Funds from operations. Funds from operations for the fourth quarter of 2012 were $5.7 million ($0.03 per share), substantially equivalent to the $5.7 million ($0.03 per share) recorded in the third quarter of 2012 and down 66% from the $17.0 million ($0.10 per share) recorded in the fourth quarter of 2011. Funds from operations for the year ended December 31, 2012 were $29.6 million ($0.17 per share), down 46% from the $54.5 million ($0.32 per share) recorded for 2011. Property dispositions contributed to lower funds from operations in 2012. The decrease in funds from operations compared to 2011 is also due to lower commodity prices for natural gas (39%), oil (11%) and NGLs (18%) in the year ended December 31, 2012 versus the year ended December 31, 2011. Production declines in natural gas, oil and NGLs of 24%, 14% and 13% respectively in the year ended December 31, 2012 compared to December 31, 2011 also contributed to lower funds from operations in 2012.
Three months ended Year ended December 31 December 31(thousands of dollars) 2012 2011 2012 2011Cash from operating activities $ 6,976 $ 16,462 $ 29,839 $ 54,309Changes in non-cash working capital (1,396) 389 (704) (94)Decommisioning expenditures 114 146 506 249 --------------------------------------Funds from operations $ 5,694 $ 16,997 $ 29,641 $ 54,464----------------------------------------------------------------------------
Earnings. The Company reported a loss of $8.9 million in the fourth quarter of 2012 compared to earnings of $0.1 million for the third quarter of 2012 and a loss of $32.2 million for the fourth quarter of 2011. In the fourth quarter of 2012, earnings were impacted by losses recognized on the Company's asset dispositions. Overall, the dispositions during the 2012 financial year resulted in a net loss on sale of property, plant and equipment in the amount of $0.7 million (2011 - gain of $4.7 million).
The Company's funds from operations and earnings are highly sensitive to changes in factors that are beyond its control. An estimate of the Company's sensitivities to changes in commodity prices, exchange rates and interest rates is summarized below:
SENSITIVITIES Funds from Operations Earnings Per Per Millions Share Millions Share$0.50/Mcf in price of natural gas $ 4.2 $ 0.02 $ 3.1 $ 0.02US $5.00/bbl in the WTI crude price $ 3.2 $ 0.02 $ 2.4 $ 0.01US $0.01 in the US/Cdn exchange rate $ 0.7 $ 0.00 $ 0.5 $ 0.001% in short-term interest rate $ 0.9 $ 0.00 $ 0.7 $ 0.00----------------------------------------------------------------------------
This sensitivity analysis was calculated by applying different pricing, interest rate and exchange rate assumptions to the 2012 actual results related to production, prices, royalty rates, operating costs and capital spending. As the contribution of oil production continues to increase as a percentage of total production, the impact of oil prices will be more significant and the impact of natural gas prices will be less significant to funds from operations and earnings than is shown in the table above.
