Charger Energy Corp.

Charger Energy Corp.

April 26, 2012 19:26 ET

Charger Energy Corp. Announces 2011 Results

Conversion of natural gas volumes to barrels of oil equivalent (boe) are at 6:1.

CALGARY, ALBERTA--(Marketwire - April 26, 2012) -

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Charger Energy Corp. ("Charger", the "Company") (TSX VENTURE:CHX) announces its 2011 annual financial and operating results for the year ended December 31, 2011. Charger will file audited Financial Statements, Management's Discussion and Analysis and its Annual Information Form incorporating NI51-101 reserves on www.sedar.com and on the Company's website at www.chargerenergy.com on or prior to April 30, 2012.

2011 Charger Standalone

Charger completed a business combination by way of a plan of arrangement ("the Arrangement") on March 6, 2012 that included Seaview Energy Inc. ("Seaview"), a TSX Venture Exchange listed company. The Arrangement was considered a "reverse takeover" transaction under applicable securities legislation. The following presents the activities and results of Charger on a standalone basis for 2011.

Charger Standalone Activities and Results for 2011

  • Initiated two core areas in east central Alberta through farm-in agreements with a major independent producer in the Provost Halkirk and Ghost Pine areas that provide access to 90 net sections of land;
  • Completed second financing for gross proceeds of $30 million;
  • Acquired 29 additional crown sections of land within the two core areas;
  • Initiated a Viking light oil drilling program in the Halkirk -Provost core area in the summer of 2011;
  • Announced strategic four company business combination in November to create a publicly traded company with focused light oil growth potential.

Charger initiated its Viking light oil drilling program in the Halkirk-Provost core area in the third quarter of 2011, drilling 9 (8.75 net) successful Viking horizontal wells prior to year end. A further three horizontal Viking wells were drilled late in the fourth quarter and were completed, equipped and put on production in the first quarter of 2012. Charger's current production from these activities is approximately 520 boe/d. In addition, the Company plans to tie-in approximately 100 boe/d of associated solution gas.

Plan of Arrangement

On March 6, 2012, Charger completed a business combination with Seaview, Silverback Energy Ltd. ("Silverback") and Sirius Energy Inc. ("Sirius") whereby Charger, Silverback and Sirius (all private companies) exchanged all of their issued and outstanding shares for Class A shares of Seaview. On completion of the Arrangement, the resulting entity was renamed Charger Energy Corp. The Class A shares outstanding upon closing of the Arrangement totaled approximately 67.3 million. Additional details concerning the Arrangement are included in the Joint Information Circular of Charger, Seaview, Silverback and Sirius dated February 2, 2012 which is filed on SEDAR at www.sedar.com.

The audited financial statements for the year ended December 31, 2011 and Management's Discussion and Analysis for each of Charger, Seaview, Silverback and Sirius will be posted on the Charger web site and filed on SEDAR on or prior to April 30, 2012.

2012 First Quarter Financial Reporting

As a result of the Arrangement, Charger has become the reporting issuer under applicable securities legislation and results for the first quarter of 2012 will be reported on a standalone basis from January 1 to March 5, 2012. From March 6 to March 31, 2012, the Charger results will incorporate the Arrangement and the combined financial and operating results for the four companies.

Selected Pro Forma Information

The following is selected pro forma information for the four companies involved in the Arrangement and is presented on a combined basis as of December 31, 2011. Additional pro forma reserves data and other information relating to the oil and gas assets of Charger, Seaview, Silverback and Sirius on a combined basis as of December 31, 2012 in accordance with NI 51-101 is included in the Company's Annual Information Form.

Reserves and Net Present Value
Pro Forma Reserves as at December 31, 2011 Total Proved Probable Proved plus Probable
Light & Medium Oil (Mbbl) 2,989 2,461 5,450
Heavy Oil (Mbbl) 422 191 613
Natural Gas Liquids (Mbbl) 493 468 961
Natural Gas (MMcf) 37,820 23,252 61,071
Total Oil Equivalent (Mboe) 10,208 6,996 17,203
BTAX NPV at 10% ($000's) 112,252 64,605 176,857
(1) Reserves as of December 31, 2011 by Sproule, GLJ and Insite using December 31, 2011 Sproule prices.
(2) The Company has adopted the standard of 6 Mcf to 1 boe when converting natural gas to barrels of oil equivalent. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf : 1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Pro Forma Net Debt
Pro Forma Debt and Working Capital
as at December 31, 2011 Charger Seaview Silverback Sirius Total
Debt and Working Capital $ 000's
Bank Debt - 30,962 12,355 4,035 47,352
Net Working Deficit (surplus) (14,958 ) (1,592 ) 2,084 160 (14,306 )
Net Debt(1) (14,958 ) 29,370 14,439 4,195 33,046
(1) The Company uses "Net Debt" which does not have any standardized meaning prescribed by IFRS. The term is used to analyze leverage and capital resources. Net debt includes bank debt, offset by working capital excluding the current portion of future income taxes and financial derivative instruments.
Pro Forma Land Holdings
Land Holdings by Core Area
as at December 31, 2011 Crown Freehold Total Land Held Avg. Working Interest Option Total Land Available
Land by Core Area (net) sections
Halkirk-Provost 121 157 278 91 % 298 576
Ghost Pine 48 1 49 53 % 49 98
Peace River Arch - Wapiti 98 1 99 52 % - 99
Other 48 - 48 70 % - 48
Total Sections (net) sections 314 159 473 77 % 347 820
Total Acres (net) acres 200,640 101,760 302,400 77 % 222,080 524,480
Total Undeveloped Acres (net) acres 132,162 222,080 354,242
Pro Forma Net Asset Value
Pro Forma Net Asset Value(1)
as at December 31, 2011 Total
Net Asset Value $ 000's
P+P BTAX NPV10 176,856
less Net Debt (33,046 )
Undeveloped Land Value(2) 19,824
NAV 163,634
per Share(3) $ 2.43
(1) NAV was calcuated using P+P reserves of Charger, Seaview, Silverback and Sirius discounted at 10 percent as evaluated by Sproule, GLJ and Insite under the standards of NI 51-101 and an internally generated estimate of undeveloped land value. The net asset value is a point in time calculation and is based on various assumptions, including commodity prices and foreign exchange rates that vary over time. It should not be assumed that the NAV represents the fair market value. Forecast prices used in this assessment were the Sproule price forecast as of December 31, 2011. No value was assigned for the Company's proprietary seismic.
(2) Undeveloped land value is based on an internally generated estimate of $150 / acre.
(3) NAV per share is presented on a post-Arrangement basis whereby Charger has 67.3 million shares outstanding.

Outlook - Operations, Production and Viking Development Program Update

Charger's current oil and natural gas production on a combined basis is approximately 3,300 boe/d (32% oil and liquids), excluding approximately 100 boe/d of associated solution gas, expected to be tied-in for the second quarter. During the first quarter of 2012, Charger drilled and completed 2 new Viking horizontal oil wells in the Halkirk-Provost area and completed 3 Viking oil wells that were drilled in the fourth quarter of 2011. Also in the first quarter, the Company participated in 2 (0.66 net) horizontal Doig oil wells in the Peace River Arch area operated by a major producer.

Charger has identified key areas within the Halkirk-Provost Viking play with promising initial results. In the Neutral Hills and Consort areas, the Company has drilled several wells with initial production rates at or above management expectations. As a result of this initial success, development is moving to multi-well pads which are intended to enhance capital efficiencies and to optimize development of the Viking play. The Company is currently drilling 4 infill wells from a pad in Neutral Hills on lands offsetting some of Charger's best wells to date. The Company's Halkirk-Provost lands will also be targeted for infill drilling in 2012 where there are a number of industry wells with above average production rates. Charger has identified approximately 100 sections (64,000 net acres) which are highly prospective for Viking light oil development from its extensive land position in the Halkirk-Provost area.

Like many of its peer group, Charger is currently evaluating the economics of gas properties, and where appropriate, may choose to shut-in some of its gas production.

Charger will focus its capital spending activities primarily in the Halkirk-Provost area for 2012 targeting light oil. In addition, we will continue to evaluate strategic acquisition opportunities and, in conjunction with this strategy, will continue to actively monitor commodity and capital market conditions to prudently manage the producing assets, capital program and financial resources of the Company in the best interest of shareholders. Management may choose to revise its capital program in the context of such evaluation.

Charger's strategy is to grow shareholder value by focusing primarily on acquiring, developing and producing light oil resource plays in Western Canada using horizontal drilling and multi-stage fracturing technology. The Company is pursuing a growth strategy focused on building a large undeveloped land base and drilling inventory through a combination of strategic acquisitions, farm-ins and crown land acquisitions.

About Charger Energy Corp.

Charger is a Calgary, Alberta based crude oil and natural gas company that trades on the TSX Venture Exchange under the symbol "CHX". The Company is committed to maximizing value for its shareholders through successful drilling of internally‐generated light oil prospects and by pursuing strategic property and corporate acquisitions with light oil potential using new completion technology. The Company has operated, high working interest, light oil and natural gas assets in the Halkirk-Provost and Ghost Pine areas of east central Alberta as well as the Peace River Arch area of north western Alberta.

Reader Advisory and Note Regarding Forward Looking Information

This news release contains forward‐looking statements and forward‐looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward‐looking statements or information. Forward‐looking statements and information are often, but not always, identified by the use of words such as "appear", "seek", "anticipate", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. More particularly and without limitation, this news release contains forward‐looking statements and information concerning the expected results of the Arrangement; the Company's petroleum and natural gas production and reserves; drilling opportunities; management team; business strategy; future development and growth opportunities; prospects; asset base; anticipated benefits from the Arrangement; value and debt levels; and capital programs. The forward‐looking statements and information are based on certain key expectations and assumptions made by the management of the Company, including expectations and assumptions concerning prevailing commodity prices and exchange rates, applicable royalty rates and tax laws; future well production rates and reserve volumes; the timing of receipt of regulatory approvals; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services. Although management of the Company believes that the expectations and assumptions on which such forward looking statements and information are based are reasonable, undue reliance should not be placed on the forward‐looking statements and information since no assurance can be given that they will prove to be correct.

Forward-looking information is provided for the purpose of providing information about the current expectations and plans of management of the Company relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Since forward‐looking statements and information 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, the risks associated with the oil and gas industry in general such as 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 reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations, marketing and transportation, loss of markets, environmental risks, competition, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, ability to access sufficient capital from internal and external sources, failure to obtain required regulatory and other approvals and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. There are risks also inherent in the nature of the Arrangement, including failure to realize anticipated synergies or cost savings; risks regarding the integration of the four entities and incorrect assessments of the values of each entity. Accordingly, readers should not place undue reliance on the forward‐looking statements, timelines and information contained in this news release. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward‐looking statements and information contained in this news release are made as of the date hereof and no undertaking is given 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.

This press release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, nor shall there be any sale of securities mentioned in this press release in any state in the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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