Wilmington Capital Management Inc.
TSX : WCM.A
TSX : WCM.B

Wilmington Capital Management Inc.

August 07, 2014 15:29 ET

Wilmington Announces 2014 Second Quarter Results

TORONTO, ONTARIO--(Marketwired - Aug. 7, 2014) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A)(TSX:WCM.B) reported a net income attributable to shareholders for the three months ended June 30, 2014 of $174,000 or $0.02 per share compared to a net loss of $41,000 or ($0.00) per share for the same period in 2013. For the six months ended June 30, 2014, the Corporation generated a net loss attributable to shareholders of $17,000 or ($0.00) per share compared to a net loss of $98,000 or ($0.01) per share for the same period in 2013.

To view a full copy of the Corporation's unaudited condensed interim financial results for the period ended June 30, 2014 including the Corporation's unaudited condensed interim consolidated financial statements and accompanying Management Discussion and Analysis ("MD&A"), please refer to SEDAR's website at www.sedar.com.

SECOND QUARTER 2014 FINANCIAL HIGHLIGHTS

During the second quarter 2014, the Corporation continued to focus on executing the strategic plans approved in early 2014 for each of its three operating platforms - self-storage facilities, private equity funds and natural gas assets. The principal focus continues to be centered on building upon the foundation in and adding scale to each of the operating platforms. Highlights for the second quarter 2014 were as follows:

  • Generated an operating netback of $1.93 per mcf from the Shackleton Partnership up from $1.77 per mcf for the comparable quarter in 2013;
  • Received $422,000 or 50% of the amount owing by the Shackleton Partnership to the Corporation;
  • Recorded an unrealized gain of $1.4 million on investments of Network 2012 Fund;
  • Realized continued improvement in the Trust's occupancy levels and operating margins which averaged 85% and 60% respectively (82% and 58% in Q2 2013); and
  • Received a distribution of $75,000 from the Trust representing the Corporation's share of a 3% per annum distribution on invested capital which is paid quarterly.

As at June 30, 2014, Wilmington had assets under management in its operating platforms of approximately $153.5 million ($56.6 million representing Wilmington's share).

STRATEGIC PLAN

Wilmington continues to advance its principal objectives of making investments capable of generating appreciation in value as opposed to current income and to maximize shareholder returns by investing its own capital alongside partners and co-investors in hard assets and private equity funds. These assets are managed through the Corporation's operating platforms where Wilmington can add scale and improve valuations.

OPERATIONS REVIEW

Storage Facilities

Real Storage Private Trust ("Trust")

The Trust (42.13% owned) owns 20 self-storage facilities comprising 791,350 square feet of rentable area and one development property. The Trust recorded significant period over period improvements in 2014 as the facilities in Western Canada, which were for the most part in the initial lease up stage in 2013, achieved stabilized occupancy levels. In addition, the Trust completed the expansion of a facility in Eastern Canada, adding 4,350 square feet of rentable area. During the second quarter of 2014, same store occupancy levels averaged 85% compared to 82% in 2013; same store operating margins improved to 60% in the second quarter of 2014 from 58% in the comparable quarter of 2013.

During the third quarter 2013, the Trust commenced quarterly distributions to its unit holders equivalent to 3% per annum on invested capital. For the six months ended June 30, 2014, the Trust declared distributions of $356,000 (Corporation's share - $150,000).

Private Equity

Network Capital Management Inc. ("NCMI") and Network 2012 Fund

NCMI (50% owned) has funds under management totaling approximately $47.0 million. The underlying investments in each of the various funds consist of a strong mix of junior oil and gas and service companies. The Corporation invested $8.0 million of capital in the Network 2012 Fund and has received cumulative distributions of $1.0 million to date. During the third quarter of 2014, Network expects to close a new fund which represents the 16th fund raised by NCMI since its inception in 1997.

Natural Gas Assets

Shackleton 2011 Limited Partnership (the "Shackleton Partnership")

The Shackleton Partnership (59% owned) owns a 100% interest in natural gas wells in Southwestern Saskatchewan. The Shackleton Partnership's natural gas production amounted to 601 boe per day for the second quarter of 2014 and 598 boe per day for the six months ended June 30, 2014. For the three and six months ended June 30, 2013, production was 705 boe per day and 724 boe per day respectively. The weighted average price realized during the second quarter of 2014 was $3.95 per mcf and operating netbacks averaged $1.93 per mcf (realized price of $3.33 per mcf and netbacks of $1.77 per mcf for the comparable period in 2013). Of its 2014 production, approximately 50% has been hedged under fixed price contracts with an average price of $3.61 per GJ.

Given the improved natural gas pricing environment, the Shackleton Partnership is focused on production optimization through well work overs and introducing new technology.

Northpoint Resources Ltd. ("Northpoint")

On July 30, 2013, the Corporation added to its natural gas platform by acquiring a 36.5% ownership interest in Northpoint, a privately held oil and gas producer with assets in the Altares region of Northeastern British Columbia. In addition and as part of an overall recapitalization plan, the Corporation acquired $798,000 of a 10%, $5.0 million debenture issue by Northpoint which matures on August 1, 2017. On June 23, 2014, the Corporation invested an additional $0.5 million, increasing its ownership to 38.6% and bringing its total investment in Northpoint to approximately $2.7 million.

Northpoint's average production for the three and six months ended June 30, 2014 of 1,292 boe per day and 1,287 boe per day respectively. During the quarter ended June 30, 2014, Northpoint commenced drilling of its second horizontal well, however, technical difficulties resulted. The well reached a total depth of 1,511 meters versus a planned depth of 2,500 meters. Production results will not be known until early September 2014.

Outlook

The Corporation believes that the foundation for achieving future growth through self-storage and private equity operating platforms is largely in place. The Corporation's goal of scaling its interest in natural gas assets currently held through the Shackleton Partnership and Northpoint to the equivalent of 4,000 boe per day is largely dependent on natural gas prices and the success of drilling activities. The Shackleton Partnership and Northpoint combined have production of approximately 1,900 boe per day (Corporation's share - 850 boe per day). In the years ahead, the Corporation expects to add scale to these operating platforms, improve valuations and earn attractive cash flow and total returns for shareholders.

FINANCIAL RESULTS
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(unaudited) (unaudited)
For the three months
ended June 30,
For the six months
ended June 30,
(CDN $ Thousands, except per share amounts) 2014 2013 2014 2013
Revenue
Natural gas sales 1,295 1,282 2,678 2,557
Royalties (259 ) (241 ) (599 ) (418 )
Natural gas revenue 1,036 1,041 2,079 2,139
Investment and other income 50 151 99 189
1,086 1,192 2,178 2,328
Expenses
Petroleum operations 404 358 732 692
General and administrative 290 316 588 655
Depletion, depreciation and amortization 349 356 691 745
Stock-based compensation 29 46 57 92
Foreign exchange loss --- 90 --- 118
Finance costs 51 88 118 166
1,123 1,254 2,186 2,468
Loss before share of equity accounted investments and income taxes (37 ) (62 ) (8 ) (140 )
Share of net income from Real Storage Private Trust 203 44 288 67
Share of net income (loss) from Network Capital Management Inc. 14 (32 ) 19 (54 )
Share of net income (loss) from Network 2012 Fund 8 (39 ) (36 ) (77 )
Share of net income (loss) from Northpoint Resources Ltd. 219 --- (106 ) ---
Income (loss) before income taxes from continuing operations 407 (89 ) 157 (204 )
Income tax expense 180 35 31 18
Net income (loss) from continuing operations 227 (124 ) 126 (222 )
Income from discontinued operations, net of tax --- 118 --- 212
Net income (loss) 227 (6 ) 126 (10 )
Net income (loss) attributable to:
Owners of the Corporation 174 (41 ) (17 ) (98 )
Non-controlling interest 53 35 143 88
227 (6 ) 126 (10 )
Net income (loss) per share from continuing operations
Basic 0.02 (0.02 ) --- (0.04 )
Diluted 0.02 (0.02 ) --- (0.04 )
Net income (loss) per share
Basic 0.02 --- --- (0.01 )
Diluted 0.02 --- --- (0.01 )
CONDENSED INTERIM CONSOLIDATED BALANCE SHEET
(unaudited) (audited)
As at June 30, December 31,
(CDN $ Thousands) 2014 2013
Assets
Non-current assets
Investment in Real Storage Private Trust 10,217 10,079
Investment in Network Capital Management Inc. 86 67
Investment in Network 2012 Fund 9,885 8,341
Investment in Northpoint Resources Ltd. 2,194 1,819
Northpoint Debenture 798 798
Natural gas property, plant and equipment 16,001 16,597
39,181 37,701
Current assets
Loan to Network Capital Management Inc. 25 25
Income tax receivable 349 299
Receivables and other assets 876 1,451
Cash and cash equivalents 1,289 730
2,539 2,505
Total assets 41,720 40,206
Liabilities
Non-current liabilities
Decommissioning liabilities 818 792
Deferred tax liabilities 381 65
1,199 857
Current liabilities
Accounts payable and accrued liabilities 1,038 991
Revolving Loan Facility 4,550 5,200
5,588 6,191
Total liabilities 6,787 7,048
Equity
Shareholders' equity 30,685 29,053
Non-controlling interest 4,248 4,105
Total equity 34,933 33,158
Total liabilities and equity 41,720 40,206
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited) (unaudited)
For the three months
ended June 30,
For the six months
ended June 30,
(CDN $ Thousands) 2014 2013 2014 2013
Net income (loss) 227 (6 ) 126 (10 )
Items that may subsequently be reclassified to net income (loss) from continuing operations
Share of other comprehensive income (loss) from Network 2012 Fund 1,425 (83 ) 1,830 178
Deferred income tax expense (benefit) on above items 185 (11 ) 238 23
Other comprehensive income from continuing operations 1,240 (72 ) 1,592 155
Items that may subsequently be reclassified to net income (loss) discontinued operations
Other comprehensive income from discontinued operations, net of tax --- 22 --- 36
Total other comprehensive income (loss) 1,240 (50 ) 1,592 191
Comprehensive income (loss) 1,467 (56 ) 1,718 181
Comprehensive income (loss) attributable to:
Owners of the Corporation 1,414 (91 ) 1,575 93
Non-controlling interest 53 35 143 88
1,467 (56 ) 1,718 181

Executive Officers of the Corporation will be available at 403-800-0869 to answer any questions on the Corporation's financial results.

This news release contains forward-looking statements concerning the Corporation's business and operations. The Corporation cautions that, by their nature, forward-looking statements involve risk and uncertainty and the Corporation's actual results could differ materially from those expressed or implied in such statements. Reference should be made to the most recent Annual Information Form for a description of the major risk factors.

Contact Information

  • Wilmington Capital Management Inc.
    Executive Officers
    (403) 800-0869