Fortaleza Energy Inc.

August 31, 2015 13:57 ET

Fortaleza Announces Second Quarter 2015 Financial and Operating Results

CALGARY, ALBERTA--(Marketwired - Aug. 31, 2015) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Fortaleza Energy Inc. ("Fortaleza" or the "Corporation") today announces its financial and operating results for the three and six months ended June 30, 2015. The Corporation's condensed interim consolidated financial statements and management's discussion and analysis for the three and six months ended June 30, 2015 are available on the Corporation's website (www.fortalezaenergy.com) or SEDAR (www.sedar.com).

Financial and Operating Summary
Three months ended June 30, Six months ended June 30,
($000's except per share amounts) 2015 2014 2015 2014
Financial
Natural gas sales 90 201 204 570
Royalties (6 ) (27 ) (12 ) (81 )
Blending services sales 41 - 1,008 -
Total revenue 125 174 1,200 489
Funds from (used in) operations (1) (670 ) (178 ) (1,371 ) (166 )
Per share - basic and diluted (0.01 ) (0.00 ) (0.02 ) (0.00 )
Net loss (411 ) (219 ) (1,301 ) (270 )
Per share - basic and diluted (0.01 ) (0.00 ) (0.02 ) (0.00 )
Working capital (deficiency) (1) (860 ) 2,754 (860 ) 2,754
Operations
Production:
Natural gas (Mcf/d) 269 301 291 388
Natural gas liquids (bbl/d) 8 8 8 11
Total (Mcfe/d) 318 347 341 454
Average sales price:
Natural gas ($/Mcf) 2.40 5.15 2.73 5.67
Natural gas liquids ($/bbl) 41.42 86.28 39.42 87.15
Total ($/Mcfe) 3.09 6.28 3.30 6.94
Operating netback (1) ($/Mcfe) 0.01 2.40 (0.21 ) 3.40
(1) The terms "funds from operations", "operating netback" and "working capital" are not recognized measures under IFRS. Management believes that in addition to net income, funds from operations and operating netback are useful supplemental measures as they provide an indication of the results generated by the Corporation's principal business activities before the consideration of how those activities are financed. Investors are cautioned, however, that these measures should not be construed as alternatives to net income determined in accordance with IFRS. The Corporation's method of calculating funds from operations may differ from that of other companies, and, accordingly it may not be comparable to measures used by other companies. The Corporation calculates funds from operations by taking cash flow from operating activities as determined under IFRS before changes in non-cash operating working capital and abandonment expenditures. Operating netback is calculated on a per Mcfe basis taking natural gas sales and deducting royalties, operating expenses and transportation expenses. Working capital is calculated as current assets less current liabilities.

Highlights

Since establishing BlendForce, it has completed the blending and supply of completion fluids for four Beaverhill Lake wells, which are some of the best performing wells in the Swan Hills area. In addition, BlendForce had completed blending and supply of production enhancement fluids, and fluids for spearheads in 15 wells for six operators located as far north as Fort Nelson, BC. The overall new drilling activity levels have been significantly reduced by the lower commodity prices, however, BlendForce has been successful in gaining market share, blending and supplying production enhancement fluids.

The second quarter results were affected by a prolonged spring break up and significantly less drilling and completions activity in the Swan Hills area in the summer months. BlendForce has seen an increase in sales of production enhancement fluids in the last half of August and is delivering an acid frac system in the first week of September. We expect drilling activity in the Swan Hills area requiring acid frac systems to remain relatively steady through to the end of the first quarter 2015.

Natural Gas, Crude Oil and Natural Gas Liquids (NGL) Conversions

Certain crude oil and NGL volumes have been converted to cubic feet equivalent (cfe) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). Cfe may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head.

Caution to Reader

This news release contains forward-looking information, including without limitation statements concerning the BlendForce market outlook. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Fortaleza at the time of preparation, may prove to be incorrect. The actual results achieved in future periods will vary from the information provided herein and the variations may be material.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares of Fortaleza have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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