Waldron Energy Corporation
TSX : WDN

Waldron Energy Corporation

August 15, 2011 16:19 ET

Waldron Energy Corporation Announces Second Quarter 2011 Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Aug. 15, 2011) - Waldron Energy Corporation )(TSX:WDN) ("Waldron" or the "Corporation") is pleased to provide its financial and operational results for the three and six months ended June 30, 2011 reported in accordance with International Financial Reporting Standards ("IFRS"). These reports are available for review at www.sedar.com and on the Corporation's website at www.waldronenergy.ca.

Financial and Operational Summary
Three months ended June 30 Six months ended June 30
2011 2010 2011 2010
Financial (000's except for per share amounts) (unaudited) (unaudited) (unaudited) (unaudited)
Petroleum and natural gas sales $ 8,953 $ 6,130 $ 16,234 $ 10,427
Funds from operations(1) $ 4,073 $ 1,810 $ 6,994 $ 2,933
Per share basic $ 0.13 $ 0.06 $ 0.22 $ 0.12
Per share diluted $ 0.11 $ 0.06 $ 0.20 $ 0.12
Net income (loss) $ 346 $ (1,468) $ 147 $ (1,854)
Per share basic & diluted $ 0.01 $ (0.05) $ 0.00 $ (0.08)
Capital expenditures(2) $ 14,966 $ 4,993 $ 29,154 $ 9,810
Acquisitions $ - $ 157 $ - $ 44,577
Working capital deficiency (excluding bank debt) $ 11,671 $ 3,752 $ 11,671 $ 3,752
Current bank debt (credit facilities of $35 million) $ 13,600 $ 15,650 $ 13,600 $ 15,650
Total assets $ 124,440 $ 92,093 $ 124,440 $ 111,186
Shareholders' equity $ 76,890 $ 58,586 $ 76,890 $ 58,586
Operating
Production
Natural Gas (mcf/d) 12,808 9,602 12,065 8,170
Light crude oil (bbls/d) 182 220 188 164
NGL (bbls/d) 406 223 385 161
BOE/day 2,722 2,044 2,584 1,687
Netback per boe (6:1)
Sales price $ 36.14 $ 32.96 $ 34.72 $ 34.15
Royalties $ (3.54) $ (5.20) $ (3.98) $ (5.23)
Operating expenses $ (9.05) $ (11.63) $ (9.47) $ (10.98)
Transportation expenses $ (1.72) $ (1.49) $ (1.68) $ (1.60)
Operating netback $ 21.83 $ 14.64 $ 19.59 $ 16.34
(1) Funds from operations is a non-IFRS term and the Corporation calculates this measure as cash provided from operations before changes in non-cash working capital, acquisition costs and decommissioning expenditures.
(2) Capital expenditures include cash exploration & evaluation expenditures plus cash property & equipment expenditures.

Update

Waldron is pleased to report the following highlights during the second quarter:

  • Generated funds from operations of $4.1 million in the quarter, an increase of 39% compared to $2.9 million in the first quarter of 2011. Debt to annualized 2011 second quarter cash flow improved to 1.55 to 1 compared to debt to annualized 2011 first quarter cash flow 2.05 to 1.
  • Average production increased by 11% to 2,722 boe/d in the second quarter of 2011 from 2,444 boe/d in the first quarter of 2011.
  • Improved our operating netback by 28%, to $21.83 per boe in the second quarter of 2011 from $17.07 per boe in the first quarter of 2011.
  • Decreased our operating costs by 9%, to $9.05 per boe in the second quarter of 2011 from $9.93 per boe in the first quarter of 2011.

Operational Update

Waldron is pleased to report that the pipeline expansion at Strachan was completed at the end of July 2011. The pipeline project was the final step of the Corporation's Strachan facility expansion and increased the Corporation's natural gas handling capability from 4 to 15 MMscf/d. The expansion allows the Corporation to incrementally add production from future drilling and recompletion operations in the Strachan area.

At the end of July 2011, the Corporation fracture stimulated the 4-12-36-9W5 vertical drill well (the "4-12 well") which is currently being evaluated. Waldron had recently reported that the drilling rig from the 4-12 well would be moved to the Ferrybank 1-6-43-27W4 location (the "1-6 well"), weather permitting. However, the Corporation elected to drill vertical Ellerslie liquids rich well at Ricinus 2-15-36-9W5 (the "2-15 well"), instead of moving the rig to the 1-6 well. The 2-15 well has been logged and cased as a successful Ellerslie liquids rich well. A service rig is on location at the 2-15 well with completion operations expected to be completed within the next few days, weather permitting. Tie in of the 2-15 well will be completed seven to ten days thereafter.

Waldron is currently drilling a vertical Ellerslie liquids rich well at Ricinus 13-10-36-9W5 (the "13-10 well"). The 13-10 well is expected to be drilled and completed within the next three to four weeks.

Guidance

Waldron is maintaining its 2011 exit production rate estimate of 3,800 boepd and 2011 average production of 3,200 boepd. Waldron is currently producing approximately 3,100 boepd, with two wells awaiting tie in. Additionally, the Corporation anticipates having net debt to annualized 2011 fourth quarter funds from operations of less than 1.35 times thereby positioning Waldron for the upcoming 2012 year. The Corporation's 2011 capital budget is approximately $27 million and Waldron expects 2011 capital expenditures to total approximately $38 million. The majority of the expected increase in capital expenditures is a result of additional Crown land sales in our core area, costs associated with the 2-29 Glauc horizontal well and other minor adjustments to the 2011 capital program.

Investor Information

Currently, Waldron has 34,332,811 common shares, 7,182,560 common share purchase warrants and 2,852,000 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 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," "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. Specifically, this press release contains forward-looking statements relating to amount of production restricted at Strachan; whether or not natural gas handling capability is increased; timing of evaluation of the 4-12 well; timing and expected results of the 2-15 well completion operations; whether or not geological targets are prospective; timing of drilling the 13-10 well; current production; and whether or not 2011 guidance is met. 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 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.

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