SOURCE: Kicking Horse Energy Inc.

KCK Right Side Logo

May 21, 2015 17:00 ET

Kicking Horse Energy Inc. Announces Financial and Operating Results for the Three Months Ended March 31, 2015

CALGARY, AB--(Marketwired - May 21, 2015) - Kicking Horse Energy Inc. ("Kicking Horse" or the "Company") (TSX VENTURE: KCK) reports its operating and financial results for the three months ended March 31, 2015. The condensed interim consolidated financial statements and notes, as well as Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2015 are available on Kicking Horse's website and have been filed on SEDAR.

Highlights for Three Months Ended March 31, 2015

  • Drilled the 13-23-63-6 W6M well at 100%;
  • Completed and tested the 14-25 and 15-25-63-6 W6M wells, with 84 and 85 respective stages;
  • Began expansion of the 16-7-63-5 W6M compressor and condensate stabilization facility ("16-7 Facility");
  • Constructed approximately 16.5 km of gathering pipelines;
  • At March 31, 2015, the Company had significant "behind pipe" production including: 4 (3 net) wells drilled and completed and 3 (2.5 net) wells drilled awaiting completion; and
  • Production for the three months ended March 31, 2015 increased 262% to 1,924 boe/d over the same period in 2014.

During the quarter ended March 31, 2015, the Company intentionally delayed producing some wells due to third party pipeline expansions, poor commodity pricing and the ongoing 16-7 Facility construction.

Subsequent to the end of the quarter, the third party pipeline constraints have been addressed and the 16-7 Facility expansion has been completed, with the facility being fully commissioned in early May 2015. Since the end of April 2015, 3 previously completed new wells have been brought onto production and the 1-14-63-6 W6M well is expected to be brought online in June 2015. Current production is approximately 4,000 boe/d. The Company intends to begin completion operations on the first of the 3 gross (2.5 net) standing wells in June 2015.

Subsequent to the end of the quarter, the Company has hedged 300 bbl/d of production at $75.05/bbl WTI CAD from June 1, 2015 to December 31, 2015.

Executive Promotion

Kicking Horse is pleased to announce the promotion of Paul Poohkay to Vice President, Drilling and Completions. Paul has been a key contributor to the Company's successes over the past two years.

Outlook

The Company is maintaining its previously announced guidance for 2015 and remains optimistic about its future prospects. Given production delays experienced in Q1 2015, the Company expects its 2015 production to average between 3,200 to 3,700 boe/d and 2015 exit production to be approximately 3,600 to 3,900 boe/d. Capital spending in the second half of the year will remain subject to the ongoing monitoring of oil and natural gas prices, along with a continued focus on maintaining financial flexibility.

Financial and Operating Highlights

              
              
   3 Months   3 Months      
Financial  Ended Mar.   Ended Mar.      
(000s, except per share amounts)  31, 2015   31, 2014   % Change  
Petroleum and natural gas sales  $5,935   $3,742   59 %
Net debt   43,765    3,874   1030 %
Net income (loss)   (1,758 )  1,469   -220 %
 Per share- Basic   (0.03 )  0.08   -138 %
 Per share- Diluted   (0.03 )  0.07   -139 %
Funds from operations(1)  $2,095   $2,266   -8 %
 Per share- Basic   0.03    0.12   -70 %
Capital expenditures  $23,492   $6,627   254 %
Shares outstanding (000s)   60,131    19,184   213 %
Operations               
Average daily production               
 Condensate & Oil (bbls/d)   950    294   223 %
 Other NGLs (bbls/d)   49    -      
 Natural gas (mcf/d)   5,550    1,424   290 %
Combined (boe/d)   1,924    532   262 %
Average prices received               
 Condensate & Oil ($/bbl)  $49.14   $108.74   -55 %
 Other NGLs ($/bbl)   20.82    -      
 Natural gas ($/mcf)   3.29    6.73   -51 %
Combined ($/boe)  $34.28   $78.22   -56 %
 Royalties   (2.12 )  (4.06 ) -48 %
 Operating expense   (7.68 )  (5.81 ) 32 %
 Transportation expense   (6.64 )  (8.11 ) -18 %
Operating netback ($/boe). (2)  $17.84   $60.24   -70 %
            

Notes:

  1. Funds from operations is a non-IFRS measure. The comparable IFRS measure is cash flow from operating activities. A reconciliation of the two measures can be found in the MD&A.
  2. Netback is a non-IFRS measure. Netback per boe is calculated by dividing the revenue and costs in total for the Company by the total production of the Company measured in boe.

About Kicking Horse Energy Inc.

Kicking Horse Energy Inc. is a public oil and gas company which is primarily focused on the development of Alberta's liquids- rich Montney Formation tight gas play. For more information, please see the Company's website: www.kickinghorseenergy.com

ADVISORY ON FORWARD-LOOKING STATEMENTS: This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "continue", "anticipate", "estimate", "may", "will", "should", "believe", "plans", "cautions" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains statements concerning the Company's current standing wells which are awaiting completion and the expected timing to complete; the anticipated timing for bringing the 1-14-63-6 W6M well on production; and the Company's guidance for 2015 and specific guidance for the second half of 2015, including average and 2015 exit production rates and the Company's capital program and capital budget for 2015.

Forward-looking statements or information are based on a number of material factors, expectations or assumptions of Kicking Horse which have been used to develop such statements and information but which may prove to be incorrect. Although Kicking Horse believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Kicking Horse can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. In particular, in addition to other factors and assumptions which may be identified herein, no assurances can be given respecting: whether the Company's exploration and development activities respecting the Deep Basin project will be successful or that material volumes of petroleum and natural gas reserves will be encountered, or if encountered can be produced on a commercial basis; that the results of production tests will be indicative of the long-term performance of the recently drilled wells or of ultimate recovery from the recently drilled wells; the ultimate size and scope of any hydrocarbon bearing formations at the Deep Basin project; that additional drilling operations in the Deep Basin project will be successful such that further development activities in this area is warranted; that Kicking Horse's efforts to raise additional capital will be successful; that Kicking Horse will continue to conduct its operations in a manner consistent with past operations; results from drilling and development activities will be consistent with past operations; the accuracy of the estimates of Kicking Horse's reserve volumes; the general stability of the economic and political environment in which Kicking Horse operates; drilling results; field production rates and decline rates; the general continuance of current industry conditions; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Kicking Horse to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Kicking Horse operates; and the ability of Kicking Horse to successfully market its oil and natural gas products.

Further, events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including, without limitation: changes in commodity prices; changes in the demand for or supply of the Company'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 Kicking Horse or by third party operators of Kicking Horse's properties, increased debt levels or debt service requirements; inaccurate estimation of Kicking Horse's oil and gas reserve and resource volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time-to-time in Kicking Horse's public disclosure documents. Additional information regarding some of these risk factors may be found under "Risk Factors" in the Company's annual MD&A for the period ended December 31, 2014 and in the Company's Annual Information Form, both of which can be found at www.sedar.com. The reader is cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements contained in this press release are made as of the date hereof and Kicking Horse undertakes no obligations 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.

Certain Defined Terms boe - barrels of oil equivalent

boe/d - barrels of oil equivalent per day bbl - barrel

bbls/d - barrels per day mcf - thousand cubic feet

mcf/d - thousand cubic feet per day

ADVISORY ON USE OF "boes": "boes" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (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.

Given that the value ratio based on the current price of crude oil as compared to natural gas 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.

Non-IFRS Measurements: Within this release references are made to terms commonly used in the oil and gas industry. Funds from operations, funds from operations per share and netbacks do not have any standardized meaning under IFRS and are referred to as non-IFRS measures. Funds from operations per share is calculated based on the weighted average number of common shares outstanding consistent with the calculation of net income per share. Operating netbacks equal total petroleum and natural gas sales net of royalties less operating and transportation expenses calculated on a boe basis. Management utilizes these measures to analyze operating performance. The Company's calculation of the non-IFRS measures included herein may differ from the calculation of similar measures by other issuers. Therefore, the Company's non-IFRS measures may not be comparable to other similar measures used by other issuers. Funds from operations is not intended to represent operating profit for the period nor should it be viewed as an alternative to operating profit, net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Non-IFRS measures should only be read in conjunction with the Company's annual audited and interim financial statements. A reconciliation of these measures can be found in the MD&A.

Neither 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 release.

Contact Information