Shoreline Energy Corp.
TSX : SEQ

Shoreline Energy Corp.

March 30, 2012 21:59 ET

Shoreline Energy Corp. Releases 2011 Fourth Quarter and Year-End Financial Results and Files Year End Reports

CALGARY, ALBERTA--(Marketwire - March 30, 2012) - Shoreline Energy Corp. ("Shoreline" or the "Company") (TSX:SEQ) announces its 2011 audited financial statements and management's discussion and analysis ("MD&A") and information relating to its 2011 fourth quarter as well as its year-end financial results. Shoreline's 2011 year-end financial statements, MD&A, and Annual Information Form ("AIF") may be obtained at www.sedar.com or via the Company's website at www.shorelineenergy.ca, and should be read in conjunction with the contents of this press release.

2011 Overview

Shoreline has delivered on its business plan throughout 2011 by executing on a number of fronts, including; its initial public offering; first production acquisition; implementation of a shareholder dividend policy; completion of a successful phase one capital program which added oil weighted production and reserves with top quartile capital efficiency. In addition the Company acquired three private companies in the fourth quarter, significantly increasing its production and land base in the Peace River Arch area of northwestern Alberta.

These operations doubled the Company's production levels in the eight months since the IPO, and have begun to balance the Company's product mix, while increasing Shorelines project inventory from which the company plans to create shareholder value. Shoreline will continue to focus on increasing its oil weighting, cash flow, and dividend coverage through deployment of capital into lower risk oil weighted development opportunities, and by employing horizontal drilling technology to increase light oil recovery from existing reservoirs on Shoreline's land base.

2011 Financial Highlights

Shoreline is pleased to report the following financial highlights during 2011:

  • Revenue from petroleum and Natural gas sales of $3.75 million dollars in the fourth quarter, an increase of 28% when compared to $2.93 in the third quarter of 2011.
  • At the end of the fourth quarter the Company paid its second quarterly dividend of $0.20 per share.
  • Average production increased 29% to 1,159 barrels of oil equivalent (BOE, using 6 mcf:1 BOE conversion) per day in the fourth quarter of 2011 from 895 BOE/D in the third quarter of 2011.
  • Estimated year-end exit production of approximately 1,600 BOE/D, (25% oil and natural gas liquids, 75% natural gas).
  • Issued $0.40 per share in 2011 dividends, and subsequently declared a $0.20 per share dividend for Q1 2012.
  • Operating netback of $13.13 per BOE.

2011 Year End Financial Summary

Financial ($'s except for per share amounts) Year Ended
2011 (1) 2010
Revenue, net of royalties 6,894,505 21,418
Net earnings (loss) (13,065,699 ) 37,970,592
Per share basic & diluted(2) (4.68 ) 379,706
Funds from operations(3) 1,472,777 (979,509 )
Per share basic & diluted(3) 0.53 -
Total assets 70,658,402 8,433
Non-current liabilities 20,507,075 -
Dividends declared 1,894,268 -
Dividends declared per share (full amount) 0.40 -
Capital expenditures 6,272,628 -
Acquisitions 52,141,308 -
Reserves
Total proved (mboe)(4) 3,749 -
Total proved plus probable (mboe)(4) 5,181 -
Undeveloped land - gross (acres) 68,457 -
Undeveloped land - net (acres) 44,988 -
Operating
Production(1)(5)
Crude oil & NGLs (bbls per day) 173 -
Natural gas (mcf per day) 4,233 -
Combined (boe per day) 967 -
Netback ($ per boe)
Petroleum and natural gas sales 35.03 -
Royalties (5.93 ) -
Operating expenses (10.83 ) -
Transportation expenses (4.04 ) -
Operating netback 14.23 -
Common Shares
Shares outstanding, end of year 5,640,882 100
Weighted average common shares - basic & diluted(2) 2,791,045 100
(1) On February 25, 2011, the Company reorganized to become a petroleum and natural gas exploration and production company. Prior to that date and from May 11, 2005 the Company was incorporated and operated as a mutual fund corporation. On April 29, 2011 the Company acquired oil and natural gas producing assets which is reflected in the year end December 31, 2011 financial results.
(2) The effect of outstanding options and warrants on loss per share for the period ended December 31, 2011 is anti-dilutive.
(3) See "Non-GAAP Terms".
(4) Working interest reserves as evaluated by GLJ for the year-end 2011 are based on forecast prices and costs.
(5) The Company initiated production from its petroleum and natural gas producing assets as of May 1, 2011, thus production data has been prorated to reflect 245 days for boe per day calculations.

Summary of 2011 Quarterly Results

(C$000s, except per share and boe amounts) 2011 Q4 2011 Q3 2011 Q2 2011 Q1
Average production (boepd) 1,159 895 791 0
Petroleum & natural gas sales 3,746 2,928 1,626 0
Net revenue 3,044 2,436 1,414 0
Net income (loss) (12,270 ) (320 ) (476 ) 0
Per share - basic and diluted(1) (2.85 ) (0.08 ) (0.18 ) 0
Cash flow from (used in operations 283 519 (207 ) 0
Funds from (used in) operations(2) 370 740 363 0
Per Share - basic and diluted(1)(2) 0.08 0.19 0.14 0
Capital Expenditures 4,240 1,402 631 0
Acquisitions 24,692 (648 ) 28,098 0
Dispositions 0 0 0 0
Working capital (10,898 ) 6,171 7,200 0
Total assets 70,658 39,622 40,135 8
Shareholders' equity 34,758 32,638 33,817 (13 )
Dividends 1,128
766
0
0
Shares outstanding, end of period (,000) 5,641 3,830 3,830 0.1
Notes
(1) As at December 31, 2011 there were 383,000 options outstanding and 5,592,032 warrants outstanding that were not included in the calculation of weighted average shares outstanding as the effect would be anti-dilutive.
(2) See "Non-IFRS Terms" as defined in the Company's MD&A.

2012 Outlook

The Company is pleased with oil development activities performed to date in its' core Peace River Arch operating area, and intends to continue to deploy capital into similar lower risk oil projects. In response to the drop in natural gas prices, Shoreline is shifting more of its capital expenditures towards internally generated oil opportunities. While the Company is susceptible to continued weakness in natural gas prices, the increases in oil reserves and production coupled with Shoreline's relatively low operating costs on a large portion its natural gas production serve to partially mitigate this effect. With continued strength in oil pricing, as well as success in the field, and despite weak natural gas prices Shoreline anticipates that its 2012 net operating income will exceed 2011 levels. The Company continues to evaluate acquisition opportunities in its core area, as well as accretive transactions which could see an expansion outside of our existing core area.

Annual Meeting of Shareholders

Shoreline's Annual General Meeting of Shareholders is scheduled for Thursday June 14, 2012 at 2:30 p.m., Calgary Time, at the Calgary Petroleum Club, 319-5 Avenue S.W., Calgary, Alberta.

Investor Information

Currently, Shoreline has 5,640,882 common shares outstanding. Shoreline is a Calgary, Alberta based company engaged in the exploration, development and production of petroleum and natural gas. Shoreline offers investors a combination of value growth via lower risk development of additional oil and gas reserves and production on its current lands, as well as through a quarterly dividend. The Company's common shares are currently listed on the TSX under the trading symbol "SEQ." Additional information regarding Shoreline is available under the company's profile at www.sedar.com or at the company's website, www.shorelineenergy.ca.

Forward Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Company's plans and other aspects of the Company's anticipated future operations, strategies, financial and operating results and business opportunities. These forward-looking statements may include opinions, assumptions, estimates, management's assessment of value, reserves, future plans and operations.

Forward-looking statements typically use words such as "will," "anticipate," "believe," "estimate," "expect," "intend," "may," "project," "should," "plan," and similar expressions suggesting future outcomes, and include statements that actions, events or conditions "may," "would," "could," or "will" be taken or occur in the future. The forward-looking statements are based on various assumptions including expectations regarding the success of current or future drill wells; the outlook for petroleum and natural gas prices; estimated amounts and timing of capital expenditures; estimates of future production; assumptions concerning the timing of regulatory approvals; the state of the economy and the exploration and production business; results of operations; business prospects and opportunities; future exchange and interest rates; the Company's ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Company to access capital and credit. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements are subject to a wide range of assumptions, known and unknown risks and uncertainties and other factors that contribute to the possibility that the predicted outcome will not occur, including, without limitation: risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation; loss of markets; volatility of commodities prices; currency fluctuations; imprecision of reserves estimates; environmental risks; competition from other producers; inability to retain drilling rigs and other services; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; general economic conditions; delays resulting from or inability to obtain required regulatory approvals and to satisfy various closing conditions; and ability to access sufficient capital from internal and external sources. Readers are cautioned that the foregoing list of factors is not exhaustive.
Although Shoreline believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements and you should not rely unduly on forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by applicable law, Shoreline does not undertake any obligation to publicly update or revise any forward-looking statements.

Note Regarding BOEs

The term barrel of oil equivalent ("BOE") or MCFe may be misleading, particularly if used in isolation. A conversion ratio for gas of 6 MCF : 1 BOE is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Note Regarding Non-GAAP Financial Measures

Funds from operations and operating netback are not recognized measures under IFRS as issued by the International Accounting Standards Board. Management believes that in addition to net earnings, funds from operations and operating netback are useful supplemental measures as they demonstrate the Company's ability to generate the cash necessary to fund future growth through capital investment or repay debt if incurred in future periods. Investors are cautioned, however, that these measures should not be construed as an alternative to cash flow from operating activities or net earnings determined in accordance with IFRS as an indication of the Company's performance. The Company's method of calculating these measures may differ from other entities and, accordingly, they may not be comparable to measures used by other entities. For these purposes, the Company defines funds from operations as cash flow from operations before changes in non-cash operating working capital, financing expenditures related to the costs of acquisitions and decommissioning expenditures and defines operating netback as revenue less royalties, operating and transportation expenses. Net debt is defined as current assets less current liabilities.

Contact Information

  • Shoreline Energy Corp.
    Mr. Trevor Folk
    Chief Executive Officer
    tfolk@shorelineenergy.ca

    Shoreline Energy Corp.
    Mr. Kevin Stromquist
    President & Chief Operating Officer
    kstromquist@shorelineenergy.ca

    Shoreline Energy Corp.
    Mr. Daniel Grisdale
    Chief Financial Officer
    dgrisdale@shorelineenergy.ca

    Shoreline Energy Corp.
    Mr. Shaun E. Alspach
    Executive Vice-President, Business Development
    salspach@shorelineenergy.ca

    Shoreline Energy Corp.
    Calgary Office
    c/o Suite 400, 209-8th Ave SW
    Calgary, Alberta, T2P 1B8
    (403) 767.9066

    Shoreline Energy Corp.
    Toronto Office
    Suite 103, 145 King Street West
    Toronto, Ontario, M5H 1J8
    1-866-773-1562