Storm Resources Ltd. ("Storm" or the "Company") is Pleased to Announce Its Financial and Operating Results for the Three and Nine Months Ended September 30, 2017
CALGARY, ALBERTA--(Marketwired - Nov. 14, 2017) - Storm Resources Ltd. (TSX:SRX)
Storm has also filed its unaudited condensed interim consolidated financial statements as at September 30, 2017 and for the three and nine months then ended along with Management's Discussion and Analysis ("MD&A") for the same period. This information appears on SEDAR at www.sedar.com and on Storm's website at www.stormresourcesltd.com.
Selected financial and operating information for the three and nine months ended September 30, 2017 appears below and should be read in conjunction with the related financial statements and MD&A.
|Thousands of Cdn$, except volumetric and per-share amounts||Three Months to Sept. 30, 2017||Three Months to Sept. 30, 2016||Nine Months to Sept. 30, 2017||Nine Months to Sept. 30, 2016|
|Revenue from product sales(1)||24,100||21,047||88,462||51,038|
|Per share - basic and diluted ($)||0.11||0.07||0.35||0.19|
|Net income (loss)||682||(85||)||31,065||(25,562||)|
|Per share - basic and diluted ($)||0.01||-||0.26||(0.21||)|
|Operations capital expenditures(2)||23,895||7,580||55,559||32,139|
|Land and property acquisitions||-||(600||)||-||(600||)|
|Debt including working capital deficiency(2)(3)||101,297||69,303||101,297||69,303|
|Common shares (000s)|
|Weighted average - basic||121,557||120,195||121,522||119,907|
|Weighted average - diluted||121,613||120,195||121,679||119,907|
|Outstanding end of period - basic||121,557||120,283||121,557||120,283|
|(Cdn$ per Boe)|
|Revenue from product sales(1)||17.23||17.22||21.08||14.13|
|Field operating netback(2)||9.71||8.95||12.71||6.27|
|Realized (loss) gain on hedging||1.34||(0.03||)||(0.72||)||1.74|
|General and administrative||(1.03||)||(1.03||)||(1.10||)||(1.15||)|
|Interest and finance costs||(0.61||)||(0.72||)||(0.69||)||(0.65||)|
|Funds flow per Boe||9.41||7.17||10.20||6.21|
|Barrels of oil equivalent per day (6:1)||15,193||13,285||15,371||13,185|
|Natural gas production|
|Thousand cubic feet per day||74,318||65,914||75,537||65,245|
|Price (Cdn$ per Mcf)(1)||2.02||2.41||2.70||1.77|
|Barrels per day||1,600||1,210||1,608||1,278|
|Price (Cdn$ per barrel)(1)||53.52||49.01||58.70||46.51|
|Barrels per day||1,206||1,089||1,173||1,033|
|Price (Cdn$ per barrel)(1)||21.66||10.03||21.74||10.70|
|Wells drilled (100% working interest)||3.0||-||9.0||7.0|
|Wells completed (100% working interest)||5.0||3.0||9.0||5.0|
|(1)||Excludes gains and losses on commodity price contracts.|
|(2)||Certain financial amounts shown above are non-GAAP measurements, including field operating netback, operations capital expenditures, debt including working capital deficiency and all measurements per Boe.See discussion of Non-GAAP Measurements on page 25 of the MD&A.|
|(3)||Excludes the fair value of commodity price contracts.|
2017 THIRD QUARTER HIGHLIGHTS
- Production increased 14% from the prior year (13% on a per-share basis) to average 15,193 Boe per day. The increase was achieved with approximately 2,500 Boe per day being shut in as a result of the maintenance turnaround at the McMahon Gas Plant (loss of 14,000 Boe per day for 14 days in July) and 1,100 Boe per day was shut in during September due to the very low natural gas price at Station 2 ($0.66 per GJ).
- Condensate and NGL production increased 22% from the prior year to 2,806 barrels per day which represented 18% of per-Boe production and 43% of total revenue.
- In response to the low Western Canadian natural gas prices during the quarter, sales were maximized into the higher priced Chicago market which resulted in 71% of third quarter natural gas sales being at Chicago, 5% at Alliance Transfer Point ("ATP") and the remainder at Station 2.
- At the end of the quarter, there was an inventory of ten Montney horizontal wells (10.0 net) at Umbach that had not started producing which includes four completed wells. Two horizontal wells (2.0 net) started production in the quarter while eight horizontal wells (8.0 net) have started production during the first nine months of the year.
- Montney horizontal well performance at Umbach continues to improve as length is increased and as drilling targets areas where field condensate rates are higher. The three wells (3.0 net) completed in 2017 with enough history averaged 4.1 Mmcf per day gross raw gas plus 128 barrels per day of field condensate over the first 180 calendar days (approximately 800 Boe per day sales with 24% liquids including gas plant NGL). After adjusting for the 39 days of downtime with the McMahon Gas Plant turnaround, the gas rate would be 23% higher than the average well completed in 2014 to 2016 while the field condensate rate would be 130% higher.
- Controllable cash costs (production, general and administrative, interest and finance) were $7.67 per Boe which is a year-over-year decrease of 9%. The decrease was mainly due to production costs declining 10% as a result of production growth and the long-term processing arrangement at the McMahon Gas Plant which commenced in January 2017.
- Funds flow was $13.2 million ($9.41 per Boe), an increase of 50% from a year ago. The improvement was primarily from a higher netback combined with a 14% increase in production volumes. The netback increased by $2.24 per Boe with most of this from hedging (+$1.37 per Boe) and lower production costs (+$0.66 per Boe).
- Net income was $0.7 million or $0.01 per share. Hedging continues to have a recurring impact on quarterly net income with the realized and unrealized gains and losses on hedging adding $1.7 million to net income.
- Capital investment was $23.9 million with 81% being invested in drilling and completions at Umbach. This was less than the original forecast of $28.0 million as a result of lower than budgeted drilling and completion costs.
- Total debt including working capital deficiency was $101.3 million which is 1.9 times annualized third quarter funds flow. The bank credit facility is $165.0 million.
- Natural gas sales will be further diversified through recently added marketing arrangements that now result in approximately 54% to 68% of firm transportation capacity for 2018 being sold at the Chicago price, 11% at the Sumas price less a marketing adjustment (US$0.69/Mmbtu), 5% at the ATP price, 3% to 17% at the Station 2 price and 13% at the AECO price.
- Commodity price hedges continue to be added and currently protect approximately 30% of forecast production for 2018.
Umbach, Northeast British Columbia
Storm's land position at Umbach is prospective for liquids-rich natural gas from the Montney formation and currently totals 109,000 net acres (155 net sections). To date, Storm has drilled 65 horizontal wells (61.4 net).
Production in the third quarter was 15,073 Boe per day with liquids recovery representing 38 barrels per Mmcf sales (57% being higher priced condensate).
Activity in the third quarter included completing five horizontal wells (5.0 net) and drilling three horizontal wells (3.0 net). Two horizontal wells (2.0 net) started production which left an inventory of ten horizontal wells (10.0 net) that had not started producing at the end of the quarter including four completed wells. Eight horizontal wells (8.0 net) have started production in 2017 with production from these wells totaling 4,800 Boe per day in the third quarter.
Since 2013, approximately $100 million has been invested in building out infrastructure (pipelines and facilities) with current capacity totaling 115 Mmcf per day raw gas from three field compression facilities. Throughput in the third quarter was 79 Mmcf per day raw gas (August and September averaged 88 Mmcf per day). Capacity can be increased to 150 Mmcf per day by installing additional compression at a cost of $7.0 million with the installation timing dependent on well performance and commodity prices. The increased compression capacity would support growth in corporate production to approximately 27,000 Boe per day.
Storm's produced raw natural gas is sour (approximately 1.2% H2S) with 78% directed to the McMahon Gas Plant in the third quarter and 22% directed to the Stoddart Gas Plant. At the Stoddart Gas Plant, the firm processing commitment is 15 Mmcf raw gas per day until April 2018. At the McMahon Gas Plant, the firm processing commitment started in January 2017, totals 65 Mmcf raw gas per day, has terms of 5 to 15 years, and includes the option to add up to 35 Mmcf raw gas per day.