Charger Energy Corp.

TSX VENTURE : CHX


Charger Energy Corp.

November 12, 2012 07:00 ET

Charger Energy Corp. Announces 2012 Third Quarter Results

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

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2012) -

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Charger Energy Corp. ("Charger", the "Company") (TSX VENTURE:CHX) announces its unaudited interim financial and operating results for the quarter ended September 30, 2012. Charger has filed interim Financial Statements and Management's Discussion and Analysis on www.sedar.com and on the Company's website at www.chargerenergy.com.

Third Quarter 2012

  • Successfully drilled and completed 1 (0.9 net) horizontal Viking light oil well during the quarter at Brownstone in the Halkirk-Provost core area. The Brownstone well was placed on production late in the third quarter and is currently producing approximately 135 boe/d;
  • Completed construction of a 4,000 bbl/d multi-well battery and treating facility at Neutral Hills;
  • Achieved third quarter production of 3,139 boe/d (34% oil and liquids), consistent with second quarter production;
  • Capital spending totalled $6.7 million during the third quarter of 2012, focused primarily on development of the Viking light oil play in the Halkirk-Provost core area where the Company spent approximately $1.7 million to drill, complete and equip the Viking well at Brownstone and $2.6 million on facilities which includes the cost to complete the multi-well battery at Neutral Hills; Also during the quarter, Charger spent approximately $1.0 million for recompletions, workovers and optimizations on the assets the Company acquired in the first quarter; and
  • Generated funds flow from operations during the third quarter of $2.0 million ($0.03 per share).
Selected Financial & Operational Information Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
($000 except per share amounts) 2012 2011 2012 2011
Financial
Petroleum and natural gas sales 9,430 109 22,957 232
Funds flow from (used in) operations(1) 1,997 (174 ) 3,927 (1,021 )
Per share - basic and diluted 0.03 (0.01 ) 0.07 (0.05 )
Net loss and comprehensive loss (3,461 ) (1,382 ) (7,515 ) (3,242 )
Per share - basic and diluted (0.05 ) (0.05 ) (0.13 ) (0.17 )
Capital expenditures (6,711 ) (11,375 ) (25,261 ) (19,183 )
Dispositions - - 4,000 -
Bank debt 58,600 - 58,600 -
Working capital(deficiency)(2) (2,656 ) 14,958 (2,656 ) 14,958
Operational Production
Crude oil and liquids (bbls/d) 1,071 8 868 4
Natural gas (mcf/d) 12,407 185 9,749 151
Oil equivalent (boe/d) 3,139 38 2,493 29
(1) Funds flow from (used in) operations is calculated based on cash flow from operating activities before changes in non-cash working capital, transaction costs, and decommissioning expenditures.
(2) Working capital (deficiency) - excludes the current portion of financial derivative instruments. 2011 comparative figures as at December 31, 2011.

Outlook

Charger drilled and completed 1 (0.9 net) Viking horizontal well at Brownstone which was placed on production late in the third quarter. This well is performing in line with management expectations with current production of approximately 135 boe/d. Charger has achieved improved capital cost efficiencies with the Company's recent long reach Viking horizontal wells costing approximately $1.7 million to drill, complete and equip. The Company believes that further cost efficiencies are achievable with a large scale drilling program incorporating multi-well pads.

To date in the fourth quarter of 2012, Charger has recompleted 1 (0.7 net) vertical well at Wilson Creek by perforating and stimulating the Belly River zone. This well is capable of producing approximately 140 boe/d (94 boe/d net) and is yet to be tied-in. Charger has also recently recompleted 1 vertical Viking gas well in the Drumheller area. The well is currently producing approximately 50 boe/d.

Charger's senior lender has confirmed Charger's revolving credit facility at $65 million. At September 30, 2012, the Company had drawn $58.6 million against this credit line.

Charger's capital program for the remainder of 2012 and 2013 will be directed primarily toward development drilling in the Halkirk-Provost area and low cost workover, recompletion and optimization initiatives where production and cash flow can be added with minimal risk. Charger will continue to manage capital spending in the context of cash flow and available credit lines. The Company continues to evaluate a number of financing, joint venture and other strategic opportunities that will help accelerate Charger's capital program and increase production and cash flow. The company expects 2012 exit production to be approximately 3,000 boe/d with 2012 average production of 2,600 to 2,700 boe/d, recognizing that the business combination did not close until March 6, 2012.

Charger's strategy is to grow shareholder value by focusing primarily on developing and producing Viking light oil primarily in the Halkirk-Provost area of Central Alberta using horizontal drilling and multi-stage fracturing technology.

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.

Barrel of oil equivalents or BOEs 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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

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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