Torquay Oil Corp.
TSX VENTURE : TOC.A
TSX VENTURE : TOC.B

Torquay Oil Corp.

May 29, 2012 19:04 ET

Torquay Oil Corp. Reports 2012 First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 29, 2012) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION OR DISTRIBUTION IN THE UNITED STATES, TO UNITED STATES NEWS WIRE SERVICES OR TO UNITED STATES PERSONS.

Torquay Oil Corp. (TSX VENTURE:TOC.A) (TSX VENTURE:TOC.B) ("Torquay" or the "Corporation") is pleased to announce that it has filed its unaudited financial statements and related Management's Discussion and Analysis ("MD&A") as at and for the three months ended March 31, 2012. The Corporation's unaudited financial statements and related MD&A are available for review at www.torquayoil.com or www.sedar.com.

Torquay Oil Corp. exited Q1 2012 producing 575 boe/day, and averaged production of 561 boe/day throughout the quarter, an increase of 52% over the Q1 2011 average production.

Torquay experienced fluctuations in oil pricing throughout the quarter. Despite these fluctuations, Torquay's field netbacks averaged $58.30/boe, an increase of 13% over the Q1 2011 average, while operating costs were reduced by 24% from Q1 2011 to $9.34/boe.

Funds flow from operations was $2,257,380 for the quarter ended March 31, 2012, an increase of 126% over Q1 2011.

The Corporation had $9.4MM of net debt on its $11.5MM credit facility as of March 31, 2012. Torquay plans to exit the year with a debt level of approximately one times trailing cash flow.

During the first quarter Torquay drilled one (1.0 net) exploration well at Willmar, Saskatchewan that proved to be uneconomic and one (1.0 net) well at Queensdale, Saskatchewan. The well at Queensdale was the Corporation's third well drilled into the pool and to date has averaged over 150 boe/day through the first two months of production.

In Q1 2012 Torquay also shot a four square km 3D seismic program at Queensdale to further delineate the pool and continues to focus on expanding this core area.

The Company holds approximately 86 net sections of contiguous land in the Lake Alma area. Economic Bakken wells have now been drilled to within five kilometers south and six kilometers east of the land block. As well, Three Forks production in the United States has now moved to within 50 kilometers of Torquay's land at Lake Alma. The Company has identified numerous Three Forks shows on its land base and continues to advance the Three Forks play alongside its Bakken play.

Financial and Operational Highlights

Three months ended March 31, 2012 Three months ended March 31, 2011
($000's except per share amounts)
Petroleum & natural gas revenue $ 4,034 $ 2,448
Funds flow from operations 2,257 1,000
Funds flow per share (basic and diluted) 0.05 0.03
Net loss (1,240 ) (2,962 )
Net loss per share (basic and diluted) (0.03 ) (0.08 )
Capital expenditures (net) 2,323 16,682
Weighted common shares outstanding (1) 48,168 35,461
Production
Crude oil (bbls/d) 492 287
NGL's (bbls/d) 28 49
Natural gas (mcf/d) 248 207
Total boe/d 561 370
Pricing
Crude oil ($/bbl) $ 87.05 $ 84.28
NGL's ($/bbl) 41.75 42.88
Natural gas ($/mcf) 1.43 4.39
Average ($/boe) $ 78.99 $ 73.44
Netbacks ($/boe)
Petroleum & Natural gas revenue $ 78.99 $ 73.44
Royalties (11.35 ) (9.28 )
Operating costs (9.34 ) (12.40 )
Field netback $ 58.30 $ 51.76
(1) Basic per share amounts are calculated by dividing net income or loss by the weighted average number of Class A outstanding during the period. In addition, for the purpose of calculating diluted per share amounts the effect of warrants, options and convertible Class B Shares are anti-dilutive and consequently are not included in the determination of diluted shares outstanding.

Torquay is a uniquely positioned, oil focused, junior exploration Corporation formed to generate and develop its own prospects, acquire oil-weighted properties and participate with joint venture partners in oil exploration and development in the Western Canadian Sedimentary Basin. The Corporation's Class A Shares and Class B Shares trade on the TSX Venture Exchange under the symbols TOC.A and TOC.B. The Corporation currently has 48,659,448 Class A Shares and 1,260,000 Class B Shares outstanding.

FORWARD LOOKING STATEMENTS:

This news release contains forward-looking statements and forward-looking information (collectively "forward looking information") within the meaning of applicable securities laws. Forward-looking information typically use words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. In particular, forward looking information in this news release includes, but is not limited to: statements with respect to, debt to cash flow ratios, future cash flows and the expected results from operations. The forward-looking information is based on certain key expectations and assumptions made by Torquay, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; future well production rates and estimates of operating costs; reserve and resource volumes; expected results of operating techniques; the state of the economy and the exploration and production business; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; ability to market oil and natural gas successfully and the ability of the Corporation to access capital.

Although Torquay 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 Torquay 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, results from operations will not meet with expectations and risks associated with the oil and gas industry generally. Additional information on the foregoing risks and other factors that could affect Torquay' operations and financial results are included in Torquay's annual information form and other reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking statements contained in this news release are made as of the date hereof and Torquay 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. The term "boe" may be misleading, particularly if used in isolation. A boe conversion of 6 Mcf: 1 bbl 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. References to "funds flow from operations" (cash flow from operating activities before changes in non-cash working capital and decommissioning expenditures) and "operating netbacks" (oil and gas revenue less royalties and operating costs) which are not IFRS measures and do not have standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures from other entities.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Torquay Oil Corp.
    Mr. Terry McCallum
    President & Chief Executive Officer
    403 233 2444 ext. 32
    403 262 6991 (FAX)
    terry@torquayoil.com

    Torquay Oil Corp.
    Mr. Brent McKercher
    Executive Vice President & Chief Operating Officer
    403 233 2444 ext. 30
    403 262 6991 (FAX)
    brent@torquayoil.com
    www.torquayoil.com