ENP Newswire -
Release date- 27082014 -
Certain selected financial and operational information is set out below and should be read in conjunction with Palliser's financial statements complete with the notes to the financial statements and related MD&A which is expected to be available at www.sedar.com and the Company's website at www.palliserogc.com on
Q2 2014 Highlights
Decrease in average quarterly production. Second quarter 2014 production averaged 1,739 boe/d, a decrease of 37% from the second quarter of 2013, and a decrease of 7% from 1,874 boe/d in the first quarter of 2014;
Increased operating costs. Production, operating, and transportation expenses averaged
Decreased operating netbacks. Operating netbacks averaged
Decreased funds flow from operating activities. Funds flow from operating activities was
Maintained a significant undeveloped heavy oil land position. The Company's undeveloped heavy oil land position at the end of the second quarter was 34,116 net acres and
Maintained a significant prospect inventory. The Company's heavy oil prospect inventory stands at 169 locations, 83 of which are included in the 2013 independent reserves report and 86 locations that are not included in the reserves report.
Operationally, the second quarter of 2014 was another very quiet period for Palliser, with capital expenditures constrained, due to the Company's limited financial flexibility. Production averaged 1,739 boe/d, a seven per cent decline from the first quarter 2014 production average of 1,874 boe/d. Palliser recorded positive funds flow from operating activities of
The second quarter saw stronger heavy oil pricing, with Palliser realizing an average crude oil price of
Initiatives to reduce operating costs, which were undertaken in the first half of 2014, are starting to be reflected in lower overall operating costs, and G&A expenses are being reduced. The Company is applying all available funds to reducing its indebtedness.
Capital expenditures totaled
Financial and Outlook
In the second quarter management identified impairment triggers relating to both its
As a result, management conducted impairment tests for its
The production associated with the Manitou Sale was then approximately 125 bbl/d. In addition, Palliser has signed two farmout agreements with Maha for a capital program that will be undertaken at no cost to Palliser, with the exception that surface equipment for all of the wells will be supplied from Palliser's inventory of surplus equipment.
In a farmout with a third party at
With limited capital spending to date in 2014, production from the second quarter is expected to continue to decline in to the third quarter. Production growth from a seven well (4.25 net) capital program in the third quarter is expected to reverse that trend with a net production increase in to the fourth quarter.
Proposed Amalgamation - Update to the
Based on audited management prepared financial statements for the year ended
Based on unaudited management prepared financial statements for the six month period ended
As announced in the
Stockholm Corporate Finance will be paid a cash commission equal to 5.75% of the gross proceeds raised under the Equity Financing, as well as a monthly advisory fee payable in cash. The particulars of the bond financing have not been established to date, however, the bond financing is expected to be completed in the Nordic market. Maha has also engaged
Pursuant to the terms of the engagement agreement entered into between Maha and
Pursuant to the Amalgamation, shareholders of Palliser will receive 0.1393 of a common share of New Maha (a 'New Maha Share') for each common share of Palliser (a 'Palliser Share'). The deemed value of the Amalgamation to Palliser Shareholders is equal to approximately
Shareholders of Maha will receive one New Maha Share for each common share of Maha (a 'Maha Share'), the aggregate deemed consideration for the Maha Shares will be
Based on the 63,915,979 Palliser Shares issued and outstanding as of the date hereof and the 598,612 Palliser Shares issuable pursuant to outstanding Palliser share unit awards that will vest upon the completing of the Amalgamation, the holders of Palliser Shares will receive 8,986,883 New Maha Shares.
Based on the 35,799,304 Maha Shares issued and outstanding as of the date hereof and the 552,000 Maha Shares issuable to
Assuming Maha completes the Equity Financing of 10,000,000 Maha Shares at an issue price of
Annual & Special Shareholders Meeting
The Palliser annual and special shareholders' meeting is scheduled to take place on
President & CEO
Tel: (403) 209-5717
Tel: (403) 209-5718
Palliser is a
Completion of the transaction is subject to a number of conditions, including TSXV acceptance and shareholder approval. The Amalgamation transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Statements in this document may contain forward-looking information including matters related to the strategic review. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.
Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to: the risks associated with the oil and gas industry; commodity prices, and exchange rate changes.
Industry related risks could include, but are not limited to: operational risks in exploration; proposed dispositions not being completed or if completed, not providing the benefits expected; development and production; delays or changes in plans; risks associated to the uncertainty of reserve estimates; health and safety risks, and the uncertainty of estimates and projections of production, costs and expenses.
In addition, 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 Company 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 Company can give no assurance that such expectations will prove to be correct.
In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the ability of the Company to obtain financing on acceptable terms; the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; field production rates and decline rates; the ability to replace and expand reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates and the ability of the Company to successfully market its oil and natural gas products.
Readers are cautioned that the foregoing lists of factors and assumptions are not exhaustive. Additional information on these and other factors that could affect the Company'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 the Company's website (www.palliserogc.com).
Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company 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.
The Company has adopted the industry standard of 6:1 Mcf to Bbl when converting natural gas to barrels of oil equivalent. Disclosure provided herein in respect of Boes 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 Mcf:1 Bbl, utilizing a conversion ratio of 6:1 may be misleading as an indication of value.
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OCTOBER 31, 2014
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