Lightstream Resources Ltd.

Lightstream Resources Ltd.

January 19, 2015 06:00 ET

Lightstream Announces 2014 Production Results and Suspension of Dividend

CALGARY, ALBERTA--(Marketwired - Jan. 19, 2015) - Lightstream Resources Ltd. (the "Company" or "Lightstream") (TSX:LTS) announces year-end 2014 production results with exit rates exceeding guidance. In light of further declines in world oil prices and to preserve financial flexibility, we are immediately suspending our monthly dividend.

Capital Plan and Dividend

As previously outlined in our December 2014 press release, our strategy for 2015 is to adopt a conservative capital and dividend program with the objective of ensuring that our expenditures will be funded through cash flow, without an increase in debt levels. Since that time, WTI oil prices have continued to decline through the beginning of 2015 to levels around US$50/bbl. As a result, we are suspending the dividend effective January 2015. Capital program spending in the first half 2015 will be approximately $95 million with drilling operations focused on our core areas in the Bakken and Cardium. With this size of program and at US $50/bbl for WTI oil, we expect to be cash flow neutral through June 2015. In this low oil price environment, we also expect to realize significant future capital savings through service cost reductions which are not currently reflected in our forecast. We will continue to monitor oil price trends and adjust our capital plan and dividend policy appropriately. We believe these measures are in line with our goal of preserving the financial viability and long term prospectivity of Lightstream.

2014 Production Update

The successful execution of our capital program resulted in a December production exit rate of 37,500 boepd (75% light oil and liquids), surpassing our mid-point guidance expectations by 1,000 boepd. Average production for the fourth quarter was 36,400 boepd (75% light oil and liquids), and after total dispositions in 2014 representing 6,315 boepd, we averaged 40,400 boepd (78% light oil and liquids) for the year, in line with our guidance estimate.

The annual audit of our consolidated financial statements is not yet complete and accordingly all financial and production amounts represent management's estimates which are unaudited and subject to revision.

2014 Net Wells Drilled

Q1 Q2 Q3 Q4 Total
Cardium 25 1 10 15 51
SE Saskatchewan 18 - 8 13 39
Alberta/BC 7 - - 1 8
TOTAL 50 1 18 29 98

Financial Liquidity

We currently have approximately $575 million of available liquidity under our $1.15 billion secured credit facility and are in compliance with its covenants. However, sustained low WTI prices could bring us close to the threshold of a debt-to-EBITDA covenant under the facility before the end of 2015. We will be proactive in managing our debt and will consult with and expect to renegotiate debt terms with our credit facility lenders to avoid any potential covenant issues through the downside of this commodity cycle.

Disposition Activity

Following our successful 2014 disposition program, we recently entered into a purchase and sale agreement to sell royalty and fee title assets for $12.4 million in Alberta and British Columbia. These assets produced 72 boepd (60% gas) in October 2014 and include 35,600 fee title acres. All proceeds of this disposition will be applied to reduce outstanding debt. We will continue to look for further opportunities to divest minor, non-core assets this year and remain committed to monetizing all or a portion of our Bakken business unit over the next 24 months.

Lightstream Resources Ltd. is an oil and gas exploration and production company focused on light oil in the Bakken and Cardium resource plays. We are committed to delivering industry leading operating netbacks, strong cash flows and consistent operating results through leading edge technology applied to a multi-year inventory of existing and emerging resource play opportunities. Our long-term strategy is to efficiently develop our assets and deliver an attractive dividend yield.

Well Counts. All references to well counts are on a net basis.

Forward-Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to our business strategies, plans and objectives; our capital budget for 2015; our annual average production rate for 2015; proposed exploration and development activities (including the number of wells to be drilled, completed and put on production), our drilling prospect inventory, projected capital expenditures, the timing of certain projects, future finding and development costs, planned asset dispositions, future dividend payments, anticipated interest savings, anticipated reduction in capital/service expenses, negotiations with lenders, debt repayment and the sufficiency of our financial resources to fund our operations. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning the success of future drilling, completion, recompletion and development activities, the performance of new and existing wells, prevailing commodity prices and economic conditions, the market for asset dispositions and the ability of counterparties to close on dispositions, the availability and cost of labour and services, timing of pipeline and facilities construction, access to third party facilities and weather and access to drilling locations. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we 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. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to commodity price and exchange rate fluctuations, risks associated with the oil and gas industry in general (e.g., 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 production, costs and expenses, reliance on industry partners and credit providers, risks that asset dispositions cannot be completed, availability of equipment and personnel, uncertainty surrounding timing for drilling and completion activities resulting from weather and other factors, changes in applicable regulatory regimes and health, safety and environmental risks), general economic conditions and the potential for counterparties to be unable to close dispositions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at Except as may be required by applicable securities laws, Lightstream assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Contact Information

  • Lightstream Resources Ltd.
    John D. Wright
    President and Chief Executive Officer

    Lightstream Resources Ltd.
    Peter D. Scott
    Senior Vice President and Chief Financial Officer

    Lightstream Resources Ltd.
    Annie C. Belecki
    General Counsel