Waldron Energy Corporation

Waldron Energy Corporation

August 31, 2010 06:00 ET

Waldron Energy Corporation Announces Second Quarter 2010 Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Aug. 31, 2010) - Waldron Energy Corporation ("Waldron" or the "Corporation") (TSX VENTURE:WDN) announces financial and operational results for three and six months ended June 30, 2010. These reports are available for review at www.sedar.com and on the Corporation's website at www.waldronenergy.ca.

Q2 2010 Highlights

    Waldron continued its exploration success and Ellerslie channel extension at Ricinus with two Ellerslie liquids rich natural gas exploration discoveries during the quarter.
    Second quarter 2010 production averaged 2,043 barrels of oil equivalent per day ("boepd") compared to 1,326 boepd in the first quarter of 2010 and 939 boepd in the second quarter of 2009, representing a 54% and 118% increase, respectively.
    Funds from operations was $1.8 million in the second quarter of 2010 compared to $0.4 million in the second quarter of 2009 representing an increase of 330%.
    The Corporation's credit facilities increased from $25 million to $28 million.
    In June 2010, the Corporation completed its name change to Waldron Energy Corporation (symbol: WDN) and completed a ten for one share consolidation.
    Three months ended June 30   Six months ended June 30
      2010       2009       2010       2009  
Financial (000's except for per share amounts)   (unaudited )   (unaudited   (unaudited )   (unaudited )
  Petroleum and natural gas sales   $ 6,130     $ 2,040     $ 10,427     $ 4,597  
  Funds from operations   $ 1,810     $ 420     $ 3,266     $ 1,133  
    Per share basic & diluted   $ 0.06     $ 0.10     $ 0.14     $ 0.28  
  Net loss   $ (1,791 )   $ (1,170   $ (2,716 )   $ (1,872 )
    Per share basic & diluted   $ (0.06 )   $ (0.29   $ (0.11 )   $ (0.46 )
  Capital expenditures   $ 4,993     $ 1,780     $ 9,810     $ 6,006  
  Acquisitions   $ 157     $ -     $ 44,910     $ -  
  Working capital deficiency (excluding bank debt)   $ 2,975     $ 1,782     $ 2,975     $ 1,782  
  Current bank debt (credit facilities $28 million)   $ 16,427     $ 5,540     $ 16,427     $ 5,540  
  Total assets   $ 91,613     $ 37,417     $ 91,613     $ 37,417  
  Shareholder's equity   $ 62,304     $ 23,947     $ 62,304     $ 23,947  
    Natural Gas (mcf/d)     9,602       5,322       8,170       5,202  
    Light crude oil (bbls/d)     220       32       164       44  
    NGL (bbls/d)     223       21       161       13  
    BOE/day     2,043       939       1,687       924  
  Netback per boe (6:1)                                
    Sales price   $ 32.96     $ 23.89     $ 34.15     $ 27.48  
    Royalties   $ (5.20 )   $ (3.86   $ (5.23 )   $ (5.24 )
    Operating expenses   $ (11.63 )   $ (8.15   $ (10.98 )   $ (8.95 )
    Transportation expenses   $ (1.49 )   $ (1.80   $ (1.60 )   $ (1.79 )
    Operating netback   $ 14.64     $ 10.08     $ 16.34     $ 11.50  


Waldron's drilling success continued to expand and delineate the liquids rich Ellerslie natural gas channel in Ricinus. During the second quarter, the Corporation drilled two Ellerslie exploration wells at Ricinus. Waldron drilled the wells, 14-29-37-8W5M (the "14-29 well") and 15-10-36-9W5 new pool wildcat (the "15-10 well"), as follow ups to the 06-30 -37-8W5M (the "6-30 well") first quarter discovery. The 6-30 low perm edge well and 14-29 high perm well extended the existing Ferrier Ellerslie F channel by six miles. The 15-10 high perm well extended this same Ellerslie channel 10 miles further south. The 15-10 high perm vertical well tested at 4.2 MMcf per day with 120 barrels per day of on-lease condensate and is expected to be on production in the first week of September 2010 at approximately 600 boepd.

Waldron has focused its strategy on repeatable top tier resource plays like the Ellerslie and Glauconite. Capitalizing on our extensive technical experience in the Ellerslie, the Corporation has strategically assembled a core area in west central Alberta at Ricinus in one of Alberta's most prolific multi-zone areas. Waldron is targeting the high permeable part of the Ellerslie channel with 3,200 to 3,500 meter deep vertical liquids rich natural gas wells that have strong economics, even at current low natural gas prices. These types of wells are characterized by a quick pay-out and an economic return of two to four times original investment, as the wells have high initial productivity, a comparatively low annual decline and large reserves per well. These wells generally cost between $3.0 to $3.5 million to drill and tie in and contain Ellerslie reserves of approximately 4 to 5 BCF of natural gas combined with liquids of up to 40 bbls per MMcf of gas (120,000 to 160,000 bbls) per well.

To date, Waldron has evaluated its 3D seismic on 15 of its 22 sections of 100% working interest Ricinus lands and has identified over 25 high perm Ellerslie drilling locations. Additionally, the Corporation has identified 14 potential Viking locations and two Cardium locations. Our ongoing seismic work will continue to expand our Ricinus drilling inventory.

Initially, Waldron's capital program for 2010 was designed to focus on our Ellerslie prospects for the first half of 2010 and the Glauconite and Belly River in the second half. The Corporation's plan for the second half of 2010 was to drill two Glauconite horizontals and four Belly River light oil prospects that form an integral part of our attractive, large and expanding multi-zone opportunity portfolio. Due to our 2010 first half success, strong economics, 100% working interests, ample processing capacity and significant upside of the Ellerslie resource play, Waldron has decided to re-deploy its 2010 second half capital towards the high perm liquids rich Ellerslie wells. As mentioned, these Ellerslie wells typically provide highly attractive economic returns, and, as such, Waldron will drill three new 100% working interest Ellerslie wells. The Ricinus 03-14-36-9W5M multi-zone Ellerslie/Viking exploration vertical well (the "3-14 well") is planned to spud in the first week of September 2010 and is expected to be a 30 day drill well with an immediate tie in. Two additional 100% working interest Ellerslie wells, at 14-20 and 6-13, are planned to follow the 3-14 well and are expected to be drilled and tied in by year end. Waldron is continuing to license its liquids rich horizontal Glauconite gas and Belly River light oil opportunities where both play types will figure prominently in the Corporation's 2011 capital program.


The Corporation has a $20.5 million capital budget for 2010. Waldron drilled three Ellerslie wells in the first half of 2010 and is now planning on drilling an additional three Ellerslie wells in the second half of 2010. The Corporation plans to fund the remaining $10 million of the 2010 capital program through cash flow and available credit facilities. Production averaged 2,043 boepd for the second quarter, which was impacted by the 20 day Keyera Strachan plant turnaround at Ricinus. Waldron's current production is approximately 2,200 boepd with approximately 600 boepd of productive capacity that has been tested and is expected to be on production in the next week. Waldron is on track in achieving its current guidance of exiting 2010 with December average production of 2,800 boepd and averaging 2,050 boepd for 2010. Based upon guidance, Waldron had budgeted $12 million in cash flow for 2010. The current price of natural gas, if continued to year end, could result in 2010 cash flows of approximately $10 million and approximate year end net debt of approximately $22 million on existing credit facilities of $28 million.

Toronto Stock Exchange Conditional Approval

Waldron is pleased to announce that the Toronto Stock Exchange (the "TSX") has conditionally approved the listing of the common shares of the Corporation on the TSX under the same symbol, WDN. The Corporation intends to transfer its listing from the TSX Venture Exchange to the TSX on or about Tuesday September 7, 2010, subject to final approval of the TSX.

Director Addition & Stock Option Grant

On July 6, 2010 Greg Bay was appointed to the board of directors of Waldron. Mr. Bay is the founding partner and President & CEO of Cypress Capital Management Ltd. ("Cypress") and brings with him over 25 years of experience in the investment industry with emphasis on the oil and gas sector. Mr. Bay holds the CFA designation and currently serves on the board of directors of Mullen Group Ltd., Fairborne Energy Ltd. and Bellamont Exploration Ltd..

Waldron is pleased to announce that pursuant to the terms and conditions of its stock option plan, it has granted 125,000 incentive stock options to each of the new directors, Greg Bay and Jack Marsh, for the purchase common shares of Waldron at an exercise price set as the August 31, 2010 closing price.

Investor Information

Currently, Waldron has 28,620,478 common shares, 7,182,560 common share purchase warrants and 2,335,000 options outstanding.

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 TSX Venture 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 the number and location of drilling locations; current production rates; whether or not geological zones are prospective; results and confirmation of exploration concepts; timing of operations; number of drilling locations; estimated costs; estimated reserves; estimated cash flows for the year; and estimated year end net debt. 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.

Although Waldron 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, Waldron does not undertake any obligation to publicly update or revise any forward-looking statements.

Note Regarding BOEs

The term barrel of oil equivalent ("boe") 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.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information