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SMALL BUSINESS
Petroflow Energy Ltd. announces second quarter results for 2009
(TSX Symbol - PEF; NYSE Amex Symbol - PED)
Certain selected financial and operational information for the three and six months ended
OVERVIEW AND HIGHLIGHTS
- Petroflow's average sales production rate grew to 4,250 boe per day,
a 75% increase over the second quarter of 2008 average sales
production of 2,426 per day, and a 22% increase over the first
quarter of 2009 average sales production of 3,462 boe per day.
- Funds from operations increased by 76% in the second quarter of 2009
to $4.6 million from $2.6 million in the second quarter of 2008.
- Funds from operations for the second quarter were positively impacted
as a result of the realized gain on the monetization of derivative
instruments, which helped offset the impact of declining commodity
prices.
- During the second quarter of 2009, Petroflow's average operating net
back per boe (defined as revenue including commodity derivatives,
less royalties, operating costs and transportation costs) was $25.25
per boe.
- The realized gain on its commodity contracts increased by 921% in the
second quarter of 2009 to $7.7 million from a realized loss of
$0.9 million during the second quarter of 2008. The increase was a
result of the monetization of derivative instruments in the second
quarter of 2009.
- The Company recorded $0.29 loss per share for the second quarter of
2009 compared to a loss of $0.30 in the same period of 2008. Net loss
was $8.6 million for the second quarter of 2009, a decrease of 4%
from a net loss of $8.9 million for the same period in 2008.
- Operating costs increased 7% to $12.53 per boe in the second quarter
of 2009 as compared to $11.73 per boe in the second quarter of 2008
and $11.48 per boe in the first quarter of 2009. The Company
performed extensive workovers on six wells during the second quarter.
The workovers were designed to enhance long term production and
ultimately lower operating expenses. The cost of this program was
$0.55 per boe.
- During the second quarter of 2009 and shortly thereafter, significant
changes in the management of the Company occurred with the
resignations of the Chairman of the Board of Directors, Mr. Richard
Clark; followed by the CEO of the Company, Mr. John Melton. Mr. David
Elgie, a professional engineer with considerable public company
experience has replaced Mr. Clark. The remainder of the Company's
management team, headed by Mr. Sandy Andrew as President has remained
in place.
- The global economic and financial crisis has continued to reduce
liquidity in financial markets, restrict access to financing and
cause significant demand destruction for commodities and lower
pricing. These factors have continued to affect the economy in the
second quarter of 2009 and continue to impact the performance of the
economy going forward. The Company will continue to be flexible in
its capital spending in order to respond to changes in commodity
prices, costs and capital markets.
Petroflow announces its financial and operational results for the three
and six months ended June 30, 2009
Financial and Operating Summary
Three months ended June 30,
2009 2008 % Change
-------------------------------------------------------------------------
Financials
Oil sales 2,207,782 4,711,123 (53%)
Natural gas and NGL sales 6,714,341 10,681,188 (37%)
Total oil, natural gas
and NGL revenue 8,922,123 15,392,311 (42%)
Funds from operations(1) 4,551,366 2,578,764 76%
Per share basic and diluted ($) 0.16 0.09 76%
Net loss (8,572,558) (8,884,498) (2%)
Per share basic and diluted ($) (0.29) (0.30) 11%
Capital expenditures(2) - 20,023,615 (100%)
Net debt (end of period)(3) 142,430,358 78,729,439 81%
-------------------------------------------------------------------------
Operating Highlights
Production:
Oil (bbls per day) 388 409 (5%)
Natural gas and NGL (mcf per day) 23,173 12,099 92%
-------------------------------------------------------------------------
Total (boe per day) (6:1) 4,250 2,426 75%
Average realized price:
Oil ($ per bbl) 62.60 126.48 (51%)
Natural gas and NGL ($ per mcf) 3.18 9.70 (67%)
Realized gain (loss) on
commodity contracts ($ per bbl) 20.04 (4.27) 569%
Combined average ($ per boe) 43.11 65.45 (34%)
Netback ($ per boe)
Oil, natural gas and NGL sales 23.07 69.73 (67%)
Realized gain (loss) on
commodity contracts 20.04 (4.27) 569%
Royalties and severance taxes 5.33 14.90 (64%)
Operating expenses 12.53 11.73 7%
Transportation expenses - 0.37 (100%)
-------------------------------------------------------------------------
Operating netback 25.25 38.46 (34)%
-------------------------------------------------------------------------
G&A expense 5.85 13.94 (58%)
Interest expense 7.66 6.48 18%
-------------------------------------------------------------------------
Corporate netback 11.74 18.04 (35%)
-------------------------------------------------------------------------
Common shares
Common shares outstanding,
end of period 29,509,894 29,423,894 0%
Weighted average basic shares
outstanding 29,529,762 29,341,315 1%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Six months ended June 30,
2009 2008 % Change
-------------------------------------------------------------------------
Financials
Oil sales 4,155,670 7,467,894 (44%)
Natural gas and NGL sales 14,338,968 18,144,527 (21%)
Total oil, natural gas
and NGL revenue 18,494,638 25,612,421 (28%)
Funds from operations(1) 5,844,388 5,895,907 (1%)
Per share basic and diluted ($) 0.20 0.20 (2%)
Net loss (8,590,380) (11,043,378) (21%)
Per share basic and diluted ($) (0.29) (0.38) (23%)
Capital expenditures(2) 14,680,987 35,455,885 (59%)
Net debt (end of period)(3) 142,430,358 78,729,439 81%
-------------------------------------------------------------------------
Operating Highlights
Production:
Oil (bbls per day) 403 369 9%
Natural gas and NGL (mcf per day) 20,728 11,541 80%
-------------------------------------------------------------------------
Total (boe per day) (6:1) 3,858 2,292 68%
Average realized price:
Oil ($ per bbl) 56.95 111.25 (49%)
Natural gas and NGL ($ per mcf) 3.82 8.64 (56%)
Realized gain (loss) on
commodity contracts ($ per bbl) 13.17 (2.45) 638%
Combined average ($ per boe) 39.66 58.94 (33%)
Netback ($ per boe)
Oil, natural gas and NGL sales 26.49 61.39 (57%)
Realized gain (loss) on
commodity contracts 13.17 (2.45) 638%
Royalties and severance taxes 5.86 13.30 (56%)
Operating expenses 12.06 10.29 17%
Transportation expenses - 0.48 (100%)
-------------------------------------------------------------------------
Operating netback 21.74 34.87 (38%)
-------------------------------------------------------------------------
G&A expense 6.32 10.25 (38%)
Interest expense 7.07 7.20 (2%)
-------------------------------------------------------------------------
Corporate netback 8.35 17.42 (52%)
-------------------------------------------------------------------------
Common shares
Common shares outstanding,
end of period 29,509,894 29,423,894 0%
Weighted average basic shares
outstanding 29,574,152 29,291,630 1%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Management uses funds from operations (before changes in non-cash
working capital) to analyze operating performance and leverage. Funds
from operations as presented does not have any standardized meaning
prescribed by Canadian GAAP and, therefore, may not be comparable
with the calculation of similar measures for other entities.
(2) Includes non-cash capital expenditures through leases.
(3) Net debt is total of bank loan, obligation under capital lease less
working capital (excluding derivative contract).
Operational Update
Oklahoma
There was no drilling on this property during 2009. This property currently produces on average 77 boes per day.
There were no capital expenditures on the Company's properties in
Forward-Looking Statements
This news release contains statements about oil and gas production and operating activities that may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation as they involve the implied assessment that the resources described can be profitably produced in the future, based on certain estimates and assumptions. More particularly, this press release contains statements concerning anticipated: (i) production weighting for 2009, (ii) capital expenditures for 2009 and (iii) exploration and development activities and results.
The forward-looking statements are based on certain key expectations and assumptions made by Petroflow, including expectations and assumptions concerning the performance of existing wells and success obtained in drilling new wells, anticipated expenses, cash flow and capital expenditures and the application of regulatory regimes.
Although the Company 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 the Company 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 reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Certain of these risks are set out in more detail in Petroflow's Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and Petroflow 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.
Note: Boe means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Boe/d means barrel of oil equivalent per day.
In this press release: (i) mcf means thousand cubic feet; (ii) mcf/d means thousand cubic feet per day (iii) bbls means barrels (iv) bbls/d means barrels per day
The TSX has not reviewed and does not accept responsibility
for the adequacy or accuracy of this news release.
SOURCE Petroflow Energy Ltd.