Waldron Energy Corporation

Waldron Energy Corporation

March 30, 2011 07:00 ET

Waldron Energy Corporation Announces 2010 Operational and Financial Results

CALGARY, ALBERTA--(Marketwire - March 30, 2011) - Waldron Energy Corporation ("Waldron" or the "Corporation") (TSX:WDN) is pleased to announce its financial and operational results for the year and three months ended December 31, 2010. These reports are available for review at www.sedar.com and on the Corporation's website at www.waldronenergy.ca

2010 Highlights
  • Average daily production increased to 2,108 barrels of oil equivalent per day ("boepd") compared to 867 boped in 2009;
  • Funds from operations increased to $9.2 million ($0.35 per share basic and diluted) from $0.5 million ($0.12 per share basic and diluted) in 2009;
  • Total Proved Reserves increased to 6,745 thousand barrels of oil equivalent ("mboe") compared to 1,162 mboe in 2009;
  • Total Proved plus Probable Reserves increased to 13,056 mboe from 1,931 mboe in 2009;
  • Petroleum and natural gas sales increased to $24.6 million from $8.3 million in 2009;
  • Capital expenditures in 2010 totaled $24.5 million with finding and development costs(6), including changes in future development capital, of $14.86 per boe on a total proved basis and $10.57 per boe on a total proved plus probable basis;
  • Completed a $45.0 million asset acquisition and a $6.3 million disposition of non-core lands in Ferrybank and Crystal area with finding, development and acquisition costs, including changes in future development capital, of $15.93 per boe on a total proved basis and $11.78 per boe on a total proved plus probable basis; and
  • Successfully drilled three liquids rich Ellerslie wells and deepened two wells.
Financial Summary
  Three months ended Dec 31,   Year ended Dec 31,  
    2010     2009     2010     2009  
Financial (000's except for per share amounts)                        
Petroleum and natural gas sales $ 7,653   $ 2,251   $ 24,615   $ 8,300  
Funds from operations(1) $ 3,360   $ (635 ) $ 9,168   $ 502  
  Per share basic & diluted(1)(2) $ 0.12   $ (0.15 ) $ 0.35   $ 0.12  
Net loss $ 711   $ 2,050   $ 4,552   $ 5,258  
  Per share basic & diluted(2) $ 0.02   $ 0.50   $ 0.17   $ 1.29  
Capital expenditures(3) $ 10,844   $ 184   $ 24,449   $ 6,703  
Acquisitions $ 53   $ 1,000   $ 44,963   $ 1,000  
Working capital deficiency (excluding bank debt) $ 7,666   $ 239   $ 7,666   $ 239  
Current bank debt (credit facilities $28 million) $ 9,600   $ -   $ 9,600   $ -  
Total assets $ 92,293   $ 38,773   $ 92,293   $ 38,773  
Shareholders' equity $ 65,723   $ 32,282   $ 65,723   $ 32,282  
  1. Funds from operations is a non-GAAP term and the Corporation calculates this measure as cash provided from operations before changes in non-cash working capital and asset retirement expenses.
  2. At December 31, 2010 there were 2,395,000 (2009 – 367,500) options and 7,182,560 (2009 – 90,000) warrants outstanding that were not included in the calculation of weighted average shares outstanding as the effect would be anti-dilutive.
  3. Capital expenditures exclude acquisitions, dispositions, asset retirement expenditures and capitalized stock based compensation.
Operational Summary
  Three months ended Dec 31,   Year ended Dec 31,  
  2010   2009   2010   2009  
  Natural Gas (mcf/d)   12,429     4,621     9,848     4,919  
  NGL (bbls/d)   400     6     274     15  
  Light crude oil (bbls/d)   209     28     192     32  
  BOE/day   2,681     805     2,108     867  
Netback per boe                        
  Sales price $ 31.03   $ 30.41   $ 32.00   $ 26.24  
  Royalties $ (1.59 ) $ (3.76 ) $ (3.69 ) $ (4.28 )
  Operating expenses $ (9.85 ) $ (8.92 ) $ (10.11 ) $ (9.12 )
  Transportation expenses $ (2.00 ) $ (1.88 ) $ (1.73 ) $ (1.79 )
  Operating netback $ 17.59   $ 15.85   $ 16.47   $ 11.05  

Reserves Summary

The following table summarizes the Corporation's gross and net interests in proved and probable reserves at December 31, 2010 as assessed in the GLJ Report prepared in accordance with National Instrument 51-101 using the GLJ Petroleum Consultants Ltd. January 1, 2011 forecast prices and cost assumptions.

  Gross   Net   Gross   Net   Gross   Net  
RESERVES CATEGORY (Mbbl ) (Mbbl ) (Mmcf ) (Mmcf ) (Mboe ) (Mboe )
Producing Developed 686   526   13,807   11,797   2,988   2,493  
  Non-Producing 121   85   4,235   3,578   826   682  
  Undeveloped 644   480   13,724   11,852   2,931   2,455  
TOTAL PROVED 1,450   1,090   31,766   27,227   6,745   5,629  
PROBABLE 1,376   1,014   29,608   24,594   6,311   5,113  
TOTAL PROVED PLUS PROBABLE 2,827   2,105   61,374   51,821   13,056   10,742  
  1. Numbers in this table are subject to rounding.
  2. Natural gas volumes include solution gas volumes associated with the Corporation's light and medium crude oil reserves.
  3. Natural gas is converted to barrels of oil equivalent ("boe") at a ratio of six thousand standard cubic feet to one barrel of oil.

Net Present Values of Future Net Revenue

The following table summarizes Waldron's share of the net present value of future net revenue attributable to its reserves before taxes but prior to the provision for interest and general and administrative expenses:

  0 % 5 % 10 % 15 %
RESERVES CATEGORY (M$ ) (M$ ) (M$ ) (M$ )
  Producing 62,063   50,773   43,420   38,211  
  Developed Non-Producing 14,481   10,869   8,677   7,200  
  Undeveloped 42,748   29,907   21,323   15,329  
TOTAL PROVED 119,292   91,549   73,420   60,739  
PROBABLE 131,909   89,527   65,242   49,738  
TOTAL PROVED PLUS PROBABLE 251,201   181,076   138,662   110,477  
  1. Gross reserves are the Corporation's total interest share before the deduction of royalties and without including any royalty interest of the Corporation.
  2. Utilizes GLJ Petroleum Consultants escalated price forecasts as of January 1, 2011.
  3. Natural gas volumes include solution gas volumes associated with the Corporation's light and medium crude oil reserves.
  4. Natural gas is converted to barrels of oil equivalent ("boe") at a ratio of six thousand standard cubic feet to one barrel of oil.
  5. Numbers in this table are subject to rounding.
  6. 2010 Finding and Development ("F&D") costs have been presented in accordance with NI 51-101. The Corporation was recapitalized on December 31, 2009 and therefore the three year disclosure under NI 51-101 for F&D was not considered applicable to Waldron. The aggregate of the exploration and development costs incurred in the most recent financial year and the changes during that year in estimated future development costs generally will not reflect total finding and development related to reserves additions for that year.
Net Asset Value
The following table summarizes the Corporation's net asset value at December 31, 2010:
Net Asset Value (December 31, 2010)   2010  
Proved plus Probable NI 51-101 discounted at 10% $ 138,662  
Undeveloped Land, Seismic and Other Assets (internal estimate)   17,300  
Net Debt   (17,266 )
Net Asset Value - Basic $ 138,696  
Basic Common Shares Outstanding (at Dec. 31, 2010)   30,345  
Net Asset Value - Basic (per share)(1) $ 4.57  
Net Asset Value - Basic $ 138,696  
Funds Received from Exercise of Dilutives   17,384  
Net Asset Value - Fully Diluted $ 156,080  
Diluted Shares Outstanding (at Dec. 31, 2010)   39,923  
Net Asset Value - Fully Diluted (per share)(1) $ 3.91  
  1. Net Asset Value numbers are at December 31, 2010 and do not incorporate drilling results during the first quarter of 2011 and the February 2011 financing by way of a private placement for 1,334,000 common shares at a price of $3.75 per share for gross consideration of $5 million. After giving effect to the financing: Net Asset Value – Basic (per share) = $4.57 and Net Asset Value – Diluted (per share) = $3.90.
  2. The estimated values do not represent fair market value.


2010 was a successful year for Waldron. During the year, Waldron successfully drilled three Ellerslie vertical natural gas wells and deepened two previously suspended wells. This approach allowed the Corporation to confirm its exploration concepts with a lower cost de-risking of Waldron's plays and is reflected in the Corporation's top quartile finding and developments costs. Furthermore, Waldron was also able to significantly increase its reserve base, with Proved Reserves increasing 480% and Proved and Probable Reserves increasing 576% over 2009 year end reserves.

During 2011, Waldron will continue to focus on the delineation of its liquids rich Ellerslie and Glauconite natural gas plays. The Corporation has previously set a 2011 capital budget of $27.0 million drilling nine net wells, which includes six vertical Ellerslie wells and one horizontal Glauconite well. This budget will allow Waldron to further build on its existing inventory of high quality repeatable drilling opportunities in its core areas of Ricinius, Strachan, Ferrybank and Crystal. These plays, with high liquids content and large reserves per well, are expected to provide Waldron with high economic returns, even at currently depressed natural gas prices.

Waldron's current production is approximately 3,500 boepd and the Corporation anticipates averaging approximately 3,500 boepd for the second quarter of 2011. Waldron expects first quarter 2011 average production to be approximately 2,500 boepd. Current production includes the Strachan 7-29-37-8W5 well and the Ricinus 12-11-36-9W5 well, which were both tied in at month end. Additionally, Waldron is currently drilling the Strachan 16-29-37-8W5 well targeting the Ellerslie and Glauconite Formations. Waldron's Strachan 14-30-37-8W5 deepening is expected to be completed and placed on production within the next two weeks. 

The Corporation's 2011 guidance as previously disclosed at the beginning of the year:

2011 Budgeted Average Production 3,200 – 3,400 boepd
Budgeted December 2011 Average Production 3,800 – 4,000 boepd
2011 Budgeted Capital Program $27 million
2011 Budgeted Cash Flow $20 - $21 million
2011 Commodity Assumptions ($cdn) $85.00/bbl Oil
    $4.00/Gj AECO

Investor Information

Waldron is a Calgary, Alberta based corporation engaged in the exploration, development and production of petroleum and natural gas. The Corporation's common shares are currently listed on the Toronto Stock Exchange under the trading symbol "WDN." Additional information regarding Waldron is available under the Corporation's profile at www.sedar.com or at the Corporation's website, www.waldronenergy.ca.

Forward Looking and Cautionary Statements

This news release contains forward-looking statements relating to the Corporation's plans and other aspects of the Corporation'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," "intent," "may," "project," "should," "plan," "intend," and similar expressions suggesting future outcomes, and statements that actions, events or conditions "may," "would," "could," or "will" be taken or occur in the future. Specifically, this press release contains forward-looking statements relating to; confirmation of plays and concepts; number of wells to be drilled; liquids content and reserves per well; whether or not the plays have high economic returns; estimated timing of completion and timing of production; and current production rates. In addition, statements regarding reserves are deemed to be forward-looking statements, as they involve estimates and assumptions as to the expectation that the reserves can be economically exploited 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; performance; business prospects and opportunities; future exchange and interest rates; the Corporation's ability to obtain equipment in a timely manner to carry out development activities; and the ability of the Corporation to access capital and credit. While the Corporation 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. In addition, readers are cautioned not to place undue reliance on forward-looking statements, as no assurances can be given as to future results, levels of activity or achievements and actual results may differ materially from those anticipated in forward-looking statements. Except as required by applicable securities laws, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements.

Certain financial information included in this news release for the year ended December 31, 2010, including exploration and development expenditures used in the calculation of finding and development costs and net debt used in the calculation of net asset value are based on audited financial results for the period then ended and may change upon completion of the audited financial statements for the year ended December 31, 2010. Although Waldron believes such estimates are reasonable, the changes could be material.

Disclosure provided herein in respect of barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand standard cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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