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Message: lane Energy Releases 2008 Results
| April 24, 2009 | |
| Culane Energy Releases 2008 Results | |
|
CALGARY, ALBERTA--(Marketwire - April 24, 2009) - Culane Energy Corp. ("Culane") (TSX VENTURE:CLN) announces its financial and operating results for the year ended December 31, 2008. The audited Financial Statements and related Management's Discussion and Analysis, and Statement of Reserves at December 31, 2008 have been filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com and posted on the Company's website at www.culaneenergycorp.com. 2008 Highlights (per share information stated below is based on weighted average - basic outstanding shares) - Gross revenues were $66.3 million for 2008 compared to $38.8 million for 2007, a 71% increase. - Production averaged 2,310 BOE/d for 2008 compared to 2,116 BOE/d for 2007, a 9% increase. The fourth quarter production was 1,787 BOE/d with a mix of 74% oil and 26% natural gas. - Prices for 2008 averaged $89.05 per bbl for oil and $8.63 per Mcf for natural gas compared to 2007 prices of $55.52 per bbl for oil and $6.47 per Mcf of natural gas. - Cash flow was $36.1 million or $1.57 per share for 2008 compared to $19.4 million or $0.94 per share for 2007, an 86% increase in cash flow and a 67% increase in cash flow per share. - Earnings were $9.7 million or $0.42 per share for 2008 compared to $1.3 million or $0.07 per share for 2007. - Fourth quarter production dropped 26% to 1,787 BOE/d from the third quarter production of 2,409 BOE/d due to the loss of 330 BOE/d of shut-in production pending the resolution of regulatory issues, and the balance from declines. Oil prices also fell over 50% from the 2nd and 3rd quarter levels of $106 and $108 per barrel respectively, to $50.20 for the fourth quarter. The combined result was cash flow falling to $2.6 million during the fourth quarter, 7% of the total 2008 cash flow. - A total of 28 wells (net 27.1) were drilled in 2008 (27 in 2007) resulting in 10 producing multi-leg horizontal oil wells, 5 producing gas wells, 9 suspended or standing cased wells waiting further evaluation or development, 2 water injection wells, and 2 abandoned wells. Six wells were drilled in the fourth quarter. - Capital expenditures of $23.4 million were invested in 2008, (97% at Killam) for the drilling and equipping of 28 wells. Another $21.7 million was spent on June 30, 2008 for the acquisition of additional oil and gas properties at Killam. - On April 3, 2008 the Company issued 2,860,000 class A common shares at $7.00 per share for gross proceeds of $20,020,000. - Bank debt plus working capital deficit (net debt) at December 31, 2008 is $13.2 million, down from $23.3 million at December 31, 2007. Debt to annualized cash flow is 1.22 to 1 (based on fourth quarter cash flow), while debt to equity is 0.25 to 1. - The Company has a credit facility of $30 million. The next scheduled review of the credit facility is April 30, 2009. Culane remained very active during the fourth quarter of 2008 completing its horizontal drilling program at Killam. In the fourth quarter of 2008 Culane received regulatory approval to begin water injection in two Lloydminster vertical injection wells drilled and cased in the first quarter of 2008. Culane then applied for facilities licences and subsequently constructed water injection facilities for both these wells. A six month delay in receiving this regulatory approval was caused by an offsetting operator objecting to Culane's application. An agreement is now in place to prevent this situation from occurring again. Culane began injecting water into the two Lloydminster Formation wells on January 9, 2009 and has to date injected approximately 125,000 barrels of water at a rate of 1,250 barrels per day. Culane is closely monitoring fluid levels in all its Killam wells. At this time it is premature to provide any report other than the formation is taking the water. In the first quarter of 2009, Culane drilled and cased an additional 4 Killam vertical injector wells in Section 16-46-12W4M. Culane has submitted applications to the ERCB (Government Regulator) for a full field Killam water flood. Culane anticipates receiving Government approval for the full field water flood by late third quarter or early fourth quarter. Culane will begin construction of its water injection facilities near the end of the third quarter. Once the water injection facilities are constructed and Culane has received the required Government approvals then Culane will be able to increase water injection rates from approximately 1,250 up to 6,000 barrels per day. This will be achieved through a combination of vertical well injectors and converted horizontal wells. When Culane has replaced sufficient reservoir voidage and a clear increase in well fluid levels is observed, Culane intends to introduce surfactant polymer to the water flood based on core testing results of compatable polymers. Existing pool analogies indicate that the addition of surfactant polymer can increase the oil recovery factor to in excess of 40%. Culane is about to begin core testing of compatible polymers for the Killam Lloydminster reservoir and has already conducted fluid compatibility testing at an independent lab. Culane's independent engineering evaluator has completed its evaluation of the Company's reserves as of December 31, 2008. Since the Killam water flood is at such an early stage the evaluator has assigned reserves to only a portion of the recoverable oil indicated by the reservoir simulation. These reserves have been assigned as both Proved and Probable. The evaluator has also assigned Possible reserves (3P) to the surfactant polymer flood and an additional water flood recovery, based on the laboratory work, reservoir simulation and the review of analogous pools. The Proved, Probable and Possible reserves essentially combine for a 20% oil recovery factor. Production in the fourth quarter was 1,787 BOE/d with a mix of 74% oil and 26% natural gas. Fourth quarter production dropped 26% to 1,787 BOE/d from the third quarter production of 2,409 BOE/d, due to the loss of 330 BOE/d of shut-in production pending the resolution of regulatory issues, and the balance from declines. These regulatory issues are being resolved and the Government has recently began approving previously announced shut-in wells to be brought back on production. Gross revenues were $66.3 million for 2008 compared to $38.8 million for 2007, a 71% increase. Bank debt plus working capital deficit (net debt) at December 31, 2008 was $13.6 million down from $23.7 million at December 31, 2007. Debt to annualized cash flow is 1.22 to 1 (based on fourth quarter cash flow) while debt to equity is 0.25 to 1. The Company has a credit facility of $30 million. The next review is April 30, 2009. Reserves All of the reserves of the Corporation were evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") as at December 31, 2008 and have been prepared in accordance with National Instrument ("NI") 51-101. The reserve evaluation has been approved by the Board of Directors of Culane. Company share of remaining reserves - forecast prices and costs
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Reserves
category Natural
Gas
Medium Oil Heavy Oil Sales Gas Liquids Total
(Mbbl) (Mbbl) (MMcf) (Mbbl) (MBOE)
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Gross Net Gross Net Gross Net Gross Net Gross Net
Proved
producing 21.5 16.6 926.0 715.5 1479.7 1167.8 0.4 0.3 1194.5 927.1
Proved
non-
producing 0.0 0.0 180.9 143.6 451.7 366.3 0.0 0.0 256.2 204.7
Proved
undeveloped 0.0 0.0 1021.0 799.7 -146.6 -122.2 0.0 0.0 996.6 779.4
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Total proved 21.5 16.6 2127.9 1658.9 1784.8 1411.9 0.4 0.3 2447.3 1911.1
Probable 5.7 4.1 1918.0 1238.7 1041.5 775.9 1.3 1.1 2098.6 1373.3
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Total proved
plus
probable 27.2 20.7 4046.0 2897.6 2826.3 2187.9 1.7 1.4 4545.9 3284.4
Possible 0.0 0.0 2861.4 1971.2 257.8 183.7 0.0 0.0 2904.3 2001.8
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Total proved
plus
probable
plus
possible 27.2 20.7 6907.3 4868.8 3084.1 2371.5 1.7 1.4 7450.2 5286.2
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Forecast prices Company share of Net Present Value Before Income Taxes ($M)
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Reserves category Discounted (per year) at:
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Undisc 5% 10% 15% 20%
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Proved producing 35,143.4 32,567.7 30,378.4 28,501.6 26,879.4
Proved non-producing 6,386.2 5,979.1 5,584.6 5,218.9 4,886.3
Proved undeveloped 33,081.8 21,033.0 13,525.2 8,639.2 5,339.3
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Total proved 74,611.3 59,579.8 49,488.2 42,359.7 37,105.0
Probable 76,861.0 55,459.1 42,012.0 32,964.2 26,562.0
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Total proved plus
probable 151,472.4 115,038.8 91,500.2 75,323.9 63,667.0
Possible 65,588.3 32,191.4 17,779.5 10,603.3 6,657.0
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Total proved plus
probable plus
possible 217,060.7 147,230.2 109,279.7 85,927.2 70,324.0
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Alberta Bow
McDaniel's Edmonton Par River Alberta
forecast WTI Cushing Price 40 Hardisty AECO spot
pricing Oklahoma degree API Crude Oil price US /
assumptions ($U.S./bbl) ($Cdn./bbl) ($Cdn/bbl) ($Cdn/GJ) Cdn Exchange
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2009 60.00 69.60 54.80 7.40 0.85
2010 71.40 83.00 65.30 8.00 0.88
2011 83.20 91.40 72.00 8.45 0.90
2012 90.20 93.90 73.90 8.80 0.95
2013 97.40 96.30 75.90 9.05 1.00
In 2008, gross proved reserves decreased by 7.4% and gross proved plus probable reserves increased by 1.9% from 2007. The net present value before income tax (discounted at 10%) of gross proved reserves at December 31, 2008 was $49.5 million, a decrease of 31.8% from December 31, 2007, owing primarily to commodity prices. At December 31, 2008, the net present value before income tax (discounted at 10%) of gross proved plus probable reserves was $91.5 million, a decrease of 15.5% year over year. At December 31, 2008, the net present value before income tax (discounted at 10%) of gross proved plus probable plus possible reserves was $109.3 million; there is no available comparison to December 31, 2007, as possible reserves were not assigned last year. All of the reserve increases are attributable to the drilling program and increased reserves for secondary recovery from waterflood, both at Killam, Alberta. Pursuant to NI 51-101, the Reserve category for the majority of Culane's crude oil reserves was changed from medium to heavy to reflect new regulatory classifications for Crown royalty purposes in Alberta, effective January 1, 2009, as defined by the Alberta government under the New Royalty Framework ('NRF'). This resulted in a change in classification from medium to heavy as compared to last year. The Company still considers this medium-gravity crude, using industry-standard guidelines. About Culane Energy Corp. Culane Energy is a junior oil and gas company engaged in the exploration, development and production of oil and natural gas in Alberta. ADVISORY: Certain information regarding Culane in this news release including management's assessment of future plans and operations, timing of drilling and tie-in of wells, productive capacity of the new wells, expected production rates, drilling success rates, dates of commencement of production, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, unexpected decline rates in wells, wells not performing as expected, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. Readers are cautioned that the foregoing list of factors is not exhausted. Additional information on these and other factors that could effect Culane'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). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Culane 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. Disclosure provided herein in respect of barrels of oil equivalent (boe) 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. 23,122,754 Class A Shares |
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