CALGARY, ALBERTA--(Marketwired - Aug 8, 2013) - Renegade Petroleum Ltd. ("Renegade" or the "Company") (TSX VENTURE:RPL), a light oil focused exploration and production company with assets located in Saskatchewan, Alberta, Manitoba and North Dakota, is pleased to announce it has filed its condensed interim consolidated financial statements ("Financial Statements") and related management's discussion and analysis ("MD&A") for the for the three and six month periods ended June 30, 2013 on SEDAR. Selected financial and operational information is outlined below and should be read in conjunction with the Financial Statements and related MD&A which are available for review at www.renegadepetroleum.com or www.sedar.com.
SECOND QUARTER 2013 RESULTS
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Achieved average production of 7,111 boe per day ("boe/d") for the three months ended June 30, 2013, up 92 percent from the comparable quarter of 2012. Production consisted of 94 percent light oil and 6 percent natural gas and natural gas liquids;
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Increased funds flow from operations by 57 percent to $22.2 million in the second quarter of 2013 from $14.2 million in the second quarter of 2012;
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Paid cash dividends of $11.7 million, or $0.01917 per Renegade share per month;
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Increased the credit facility to $335 million from $325 million;
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Drilled a total of 3 gross (1.8 net) wells in southeast Saskatchewan; and
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Subsequent to the quarter end, on July 11, 2013, disposed of certain non-core petroleum and natural gas properties for gross proceeds of approximately $19.0 million.
FINANCIAL HIGHLIGHTS
| | Three months ended
June 30, | | Six months ended
June 30, | |
| | 2013 | | 2012 | | %
change | | 2013 | | 2012 | | %
change | |
| Financial (000's except per share amounts) | | | | | | | | | | | | |
| Petroleum and natural gas sales | 55,567 | | 25,852 | | 115 | | 112,431 | | 53,539 | | 110 | |
| | | | | | | | | | | | | |
| Funds flow from operations(1) | 22,233 | | 14,187 | | 57 | | 49,594 | | 28,553 | | 74 | |
| | Per share - basic | 0.11 | | 0.16 | | (31 | ) | 0.24 | | 0.34 | | (29 | ) |
| | Per share - diluted | 0.11 | | 0.16 | | (31 | ) | 0.24 | | 0.33 | | (27 | ) |
| | | | | | | | | | | | | |
| Net income (loss) | (4,088 | ) | 8,042 | | (151 | ) | (9,425 | ) | 8,278 | | (214 | ) |
| | Per share - basic and diluted(2) | (0.02 | ) | 0.09 | | (122 | ) | (0.05 | ) | 0.10 | | (150 | ) |
| | | | | | | | | | | | | |
| Dividends declared | 11,682 | | - | | n/a | | 23,363 | | - | | n/a | |
| Per share | 0.06 | | - | | n/a | | 0.12 | | - | | n/a | |
| | | | | | | | | | | | | |
| Development capital expenditures | 6,133 | | 19,077 | | (68 | ) | 40,977 | | 62,615 | | (35 | ) |
| Acquisitions (corporate and property) | 8 | | 799 | | (99 | ) | 290 | | 17,016 | | (98 | ) |
| Property dispositions | (435 | ) | (357 | ) | 22 | | (13,239 | ) | (357 | ) | 3,608 | |
| Net debt(3) | 292,134 | | 80,036 | | 265 | | 292,134 | | 80,036 | | 265 | |
| | | | | | | | | | | | | |
| Weighted average shares outstanding(2) | | | | | | | | | | | | |
| | Basic | 203,147 | | 89,635 | | 127 | | 203,122 | | 83,644 | | 143 | |
| | Diluted | 203,147 | | 91,520 | | 122 | | 203,122 | | 86,108 | | 136 | |
| Shares outstanding, end of period | | | | | | | | | | | | |
| | Basic | 203,147 | | 89,635 | | 127 | | 203,147 | | 89,635 | | 127 | |
| | Diluted | 210,457 | | 98,794 | | 113 | | 210,457 | | 98,794 | | 113 | |
| Operating | | | | | | | | | | | | |
| Average daily production | | | | | | | | | | | | |
| | Crude oil (bbls/d) | 6,712 | | 3,545 | | 89 | | 7,059 | | 3,520 | | 101 | |
| | Natural gas (Mcf/d) | 1,560 | | 738 | | 111 | | 1,585 | | 698 | | 127 | |
| | Natural gas liquids (bbls/d) | 139 | | 44 | | 216 | | 139 | | 42 | | 231 | |
| | Total (boe/d) (4) | 7,111 | | 3,712 | | 92 | | 7,461 | | 3,678 | | 103 | |
| Average realized price | | | | | | | | | | | | |
| | Crude oil and natural gas liquids ($/bbl) | 88.51 | | 78.87 | | 12 | | 85.71 | | 82.29 | | 4 | |
| | Natural gas ($/mcf) | 2.72 | | 1.38 | | 97 | | 2.68 | | 1.55 | | 73 | |
| | Total ($/boe) (4) | 85.87 | | 76.53 | | 12 | | 83.25 | | 79.99 | | 4 | |
| Netback ($/boe) | | | | | | | | | | | | |
| | Oil and gas sales | 85.87 | | 76.53 | | 12 | | 83.25 | | 79.99 | | 4 | |
| | Royalties | (14.97 | ) | (11.92 | ) | 26 | | (13.72 | ) | (12.14 | ) | 13 | |
| | Operating expenses | (18.41 | ) | (13.22 | ) | 39 | | (17.72 | ) | (13.50 | ) | 31 | |
| | Transportation | (1.83 | ) | (2.92 | ) | (37 | ) | (1.79 | ) | (2.93 | ) | (39 | ) |
| | Operating netback prior to realized derivative contracts | 50.66 | | 48.47 | | 5 | | 50.02 | | 51.42 | | (3 | ) |
| | Realized gain on derivative contracts | (2.02 | ) | 2.56 | | (179 | ) | (1.54 | ) | 0.80 | | (293 | ) |
| | Operating netback(4) | 48.64 | | 51.03 | | (5 | ) | 48.48 | | 52.22 | | (7 | ) |
| (1) | "Funds flow from operations" should not be considered an alternative to, or more meaningful than, cash flow from operating activities as determined in accordance with International Financial Reporting Standards as an indicator of Renegade's performance. "Funds flow from operations" represents cash flow from operating activities prior to changes in non-cash working capital, transaction costs and decommissioning provision expenditures incurred. Renegade also presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. |
| (2) | Due to the anti-dilutive effect of Renegade's net loss for the three and six months ended June 30, 2013, the diluted number of shares is equal to the basic number of shares. Therefore, diluted per share amounts of the net loss are equivalent to basic per share amounts. |
| (3) | Current assets less current liabilities, excluding derivative contracts. |
| (4) | A conversion ratio of 1 barrel of oil equivalent ("boe"): 6 Mcf has been used, which is based on an energy equivalency conversion method primarily applicable at the burner tip and does not necessarily represent a value equivalency at the wellhead. Boes may be misleading, particularly if used in isolation. |
OPERATIONAL UPDATE
During the second quarter of 2013, Renegade drilled a total of 3 gross (1.8 net) wells with a 100% success rate. Activity was focused in southeast Saskatchewan as drilling in the west central Saskatchewan Viking program did not commence until early July. The first southeast Saskatchewan well, in the Crystal Hill area, was brought on-stream in late June while the remaining two wells in the Queensdale area were completed and placed on production in July.
At Crystal Hill, Renegade drilled 1 gross (0.5 net) well and achieved a 30 day IP rate of 170 bbls/d. In addition, the Company has now drilled and completed the first 2 gross (1.3 net) wells on the acquired Queensdale trend. The first well has been on production for 25 days and has a 25 day IP rate of 237 bbl/d with a current casing pressure of 3,700 kPa. The second well has been on production for 15 days and has a 15 day IP rate of 320 bbl/d with a casing pressure of 5,000 kPa. Both wells are expected to have significant optimization potential, as the rates are currently being restricted as casing pressure builds. These successful results have exceeded management's expectations and reinforce the quality of assets Renegade has accumulated in southeast Saskatchewan.
The Company began its Viking drilling program in west central Saskatchewan in early July. Renegade has recently completed the drilling of a 14 gross (13.5 net) well summer program and has fracture stimulated 5.5 net wells that are at various stages of being brought on production. The Company plans to have all 13.5 net wells on-stream within the third quarter. Early results show that these wells are in line with management's expectations.
2013 PRODUCTION GUIDANCE AND OUTLOOK
Renegade's current production is approximately 7,400 boe/d and Renegade confirms its previously announced 2013 average production guidance of 7,400 to 7,700 boe/d.
Renegade remains active in southeast Saskatchewan and will have one rig operating in the area throughout the third and fourth quarter. The remaining wells in the 2013 drilling program will continue to be focused along the acquired Queensdale trend and its analog pools in Silverton and Gainsborough.
"We are excited and encouraged by the initial drilling results on the recently acquired Queensdale asset base. The first few wells have outperformed management's expectations to date. Renegade has assembled a strong asset base of high quality, light oil focused drilling locations with an inventory for several years. We look forward to the continued development of the Company's south east Saskatchewan and west central Saskatchewan assets throughout the remainder of 2013 and into 2014," said Mr. Michael Erickson, President and CEO.
STRATEGIC REVIEW PROCESS ON-GOING
The Company's strategic review process is ongoing and the Company will provide further updates as appropriate.
READER ADVISORIES
Forward-Looking Statements
Statements in this document may contain forward-looking statements or information within the meaning of applicable securities laws, including management's assessment of future plans and operations including capital expenditures, drilling results, locations and plans, management's expectations with respect to the quality of the Company's assets, areas of activity, the Company's plans with respect to optimization operations and the results thereof, expectations with respect to production rates, decline rates and type curves, operational plans, the timing of bringing certain production on-stream, production guidance, matters related to the strategic plans of the Company and the timing of updates to be made by the Special Committee. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to: the risks associated with the oil and gas industry; commodity prices and exchange rate changes; operational risks inherent in exploration, development and production activities; delays or changes in plans; risks associated to the uncertainty of reserve estimates; health and safety risks; and the uncertainty of estimates and projections of production, costs and expenses.
In addition, forward-looking statements or information are based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which the Company operates; the timely receipt of any required regulatory approvals; the ability of the Company to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects which the Company has an interest in to operate the field in a safe, efficient and effective manner; the ability of the Company to obtain financing on acceptable terms; field production rates and decline rates; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of the Company to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the timing of operations; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its oil and natural gas products. Readers are cautioned that the foregoing lists of factors and assumptions are not exhaustive. Additional information on these and other factors that could affect the Company's operations and financial results are included in the Company's filings with Canadian securities regulatory authorities, including the Company's annual information form, and may be accessed through the SEDAR website (www.sedar.com), at the Company's website (www.renegadepetroleum.com).
The forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Certain Oil & Gas Matters
Any references in this news release to IP rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter are not necessarily indicative of long term performance or ultimately recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Renegade.
Conversion
The term "boe" may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one boe (6 mcf/bbl.) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. All boe conversions in this report are derived from converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
