Renegade Petroleum Ltd.
TSX VENTURE : RPL

Renegade Petroleum Ltd.

November 29, 2010 09:00 ET

Renegade Petroleum Ltd. Announces Third Quarter 2010 Results and Provides Operational Update

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2010) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Renegade Petroleum Ltd. ("Renegade" or the "Company") (TSX VENTURE:RPL) is pleased to announce it has filed on SEDAR its unaudited consolidated financial statements ("Financial Statements") and management's discussion and analysis ("MD&A") for the quarter ended September 30, 2010. Selected financial and operational information is outlined below and should be read in conjunction with Renegade's Financial Statements and the related MD&A which are available for review at www.renegadepetroleum.com or www.sedar.com.

HIGHLIGHTS FOR Q3 2010

  • Achieved new production records to an average of 1,311 BOE per day for the three months ended September 30, 2010, up 40% over the second quarter of 2010 and 757% over the comparable quarter in 2009. Production for the three months ended September 30, 2010 consisted of 96% light oil and 4% natural gas and natural gas liquids;
  • Increased cash flow from operating activities 296% to $2.0 million or $0.04 per share in the third quarter of 2010 from $0.5 million or $0.10 per share in the third quarter of 2009;
  • Increased funds flow from operations 277% to $1.6 million in the third quarter of 2010 from $0.4 million in the third quarter of 2009;
  • Drilled 19 gross (12.1 net) wells in the third quarter of 2010 with a 87% success rate; and
  • Increased land position by 4,000 gross (3,475 net) acres in each of its core areas in SE Saskatchewan, Dodsland and in North Dakota. In addition, Renegade entered into a farm-in agreement with a private company based in Manitoba for an initial 2,400 gross (1,440 net) acres of land in the heart of the Waskada field and the Pearson field targeting Spearfish production. Renegade has a one well commitment and two well rolling option on the farm-in.

FINANCIAL & OPERATIONAL HIGHLIGHTS

  Three Months Ended
September 30,
      Nine Months Ended
September 30,
     
  2010   2009   % change   2010   2009   % change  
FINANCIAL                        
($000s, except per share amounts)                        
Petroleum and natural gas sales 8,609   752   1,045   18,665   2,047   812  
                         
Funds flow from operations (1) 1,587   421   277   5,728   1,090   426  
- Per share basic (2) 0.03   0.08   (63 ) 0.14   0.22   (36 )
- Per share diluted (2) 0.03   0.08   (63 ) 0.13   0.21   (38 )
                         
Net earnings (loss) (2,688 ) 9   (29,967 ) (5,728 ) (19 ) (30,274 )
- Per share basic (2) (0.05 ) -   n/a   (0.14 ) -   n/a  
- Per share diluted (2)(3) (0.05 ) -   n/a   (0.14 ) -   n/a  
                         
Capital expenditures 19,642   180   10,812   126,324   832   15,083  
Bank debt, net of cash (cash) 28,103   (1,215 ) 2,413   28,103   (1,215 ) 2,413  
Working capital deficit (surplus) 38,437   (188 ) 20,545   38,437   (188 ) 20,545  
OPERATING                        
                         
Production (BOE/d)                        
-Crude oil (bbls per day) 1,262   108   1,069   911   111   721  
-Natural gas (Mcf per day 282   255   11   231   222   4  
-Natural gas liquids (bbls per day) 2   2   -   2   1   100  
-Barrels of oil equivalent (BOE per day) (4) 1,311   155   746   952   149   539  
                         
Average realized price                        
-Crude oil and natural gas liquids ($ per bbl) 73.55   70.72   4   74.41   62.22   20  
-Natural gas ($ per Mcf) 2.42   1.97   23   3.38   2.78   22  
                         
Netback per BOE                        
-Petroleum and natural gas sales ($ per BOE) (4) 71.34   54.02   32   72.30   50.30   44  
-Royalties ($ per BOE) (4) 14.30   7.41   93   11.71   7.51   56  
-Operating expenses ($ per BOE) (4) 28.35   6.26   353   19.48   5.49   255  
-Transportation expenses ($ per BOE) (4) 1.95   1.08   81   2.18   1.24   76  
Operating netback ($ per bbl) 26.77   39.27   (32 ) 38.93   36.06   8  
                         
Common shares outstanding (5) 49,299   5,065       49,299   5,065      
Weighted average shares(5) 49,186   5,065       40,551   5,065      
                         
  1. "Funds flow from operations" should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with Canadian Generally Accepted Accounting Principles as an indicator of Renegade's performance. "Funds flow from operations" represents cash flow from operating activities prior to changes in non-cash working capital and incurred asset retirement expenditures. Renegade also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share.
  2. All references to per share basic and per share diluted amounts reflect the consolidation on January 18, 2010 of all of Renegade's common shares on a ten (10) to one (1) basis.
  3. Due to the anti-dilutive effect of Renegade's net loss for the three months ended September 30, 2010 and the nine months ended September 30, 2010 and 2009, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts.
  4. A conversion ratio of 1 Boe: 6 Mcf has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Boes may be misleading, particularly if used in isolation.
  5. All references to outstanding common share and weighted average common share amounts reflect the consolidation on January 18, 2010 of all of Renegade's common shares on a ten (10) to one (1) basis.

OPERATIONS UPDATE

Despite adverse weather conditions in southeast Saskatchewan during the third quarter, Renegade successfully executed drilling, recompletion and facility maintenance programs achieving record high production levels while improving its facilities to cost effectively process increasing volumes of produced fluids on a go forward basis.

During the quarter the Company spent $19.6 million on capital expenditures consisting of $13.1 million on drilling, completions, well equipping and workovers, $3.9 million on facility upgrades and $2.6 million on land acquisitions and seismic.

Renegade drilled 3.0 gross (3.0 net) Bakken wells in Huntoon, 8.0 (3.5 net) Viking oil wells in Dodsland, 5.0 gross (3.5 net) Mississippian wells in Hastings/Alameda, 1.0 gross (0.5 net) Mississippian well in Florence and 2.0 gross (1.67 net) Mississippian wells in Crystal Hills/Rocanville. In addition, the Company successfully executed 5.0 gross (5.0 net) recompletions in the Hastings field.

Due to the successful acquisition program during the first half of the year, Renegade now operates 24 light oil processing facilities. During the third quarter the Company invested $3.9 million to upgrade and expand the facilities in order to improve the cost effectiveness of handling large volumes of produced fluid typical of production operations in southeast Saskatchewan. Several of the facilities were temporarily shut in and production volumes were re-routed. As a result, higher operating costs were incurred for the quarter. The bulk of the facility maintenance program is complete and Renegade believes the investments to date will improve its operational capability and effectiveness. Renegade is targeting normalized operating costs in the $15/boe to $18/boe range.

The Company is currently evaluating several 3D seismic programs to further understand and delineate several plays including high impact Mississippian targets in southeast Saskatchewan and the Bakken zone in North Dakota.

OUTLOOK

During its high growth phase in 2010, Renegade executed drilling, work over and optimization programs in each of its core areas in southeast Saskatchewan and Dodsland. The Company continually evaluates and assesses its asset base and is focusing capital programs that will provide the highest rates of return for 2011. Renegade has made the necessary investments in its core areas to ensure an efficient and highly profitable production profile during 2011.

In the fourth quarter and extending into the first quarter of 2011, Renegade will focus its drilling program on high impact areas including the Bakken in Huntoon, the Kisby formation in Buffalo Head /Wordsworth, Mississippian targets in the Hastings/Alameda and low risk, predictable opportunities in the Viking oil play in Dodsland. The Company will also commence a drilling program in the heart of the Waskada field in Manitoba targeting the Spearfish light oil play.

In addition, Renegade spud its first well in Renville County, North Dakota subsequent to the quarter end. This well will target multiple light oil zones including the Bakken where Renegade has more than 29,500 gross (15,600 net) acres to exploit upon success.

As a result of operational challenges from unprecedented adverse weather conditions in the third and fourth quarters, the 2010 drilling program will extend into the first quarter of 2011. As a result the Company is working towards achieving its previously announced production targets through the first quarter of 2011. The Company is finalizing its 2011 operational program and budget and anticipates it being completed in early 2011. 

CORPORATE INFORMATION

Renegade's common shares trade on the TSX Venture Exchange under the symbol RPL. Renegade currently has approximately 55.3 million shares outstanding and 62.4 million fully-diluted shares. The Company's presentation can be viewed on its website at www.renegadepetroleum.com.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements. More particularly, this press release contains statements concerning Renegade's capital expenditure program, Renegade's drilling plans, the expected ability of Renegade to execute on its exploration and development program and Renegade's anticipated production (both in terms of quantity and raw attributes).

The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Renegade, including: (i) with respect to capital expenditures, generally, and at particular locations, the availability of adequate and secure sources of funding for Renegade's proposed capital expenditure program and the availability of appropriate opportunities to deploy capital; (ii) with respect to drilling plans, the availability of drilling rigs, expectations and assumptions concerning the success of future drilling and development activities and prevailing commodity prices; (iii) with respect to Renegade's ability to execute on its exploration and development program, the performance of Renegade's personnel, the availability of capital and prevailing commodity prices; and (iv) with respect to anticipated production, the ability to drill and operate wells on an economic basis, the performance of new and existing wells and accounting risks typically associated with oil and gas exploration and production.

Although Renegade believes 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 Renegade 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, the failure to obtain necessary regulatory approvals, 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; health, safety and environmental risks; commodity price and exchange rate fluctuations; and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures).

The forward-looking statements contained in this document are made as of the date hereof and Renegade undertakes no obligation 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.

Neither the 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

  • Renegade Petroleum Ltd.
    Michael Erickson
    President & CEO
    (403) 355-8922
    or
    Renegade Petroleum Ltd.
    Alex Wylie
    Vice-President, Finance & CFO
    (403) 410-3376