PetroBakken Energy Ltd.

PetroBakken Energy Ltd.

March 04, 2010 07:30 ET

PetroBakken Generates Funds Flow From Operations of $173.6 Million and Net Income of $33.4 Million in the Fourth Quarter

CALGARY, ALBERTA--(Marketwire - March 4, 2010) - PetroBakken Energy Ltd. (the "Company" or "PetroBakken") (TSX:PBN) is pleased to announce our fourth quarter and year end 2009 financial and operating results. The fourth quarter results include the results of TriStar Oil & Gas Ltd. ("TriStar") that was acquired on October 1, 2009.


(In this press release annual comparisons are 2009 compared to 2008 and quarterly comparisons are fourth quarter 2009 compared to fourth quarter 2008, unless otherwise noted. Third quarter 2009 results refer to the pro forma PetroBakken results, including TriStar, that were announced on November 10, 2009.)

-- PetroBakken's fourth quarter production averaged 45,621 barrels of oil
equivalent per day ("boepd"), a 10% increase over pro forma third
quarter 2009 production and a 105% increase over the fourth quarter of

-- January 2010 production averaged 43,600 boepd, after the disposition in
December 2009 of approximately 2,000 boepd.

-- Operating netbacks (excluding hedging gains) were $46.68/boe in the
fourth quarter, up from $40.52/boe in the third quarter of 2009, based
on higher commodity prices and lower production expenses.

-- We generated funds flow from operations of $173.6 million ($1.01/share
diluted) in the fourth quarter and $394.8 million ($3.14/share diluted)
in 2009, including one-time acquisition related costs.

-- We recorded net income of $33.4 million ($0.19/share diluted) in the
fourth quarter and $43.4 million (0.34/share diluted) in 2009, including
one-time acquisition related costs.

-- We were active drilling 64.8 net wells in the quarter for a total of
117.3 net wells in 2009, the vast majority of which were drilled in
southeast Saskatchewan.

-- We continue to expand our portfolio of resource-based opportunities and
announced three significant corporate acquisitions in the first quarter
2010. These transactions will establish us as a leading landholder in
the Cardium light oil resource play in Alberta.


The following table provides a summary of PetroBakken's financial and operating results for the three and twelve month periods ended December 31, 2009 and 2008. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") will be available on the Company's website at and on the SEDAR website at

Three months ended Years ended
December 31, December 31,
2009 2008 2009 2008

Financial ($000s, except
where noted)
Oil and natural gas revenue 276,334 121,012 575,588 585,800
Funds flow from operations
(1) 173,566 77,919 394,819 416,628
Per Share - basic ($) 1.01 0.71 3.15 3.79
- diluted ($) 1.01 0.71 3.14 3.79
Net income 33,385 45,111 43,397 186,349
Per Share - basic ($) 0.19 0.41 0.35 1.70
- diluted ($) 0.19 0.41 0.34 1.70
Capital expenditures 177,278 200,186 394,023 545,833
Total assets 4,480,604 1,318,090 4,480,604 1,318,090
Net debt(1) 910,791 406,476 910,791 406,476

Operating netback ($/boe
except where noted)(1)(2)

Oil and NGL revenue ($/bbl)
(3) 71.63 57.71 64.27 92.80
Natural gas revenue ($/mcf)
(3) 4.61 6.86 4.40 8.06
Oil, NGL and natural gas
revenue(3) 65.05 55.90 58.97 86.78
Royalties 10.14 8.62 8.55 10.03
Production expenses 8.23 8.24 7.38 8.76
Operating netback(4) 46.68 39.04 43.04 67.99

Average daily production(2)
Oil and NGL (bbls) 38,796 19,841 22,648 15,369
Natural gas (mcf) 40,951 14,598 22,110 14,436
Total (boe) 45,621 22,274 26,333 17,775
(1) Non-GAAP measure. See "Non-GAAP Measures" section.
(2) Six mcf of natural gas is equivalent to one barrel of oil equivalent
(3) Net of transportation expenses.
(4) Excludes hedging activities.


PetroBakken's financial performance continued to be strong in the fourth quarter with increased production and high operating netbacks due to our light oil focus, resulting in funds flow from operations of $173.6 million ($1.01 per basic and diluted share). Production for the quarter of 45,621 boepd increased 10% over the third quarter of 2009 as our active drilling program in southeast Saskatchewan in the second half of the year resulted in continued light oil production additions. Our operating netback also improved 15% compared to the third quarter of 2009, driven by a 12% increase in realized prices per boe and a 7% reduction in production expenses per boe. Production expenses have fallen as our low-cost southeast Saskatchewan production base continues to grow.

Capital expenditures for the quarter of $177.3 million related mainly to our drilling program, slightly exceeding funds from operations. Net debt was reduced from the third quarter primarily due to a $178.8 million asset disposition. At year-end our financial position remained strong with $144 million of available credit and a bank debt to fourth quarter annualized funds from operations ratio of 1.1 to 1.

Subsequent to year-end, we closed a convertible notes offering with an annual interest rate of 3.125% and a 2016 maturity date for gross proceeds of US$750 million. The proceeds were used to repay all outstanding bank debt. We currently have a $900 million oil and gas reserve-based revolving credit facility that provides financial flexibility to pursue acquisitions and an expanded capital program.


PetroBakken is completing the process of selling non-core assets in Alberta. In addition to the $178.8 million disposition completed in the fourth quarter of 2009, we have closed three additional divestitures in the first quarter of 2010 representing approximately 3,000 boepd (55% natural gas) of production for gross proceeds of $112 million. We expect to close one more asset disposition by the end of March 2010.

PetroBakken closed the acquisition of Berens Energy Ltd. on February 25, 2010 for $343 million including the assumption of bank debt, which was funded from our credit facility. We expect to close the acquisition of Result Energy Inc. on April 1, 2010 and the acquisition of a private oil and gas company by the end of April 2010. The $229.0 million estimated cash portion of these acquisitions will also be funded through our credit facility. These transactions are expected to add 5,800 boepd of production and a Cardium land base of 250 (180 net) sections of land with over 500 net drilling locations.


At year-end 2009, PetroBakken had 171,856,299 common shares, 4,161,500 stock options, 1,971,384 incentive shares and 1,751 deferred common shares outstanding.


PetroBakken announced year end reserves on March 3, 2010. The following highlights and tables include a correction to the opening reserves balances affecting the reported reserves reconciliation and the finding, development and acquisition ("FD&A") costs. The change has no affect on ending reserves or net present values.

-- Proved plus probable ("2P") reserves increased by 141% to 143.6 million
barrels of oil equivalent ("boe") at December 31, 2009.

-- 2009 working interest production was replaced 9.9 times as a result of
increases in reserves from operations and acquisitions.

-- Net present value ("NPV") (before tax, discounted at 10%) of 2P reserves
increased by 145% to $3.7 billion.

-- 2P FD&A costs of $32.48 per boe, including the TriStar Oil & Gas Ltd.
("TriStar") acquisition and changes in future development costs.
Excluding net acquisitions, our 2P finding and development ("F&D") costs
were $33.02 per boe.

PetroBakken Working Interest Reserves(1)
Forecast Prices(2)

Total Oil NGL Natural Gas Total
(mbbl) (mbbl) (mmcf) (mboe)
Proved Developed Producing 48,196 2,256 53,757 59,412
Total Proved 71,629 3,125 88,299 89,470
Proved + Probable (2P) 116,085 5,047 135,035 143,638

(1) Company working interest reserves excluding royalty income reserves and
before deduction of royalties payable.
(2) Based on the Sproule price forecast effective December 31, 2009.

Royalty income volumes are excluded from Company gross reserves noted above but are included in calculating Company net reserves and net present values. Production in 2009 included 540 boepd of royalty income production.

PetroBakken Net Present Value - Before Tax ($ millions)
Forecast Prices
As at December 31, 2009

0% 5% 8% 10% 15%
Proved Developed Producing 3,029.6 2,321.7 2,059.0 1,921.1 1,659.3
Total Proved 4,103.5 3,056.4 2,663.0 2,455.9 2,062.2
Proved + Probable (2P) 7,000.7 4,794.0 4,035.0 3,651.2 2,951.9

PetroBakken Net Present Value - After Tax ($ millions)
Forecast Prices
As at December 31, 2008

0% 5% 8% 10% 15%
Proved Developed Producing 2,675.2 2,064.4 1,837.8 1,718.8 1,493.0
Total Proved 3,450.4 2,586.4 2,261.2 2,089.8 1,763.7
Proved + Probable (2P) 5,552.3 3,859.3 3,269.4 2,969.4 2,419.7

Reserve Reconciliation - Forecast Prices (mboe)

Developed Total Proved +
Producing Proved Probable
PetroBakken reserves at December 31, 2008 26,501 40,465 59,536
2009 production net of royalty interest (9,414) (9,414) (9,414)
Acquisitions 35,319 49,768 78,187
Net additions and revisions 7,006 8,651 15,329
--------------------------- ----- ----- ------
PetroBakken reserves at December 31, 2009 59,412 89,470 143,638

PetroBakken year-over-year increase in
reserves 124% 121% 141%
PetroBakken production replacement 450% 621% 993%

PetroBakken FD&A Costs (1)

Finding & Acquisitions
Development (2) FD&A
Capital expenditures
Capital expenditures 385,911 8,112 394,023
Corporate acquisition
capital (3) - 1,986,728 1,986,728
--------------------- ------- --------- ---------
Total capital 385,911 1,994,840 2,380,751
Change in future development
costs ($000s)
Total Proved 5,302 349,998 355,300
Proved + Probable (2P) 120,322 536,678 657,000

Total costs ($000s)
Total Proved 391,213 2,344,838 2,736,051
Proved + Probable (2P) 506,233 2,531,518 3,037,751

Net reserve additions (mboe)
Total Proved 8,651 49,768 58,419
Proved + Probable (2P) 15,329 78,187(4) 93,516

FD&A costs ($/boe)
Total Proved 45.22 47.12 46.83
Proved + Probable (2P) 33.02 32.38 32.48


(1) The aggregate of the exploration and development costs incurred in the
most recent financial year and the change during that year in estimated
future development costs generally will not reflect total finding and
development costs related to reserve additions for that year.
(2) Includes the acquisition of TriStar and other assets, and the
disposition of approximately 2,000 boepd of assets.
(3) Portion of purchase price allocated to property, plant & equipment and
reflects TriStar net present value as at October 1, 2009 based on 2P
NPV10%, before tax.
(4) 2P acquisition reserve volumes net of dispositions at December 31, 2009
include the effect of the Ante Creek disposition of 7.5 mmboe.


Management of PetroBakken will be holding a conference call for investors, financial analysts, media and any interested persons on Friday, March 5, 2010 at 8:00 a.m. (MST) (10:00 a.m. EST) to discuss PetroBakken fourth quarter financial and operating results.

The investor conference call details are as follows:

Live call dial-in numbers: 416-340-8018 / 866-223-7781

Replay dial-in numbers: 416-695-5800 / 800-408-3053
Replay pass code: 8357216

The live audio webcast link will be available on our website at:

PetroBakken Energy Ltd. is a premier light oil production company combining, high growth, long-life Bakken reserves and production with legacy conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. PetroBakken has a multi-year inventory of Bakken and light oil development locations, along with significant future development opportunities in the Horn River and Montney gas resource plays in northeast BC and the Cardium in Alberta. Our strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield.

Non-GAAP Measures. This press release contains financial terms that are not considered measures under Canadian generally accepted accounting principles ("GAAP"), such as funds flow from operations, net debt and operating netback. These measures are commonly utilized in the oil and gas industry and are considered informative for management and shareholders. Specifically, net debt is used to evaluate financial leverage and includes bank debt plus and accounts payable and accrued liabilities, less current assets. Management considers operating netback important as it is a measure of profitability per barrel of production. Net debt and operating netbacks may not be comparable to those reported by other companies nor should they be viewed as an alternative to net income or other measures of financial performance calculated in accordance with GAAP.

Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Specifically, this press release contains forward-looking statements relating to financial results, results from operations and the timing of certain projects. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be incorrect. Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability, outcome of exploration contract negotiations; the uncertainty of reserve estimates; changes in environmental and other regulations; risks associated with oil and gas operations; and other factors, many of which are beyond the control of the Company. There is no representation by PetroBakken that actual results achieved during the forecast period will be the same in whole or in part as those forecast. Except as may be required by applicable securities laws, PetroBakken assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Contact Information

  • PetroBakken Energy Ltd.
    John D. Wright
    Chairman of the Board of Directors
    and Chief Executive Officer
    (403) 750 4400
    PetroBakken Energy Ltd.
    R. Gregg Smith
    President and Chief Operating Officer
    (403) 750 4400
    PetroBakken Energy Ltd.
    Corey C. Ruttan
    Executive Vice President,
    Chief Financial Officer and Director
    (403) 750 4400
    PetroBakken Energy Ltd.
    Peter D. Scott
    Vice President, Finance
    (403) 750 4400
    PetroBakken Energy Ltd.
    Bill A. Kanters
    Vice President Business Development and Corporate Planning
    (403) 750 4400