CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) - RMP Energy Inc. ("RMP" or the "Company") (TSX:RMP) today announced financial and operating results for the three months ended June 30, 2011. Detailed financial and operating highlights are as follows:
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Financial
Highlights Three Months Ended June 30, Six Months Ended June 30,
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(thousands except
share and per boe
data) (6:1 oil
equivalent % %
conversion) 2011 2010 Change 2011 2010 Change
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Petroleum and
natural gas
revenue (1) 10,692 11,186 (4) 18,804 23,165 (19)
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Cash flow from
operations (2,3) 4,512 5,631 (20) 8,001 11,988 (33)
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Per share - basic
and diluted 0.06 0.09 (33) 0.11 0.18 (39)
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Net income
(loss)(3) (8,236) (2,166) 280 117 (138) -
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Per share - basic
and diluted (0.11) (0.03) 267 - - -
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E&D capital
expenditures 7,843 9,954 (21) 32,470 30,632 6
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Total capital
expenditures (3) 41,924 10,148 313 55,997 31,184 80
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Net debt (4) -
period end 12,599 43,641 (71) 12,599 43,641 (71)
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Weighted average
basic shares 76,147,439 65,175,706 17 70,995,975 65,175,706 9
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Weighted average
diluted shares 76,147,439 65,175,706 17 70,995,975 65,175,706 9
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Issued and
outstanding
shares (5) 84,258,652 65,175,706 29 84,258,652 65,175,706 29
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Operating
Highlights
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Average daily
production:
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Natural gas
(Mcf/d) 15,153 20,530 (26) 13,820 19,658 (30)
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Liquids (Oil and
NGLs) (Bbls/d) 618 534 16 571 522 9
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Oil equivalent
(boe/d) 3,143 3,956 (21) 2,874 3,798 (24)
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Average sales
price:
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Natural gas
($/Mcf) 4.10 4.42 (7) 4.06 4.87 (17)
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Liquids (Oil &
NGLs) ($/Bbl) 89.60 60.13 49 83.68 61.79 35
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Oil equivalent
($/boe) 37.38 31.07 20 36.15 33.70 7
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Operating expenses
($/boe) 10.53 6.50 62 10.14 8.24 23
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Operating netback
(6) ($/boe) 20.19 19.69 3 19.82 21.14 (6)
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Wells drilled:
gross (net) 1 (1.0) 1 (0.6) - 6 (4.8) 6 (5.1) -
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Notes:
(1) Petroleum and natural gas revenue and pricing includes any realized
hedging gains or losses from commodity contract settlements.
(2) Cash flow from operations or operating cash flow does not have any
standardized meaning prescribed by International Financial Reporting
Standards ("IFRS"). Please refer to the Reader Advisories per below.
(3) Comparative net income, cash flow from operations and total capital
expenditures for the three and six months ended June 30, 2010 has been
restated for the effect of adopting IFRS.
(4) Net debt is not a recognized measure under IFRS. Please refer to the
Reader Advisories per below.
(5) As of August 11, 2011, common shares outstanding were 84.3 million.
(6) Operating netback is not a recognized measure under IFRS. Please refer
to the Reader Advisories per below.
Operations Update
Waskahigan
During the second quarter and to-date in the third quarter, RMP continued with the successful development of its 100% working interest Montney light oil property at Waskahigan in West Central Alberta. In the second quarter, despite an unprecedented wet spring and resulting poor surface access conditions, the Company drilled and recently completed a horizontal well at 12-34-63-23W5. The 12-34 well was drilled to a total measured depth of 3,462 meters with a horizontal section of 1,155 meters in the Montney formation. Completion operations encompassed a 12 stage, 300 tonne fracture stimulation (average 25 tonnes per stage). During a total 69.5 hour clean-up and test, the 12-34 well recovered all of its load fluid and flow tested at a final rate of approximately 880 barrels per day ("bbls/d") of light gravity sweet crude oil and 1.6 million cubic feet per day ("mmcf/d") of associated natural gas for an overall test rate of approximately 1,147 barrels of oil equivalent per day ("boe/d"). Like the previously-drilled Waskahigan oil wells, the 12-34 well qualifies for the Crown's Horizontal Oil New Well royalty rate of 5% for the first 36 months of production, up to a maximum of 80,000 barrels of oil equivalent produced.
During the first part of the third quarter, RMP completed the drilling of a horizontal well at 16-26-63-23W5 with a total measured depth of 3,669 meters, with 1,327 metres of horizontal section. This well is presently awaiting completion with a 16 stage fracture stimulation programmed. The Company is presently drilling its sixth horizontal well (6.0 net) of the year (13-27-63-23W5) and its ninth well (9.0 net) overall in the area.
In the second quarter, the Company produced 545 boe/d, including 293 bbls/d of light crude oil at Waskahigan. Field takeaway is restricted due to pipeline and field compression limitations for associated solution gas in a third-party-operated gathering system. In August, both the 12-34 well and 9-35-63-23W5 well, which tested at 1,480 boe/d, were tied-in into the Company's existing oil battery and gathering system. In spite of the downstream gathering system restriction, these tie-ins are expected to add approximately 500 boe/d to the Company's Waskahigan area production.
RMP will eliminate the field production constraints through the construction of its own Company-operated infrastructure. This significant, strategic infrastructure project will encompass an oil battery, compressor facility and gathering system with initially-designed oil processing capacity of 2,500 bbls/d (4,200 boe/d including associated solution gas). Approximately $3.4 million was incurred in the second quarter ($5.8 million in the first half) relating to the procurement of key, major equipment items and field pipeline and lease preparation work. It is anticipated that this facility will start-up in the fourth quarter of this year.
The Company continues to expand its land holdings at Waskahigan through Crown lands sales and farm-ins. RMP presently holds a substantial acreage position encompassing 38 sections (38.0 net) of acreage. In addition to holding the Montney rights at Waskahigan, the Company also holds the rights to the uphole Nordegg formation, in which other companies have recently disclosed early, initial drilling success. RMP's technical personnel continue to monitor regional Nordegg activity and integrate it into their geological, geochemical and geophysical models and mapping.
Resthaven/Bilbo
Industry is demonstrating success with exploration and development drilling activities into the liquids-rich Montney formation surrounding the Company's Resthaven/Bilbo lands. As a result, recent Crown land sales have garnered strong bid levels in excess of $4,700 per hectare. RMP presently holds 41.25 sections of acreage at Resthaven/Bilbo, including 27.0 net sections of Montney rights.
Operations and Financial Highlights
On May 11, 2011, the Company closed the plan of arrangement and acquisition of RMP Energy Ltd., which provided for the corporate recapitalization and restructuring involving the appointment of a new Management team with a demonstrated history of value creation for its shareholders in addition to a corporate name change to RMP Energy Inc. The acquisition also enhances the combined Company's portfolio of opportunities within the deeper, longer reserve life, West Central Alberta geographic corridor.
Second quarter production averaged 3,143 boe/d, weighted 80% natural gas and 20% light oil and NGLs, representing a 21% increase over the preceding first quarter of 2011. First half 2011 production averaged 2,874 boe/d. The Company is on-track to meet its production targets for 2011 and is presently maintaining its full year production guidance of 3,400 to 3,600 boe/d.
In the second quarter, the Company incurred exploration and development capital expenditures of approximately $7.8 million, including the drilling and completion of one (1.0 net) horizontal well and work-in-progress capital expenditures related to the construction and installation of the Company-owned, strategic oil battery and compression facility at Waskahigan.
Quarter-end net debt amounted to $12.6 million as compared to June 30, 2010 leverage of $43.6 million. The Company has only approximately $10 million presently drawn on its committed, revolving bank facility with a credit limit of $60 million and is projecting to exit the year with net debt between $33 million to $36 million, representing only 55% to 60% of its credit borrowing limit.
For the second quarter, RMP reported cash flow from operations of $4.5 million. The Company's cash flow from operations does not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS"). Cash flow from operations, as disclosed, represents cash flow from operating activities before: expensed corporate acquisition-related costs, decommissioning obligation cash expenditures and changes in non-cash working capital from operating activities. As a result of the acquisition and plan of arrangement with RMP Energy Ltd., approximately $4.9 million of acquisition cash -related costs have been expensed. New IFRS accounting rules require acquisition-related costs incurred by the acquirer to be expensed versus the historical treatment of purchase price capitalization.
The Company's unaudited interim financial statements and associated Management's Discussion and Analysis ("MD&A") for the six month interim period ended June 30, 2011 will be available on RMP's website at www.rmpenergyinc.com within "Investor Relations" under "Financial Reports". Additionally, these documents will be filed, in due course, on the System for Electronic Document Analysis and Retrieval ("SEDAR"). These documents can be retrieved electronically from the SEDAR system by accessing RMP's public filings under "Search for Public Company Documents" within the "Search Database" module at www.sedar.com.
Abbreviations
---------------------------------------------------------------------------- Crude Oil and Natural Gas Liquids Natural Gas and Natural Gas Liquids ---------------------------------------------------------------------------- Bbl barrel Mcf/d thousand cubic feet per day ---------------------------------------------------------------------------- boe barrels of oil equivalent NGLs natural gas liquids ---------------------------------------------------------------------------- Bbls/d barrels per day ---------------------------------------------------------------------------- boe/d barrels of oil equivalent per day ----------------------------------------------------------------------------
Reader Advisories
The information in this news release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry ; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that the Company will derive from them. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.
In this news release, reserves and production data are commonly stated in barrels of oil equivalent ("boe") using a six to one conversion ratio when converting thousands of cubic feet of natural gas ("mcf") to barrels of oil ("bbl") and a one to one conversion ratio for natural gas liquids ("NGLs"). Such conversion may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Any references in this news release to initial and/or final raw test or production rates and/or "flush" production rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company.
As an indicator of the Company's performance, the term cash flow from operations or operating cash flow contained within this news release should not be considered as an alternative to, or more meaningful than, cash flow from operating, financing or investing activities, as determined in accordance with International Financial Reporting Standards ("IFRS"). This term does not have a standardized meaning, nor is it a financial measure, under IFRS. Cash flow from operations is widely accepted as a financial indicator of an exploration and production company's ability to generate cash which is used to internally fund exploration and development activities and to service debt. This measure is widely used by shareholders and investors in the valuation, comparison and investment recommendations of companies within the natural gas and crude oil exploration and production industry. Cash flow from operations, as disclosed within this news release, represents cash flow from operating activities before: expensed corporate acquisition-related costs, decommissioning obligation cash expenditures and changes in non-cash working capital from operating activities. The Company presents cash flow from operations per share whereby per share amounts are calculated consistent with the calculation of earnings per share.
Net debt refers to outstanding bank debt plus working capital deficit (excludes current unrealized amounts pertaining to risk management commodity contracts) plus long-term accounts receivables. Net debt is not a recognized measure under IFRS.
Operating netbacks refers to realized wellhead revenue less royalties, operating expenses and transportation costs per barrel of oil equivalent ("boe").
Contact Information:
Craig Stewart
Executive Chairman
(403) 930-6302
craig.stewart@rmpenergyinc.com
RMP Energy Inc.
John Ferguson
President and Chief Executive Officer
(403) 930-6303
john.ferguson@rmpenergyinc.com
RMP Energy Inc.
Dean Bernhard
Vice President, Finance and Chief Financial Officer
(403) 930-6304
dean.bernhard@rmpenergyinc.com
www.rmpenergyinc.com