RedWater Energy Corp.

TSX VENTURE : RED


RedWater Energy Corp.

May 01, 2014 08:47 ET

RedWater Announces Financial and Operating Results for the Three and Twelve Months Ended December 31, 2013

OKOTOKS, ALBERTA--(Marketwired - May 1, 2014) - RedWater Energy Corp. ("RedWater") (TSX VENTURE:RED) is pleased to report financial and operating results for the three and twelve month periods ended December 31, 2013. RedWater's audited financial statements and related management's discussion and analysis for the three and twelve months ended December 31, 2013 have been filed and are available on the SEDAR website at www.sedar.com and may also be obtained on RedWater's website at www.redwaterenergy.com.

Highlights

  • Increased average production to 270 boepd, an increase of 82% over the comparable fourth quarter of 2012

  • Improved average oil production to 154 bbls/d, an increase 48% over the fourth quarter of 2012

  • Total revenue (net of royalties) increased 72% to $3,785,963 for the 12 months ended December 31, 2013 versus $2,196,769 for the 12 months ended December 31, 2012.

  • Significantly increased reserves

    • Proved reserves increased 220% to approximately $18.2 million @ NPV 10%

    • Proved and Probable reserves increased 163% to approximately $25.7 million @ NPV 10%

Three Months Ended
December 31,
Twelve Months Ended
December 31,
2013 2012 2013 2012
Operations
Production
Oil (bbls/d) 154 104 129 88
Natural Gas (Mcf/d) 698 263 635 188
BOEPD 270 148 235 119
Average Selling Price
Oil ($/bbls) $ 70.64 $ 71.23 $ 78.98 $ 71.36
Natural Gas ($/Mcf) 3.35 3.07 3.14 2.47
BOE ($/BOE) $ 49.00 $ 55.61 $ 51.93 $ 56.49
Operating Netback ($/BOE) $ 5.39 $ 15.68 $ 15.96 $ 16.25
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2013 2012 2013 2012
Financial
Petroleum and Natural Gas Revenues, net of royalties
976,206

686,889

3,785,662

2,196,769
Fund Flow from Operations (211,650 ) (87,272 ) (89,774 ) (332,493 )
Per Share, Basic & Diluted (0.01 ) 0.00 0.00 (0.01 )
Income (loss) (785,738 ) (292,416 ) (1,528,667 ) (921,650 )
Per Share, Basic & Diluted (0.02 ) (0.01 ) (0.04 ) (0.03 )
Capital Expenditures 972,813 1,926,739 4,609,889 3,730,798
Total Assets 19,576,162 14,707,325 19,576,162 14,707,325
Shareholders' Equity 6,717,310 7,566,686 6,717,310 7,566,686
Common Shares Outstanding
Basic 40,233,250 34,840,152 40,233,250 34,840,152
Diluted 40,233,250 34,840,152 40,233,250 34,840,152
Share Trading
High 0.13 0.20 0.19 0.32
Low 0.07 0.11 0.07 0.11
Close 0.08 0.15 0.08 0.15
Trading Volume 1,074,430 643,115 5,596,730 2,945,537

Reserves

RedWater significantly increased proved and probable reserves over the previous year. Proved reserves increased 220% while proved and probable reserves increased by 163%. The additions are the result of new discoveries, production optimization and an acquisition at Norris.

December 31, 2013 Company Share of Reserves (Net) (1) Company Share of Net Present Value
(Before Income Tax)
(1)
Reserves Category Oil
Net
Mbbl
Heavy Oil
Net Mbbl
Natural Gas
Net MMcf
Total
Net
Mboe
@10%
($M)
@15%
($M)
PROVED
Producing 127 154 908 432 8,693 7,895
Developed Nonproducing 35 24 1,028 231 2,382 1,776
Undeveloped 108 252 10 362 7,136 4,352
TOTAL PROVED 270 430 1,924 1,025 18,211 13,387
TOTAL PROBABLE 94 165 824 396 7,518 5,013
TOTAL PROVED PLUS PROBABLE 365 595 2,769 1,422 25,729 21,512
December 31, 2012 Company Share of Reserves (Net) (1) Company Share of Net Present Value
(Before Income Tax)
(1)
Reserves Category Oil
Net
Mbbl
Heavy Oil
Net Mbbl
Natural Gas
Net MMcf
Total
Net
Mboe
@10%
($M)
@15%
($M)
PROVED
Producing 48 41 305 140 2,261 1,924
Developed Nonproducing 33 0 508 119 1,533 1,273
Undeveloped 120 70 0 190 1,896 1,002
TOTAL PROVED 201 111 814 449 5,690 4,199
TOTAL PROBABLE 191 40 397 298 4,090 2,617
TOTAL PROVED PLUS PROBABLE 392 151 1,211 747 9,780 6,816
(1) GLJ Petroleum Consultants (GLJ), Evaluation of Oil and Gas Reserves Based on Forecast Prices and Costs as of December 31, 2013

Operational Review

2013 was a significant year for RedWater. RedWater exited the fourth quarter with daily average production of 270 boepd. Production was 57% oil weighted for the fourth quarter. Management has continued to focus on optimizing daily production. We completed the acquisition of the Norris properties on January 31, 2013 for $2.3 million. In addition the Company drilled 2 wells and re-completed 7 wells in 2013.

RedWater will continue to accelerate the development of its existing properties in 2014, targeting those properties with the highest risk/return profiles. We have identified a solid inventory of near term drilling, tie-in and re-completion opportunities which will be the focus in 2014. Management continues to review acquisition opportunities that fit within our core areas of Redwater and Westlock.

Business of RedWater Energy Corp.

RedWater Energy Corp. is an emerging oil and gas exploration and development company. RedWater is engaged in the acquisition, enhancement and exploration of conventional oil and gas projects in Western Canada with a focus on developing high working interest light oil opportunities. RedWater's core properties are located in Redwater, Norris, Westlock, Fairydell-Bon Accord and Panny areas of Alberta. www.redwaterenergy.com.

Cautionary Statements

Forward-looking information and statements

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains forward-looking information and statements pertaining to the following; the timing for completion and equipping of wells; the volume and product mix of RedWater's oil and gas production and its ability to develop RedWater's oil resource properties, the use of the RedWater's cash flow from operations and expanded credit facilities; the number of wells to be drilled and potential development drilling and number of potential oil development locations.

In addition, forward-looking statements or information are based on a number of material factors, expectations or assumptions of RedWater which have been used to develop such statements and information but which may prove to be incorrect. Although RedWater believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because RedWater can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: results from drilling and development activities consistent with past operations; the continued and timely development of infrastructure in areas of new production; continued availability of debt and equity financing and cash flow to fund RedWater's current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which RedWater operates; the timely receipt of any required regulatory approvals; the ability of RedWater to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which RedWater has an interest in to operate the field in a safe, efficient and effective manner; the ability of RedWater to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and expansion and the ability of RedWater 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 RedWater operates; the ability of RedWater to successfully market its oil and natural gas products that all necessary regulatory approvals will be obtained as and when required, that there will be no material adverse change in RedWater's affairs or laws, rules or regulations relating to RedWater, its securities or business, there will be no regulatory proceedings involving RedWater or any of its directors or officers, or any cease trade or other order prohibiting or restricting trading in RedWater's securities, no major national or international event will have occurred that has or would reasonably be expected to have a material adverse effect on financial markets or the business, operations or affairs of RedWater.

The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statement, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward-looking information or statements including, without limitation: changes in commodity prices; changes in the demand for or supply of RedWater'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 RedWater or by third party operators of RedWater's properties, increased debt levels or debt service requirements; inaccurate estimation of RedWater's oil and gas reserve and resource volumes; limited, unfavorable 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 RedWater's public disclosure documents, (including, without limitation, those risks identified in this news release and RedWater's public company documents filed on SEDAR).

The forward-looking information and statements contained in this news release speak only as of the date of this news release, and RedWater does not assume any obligation to publicly update or revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Funds flow from operations are not measures that have any standardized meaning prescribed by IFRS or Canadian GAAP and accordingly are referred to as non - GAAP measures. Therefore, these measures may not be comparable to similar measures presented by other issuers. These measures have been described and presented here and in our MD&A in order to provide shareholders and potential investors with additional information regarding Redwater's liquidity and its ability to generate funds to finance its operations. Management utilizes "Funds flow from operations" as a key measure to assess the ability of RedWater to finance operating activities and capital activities. All references to funds flow from operations throughout this report are calculated based on cash flows from operating activities before changes in non-cash working capital. Cash flows from operating activities are the closest comparable figure which is calculated in accordance with IFRS and Canadian GAAP.

BOE Equivalent

Barrel of oil equivalents or BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 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.

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