Parallel Energy Trust

Parallel Energy Trust

August 13, 2012 18:39 ET

Parallel Energy Trust Announces Second Quarter 2012 Financial and Operating Results and Confirms August Distribution

CALGARY, ALBERTA--(Marketwire - Aug. 13, 2012) -


Parallel Energy Trust (TSX:PLT.UN) ("Parallel" or the "Trust") is pleased to report its financial and operating results for the second quarter ended June 30, 2012. Parallel's unaudited interim financial statements and accompanying Management's Discussion and Analysis will be filed shortly on the SEDAR website ( and on the Trust's website at

Highlights for the quarter ended June 30, 2012

  • Parallel closed the acquisition of the remaining 41% of the West Panhandle Field on April 12, with an effective date of April 1. The transaction was financed by the issuance of 8,925,000 units at $7.05 per unit and $63 million of convertible debentures with a 6.5% coupon, plus an advance of approximately US$70 million under the Trust's credit facility.
  • Parallel assumed formal operatorship of the West Panhandle Field on July 1, 2012. With the takeover of operatorship, Parallel now has 14 employees in the Tulsa corporate office and 37 employees in the field.
  • Production for the three month period ended June 30, 2012 averaged 6,790 boe/day for the Trust's 100% interest in the property, an increase of 3% over average production for the field in the first quarter of 2012. Exit production for the quarter was approximately 7,000 boe/day based on field data.
  • Twelve wells were drilled during the quarter. All wells are currently on production.
  • Parallel completed additional commodity price hedges during the quarter and currently has approximately 70% of net revenue hedged through to the end of 2013. The mark-to-market value of Parallel's commodity price hedges was $9.2 million at June 30, 2012.
  • Funds from operations was $10.6 million, an increase of 25% from the first quarter of 2012 as lower commodity prices partially offset the additional 41% interest in the property acquired effective April 1.
  • Distributions announced during the quarter totaled $0.24 per unit. The distributions per unit were $0.08 per month for April, May and June.
Quarter ended
Summary of Operating and Financial Results June 30 ,2012
($000s except were indicated)
Natural gas (mcf/day) 14,297
Condensate (bbls/day) 1,505
NGLs (bbls/day) 2,902
Total (@6:1) (boe/day) 6,790
Revenue, net of royalties 19,260
Funds from operations (1) 10,625
Net income 22,198
Distributions 12,063
Capital expenditures (excluding purchase of 41% interest in property) 7,897
Working capital (1,748 )
Bank loan (C$ equivalent of US$ debt) 133,594
Convertible Debentures 63,000
Unitholder's equity 395,612
(1) Non-GAAP measure. Readers are referred to Advisories at the end of the press release for additional information.

Parallel's cash flow continues to be impacted by low commodity prices, particularly for natural gas liquids, which deteriorated markedly in the second quarter. As a result, Parallel has decided to release one of its two rigs and is currently estimating drilling 37 wells during 2012 as compared to the previous estimate of 44 wells. With the reduction to one rig and the results to date, the Trust is reducing its expected production for the April 2012 to March 2013 period from a range of 7,300 to 7,700 boe/day to a range of 7,000 to 7,400 boe/day. This revised guidance represents an estimated 2012 exit rate of 7,200 boe/day.

Parallel has recently been advised that there will be a curtailment of all gas plants that produce into certain segments of the third party owned and operated pipeline through which the gas from the Carson field is flowed, while regulatory testing of the pipeline is completed. The operator has estimated that the testing will be completed by mid to late September. This curtailment will result in the production from the Carson field being reduced by up to 2/3 of its current level. There is no certainty as to the duration and amount of the curtailment, however, Parallel estimates that it could reduce production by up to 3,000 boe/day for a six week period. Assuming that production was curtailed for this amount and duration, it would reduce the Trust's full year average production by approximately 350 boe/day. Given the uncertainty as to the duration and amount of the curtailment, it is not currently reflected in the revised production guidance.

"We are very pleased with the performance of our assets in the second quarter," said Dennis Feuchuk, CEO of the Trust. "Our initiatives to improve the reliability of our production - one of our primary objectives in 2012 - continue to bear fruit. In particular, the installation of new coolers in the Carson field after the end of the second quarter should result in lower condensate production losses in the hotter months of the year. This makes the curtailment of our production from the Carson field particularly disappointing; however, this is only a short-term issue. It will not impact our strategy or the value created from the acquisition of the 41% interest in the West Panhandle Field completed in April. With respect to our distributions, we believe that our current level is sustainable given historical commodity prices, especially the ratio of natural gas liquids to oil prices. We continue to monitor those commodity prices and we would re-evaluate our current capital and distribution levels if it appeared that commodity prices were not expected to recover to historical levels in the medium to long term. In the meantime, we believe that we can maintain our current distribution through selective capital reductions and the Trust's distribution re-investment program."

The Trust also confirms that its cash distribution to be paid on September 21, 2012, in respect of the period from and including August 1, 2012 to August 31, 2012, to unitholders of record on August 31, 2012 will be $0.08 per trust unit. The ex-distribution date is August 29, 2012.


Parallel's objectives are to create stable, consistent returns for investors through the acquisition and development of conventional oil and natural gas reserves and production with unexploited low risk potential in certain regions of the United States, and to pay out a portion of available cash to holders of trust units on a monthly basis. The trust units of Parallel are listed on the Toronto Stock Exchange under the symbol "PLT.UN" and the debentures are listed on the TSX under the symbol "PLT.DB".

Parallel is a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). Further information relating to Parallel is set out in Parallel's annual information form dated March 21, 2012, which may be obtained on the SEDAR website at under Parallel's profile.


Forward-Looking Information

This news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Parallel, including, without limitation, those listed under "Risk Factors" in Parallel's annual information form dated March 21, 2012 (collectively, "forward-looking information"). Forward-looking information in this news release includes, but is not limited to, Parallel's objectives and status as a mutual fund trust and not a SIFT trust, Parallel's expectations and estimates regarding capital expenditure plans, current and future production rates, commodity prices and foreign exchange rates, funds from operations and distributions. Parallel cautions investors in Parallel's securities about important factors that could cause Parallel's actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that the expectations set out in Parallel's final prospectus or herein will prove to be correct and accordingly, prospective investors should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this press release and Parallel does not assume any obligation to update or revise them to reflect new events or circumstances.

In this news release, Parallel and its subsidiaries are referred to collectively as the "Trust" or "Parallel" for purposes of convenience.

Non-GAAP Measures

This press release contains the term "funds from operations". This term is not a recognized measure under Canadian generally accepted accounting principles (GAAP). Parallel believes that in addition to net income, funds from operations is a useful supplemental measurement. Funds from operations provides an indication of the funds generated by the Trust's principal business activities and is defined as "cash from operating activities" prior to workovers and "change in non-cash working capital related to operating activities" in the Statement of Cash Flows.

Oil and Gas Measures and Definitions

This press release contains disclosure expressed as "boe" and "boe/day". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily.

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