CALGARY, ALBERTA -- (Marketwired) -- 03/18/16 -- (TSX: EGL): Eagle Energy Inc. ("Eagle") is pleased to report the financial and operating results and reserves information for the year ended December 31, 2015 for its predecessor reporting issuer, Eagle Energy Trust (the "Trust")(1).
"Eagle's priorities in 2015 were to maintain a strong balance sheet, stable production base and sustainability of its business in light of a volatile and unpredictable commodity price environment," said Richard Clark, Eagle's President and CEO. "As a result of our efforts, Eagle stayed on course, hit its guidance and continued to realize on operational efficiencies. Our achievements over the past year have not only set us apart from our peer group, but left us well positioned to operate within the current environment."
Mr. Clark continued, "Eagle reported full year average production volumes of 3,358 barrels of oil equivalent per day and our operated properties, in particular at Salt Flat, outperformed plans. Our non-operated Dixonville property was below planned production due to two major field gathering lines not being re-activated. However, Eagle was able to replace the shortfall with Salt Flat production that had significantly higher netbacks, resulting in higher corporate cashflow."
"Over the year, Eagle targeted expense reduction initiatives. We took steps to preserve our financial liquidity and ensure the business was conducted within our cashflow. We kept our 2015 corporate payout ratio under 100%, had a 2015 year-end debt to trailing cash flow ratio of 2.1x and ended the year with 40% of unutilized bank lines on our $US 80 million credit facility. We also decreased absolute general and administrative expenses by 17% when compared to 2014 and held our monthly operating expenses at the low end of our guidance range."
"Eagle also executed on opportunities that were transformational to the business. First, in August 2015, we announced the acquisition of a private oil and gas company with assets in the Twining area of Alberta. This acquisition was key to growing our position in Canada and establishing a Canadian operations team based in Calgary. Our operations team has worked diligently to increase production and reduce operating costs on our Twining property and in utilizing well-by-well reviews and internally developed cost reduction processes, we reduced per barrel operating costs by 14% during the first four months of operating the properties."
"Second, in November 2015, Eagle announced that it had entered into an agreement to acquire Maple Leaf Royalties Corporation ("Maple Leaf"), which held royalty and non-operated working interests in Alberta. Eagle completed the Maple Leaf acquisition in January 2016, which further expanded our position in Alberta. At the same time, we completed a reorganization to convert from a trust into a corporate structure."
"We believe that the conversion is a crucial step in continuing to execute growth in both Canada and the United States and will also allow us to be more easily compared to our peers. We look forward to the opportunities that this transformation will create for Eagle in 2016."
Eagle's reserves data and other oil and gas information is included in its Annual Information Form dated March 17, 2016 for the year ended December 31, 2015 ("AIF"). The audited consolidated financial statements, management's discussion and analysis and AIF have been filed with the securities regulators and are available online under Eagle's issuer profile on SEDAR at www.sedar.com and on Eagle's website at www.EagleEnergy.com.
(1) Prior to a reorganization that was completed on January 27, 2016, the
business of Eagle Energy Inc. was conducted through a trust structure
by Eagle Energy Trust. Information for the year ended December 31, 2015
pertains to the Trust.
Conference Call
Mr. Clark, Kelly Tomyn, Chief Financial Officer, and Wayne Wisniewski, Chief Operating Officer, will host a conference call and webcast on Friday, March 18 at 8:30 a.m. MDT (10:30 a.m. EDT) to discuss the results. To participate in the conference call, dial (647) 252-4453 or toll free at (877) 255-3077 approximately 10 minutes prior to the call and enter the code 45371752. To listen to the call on the web, visit http://www.gowebcasting.com/7292 at the time of the call. A question and answer period will follow the call.
Two hours after the live call, a digital recording will be available for replay until midnight on March 29, 2016. To access the recording, call 800-585-8367 and quote this conference ID: 45371752. An audio version will also be available on Eagle's website at www.EagleEnergy.com.
In this news release, references to "Eagle" include the Trust and its operating subsidiaries. This news release contains non-IFRS financial measures and statements that are forward-looking. Investors should read "Non-IFRS Financial Measures" and "Note about Forward-looking Statements" near the end of this news release. Figures within this news release are presented in Canadian dollars unless otherwise indicated.
Confirms March 2016 Dividend
Eagle's board of directors has confirmed a March 2016 dividend of $0.01 per share ($0.12 annualized), which is payable on April 22, 2016 to shareholders of record on March 31, 2016. The ex-dividend date is March 29, 2016.
Eagle's dividend has been designated as an "eligible dividend" for Canadian income tax purposes.
Highlights for the Year Ended December 31, 2015
Eagle achieved the following results in 2015:
-- Acquired assets in the Twining field in Alberta in August 2015 at a
total cost of $27.3 million and established a Canadian based operations
team to complement its US based team.
-- Continued to manage Eagle in a fiscally prudent manner, with 2015 year-
end debt to trailing cash flow of 2.1x and 40% of its $US 80 million
facility undrawn.
-- Increased year-over-year proved developed producing reserves by 10%,
total proved reserves by 14% and total proved plus probable reserves by
16%.
-- Grew total proved plus probable reserves to approximately 18.6 million
boe (70% proved, 58% proved producing).
-- Achieved a total proved reserve replacement ratio of 234% and a total
proved plus probable reserve replacement ratio of 307%.
-- Executed a drilling program with a 100% success rate.
-- Reported average working interest sales volumes of 3,358 barrels of oil
equivalent per day ("boe/d"), (93% oil, 2% natural gas liquids ("NGLs")
and 5% natural gas). Current working interest production approximates
3,700 boe/d.
-- Reported funds flow from operations of $30.4 million ($25.09 per boe or
$0.89 per Trust unit).
-- On January 27, 2016, the Trust closed the previously announced
acquisition of Maple Leaf and conversion into a corporate structure. The
resulting entity, Eagle Energy Inc., is listed on the Toronto Stock
Exchange. Its common shares trade under the symbol "EGL". The
acquisition of Maple Leaf is expected to add approximately 235 boe/d
from royalty interest, and 161 boe/d from working interest assets in
Alberta.
2016 Budget and Outlook
This outlook section is intended to provide shareholders with information about Eagle's expectations for production and capital expenditures for 2016. Readers are cautioned that the information may not be appropriate for any other purpose. This information constitutes forward-looking information. Readers should note the assumptions, risks and discussions under "Note about Forward-Looking Statements" at the end of this news release.
Eagle's 2016 capital budget of $CA 5.0 million consists of $US 3.0.million for Eagle's operations in the United States and $0.8 million for Eagle's operations in Canada. The 2016 capital budget excludes future corporate and property acquisitions, which are evaluated separately on their own merit.
Eagle's 2016 capital budget, production and operating cost guidance remains unchanged from what Eagle previously announced on February 11, 2016:
--------------------------------------
--------------------------------------
2016 Guidance Notes
----------------------------------------------------------------------------
Capital Budget $5.0 mm (1)
Working Interest Production 3,200 to 3,600 boe/d (2)
Operating Costs per month $2.2 to $2.6 mm
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) The 2016 capital budget of $CA 5.0 million consists of $US 3.0.million
for Eagle's operations in the United States and $0.8 million for
Eagle's operations in Canada. At an assumed $US 40.00 per barrel WTI
oil price, Eagle's 2016 capital budget of $5.0 million and dividend of
$0.01 per common share of Eagle per month ($0.12 per share annualized)
results in a corporate payout ratio of 93%.
(2) 2016 production is forecast to consist of 87% oil, 10% natural gas and
3% NGLs. These numbers are working interest production numbers only and
exclude 235 boe/d of royalty interest volumes from the acquisition of
Maple Leaf that was completed on January 27, 2016.
Eagle's Funds Flow from Operations and Corporate Payout Ratio
A strengthening in the Canadian dollar has prompted a change in the foreign exchange rate assumptions. Refer to the table titled "Sensitivity to Commodity Price", below.
As a result of the change in the foreign exchange rate assumption, Eagle's funds flow from operations and corporate payout ratio are calculated as follows:
--------------------------------------
--------------------------------------
Amount Notes
----------------------------------------------------------------------------
Funds Flow from Operations $10.8 mm (1)
Basic Payout Ratio 48% (2)
Plus: Capital Expenditures 45%
--------------------------------------
Equals: Corporate Payout Ratio 93% (3)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) 2016 funds flow from operations is expected to be approximately $CA
10.8 million based on the following assumptions:
(a) average working interest production of 3,400 boe/d (the mid-point
of the guidance range);
(b) pricing at $US 40.00 per barrel WTI oil, $US 3.16 per Mcf NYMEX
gas, $CA 2.57 per Mcf AECO and $US 14.00 per barrel of NGL (NGL
price is calculated as 35% of the WTI price);
(c) differential to WTI is $US 3.10 discount per barrel in Salt Flat,
$US 3.50 discount per barrel in Hardeman, $CA 16.17 discount per
barrel in Dixonville and $CA 12.67 discount per barrel in Twining;
(d) average operating costs of $CA 2.4 million per month ($US 0.9
million per month for Eagle's operations in the United States and
$CA 1.2 million per month for Eagle's operations in Canada), the
mid-point of the guidance range;
(e) foreign exchange rate of $US 1.00 equal to $CA 1.33 (previously
$CA 1.40); and
(f) field netback (excluding hedges) of $10.56 per boe.
(2) Eagle calculates its Basic Payout Ratio as follows:
Shareholder Dividends = Basic Payout Ratio
-----------------------------------------
Funds Flow from Operations
(3) Eagle calculates its Corporate Payout Ratio as follows:
Corporate Payout
Capital Expenditures + Shareholder Dividends = Ratio
--------------------------------------------------
Funds Flow from Operations
(4) Funds flow from operations, basic payout ratio and corporate payout
ratio are non-IFRS financial measures. See the section titled "Non-IFRS
Financial Measures".
The following tables show the sensitivity of Eagle's 2016 funds flow from operations, corporate payout ratio and debt to trailing cash flow to changes in commodity prices, exchange rates and production:
------------------------------------------------
------------------------------------------------
Sensitivity to Commodity 2016 Average WTI
Price (Production 3,400 boe/d)
------------------------------------------------
$US 35 (FX $US 40 (FX $US 45 (FX
1.38) 1.33) 1.28)
----------------------------------------------------------------------------
Funds Flow from Operations
($CA) $10.3 $10.8 $10.8
Corporate Payout Ratio 99% 93% 92%
Debt to Trailing Cash Flow 6.4x 6.0x 6.0x
----------------------------------------------------------------------------
----------------------------------------------------------------------------
------------------------------------------------
------------------------------------------------
2016 Average Production (boe/d)
Sensitivity to Production (WTI $US 40, F/X 1.33)
------------------------------------------------
3,200 3,400 3,600
----------------------------------------------------------------------------
Funds Flow from Operations
($CA) $10.0 $10.8 $11.5
Corporate Payout Ratio 101% 93% 87%
Debt to Trailing Cash Flow 6.6x 6.0x 5.6x
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Assumptions:
(1) Annualized dividends are assumed to be $0.12 per share per year.
(2) Operating costs are assumed to be $2.4 million per month (mid-point of
guidance range).
(3) Differential to WTI held constant.
(4) Foreign exchange rate is assumed to be $US 1.00 equal to $CA 1.33
unless otherwise indicated in the table.
Operations Update
Eagle's operational focus in 2015 was to maximize field cashflow. Well reviews were performed on all wells with the objective of reducing operating costs. As a result, operating costs have been reduced by more than 40% at the Hardeman assets in North Texas and Oklahoma since Eagle assumed operatorship of these assets two years ago. The biggest portion of the operating expense reduction has been in water disposal costs, particularly in the southern operating area where a salt water disposal system was installed in September 2015. The project required electrification in the southern area which, in addition to powering the salt water disposal facility, will ultimately help improve run time and reduce propane charges in that part of the field.
At Salt Flat, Eagle continued to focus on operational efficiencies, achieving a 10% year-over-year per boe cost reduction for the past three years. Eagle produces over 100,000 barrels of water per day at Salt Flat, making it necessary to effectively and efficiently handle large volumes of produced water.
During 2015, Eagle established an operating presence in Canada as a result of the acquisition of the Dixonville properties at the end of 2014 and the Twining properties in August 2015. Production during the fourth quarter of 2015 was split evenly between the US and the Canadian properties. Eagle's operations team based in Calgary manages these properties and continues to examine operational efficiencies. Utilizing well-by-well review and internally developed operating cost reduction processes, Eagle reduced per barrel operating costs by 14% at Twining during the first four months operating the properties.
Eagle successfully drilled seven wells (including one salt water disposal well) in 2015, with capital spending and production within stated guidance. Three horizontal wells were drilled at Salt Flat, with first year production and estimated ultimate recovery from these three wells exceeding results from Eagle's previous drilling program in the area. At Hardeman, four vertical wells were drilled, one of which was the salt water disposal well.
Eagle produced an average of 3,358 boe/d, with Eagle's operated properties outperforming plans, in particular at Salt Flat. Dixonville (where Eagle has a 50% non-operated working interest) was below planned production due to two major field gathering lines not being re-activated. Eagle was able to replace the Dixonville production shortfall with Salt Flat barrels that had a significantly higher netback, resulting in higher corporate cashflow. As well, volumes in the fourth quarter included an average of 690 boe/d from the Twining acquisition.
Eagle achieved a 234% total proved reserves replacement ratio and made meaningful improvements to per boe netbacks through negotiating more favorable marketing contracts, decreasing general and administrative costs by thoughtful outsourcing of certain functions and undertaking targeted business process improvements.
Year-end Reserves Information
Eagle targets low risk, producing properties with development potential, and maintains or grows production by converting the non-producing portion of those assets into producing assets, thereby sustaining cash flow and dividends.
An independent evaluation of the Trust's US reserves was conducted by Netherland, Sewell & Associates, Inc. and of the Trust's Canadian reserves by McDaniel & Associates Consultants Ltd. These reserves evaluation reports are effective December 31, 2015 and were prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Details regarding the Trust's reserves and oil and gas assets are set forth in Eagle's AIF.
2015 Year-End Reserves Report - Highlights
-- Increased year-over-year proved developed producing reserves by 10%,
total proved reserves by 14% and total proved plus probable reserves by
16%.
-- Grew total proved plus probable reserves to approximately 18.6 million
boe (70% proved, 58% proved producing).
-- 94% of the proved developed producing reserves are light oil.
-- Achieved total proved plus probable finding, development and acquisition
costs (including changes in future development costs) of $14.02 per boe.
-- Maintained Eagle's proved plus probable reserve life index above 14
years and replaced 234% of its reserves on a proved basis.
The following tables summarize the independent reserves estimates and values of Eagle's reserves as at December 31, 2015:
Summary of Reserves
-------------------------------------------------------
-------------------------------------------------------
Canadian Operations Company Gross(1)
-------------------------------------------------------
Total Oil Total Oil
Natural Gas Natural Equivalent Equivalent
Reserves Categories Crude Oil Liquids Gas 2015 2014
(Mbbls) (Mbbls) (MMcf) (Mboe) (Mboe)
Proved
Developed producing 7,683 62 3,010 8,247 7,182
Developed non-
producing 61 10 410 139 -
Undeveloped 581 26 1,082 787 159
-------------------------------------------------------
Total proved 8,325 98 4,502 9,173 7,341
-------------------------------------------------------
Total probable 3,635 64 2,853 4,174 2,877
-------------------------------------------------------
Total proved plus
probable 11,960 162 7,355 13,347 10,217
----------------------------------------------------------------------------
----------------------------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
US Operations Company Gross(1)
-------------------------------------------------------
Total Oil Total Oil
Natural Gas Natural Equivalent Equivalent
Reserves Categories Crude Oil Liquids Gas 2015 2014
(Mbbls) (Mbbls) (MMcf) (Mboe) (Mboe)
Proved
Developed producing 2,404 53 266 2,501 2,591
Developed non-
producing 324 11 76 348 397
Undeveloped 998 4 27 1,007 1,052
-------------------------------------------------------
Total proved 3,726 68 369 3,856 4,040
-------------------------------------------------------
Total probable 1,350 4 26 1,358 1,748
-------------------------------------------------------
Total proved plus
probable 5,077 71 395 5,214 5,788
----------------------------------------------------------------------------
----------------------------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Total Company
Operations Company Gross(1)
-------------------------------------------------------
Total Oil Total Oil
Natural Gas Natural Equivalent Equivalent
Reserves Categories Crude Oil Liquids Gas 2015 2014
(Mbbls) (Mbbls) (MMcf) (Mboe) (Mboe)
Proved
Developed producing 10,087 115 3,277 10,748 9,773
Developed non-
producing 385 21 486 487 397
Undeveloped 1,579 30 1,109 1,793 1,212
-------------------------------------------------------
Total proved 12,051 165 4,871 13,028 11,381
-------------------------------------------------------
Total probable 4,985 68 2,879 5,533 4,624
-------------------------------------------------------
Total proved plus
probable 17,037 233 7,750 18,561 16,006
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) Company gross reserves are Eagle's total working interest share before
the deduction of any royalties and without including any of Eagle's
royalty interests.
(2) Totals may not add due to rounding.
Summary of Net Present Value of Future Net Revenue of Reserves
-------------------------------------------------------
-------------------------------------------------------
Canadian Operations Net Present Value of Future Net Revenue
Before Income Taxes Discounted at (%/year)
-------------------------------------------------------
Reserves Category 0% 5% 10% 15% 20%
$CA ($000's) ($000's) ($000's) ($000's) ($000's)
Proved
Developed producing 239,819 141,693 95,665 70,945 56,086
Developed non-
producing 2,595 2,003 1,534 1,193 948
Undeveloped 13,474 7,493 4,165 2,171 900
-------------------------------------------------------
Total proved 255,887 151,189 101,365 74,309 57,934
-------------------------------------------------------
Total probable 163,567 59,240 29,713 18,377 12,788
-------------------------------------------------------
Total proved plus
probable 419,454 210,429 131,078 92,685 70,721
----------------------------------------------------------------------------
----------------------------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
US Operations Net Present Value of Future Net Revenue
Before Income Taxes Discounted at (%/year)
-------------------------------------------------------
Reserves Category 0% 5% 10% 15% 20%
$US ($000's) ($000's) ($000's) ($000's) ($000's)
Proved
Developed producing 60,908 43,721 35,481 30,463 26,984
Developed non-
producing 11,626 7,456 5,345 4,126 3,339
Undeveloped 22,634 18,702 15,629 13,189 11,224
-------------------------------------------------------
Total proved 95,168 69,879 56,455 47,777 41,548
-------------------------------------------------------
Total probable 40,239 29,168 21,717 16,560 12,900
-------------------------------------------------------
Total proved plus
probable 135,407 99,047 78,172 64,338 54,447
----------------------------------------------------------------------------
----------------------------------------------------------------------------
-------------------------------------------------------
-------------------------------------------------------
Total Company Net Present Value of Future Net Revenue
Operations Before Income Taxes Discounted at (%/year)
-------------------------------------------------------
Reserves Category 0% 5% 10% 15% 20%
$CA ($000's) ($000's) ($000's) ($000's) ($000's)
Proved
Developed producing 316,511 197,398 141,247 110,324 91,144
Developed non-
producing 16,851 11,183 8,138 6,305 5,092
Undeveloped 41,500 30,664 23,535 18,519 14,814
-------------------------------------------------------
Total proved 374,862 239,245 172,920 135,148 111,049
-------------------------------------------------------
Total probable 212,625 94,847 56,261 38,651 28,605
-------------------------------------------------------
Total proved plus
probable 587,487 334,092 229,181 173,799 139,655
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
(1) It should not be assumed that the net present values of estimated
future net revenue shown above are representative of the fair market
value of the reserves. There is no assurance that the underlying price
and costs assumptions will be attained and variances could be material.
The recovery and estimates of reserves provided in this news release
are estimates only and there is no guarantee that the estimated
reserves will be recovered. Actual reserves may be greater than or less
than the estimates provided.
(2) The US operations numbers have been converted into Canadian dollars
using the following foreign exchange rates: 2016 - $CA 1.00 equal to
$US 0.730; 2017 - $CA 1.00 equal to $US 0.750; 2018 - $CA 1.00 equal to
$US 0.800; 2019 - $CA 1.00 equal to $US 0.800; 2020 and thereafter -
$CA 1.00 equal to $US 0.825 (as per McDaniel & Associates Consultants
Ltd. January 1, 2016 price deck forecast).
At a 10% discount factor, proved developed producing reserves comprise 61% (2014 - 65%) of the total proved plus probable value. Total proved reserves account for 75% (2014 - 78%) of the total proved plus probable value.
Future Development Cost ("FDC")
Total future development costs are estimated at $30.4 million for total proved and $46.6 million for total proved plus probable reserves. When compared to 2016 funds flow guidance of $10.8 million (based on $US 40 WTI oil price and a foreign exchange rate of $US 1.00 equal to $CA 1.33), future development costs represent 2.8 years and 4.3 years of funds flow, respectively.
Reserves Performance Ratios
During 2015, Eagle's capital expenditures, including acquisition capital, resulted in capital efficiency statistics as shown in the following table. Statistics which cannot be meaningfully calculated are shown as a dashed line.
--------------------------------------------
--------------------------------------------
2015 2014
--------------------------------------------
Proved Proved
plus plus
Proved Probable Proved Probable
--------------------------------------------
Reserves (Mboe) 13,028 18,561 11,381 16,006
----------------------------------------------------------------------------
Capital Expenditures ($M)
Exploration and Development
(E&D)(1) 14,134 14,134 13,037 13,037
Acquisition(2) 30,970 30,970 106,319 106,319
Disposition(2) - - (150,141) (150,141)
Disposition (related E&D) - - 11,286 11,286
Total Capital Expenditures 45,104 45,104 (19,500) (19,500)
----------------------------------------------------------------------------
Field Netbacks ($/boe)(3)
Current Year 19.30 19.30 49.75 49.75
----------------------------------------------------------------------------
Finding, Development and
Acquisition Costs(5)
Change in future development
capital ($M) 8,652 8,006 11,535 18,865
Reserve additions (Mboes) 2,880 3,788 8,529 11,517
FD&A Costs including changes
in FDC ($/boe)(5) 18.66 14.02 15.35 12.00
FD&A Costs excluding changes
in FDC ($/boe)(5) 15.66 11.91 13.99 10.36
FD&A Recycle Ratio(4) 1.03 1.38 3.24 4.15
----------------------------------------------------------------------------
Reserves replacement(6) 234% 307% 145% 265%
----------------------------------------------------------------------------
Reserves life index (yrs)(7) 10.4 14.9 10.2 14.4
----------------------------------------------------------------------------
Notes:
(1) The aggregate of the exploration and development costs ("E&D") incurred
in the most recent financial year and the change during that year in
estimated future development costs generally will not reflect total
finding and development costs related to reserve additions for that
year.
(2) Acquisition relates to the August 2015 acquisition in Twining and the
December 2014 acquisition of Dixonville. Disposition relates to the
August 2014 divestiture of the Permian properties.
(3) Field netbacks are calculated by subtracting royalties and operating
costs from revenues.
(4) The recycle ratio is calculated using Eagle's 2015 field netback of
$19.30 per boe (2014 - $49.75 per boe) and dividing that number by
finding, development and acquisition ("FD&A") costs per boe.
(5) Eagle calculates FD&A costs incorporating both the costs and associated
reserve additions related to development capital and acquisitions
during the year.
(6) The reserves replacement ratios are calculated by dividing total
reserve additions by total working interest production for the year.
(7) The 2015 reserve life index calculation is based on the mid-point of
Eagle's 2016 average working interest production guidance of 3,400
boe/d and the 2014 reserve life index calculation was based on 3,050
boe/d.
Selected Annual Information
The following table shows selected information for the Trust's fiscal year ended December 31, 2015, December 31, 2014 and December 31, 2013.
------------------------------------------
------------------------------------------
Year ended December 31 2015 2014 2013
----------------------------------------------------------------------------
($000's except per Trust unit
amounts and production)
----------------------------------------------------------------------------
Sales volumes - boe/d 3,358 2,782 3,004
Revenue, net of royalties 48,121 67,175 69,210
Field netback 23,659 50,522 57,260
Funds flow from operations 30,738 33,958 44,271
per unit - basic 0.88 1.01 1.44
per unit - diluted 0.88 1.00 1.44
Earnings (loss) (76,046) (48,028) 4,914
per unit - basic (2.18) (1.43) 0.16
per unit - diluted (2.18) (1.55) 0.16
Current assets 19,767 33,245 9,889
Current liabilities 9,397 10,720 30,461
Total assets 208,572 257,172 335,679
Total non-current liabilities 92,616 57,547 70,521
Unitholders' equity 106,559 188,905 234,697
Distributions declared 12,040 33,524 32,434
per issued unit 0.35 0.99 1.05
Units issued 34,863 35,017 32,149
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Summary of Quarterly Results
--------------------------------------------
--------------------------------------------
Q4/2015 Q3/2015 Q2/2015 Q1/2015
----------------------------------------------------------------------------
($000's except for boe/d and per
unit amounts)
----------------------------------------------------------------------------
Sales volumes - boe/d 3,783 3,607 3,034 2,995
Revenue, net of royalties 11,603 13,428 12,884 10,206
per boe 33.34 40.46 46.66 37.86
Field netback 5,246 6,956 7,713 3,744
per boe 15.08 20.96 27.94 13.89
Funds flow from operations 5,147 7,332 10,532 7,727
per boe 14.79 22.09 38.14 28.67
per unit - basic 0.15 0.21 0.30 0.22
per unit - diluted 0.15 0.21 0.30 0.22
Earnings (loss) (23,198) (51,784) (6,541) 5,477
per unit - basic (0.67) (1.48) (0.19) 0.16
per unit - diluted (0.67) (1.48) (0.19) 0.16
Cash distributions declared 2,614 3,143 3,130 3,153
per issued unit 0.07 0.09 0.09 0.09
Current assets 19,767 21,862 13,382 31,459
Current liabilities 9,397 8,033 7,754 8,642
Total assets 208,572 228,959 245,009 265,342
Total non-current liabilities 92,616 91,316 52,012 60,835
Unitholders' equity 106,559 129,611 185,243 195,865
Units issued 34,863 34,893 34,961 35,023
----------------------------------------------------------------------------
----------------------------------------------------------------------------
--------------------------------------------
--------------------------------------------
Q4/2014 Q3/2014 Q2/2014 Q1/2014
----------------------------------------------------------------------------
($000's except for boe/d and per
unit amounts)
----------------------------------------------------------------------------
Sales volumes - boe/d 1,929 2,859 3,341 3,010
Revenue, net of royalties 10,238 17,143 20,821 18,973
per boe 57.67 65.19 68.48 70.04
Field netback 6,841 12,832 16,144 14,705
per boe 38.54 48.80 53.10 54.29
Funds flow from operations 5,670 7,476 10,471 10,341
per boe 31.94 28.43 34.44 38.18
per unit - basic 0.16 0.22 0.32 0.32
per unit - diluted 0.15 0.16 0.28 0.25
Earnings (loss) (35,192) 8,104 (23,158) 2,218
per unit - basic (1.01) 0.24 (0.70) 0.07
per unit - diluted (1.13) 0.18 (0.70) 0.02
Cash distributions declared 7,159 9,036 8,775 8,555
per issued unit 0.21 0.26 0.26 0.26
Current assets 33,245 76,566 8,802 9,116
Current liabilities 10,720 13,587 32,878 33,348
Total assets 257,172 240,458 320,182 356,332
Total non-current liabilities 57,547 2,565 80,126 79,684
Unitholders' equity 188,905 224,306 207,178 243,300
Units issued 35,017 34,821 33,739 32,836
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the three months ended December 31, 2015, sales volumes increased when compared to the previous quarter due to the full benefits of the acquisition of a private company and drilling results exceeding expectations in the Salt Flat field.
Despite a quarter-over-quarter increase in production, funds flow from operations decreased in the fourth quarter of 2015 due to lower realized commodity prices. Generally, in times of decreasing prices, funds flow from operations decreases faster than decreases in sales volumes because certain expenses tend to be more fixed in nature, such as general and administrative expenses, and do not change with sales volumes. A quarter-over quarter increase in realized hedging gains partially offset the decline in commodity prices.
Earnings (loss) on a quarterly basis often does not move directionally or by the same amount as movements in funds flow from operations. This is primarily due to items of a non-cash nature that factor into the calculation of earnings (loss), and those that are required to be fair valued at each quarter end. While fourth quarter 2015 funds flow from operations decreased 25% from the third quarter level, a large third quarter impairment charge due to falling commodity prices actually resulted in a lower fourth quarter loss.
Advisories
Non-IFRS Financial Measures
Statements throughout this news release make reference to the terms "funds flow from operations", "field netback", "basic payout ratio" and "corporate payout ratio", which are non-IFRS financial measures that do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other issuers. Management believes that these terms provide useful information to investors and management since such measures reflect the quality of production, the level of profitability, the ability to drive growth through the funding of future capital expenditures and the sustainability of dividends to shareholders.
"Funds flow from operations" is calculated before changes in non-cash working capital and abandonment expenditures. Management considers funds flow from operations to be a key measure as it demonstrates Eagle's ability to generate the cash necessary to pay dividends, repay debt, fund decommissioning liabilities and make capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, funds flow from operations provides a useful measure of Eagle's ability to generate cash that is not subject to short-term movements in non-cash operating working capital.
"Field netback" is calculated by subtracting royalties and operating costs from revenues.
"Basic payout ratio" is calculated by dividing shareholder dividends by funds flow from operations.
"Corporate payout ratio" is calculated by dividing capital expenditures (excluding acquisition capital) plus shareholder dividends by funds flow from operations.
See the "Non-IFRS financial measures" section of Eagle's management discussion and analysis that relates to its annual financial statements for a reconciliation of funds flow from operations and field netback to earnings (loss) for the period, the most directly comparable measure in Eagle's audited annual consolidated financial statements.
Note about Forward-Looking Statements
Certain of the statements made and information contained in this news release are forward-looking statements and forward-looking information (collectively referred to as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historic fact are forward-looking statements. Eagle cautions investors that important factors could cause Eagle's actual results to differ materially from those projected, or set out, in any forward-looking statements included in this news release.
In particular, and without limitation, this news release contains forward-looking statements pertaining to the following:
-- Eagle's 2016 capital budget;
-- Eagle's estimated volumes and values of reserves;
-- Eagle's expectations regarding its 2016 full year average working
interest production, operating costs and field netbacks (excluding
hedges);
-- Eagle's expectations regarding its 2016 funds flow from operations,
basic and corporate payout ratios and debt to trailing cash flow, and
sensitivities of some of these metrics to changes in production rates,
exchange rates and commodity prices;
-- future development costs associated with reserves;
-- projected percentage weighting of crude oil, natural gas liquids and
natural gas production levels;
-- Eagle's strategy to target low risk, producing properties with
development potential, and to maintain or grow production by converting
the non-producing portion of those assets into producing assets, thereby
sustaining cash flow and dividends; and
-- Eagle's expectations regarding dividend levels.
With respect to forward-looking statements contained in this news release, assumptions have been made regarding, among other things:
-- future oil, natural gas liquid and natural gas prices and weighting;
-- future currency exchange rates;
-- the regulatory framework governing taxes in the US and Canada;
-- future recoverability of reserves and the accuracy of the estimates of
Eagle's reserves volumes and values;
-- future dividend levels;
-- future capital expenditures and the ability of Eagle to obtain financing
on acceptable terms for its capital projects and future acquisitions;
-- Eagle's 2016 capital budget, which is subject to change in light of
ongoing results, prevailing economic circumstances, commodity prices and
industry conditions and regulations;
-- not including capital required to pursue future acquisitions in the
forecasted capital expenditures;
-- the ability of Eagle to compete for new acquisitions;
-- estimates of anticipated future production, which is based on the
proposed 2016 drilling program with a success rate that, in turn, is
based upon historical drilling success and an evaluation of the
particular wells to be drilled; and
-- projected operating costs, which are based on historical information and
anticipated changes in the cost of equipment and services.
Eagle's actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and those in Eagle's AIF which is available on Eagle's website at www.EagleEnergy.com and on SEDAR at www.sedar.com:
-- volatility of oil, natural gas liquid, and natural gas prices;
-- commodity supply and demand;
-- fluctuations in currency exchange and interest rates;
-- inherent risks and changes in costs associated in the development of
petroleum properties;
-- ultimate recoverability of reserves;
-- timing, results and costs of drilling and production activities;
-- availability of financing and capital;
-- the regulatory framework governing taxes in the U.S. and Canada; and
-- new regulations and legislation that apply to Eagle and the operations
of its subsidiaries.
Additional risks and uncertainties affecting Eagle are contained in the AIF under the heading "Risk Factors".
As a result of these risks, actual performance and financial results in 2016 may differ materially from any projections of future performance or results expressed or implied by these forward-looking statements. Eagle's production rates, operating costs, field netbacks, drilling program, 2016 capital budget, funds flow from operations, reserves and dividends are subject to change in light of ongoing results, prevailing economic circumstances, obtaining regulatory approvals, commodity prices and industry conditions and regulations. New factors emerge from time to time, and it is not possible for management to predict all of these factors or to assess, in advance, the impact of each such factor on Eagle's business, or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
Undue reliance should not be placed on forward-looking statements, which are inherently uncertain, are based on estimates and assumptions, and are subject to known and unknown risks and uncertainties (both general and specific) that contribute to the possibility that the future events or circumstances contemplated by the forward-looking statements will not occur. Although management believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date the forward-looking statements were made, there can be no assurance that the plans, intentions or expectations upon which forward-looking statements are based will in fact be realized. Actual results will differ, and the difference may be material and adverse to the Eagle and its shareholders. These statements speak only as of the date of this news release and may not be appropriate for other purposes. Eagle does not undertake any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise.
About Eagle Energy Inc.
Eagle is an oil and gas energy corporation created to provide investors with a sustainable business while delivering stable growth in production and overall growth through accretive acquisitions. Eagle's shares are traded on the Toronto Stock Exchange under the symbol "EGL".
All material information about Eagle may be found on its website at www.EagleEnergy.com or under Eagle's issuer profile at www.sedar.com.
Contacts:
Eagle Energy Inc.
Kelly Tomyn
Chief Financial Officer
(403) 531-1574
ktomyn@EagleEnergy.com
Eagle Energy Inc.
Richard W. Clark
President and Chief Executive Officer
(403) 531-1575
rclark@EagleEnergy.com
Eagle Energy Inc.
Suite 2710, 500-4th Avenue SW
Calgary, Alberta T2P 2V6
(403) 531-1575
(855) 531-1575 (toll free)
info@EagleEnergy.com
