Cumberland Oil & Gas Ltd.
TSX VENTURE : COG

April 12, 2011 18:31 ET

Cumberland Oil & Gas Ltd. Financial and Operating Results for the Quarter and Year Ended December 31, 2010

CALGARY, ALBERTA--(Marketwire - April 12, 2011) - Cumberland Oil & Gas Ltd. ("Cumberland" or the "Company") (TSX VENTURE:COG) has filed its audited financial statements and related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2010. Copies of these documents may be obtained under Cumberland's SEDAR profile via the SEDAR website at www.sedar.com or through the Company's website at www.cumberlandltd.com

2010 Financial and Operating Highlights

  • Completed an amalgamation with four (4) Capital Pool Corporations in February 2010, resulting in Cumberland's common shares being listed on the TSX Venture Exchange, under the symbol "COG".
  • Earned a 100 per cent ownership interest in the Valhalla Doe Creek "M" light oil Pool ("Valhalla").
  • Installed water-flood injection facilities at Valhalla and commenced full scale water injection in the fourth quarter.
  • Average annual production for fiscal 2010 of 63 barrels of oil equivalent ("boe") per day.
  • Increased proved plus probable reserves 256% to 559 mboe and proved reserves 140% to 287 mboe (1).
  • Achieved all-in finding and development costs ("F&D") of $15.12 per boe on proved plus probable reserves basis and $22.76 per boe on proved reserves basis (including future development costs and revisions).
  • Increased capital expenditures to $3.0 million from $1.3 million in 2009.
  • Recorded net asset value of $0.35 per diluted share, details of which calculation were set out in the Company's March 24, 2011 news release.
  • Positive working capital of $1.63 million at December 31, 2010.

Note:

  1. More detailed information in respect of the results of Cumberland's independent reserves for the year ended December 31, 2010, as evaluated by McDaniel and Associates Consultants Ltd. ("McDaniel") and related information was contained in Cumberland's news release dated March 24, 2011, and will be contained in Cumberland's annual information form to be filed on or before April 30, 2011. It should not be assumed that the discounted future net revenues estimated by McDaniel represent the fair market value of the reserves.
Three months ended
December 31
Year ended
December 31
Financial2010200920102009
Oil and gas sales155,910132,779759,057439,961
Funds used in operations (1)(340,536)(282,519)(1,095,472)(801,777)
Per basic and diluted share(0.01)(0.01)(0.03)(0.04)
Cash used in operating activites(234,756)(290,079)(1,093,772)(771,185)
Per basic and diluted share(0.01)(0.01)(0.03)(0.04)
Net loss(505,040)(430,511)(1,758,340)(1,216,841)
Per basic and diluted share(0.01)(0.02)(0.05)(0.06)
Capital expenditures, net997,326241,0553,029,6371,300,625
Working capital (2)1,626,6851,170,2401,626,6851,170,240
Weighted average shares
- Basic35,684,31920,738,88732,184,07321,070,755
- Diluted35,684,31920,757,33532,184,07321,005,554

Notes:

  1. Funds used in operations is calculated as cash used in operating activities and adding changes in non-cash working capital, if any. Funds used in operations per share is calculated using the basic and diluted weighted-average number of shares for the period. Funds used in operations and funds used in operations per share are used to analyze Cumberland's operating performance. Funds used in operations and funds used in operations per share do not have standardized measures prescribed by Canadian GAAP and therefore may not be comparable with calculations of similar measures for other companies.
  2. Working capital includes cash and cash equivalents, accounts receivable, deposits and prepaid expenses, and accounts payable and accrued liabilities.
Three months ended
December 31
Year ended
December 31
Operations2010200920102009
Daily production
Crude oil (bbl/d)8-11-
Natural gas (mcf/d)306324311315
Oil equivalent (boe/d @ 6:1)59546352
Average prices
Crude oil ($/bbl)79.46-73.72-
Natural gas ($/mcf)3.594.493.953.83
Oil equivalent ($/boe)28.9626.7633.9722.98
Netback
Operating netback ($/boe) (1)(17.27)10.686.047.74

Note:

  1. Operating netback equals oil and gas sales less royalties, operating expenses and transportation costs, calculated on a boe basis. Operating netback does not have a standardized measure prescribed by Canadian GAAP and therefore may not be comparable with the calculation of similar measures for other companies.

Operations Update and 2011 Outlook

In 2010, the Company successfully completed construction and installation of water-flood facilities at its light oil Valhalla Doe Creek 'M" pool in the Peace River Arch. The Company expects the pool to experience water-flood response during the second half of 2011. The Company was unsuccessful in attracting investment capital to finance conventional oil and gas property acquisitions during 2010. Several accretive acquisition opportunities were identified and conditionally secured with non-binding letters of intent, but the Company was unable to secure the necessary financing to close the acquisitions.

The Company's focus for 2011 will be on developing emerging resource plays on its lands in southwest Saskatchewan and northeast British Columbia. The Company's lands are in close proximity to several resource development projects being undertaken by competitors. Prices paid at recent land sales immediately adjacent to Cumberland's land in these areas, supports the Company's technical thesis in both areas.

In southwest Saskatchewan, the Company is targeting medium gravity oil in the Shaunavon formation. The Company has identified seven (5.2 net) horizontal well locations, with plans to drill up to two (1.4 net) of these locations in 2011. Based on productive analogy from nearby wells, each horizontal well is expected to be capable of producing approximately, 100,000 to 150,000 barrels of oil.

In northeast British Columbia, the Company has four sections of land highly prospective for development of liquids rich natural gas and condensate, in both the Upper and Lower Montney formations. The lands are situated on a well defined structure proximal to recent drilling activity by competitors, are adjacent to infrastructure and afford year round access. In 2011, the Company plans to recomplete an existing cased wellbore to evaluate the productive capability of both the Upper and Lower Montney zones on its land. Both zones are developed in this wellbore and the Company plans to drill a horizontal well in each zone during 2011. The potential exists for up to fourteen (5.6 net) horizontal legs in each zone.

Reader Advisories

Forward-Looking Statements: This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect', "anticipate", "continue", "estimate", "may", "will", "should", "believe", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: the volumes and estimated value of Cumberland's oil and gas reserves; anticipated operational activities; the life of Cumberland's reserves, the volume and product mix of Cumberland's production; future oil and natural gas prices; future liquidity and financial capacity; the total future capital associated with development of reserves and resources; future operating costs, royalty rates and exchange rates.

The recovery and reserve estimates of Cumberland's reserves provided herein are estimates only and there is no guarantee that the estimated reserves or will be recovered. In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of Cumberland which have been used to develop such statements and information but which may prove to be incorrect. Although Cumberland believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Cumberland can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: results from drilling and development activities consistent with past operations and offsetting wells; continued and timely development of infrastructure in areas of new production; availability of debt and equity financing and cash flow to fund Cumberland's current and future plans and expenditures; the impact of increasing competition; stability of the economic and political environment in which Cumberland operates; timely receipt of any required regulatory approvals; ability of Cumberland to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; ability of the operator of the projects in which Cumberland has an interest in to operate the field in a safe, efficient and effective manner; ability of Cumberland to obtain financing on acceptable terms; field production and decline rates; ability to replace and expand oil and gas reserves through acquisition, development and exploration; timing and cost of pipeline, storage and facility construction and expansion and the ability of Cumberland to secure product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes, and environmental matters in the jurisdictions in which Cumberland operates; and the ability of Cumberland to successfully market its oil and natural gas products.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation; changes in commodity prices; changes in the demand for or supply of Cumberland's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Cumberland or by third party operators of Cumberland's properties, inaccurate estimation of Cumberland's oil and gas reserve and resource volumes; limited or a lack of access to capital markets; increased costs; inadequate insurance coverage; impact of competitors and certain other risks detailed from time-to-time in Cumberland's public disclosure documents (including, without limitation, those risks identified in this news release and Cumberland's Annual Information Form).

The forward-looking information and statements contained in this news release speak only as of the date of this news release and Cumberland does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Boe's may be misleading, particularly if used in isolation. A boe conversion 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.

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

Contact Information

  • Cumberland Oil & Gas Ltd.
    Alan MacDonald
    Vice President, Finance and Chief Financial Officer
    (403) 237-0790
    www.cumberlandltd.com