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

Wilmington Capital Management Inc.

May 11, 2016 18:51 ET

Wilmington Announces 2016 First Quarter Results

TORONTO, ONTARIO--(Marketwired - May 11, 2016) - Wilmington Capital Management Inc. ("Wilmington" or the "Corporation") (TSX:WCM.A) (TSX:WCM.B) reported a net loss attributable to shareholders for the three months ended March 31, 2016 of $0.5 million or ($0.05) per share compared to net loss of $0.3 million or ($0.03) per share for the same period in 2015.

To view a full copy of the Corporation's interim financial results for the three months ended March 31, 2016 including the Corporation's unaudited interim Consolidated Financial Statements and accompanying Management Discussion and Analysis ("MD&A"), please refer to SEDAR's website at www.sedar.com.

FIRST QUARTER 2016 FINANCIAL HIGHLIGHTS

The financial highlights of the Corporation and those of its associated and controlled entities are set out below. Investments in associated and controlled entities account for the majority of the Corporation's financial results and are accounted for on a consolidated basis or using the equity method of accounting.

Self-storage facilities

  • Real Storage Private Trust (42.5% owned - the "Trust") generated funds from operations of $0.9 million in the period, consistent with comparable period in 2015. The Trust reported declines in occupancy levels and operating margins in the Alberta facilities given the severe downturn in the energy sector but the impact was mitigated by higher rents and continued strong performance in the Ontario portfolio.
  • The Trust paid a quarterly distribution of $0.4 million (Q1 2015 - $0.2 million) to unit holders in the period, representing 4% of invested capital per annum.
  • On May 3, 2016, a devastating fire forced the evacuation of residents in the City of Fort McMurray, Alberta. The Trust owns and operates a self-storage facility in Fort McMurray and all employees were safely evacuated. The extent of damage, if any, to the facility is not yet known. The Trust's management has, however, contacted its insurance provider as a precautionary measure.

Private equity

  • Subsequent to the period ended March 31, 2016, 40% of the issued and outstanding shares of Network Capital Management Inc. held in escrow were released to the Corporation in accordance with the terms of the escrow agreement, resulting in the Corporation owning 90% of NCMI.

Natural gas assets

  • Shackleton 2011 Limited Partnership's (59% owned - "Shackleton Partnership") production decreased approximately 6% compared to the same period in 2015.
  • During the three months ended March 31, 2016, Northpoint restructured the terms of its debentures, whereby the maturity date was extended to December 31, 2017 and interest payments owing as of December 31, 2015 through to December 31, 2016, could be deferred at the option of Northpoint. Pursuant to the restructuring, debenture holders received one Series A preferred share for each $250.00 of debenture outstanding as compensation for the concessions. Q1 2016 saw the continuation of the steep decline in natural gas prices resulting in field net backs of negative $0.56 per mcf. As a result, Northpoint's available liquidity has been severely impaired and barring a near term recovery in natural gas prices, it is unlikely Northpoint will be in a position to operate as a going concern.

As at March 31, 2016, Wilmington had assets under management in its operating platforms of approximately $170 million ($67 million representing Wilmington's share).

OPERATIONS REVIEW

Self - Storage Facilities

Real Storage Private Trust

For the three months ended March 31, 2016, occupancy levels averaged 70% compared to 81% in the same period in 2015. The decrease in occupancy was due to the strategic acquisition of undermanaged assets in latter part of 2015 as well as a decline in occupancy of certain Alberta facilities as a result of the severe downturn in the energy sector.

Private Equity

Network Capital Management Inc. and Network 2012 Fund

Network Capital Management Inc.'s (50% owned - "NCMI") assets under management amounted to approximately $24.9 million as at March 31, 2016, a decrease of $4.6 million from December 31, 2015. The decrease was in part due to $2.8 million in distributions paid in the period to fund participants, the result of the divesture of underlying investments in certain funds and lower valuations attributed to the underlying investments remaining in the funds given the continued depression of oil and natural gas commodity prices. NCMI is focused on deploying capital raised in its most recent fund, Fund 16, which closed in the fall of 2014 and has $7.5 million of undeployed capital.

Natural Gas Assets

Shackleton 2011 Limited Partnership

The Shackleton Partnership owns and operates a 100% interest in natural gas assets in Southwestern Saskatchewan. Production during the period declined 6% compared to the same period in 2015 to 495 boe/d due to natural production decline. Shackleton Partnership realized a netback of $0.35 per mcf in Q1 2016, a decrease of $0.55 per mcf from Q1 2015 due to a 30% decline in realized natural gas prices.

Northpoint Resources Ltd.

Northpoint is a privately held natural gas producer with assets in the Altares region of Northeastern British Columbia. Northpoint's average production in the period was 992 boe/d, a decrease of 17% compared to the same period in 2015, due to the shut-in of select production to preserve reserves given the low natural gas commodity prices being realized. For the three months ended March 31, 2016, Northpoint's average realized price for natural gas was $1.54 per mcf, a decrease of 56% from the same period in 2015.

Outlook

The Corporation's long-term strategy of building shareholder value through its ownership in self-storage facilities and its private equity platform continue to be Wilmington's principal focus. The Trust's 2016 strategic plan which covers a three year period through to 2018, sees continued growth generated organically and through acquisitions. The private equity platform is being re-positioned to take advantage of the expected near term recovery in oil prices. In light of prolonged depressed natural gas prices continuing to be realized by Northpoint, the Corporation believes that it is unlikely that the impairment charges taken in respect of this investment will be reversed in the future.

FINANCIAL RESULTS
CONSOLIDATED STATEMENTS OF LOSS (unaudited)
(unaudited)
For the three months ended March 31,
(CDN $ Thousands, except per share amounts) 2016 2015
Revenue
Natural gas sales 507 767
Royalties (79 ) (123 )
Natural gas revenue 428 644
Investment and other income 35 50
463 694
Expenses
Petroleum operations 333 387
General and administrative 304 310
Depletion, depreciation and amortization 169 223
Stock-based compensation 53 10
Finance costs 56 58
915 988
Loss before share of equity accounted investments and income tax (452 ) (294 )
Share of net income from Real Storage Private Trust 55 215
Loss on ownership change in Real Storage Private Trust --- (83 )
Share of net income (loss) from Network Capital Management Inc. (32 ) 17
Share of net loss from Network 2012 Limited Partnership (78 ) (50 )
Share of net loss from Northpoint Resources Ltd. --- (201 )
Loss before income tax (507 ) (396 )
Income tax expense (recovery) 48 (72 )
Net loss (555 ) (324 )
Net loss attributable to:
Owners of the Corporation (467 ) (281 )
Non-controlling interest (88 ) (43 )
(555 ) (324 )
Net loss per share
Basic (0.05 ) (0.03 )
Diluted (0.05 ) (0.03 )

CONSOLIDATED BALANCE SHEETS (unaudited)

(unaudited) (audited)
As at March 31, December 31,
(CDN $ Thousands) 2016 2015
Assets
Non-current assets
Investment in Real Storage Private Trust 16,007 16,107
Investment in Network Capital Management Inc. 225 257
Investment in Network 2012 Limited Partnership 2,878 3,315
Natural gas property, plant and equipment 5,583 5,752
Deferred income tax assets 601 622
25,294 26,053
Current assets
Accounts receivables and other assets 731 1,057
Cash 4,129 3,993
4,860 5,050
Total assets 30,154 31,103
Liabilities
Non-current liabilities
Decommissioning liabilities 1,089 1,074
1,089 1,074
Current liabilities
Accounts payable and accrued liabilities 790 861
Revolving loan facility 4,100 4,350
4,890 5,211
Total liabilities 5,979 6,285
Equity
Shareholders' equity 23,912 24,467
Non-controlling interest 263 351
Total equity 24,175 24,818
Total liabilities and equity 30,154 31,103

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

(unaudited)
For the three months ended March 31,
(CDN $ Thousands) 2016 2015
Net loss (555 ) (324 )
Items that may be reclassified to net loss
Share of other comprehensive loss from Network 2012 Fund (163 ) (65 )
Deferred income tax recovery (22 ) (8 )
Other comprehensive loss (141 ) (57 )
Comprehensive loss (696 ) (381 )
Comprehensive loss attributable to:
Owners of the Corporation (608 ) (338 )
Non-controlling interest (88 ) (43 )
(696 ) (381 )

Executive Officers of the Corporation will be available at 403-705-8038 to answer any questions on the Corporation's financial results.

STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in this news release may constitute forward-looking statements or information under applicable securities legislation. Forward-looking statements that are predictive in nature, depend upon or refer to future events or conditions, include statements regarding the operations, business, financial conditions, expected financial results, performance, opportunities, priorities, ongoing objectives, strategies and outlook of the Corporation and its investee entities and contain words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", or similar expressions and statements relating to matters that are not historical facts constitute "forward-looking information" within the meaning of applicable Canadian securities legislation.

While the Corporation believes the anticipated future results, performance or achievements reflected or implied in those forward-looking statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond the Corporation's control, which may cause the actual results, performance and achievements of the Corporation to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

These risks and uncertainties include but are not limited to: the ability of management of Wilmington and its investee entities to execute its and their business plans; health, safety and environmental risks; uncertainties as to the availability and cost of financing; general economic and business conditions; the possibility that government policies or laws may change or governmental or regulatory approvals may be delayed or withheld; risks associated with existing and potential future law suits and regulatory actions against Wilmington; and other risks and uncertainties described in Wilmington's filings with Canadian securities regulatory authorities.

The foregoing list of important factors that may affect future results is not exhaustive. When relying on the forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statements or information, that may be as a result of new information, future events or otherwise. These forward-looking statements are effective only as of the date of this document.

This new release contains natural gas volumes which have been converted on the basis of six thousand cubic feet of natural gas to one barrel of oil equivalent. Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet 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.

Contact Information

  • Wilmington Capital Management Inc.
    Executive Officers
    403-705-8038