RMP Energy Inc.

RMP Energy Inc.

November 10, 2011 17:30 ET

RMP Energy Announces Third Quarter 2011 Results, Waskahigan Oil Battery Start-Up and Updated Market Guidance

CALGARY, ALBERTA--(Marketwire - Nov. 10, 2011) - RMP Energy Inc. ("RMP" or the "Company") (TSX:RMP) today announced financial and operating results for the three and nine months ended September 30, 2011, and provided an operational update highlighting the start-up of its 100%-owned Waskahigan oil battery and 100% success with its horizontal drilling program. Detailed financial and operating highlights are as follows:

Financial Highlights Three Months Ended Sep. 30 , Nine Months Ended Sep. 30 ,
(thousands except share and per boe data) (6:1 oil equivalent conversion) 2011 2010 % Change 2011 2010 % Change
Petroleum and natural gas revenue (1) 12,233 12,664 (3 ) 31,037 35,830 (13 )
Cash flow from operations (2,3) 4,847 7,796 (38 ) 12,848 19,784 (35 )
Per share - basic and diluted 0.06 0.12 (50 ) 0.17 0.30 (43 )
Net loss (3) (4,111 ) (14 ) 29,264 (3,994 ) (152 ) 2,528
Per share - basic and diluted (0.05 ) (0.00 ) - (0.05 ) (0.00 ) -
E&D capital expenditures 36,006 10,788 234 68,476 41,420 65
Total capital expenditures (3) 36,212 10,932 231 92,209 42,115 119
Net debt (4) - period end 37,822 46,305 (18 ) 37,822 46,305 (18 )
Weighted average basic shares 84,287,173 65,279,181 29 75,475,060 65,210,577 16
Weighted average diluted shares 84,287,173 65,279,181 29 75,475,060 65,210,577 16
Issued and outstanding shares (5) 86,882,547 65,770,977 32 86,882,547 65,770,977 32
Operating Highlights
Average daily production:
Natural gas (Mcf/d) 15,236 18,733 (19 ) 14,297 19,347 (26 )
Liquids (Oil and NGLs) (Bbls/d) 861 818 5 668 621 8
Oil equivalent (boe/d) 3,400 3,940 (14 ) 3,051 3,846 (21 )
Average sales price:
Natural gas ($/Mcf) 4.04 4.54 (11 ) 4.06 4.76 (15 )
Liquids (Oil & NGLs) ($/Bbl) 82.87 64.27 29 83.28 62.89 32
Oil equivalent ($/boe) 39.10 34.94 12 37.26 34.13 9
Operating expenses ($/boe) 10.46 7.58 38 10.26 8.01 28
Operating netback (6) ($/boe) 19.37 24.40 (21 ) 19.65 22.26 (12 )
Wells drilled: gross (net) 5 (4.4 ) 1 (1 ) 400 11 (9.2 ) 7 (6.1 ) 57


  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 loss, cash flow from operations and total capital expenditures for the three and nine months ended September 30, 2010 have 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 November 10, 2011, common shares outstanding were 96.3 million.
  6. Operating netback is not a recognized measure under IFRS. Please refer to the Reader Advisories per below.

Waskahigan Operations Update

The Company is pleased to announce that it's 100%-owned Waskahigan oil battery and compressor facility has been commissioned and is presently operational. The facility has a design capacity of 2,500 bbls/d of oil and 10 MMcf/d of natural gas. This infrastructure provides for the direct connection into both crude oil and natural gas sales pipelines, thus eliminating any trucking requirements.

At Waskahigan, the Company has successfully drilled and completed ten (10.0 net) Montney oil horizontal wells this year and is presently drilling another well. This brings the Company's total wells drilled in Waskahigan area since oil pool discovery in 2010 to fifteen (15.0 net). Two additional (2.0 net) horizontal wells are expected to be drilled by year-end.

Updated 2011 Market Guidance

For 2011, RMP expects to execute a capital budget of approximately $100 million. The Company's average daily production for 2011 is projected at 3,300 boe/d, weighted 26% towards light oil and natural gas liquids. Unplanned third-party gas plant outages at Kaybob during the year has resulted in a slightly reduced 2011 production forecast. As a result of the Company's drilling success at Waskahigan, RMP expects December 2011 monthly production to average about 5,000 boe/d, with a significantly increased weighting towards light crude oil and NGLs of approximately 40%. The Waskahigan delineation and development drilling program will continue to be the primary driver of the Company's production growth.

The Company will provide 2012 market guidance in mid-December of this year, upon review and approval of the 2012 capital budget by the Company's Board of Directors.

Third Quarter Operations and Financial Highlights

Third quarter production averaged 3,400 boe/d, weighted 75% natural gas and 25% light oil and NGLs, representing a 8% increase over the preceding second quarter 2011 output (3,143 boe/d) and a 31% increase over the first quarter 2011 yield (2,602 boe/d). Light oil production from the Company's Waskahigan operations increased 83% from the prior quarter, averaging 536 bbls/d of oil (830 boe/d including solution gas) in the third quarter.

In the third quarter, the Company incurred exploration and development capital expenditures of $36.2 million, including the drilling and completion of five (4.4 net) horizontal wells, capital expenditures related to the construction and installation of the oil battery and compression facility at Waskahigan, and undeveloped land acquisitions.

Quarter-end net debt amounted to $37.8 million as compared to September 30, 2010 net debt of $46.3 million. The Company has approximately $6.0 million presently drawn on its committed, revolving bank facility with a credit limit of $60.0 million. This drawn amount reflects the $6.3 million flow-through equity financing, which closed on September 30, 2011, and the $20.0 million bought-deal common share financing which closed on October 12, 2011.

For the third quarter, RMP reported cash flow from operations of $4.8 million. Cash flow for the quarter was impacted by a prior period Crown charge of approximately $0.7 million, relating to a revised gas plant allocation by the plant operator for the year 2007. The associated additional natural gas and NGL's revenue of approximately $1.7 million has not been recognized nor collected in the third quarter due to a dispute between RMP and the plant operator. RMP has sought legal advise in regards to collection of these funds. 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.

The Company's unaudited interim consolidated financial statements and associated Management's Discussion and Analysis ("MD&A") for the nine month interim period ended September 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.


Crude Oil and Natural Gas Liquids Natural Gas and Natural Gas Liquids
bbl barrel Mcf/d thousand cubic feet per day
Mbbl thousand barrels NGLs natural gas liquids
bbls/d barrels per day MMcf/d million cubic feet per day
boe barrels of oil equivalent Bcf billion cubic feet
Mboe thousand barrels of oil equivalent psi pounds per square inch
boe/d barrels of oil equivalent per day kPa kilopascals

Reader Advisories

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.

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. More particularly and without limitation, this new release contains forward looking information relating to: average production for annual 2011 and December 2011 average monthly production levels and expected capital expenditures for 2011. 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; 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. 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.

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").

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