TRILOGY ENERGY CORP.
TSX : TET

TRILOGY ENERGY CORP.

January 17, 2011 16:15 ET

Trilogy Energy Corp. Announces Strategic Natural Gas Liquids Recovery Agreement and January Dividend

CALGARY, ALBERTA--(Marketwire - Jan. 17, 2011) -

Natural Gas Liquids Recovery Agreement

Trilogy Energy Corp. ("Trilogy") (TSX:TET) is pleased to announce that it has entered into a commercial arrangement with Aux Sable Canada LP ("Aux Sable") pursuant to which Trilogy will receive additional economic value for the natural gas liquids in its liquids-rich natural gas stream originating from the Kaybob area. The initial term of the agreement is five years. While this agreement does not preclude Trilogy from proceeding with its previously announced plans to construct a deep-cut liquids extraction facility (the "Deep-Cut Facility") at the Kaybob North Sour Gas Plant (the "Plant"), Trilogy is indefinitely deferring those plans at this time, as the Aux Sable agreement is projected to provide natural gas liquids recovery values that are at least equivalent to the value Trilogy would have received if the Deep-Cut Facility project were to proceed after factoring in the capital, operating and other costs associated with a liquids extraction facility. Trilogy anticipates that a continued mutually beneficial, long term relationship with Aux Sable under the agreement will obviate the need for Trilogy to proceed with its Deep-Cut Facility project. The expected benefits of the Aux Sable agreement include the following:

  • the Aux Sable agreement is effective January 1, 2011, allowing for immediate recovery of additional value for Trilogy's natural gas liquids produced at Kaybob versus a Q2 2012 estimated completion date for the proposed Deep-Cut Facility;
  • based on the value sharing arrangement under the new agreement and forward strip pricing, Trilogy anticipates that 2011 cash flow will increase by approximately $15 Million as compared to Trilogy's current cash flow estimate. Assuming the contracted volumes increase to approximately 130 MMcf/d, cash flow under the agreement may reach $30 to $40 Million per year with a total of approximately $170 Million over the initial five year term of the agreement;
  • pricing under the agreement is calculated with reference to the U.S. natural gas liquids market, allowing Trilogy to access a larger, more liquid, higher priced market;
  • eliminates 2011 and 2012 planned capital expenditures of approximately $55 Million to install a new cryogenic deep-cut functional unit and related equipment at the Plant;
  • operating cost savings of approximately $2.5 Million per year at the Plant and transportation cost savings of approximately $3.0 Million to transport dry gas as compared to constructing the Deep Cut Facility;
  • no increase to Trilogy's long term debt for the Deep-Cut Facility project at the Plant; and
  • mitigates risk associated with constructing and operating the Deep-Cut Facility as well as those associated with marketing the extracted natural gas liquids.

January Dividend

Trilogy also announces that its cash dividend for January 2011 will be $0.035 per share. The dividend is payable on February 15, 2011 to shareholders of record on January 31, 2011. The ex-dividend date is January 27, 2011.

About Trilogy

Trilogy is a petroleum and natural gas-focused Canadian energy corporation that actively acquires, develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy's geographically concentrated assets are primarily low-risk, high working interest, lower-decline properties that provide abundant infill drilling opportunities and good access to infrastructure and processing facilities, many of which are operated and controlled by Trilogy. Trilogy's common shares are listed on the Toronto Stock Exchange under the symbol "TET".

Forward-Looking Statements Advisory

In the interests of providing Trilogy's shareholders and potential investors with information regarding Trilogy, certain information included in this news release constitutes forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "continue", "estimate", "propose", "budget", "forecast", "outlook", "may", "will", "could", "potential", "target" or similar words suggesting future outcomes or statements regarding an outlook. In particular, this news release contains, without limitation, forward-looking statements pertaining to the following: expectations of Trilogy's management regarding the timing and expected benefits of its natural gas liquids recovery agreement with Aux Sable including, without limitation, pricing, projected revenue to be received by Trilogy thereunder, the resultant cash flow, anticipated cost savings, future production levels under the agreement, as well as the deferral of plans to construct a natural gas liquids deep-cut extraction facility at the Kaybob North Sour Gas Plant; the timing for completion of the facility; the value which would have been obtained therefrom and the costs which would have been attributable thereto. 

With respect to forward-looking statements contained in this news release, we have made assumptions regarding, among other things, continuity of the mutually beneficial agreement with Aux Sable Canada LP; current commodity price forecasts for petroleum, natural gas and natural gas liquids; current production and reserves additions forecasts; the natural gas liquids content of Trilogy's natural gas; the ability of Trilogy and its partners to obtain drilling and operational results consistent with expectations; the ability of Trilogy to obtain equipment, services and supplies in a timely manner to carry out its activities; assumptions regarding expenses and royalties and government incentive programs; cash flow consistent with expectations; the ability of Trilogy to market oil, natural gas and natural gas liquids successfully to current and new customers; and the ability to secure adequate product processing, transmission and transportation; currency, exchange and interest rates; assumptions based on Trilogy's current guidance; the timely receipt of required regulatory approvals; among others. Although Trilogy believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because Trilogy can give no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur.

By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause actual results to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: fluctuation of oil, natural gas and natural gas liquids prices, foreign currency, exchange rates, interest rates and market demand; volatile economic and business conditions; the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserves estimates and reserves life; the uncertainty of estimates and projections relating to future production and reserves additions, costs and expenses; the ability of Trilogy to add production and reserves through development and exploration activities; the ability of management to execute its business plan; the possibility that regulatory approvals and licences may be delayed or withheld; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; uncertainties as to the availability and cost of financing, including Trilogy's ability to extend its credit facility on an ongoing basis; Trilogy's ability to secure access to adequate product processing, transmission, transportation and by-product extraction; weather conditions; Trilogy's ability to enter into or renew leases; the possibility that government programs, policies, regulations, laws or incentive programs relating to royalties, taxation or the environment, may change; risks inherent in Trilogy's marketing operations, including credit risk; risks associated with existing and potential future lawsuits and regulatory actions against Trilogy; health, safety and environmental risks; uncertainty regarding aboriginal land claims and co-existing local populations; weather conditions; general economic and business conditions; and other risks and uncertainties described elsewhere in this news release or in Trilogy's other filings with Canadian securities authorities.

The forward-looking statements contained in this news release are made as of the date hereof and Trilogy 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.

Contact Information

  • Trilogy Energy Corp.
    J.H.T. (Jim) Riddell
    Chief Executive Officer
    (403) 290-2900
    (403) 263-8915 (FAX)
    or
    Trilogy Energy Corp.
    J.B. (John) Williams
    President and Chief Operating Officer
    (403) 290-2900
    (403) 263-8915 (FAX)
    or
    Trilogy Energy Corp.
    M.G. (Mike) Kohut
    Chief Financial Officer
    (403) 290-2900
    (403) 263-8915 (FAX)
    or
    Trilogy Energy Corp.
    #1400, 332 - 6th Avenue S.W.
    Calgary, Alberta T2P 0B2