Fortaleza Energy Inc.

November 27, 2015 18:21 ET

Fortaleza Announces Third Quarter 2015 Financial and Operating Results

CALGARY, ALBERTA--(Marketwired - Nov. 27, 2015) -


Fortaleza Energy Inc. ("Fortaleza" or the "Corporation") today announces its financial and operating results for the three and nine months ended September 30, 2015. The Corporation's condensed interim consolidated financial statements and management's discussion and analysis for the three and nine months ended September 30, 2015 are available on SEDAR ( under the Corporation's profile.

Financial and Operating Summary

Three months ended September 30, Nine months ended September 30,
($000's except per share amounts) 2015 2014 2015 2014
Natural gas sales - 243 204 813
Royalties - (29 ) (12 ) (110 )
Blending services sales 323 - 1,331 -
Total revenue 323 214 1,523 703
Funds from (used in) operations(1) (513 ) (475 ) (1,884 ) (641 )
Per share - basic and diluted (0.01 ) (0.01 ) (0.02 ) (0.01 )
Net loss (1,254 ) (542 ) (2,555 ) (812 )
Per share - basic and diluted (0.02 ) (0.01 ) (0.03 ) (0.01 )
Working capital (deficiency)(1) (1,397 ) 3,644 (1,397 ) 3,644
Natural gas (Mcf/d) - 410 193 396
Natural gas liquids (bbl/d) - 11 6 11
Total (Mcfe/d) - 477 227 462
Average sales price:
Natural gas ($/Mcf) - 4.42 2.74 5.23
Natural gas liquids ($/bbl) - 73.38 38.20 82.42
Total ($/Mcfe) - 5.53 3.29 6.45
(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.

Operations Update and Outlook

Operations during the third quarter were significantly affected by the continued low level of activity in the Swan Hills area. BlendForce delivered an acid frac system in the first week of September and experienced an increase in sales of production enhancement fluids in the last half of August. The Corporation has continued to rationalize its operation and reduced costs where ever possible. The Corporation is considering installing surface equipment for its water disposal well and potentially begin water disposal activities in the first quarter of 2016 at its Swan Hills facility. 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 2016.

Senior Management and Board of Directors Changes

In an effort to reduce overheads and further streamline operations, Mr. J. Cameron Bailey has tender his resignation as Chief Executive Officer of Fortaleza. Mr. Lance Sauer who has served as Chief Operating Officer of Fortaleza since September 1, 2014 has been appointed Chief Executive Officer. Mr. Bailey will remains as a Director of Fortaleza. Furthermore, Jamie Jeffs has tendered his resignation as Chief Financial Officer of Fortaleza. These management changes became necessary to right size the Corporation due to the significantly reduced business activity. The Corporation would like to thank Mr. Jeffs for his valuable contribution over the ten years he served as Chief Financial Officer.

The Corporation regretfully accepted the resignation of Mr. Donald Leitch who has been a director of Fortaleza since May of 2007. The Corporation would like to thank Mr. Leitch for his wisdom and experience he shared with the Corporation as a Board member over his years of service.

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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