compared to the first quarter of 2013.
Recorded funds from operations of
Operating netback (excluding the realized gain or loss on financial instruments) was
Increased net undeveloped land to 293,197 acres as at
Subsequent to the first quarter and up to
Drilling and completions operations continue in Manitok's core areas although spring break-up has limited operational activity particularly in southern
To date, Manitok has successfully drilled and cased a total of 4 vertical wells and 1 horizontal well in Entice. The wells were spaced across 4 of the 9 townships acquired through
The 4 vertical wells have proven that there is multi zone potential across the land base. The horizontal well which targeted the Basal Quartz (
Completion activity has been hampered to date by road bans associated with spring break-up and wet weather. Manitok anticipates that its completion operations and initial tests to determine commerciality of the potential new pools will be completed by mid-June and a more detailed report of the results will be provided at that time, along with information regarding the next phase of drilling at Entice which is scheduled to commence immediately after spring break-up.
The lease agreement with
Of the last 4 (2.0 net) Cardium oil wells drilled (wells 23 to 26), 1 (0.3 net) is currently on production through permanent facilities while 2 (1.4 net) are currently on production through temporary facilities with tie-in to permanent facilities expected in
These wells were drilled at the north end of the field between producing wells in section 29 and a low rate well drilled in 2013 which defined the northern limits of the pool. The fourth well (0.3 net) which was drilled to the deepest portion of the structure, about 800 meters from the crest, encountered water with no oil cut.
Manitok will use this well as a water injector for its upcoming Stolberg waterflood program. The 3 producing wells, when producing through permanent facilities in the third quarter of 2014, are expected to add about 450 boe/d (256 net) of initial light oil production along with associated gas. Manitok is currently drilling 2 wells in Stolberg. The first well is targeting Cardium oil in the back-limb of the Stolberg structure in the center of the field, between the producing wells at the north and south ends of the field, which is anticipated to be a highly fractured area of the field.
It is the first well of a 3 to 4 well pad where Manitok has a 30% working interest in each well. As part of the drilling program for the first well, a pilot hole was drilled to test for Cardium oil in the fore-limb of the Stolberg structure. The pilot hole was designed to gather both pressure and phase data from the fore-limb. The results showed the Cardium fore-limb's thickness is consistent with that found in most of the back-limb, the formation is oil bearing and at original reservoir pressure.
This indicates that this part of the structure is not communicating with any of the 3 previously drilled fore-limb wells in the south end of the field or with the wells on the back-limb. Manitok is adjusting its drilling schedule to accommodate drilling a well into this newly discovered portion of the structure as soon as it is feasible. If successful, the Corporation will add several follow up locations to its current inventory. The current back-limb target will be production tested once drilling operations are finished which is anticipated to be within the next 2 weeks. The drilling rig will immediately move to the second well on the pad once production testing is complete.
The second well is a potential natural gas well targeting an upper formation in the
Once the drilling operation is finished, the well will be production tested immediately. If successful, the well can be tied-in and producing by early in the third quarter. The drilling rig will then move to a pad at the south end of the field where it will begin the first of up to 3 Cardium oil wells on a pad. Manitok will be in a position to release more information on the two wells mentioned above by mid-June.
In addition, the Cordel waterflood pilot as approved by the
The completion of the second well was suspended when road bans associated with spring break-up prohibited Manitok from moving in the drilling rig required to complete the well. Manitok anticipates that it will commence the completion on the second well in the next two weeks, weather permitting. Additional capital will not be allocated to the area until the second well has been properly evaluated.
The 2014 guidance remains unchanged from the Corporation's press release dated
Manitok is a public oil and gas exploration and development company focusing on conventional oil and gas reservoirs in the Canadian foothills and southeast
For further information view our website at www.manitokenergy.com
President & Chief Executive Officer
This press release contains forward-looking statements. More particularly, this press release contains statements concerning planned exploration and development activities, planned capital expenditures, the breakdown of planned capital expenditures by area, the development and growth potential of Manitok's properties and the anticipated increase in production from 3 producing wells in Cordel-Stolberg area due to producing through permanent facilities.
The forward-looking statements in this press release are based on certain key expectations and assumptions made by Manitok, including expectations and assumptions concerning the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the successful application of technology, prevailing weather conditions, commodity prices, royalty regimes and exchange rates and the availability of capital, labour and services.
Although Manitok believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Manitok can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks.
These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserves estimates; the uncertainty of estimates and projections relating to production, costs and expenses and health, safety and environmental risks), uncertainty as to the availability of labour and services, commodity price and exchange rate fluctuations, unexpected adverse weather conditions, general business, economic, competitive, political and social uncertainties, capital market conditions and market prices for securities and changes to existing laws and regulations.
Certain of these risks are set out in more detail in Manitok's current Annual Information Form, which is available on Manitok's SEDAR profile at www.sedar.com.
Forward-looking statements are based on estimates and opinions of management of Manitok at the time the statements are presented. Manitok may, as considered necessary in the circumstances, update or revise such forward-looking statements, whether as a result of new information, future events or otherwise, but Manitok undertakes no obligation to update or revise any forward-looking statements, except as required by applicable securities laws.
Non-GAAP Financial Measures
This press release contains references to measures used in the oil and natural gas industry such as 'funds from operations', 'funds from operations netback', 'funds from operations per share', 'operating netback', 'working capital deficit', and 'net debt'. These measures do not have standardized meanings prescribed by GAAP and therefore should not be considered in isolation. These reported amounts and their underlying calculations are not necessarily comparable or calculated in an identical manner to a similarly titled measure of other companies where similar terminology is used.
Where these measures are used they should be given careful consideration by the reader. These measures have been described and presented in this press release in order to provide shareholders and potential investors with additional information regarding the Corporation's liquidity and its ability to generate funds to finance its operations.
Funds from operations should not be considered an alternative to, or more meaningful than, cash provided by operating, investing and financing activities or net income as determined in accordance with GAAP, as an indicator of Manitok's performance or liquidity.
Funds from operations is used by Manitok to evaluate operating results and Manitok's ability to generate cash flow to fund capital expenditures and repay indebtedness. Funds from operations denotes cash flow from operating activities as it appears on the Corporation's Statement of Cash Flows before decommissioning expenditures and changes in non-cash operating working capital.
Funds from operations is also derived from net income (loss) plus non-cash items including deferred income tax expense, depletion and depreciation expense, exploration and evaluation expense, impairment expense, stock-based compensation expense, accretion expense, unrealized gains or losses on financial instruments and gains or losses on asset divestitures. Funds from operations netback is calculated on a per boe basis and funds from operations per share is calculated as funds from operations divided by the weighted average number of common shares outstanding.
Operating netback denotes petroleum and natural gas revenue and realized gains or losses on financial instruments less royalty expenses, operating expenses and transportation and marketing expenses calculated on a per boe basis. Working capital deficit includes current assets less current liabilities excluding the current portion of the amount drawn on the credit facilities, the current portion of the fair value of financial instruments and the deferred premium on financial instruments.
Manitok uses net debt as a measure to assess its financial position. Net debt includes current assets less current liabilities excluding the current portion of the fair value of financial instruments and the deferred premium on financial instruments.
Barrels of Oil Equivalent
The term barrels of oil equivalent ('boe') may be misleading, particularly if used in isolation. Per boe amounts have been calculated using a conversion ratio of six thousand cubic feet (6 mcf) of natural gas to one barrel (1 bbl) of crude oil. The boe conversion ratio of 6 mcf to 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.
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