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Press release from Marketwire

Trilogy Energy Corp. Financial and Operating Results of Trilogy Energy Corp. for the Three Months Ended March 31, 2010

Tuesday, May 04, 2010

Trilogy Energy Corp. Financial and Operating Results of Trilogy Energy Corp. for the Three Months Ended March 31, 201018:20 EDT Tuesday, May 04, 2010CALGARY, ALBERTA--(Marketwire - May 4, 2010) - Trilogy Energy Corp. (TSX:TET) is pleased to announce its financial and operating results for the three months ended March 31, 2010.On February 5, 2010, the Trust completed a conversion (the "Conversion") from an income trust structure to a corporate structure through a business combination with a private corporation pursuant to a plan of arrangement under the Business Corporations Act (Alberta) and related transactions. The name of the resulting corporation is Trilogy Energy Corp. References to Trilogy in this press release for periods prior to February 5, 2010 are references to the Trust and for periods on or after February 5, 2010 are references to Trilogy Energy Corp. Additionally, Trilogy refers to shares, shareholders and dividends which are comparable to units, unitholders and distributions previously under the Trust. FINANCIAL AND OPERATING HIGHLIGHTS - Sales volumes for the first quarter of 2010 averaged 23,079 Boe/d as compared to 20,086 Boe/d for the previous quarter, representing a 15 percent increase quarter over quarter. - Capital expenditures (excluding acquisitions and dispositions) totaled $52.3 million for the first quarter of 2010 (of which $4.6 million was related to Trilogy's Presley Pipeline and Kaybob North Sour Gas Plant expansion projects) versus $28.2 million in the prior quarter. - Funds flow from operations increased to $51.1 million during the first quarter of 2010 as compared to $29.4 million for the previous quarter. The increase was attributed to higher production levels and commodity prices, the early settlement of a financial instrument gain, the absence of a bad debt expense, and lower costs for G&A associated with the Conversion in the current quarter. - Dividends to Shareholders for the first quarter of 2010 were $13.6 million (24 percent of cash flow from operations) as compared to $16 million in the prior quarter (55 percent of cash flow from operations). - Income before tax for the first quarter was $26.7 million as compared to a loss before tax in the prior quarter of $5.0 million. The increase in earnings was primarily a function of the aforementioned increase in funds flow, in addition to the absence of any write-down on Trilogy's assets in the current quarter. - Operating costs for the quarter averaged $8.96 /Boe, consistent with the previous quarter of $8.78 /Boe.- Trilogy received the required regulatory approvals in respect of its Presley Pipeline and Kaybob North Sour Gas Plant expansion projects as at the date hereof. Trilogy is awaiting regulatory approval for a related acid gas disposal system.- Trilogy's lenders reaffirmed their total commitments of $390 million, inclusive of a $40 million construction facility in respect of the above Presley Pipeline and Kaybob North Sour Gas Plant expansion projects. FINANCIAL AND OPERATING HIGHLIGHTS TABLE (In thousand Canadian dollars except per share amounts and where stated otherwise) Three Months Ended March 31, Dec. 31, Change% 2010 2009 ---------------------------------------------------------------------------- FINANCIAL Petroleum and natural gas sales 86,268 66,428 30 Funds flow From operations(1) 51,103 29,378 74 Per share - diluted 0.45 0.28 61 Earnings Earnings (loss) before tax 26,724 (5,019) 632 Per share - diluted 0.24 (0.05) 580 Earnings (loss) after future income tax 15,392 (8,749) 276 Per share - diluted 0.14 (0.08) 276 Dividends declared 13,588 16,005 (15) Per share 0.12 0.15 (20) Capital expenditures Exploration and development 52,317 28,204 85 Acquisitions, (dispositions) and other - net - 112 (100) Net capital expenditures 52,317 28,316 85 Total assets 1,006,149 893,193 13 Net debt(1) 253,653 246,427 3 Shareholders' equity 475,145 434,612 9 Total shares outstanding (thousands) - As at end of period 114,998 110,490 4 ---------------------------------------------------------------------------- OPERATING Production Natural gas (MMcf/d) 110 94 17 Crude oil and natural gas liquids (Bbl/d) 4,801 4,457 8 Total production (Boe/d @ 6:1) 23,079 20,086 15 ---------------------------------------------------------------------------- Average prices Natural gas (before financial instruments) ($/Mcf) 5.51 4.60 20 Natural gas ($/Mcf)(2) 6.39 5.08 26 Crude oil and natural gas liquids (before financial instruments) ($/Bbl) 73.90 65.32 13 Crude oil and natural gas liquids ($/Bbl)(2) 73.90 65.32 13 ---------------------------------------------------------------------------- Drilling activity (gross) Gas 19 5 280 Oil 1 1 - D&A - - - Total wells 20 6 233 Success rate (1) 100% 100% - ---------------------------------------------------------------------------- (1) Funds flow from operations and net debt are non-GAAP terms. Funds flow from operations represents cash flow from operating activities before net changes in operating working capital accounts. Net debt is equal to long-term debt plus/minus working capital. Please refer to the advisory on Non-GAAP measures below. (2) Includes realized but excludes unrealized gains and losses on financial instruments. SUBSEQUENT EVENTSOn April 15, 2010 Trilogy declared a dividend per share of $0.035. The dividend is payable on May 17, 2010 to shareholders on record as of April 30, 2010. The ex-dividend date was April 28, 2010.Regulatory approval to construct and install Trilogy's Kaybob North Sour Gas Plant expansion project was received on April 12, 2010. OUTLOOK Trilogy's guidance for 2010 is as follows: Average production 23,000 Boe/d Average operating costs $ 10.00 /Boe Capital expenditures excluding acquisitions, drilling $120 million credits and costs of $23 million to complete the Presley Pipeline and Kaybob North Sour Gas Plant expansion projects ADDITIONAL INFORMATIONA copy of Trilogy's March 31, 2010 quarterly report to the Shareholders, including the Management's Discussion and Analysis and unaudited interim consolidated financial statements and related notes can be obtained at http://media3.marketwire.com/docs/504tet_annual.pdf. This report will also be made available at a later date through Trilogy's website at www.trilogyenergy.com and SEDAR at www.sedar.com.ABOUT TRILOGYTrilogy Energy Corp. is a petroleum and natural gas-focused Canadian energy corporation that actively acquires, develops, produces and sells natural gas, crude oil and natural gas liquids. Trilogy's common shares are listed on the Toronto Stock Exchange under the symbol "TET". NON-GAAP MEASURES In this document, Trilogy uses the terms "funds flow from operations", "operating income", "net debt", "adjusted net debt" and "payout ratio", collectively the "Non GAAP measures", as indicators of Trilogy's financial performance. The Non-GAAP measures do not have a standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and therefore are unlikely to be comparable to similar measures presented by other issuers."Funds flow from operations" refers to the cash flow from operating activities before net changes in operating working capital. The most directly comparable measure to "funds flow from operations" calculated in accordance with GAAP is the cash flow from operating activities. "Funds flow from operations" can be reconciled to cash flow from operating activities by adding (deducting) the net change in working capital as shown in the consolidated statements of cash flows. "Operating income" is equal to petroleum and natural gas sales before financial instruments and bad debt expenses minus royalties, operating costs, and transportation costs. "Net debt" is calculated as current liabilities minus current assets plus long-term debt. "Adjusted net debt equals net debt excluding the mark to market valuation of financial instruments therein. "Payout ratio" is calculated as the percentage of dividends declared over cash flow from operations for the relevant period. The components described for "operating income", "net debt" "adjusted net debt" and "payout ratio" can be derived directly from Trilogy's consolidated financial statements. Management believes that the Non-GAAP measures provide useful information to investors as indicative measures of performance. Investors are cautioned that the Non-GAAP measures should not be considered in isolation or construed as alternatives to their most directly comparable measure calculated in accordance with GAAP, as set forth above, or other measures of financial performance calculated in accordance with GAAP.FORWARD-LOOKING INFORMATION Certain information included in this news release constitutes forward-looking statements under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "budget" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking statements or information in this news release pertain to, without limitation, expected average production, average operating costs and capital expenditures for 2010. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Such assumptions include: current commodity price forecasts for petroleum and natural gas, current production forecasts, assumptions regarding royalties and expenses, drilling results consistent with our expectations, the ability of Trilogy to obtain equipment, services and supplies in a timely manner to carry out its activities; the ability of Trilogy and its partners to obtain drilling success consistent with expectations; the ability of Trilogy to market oil and natural gas successfully to current and new customers; the timing and costs of pipeline and storage facility construction and expansion and the ability to secure adequate product processing, transmission and transportation and the timely receipt of required regulatory approvals: among others.Although Trilogy 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 Trilogy can give no assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Trilogy and described in the forward-looking statements or information. These risks and uncertainties include, but are not limited to: fluctuations of oil and gas prices, foreign currency, exchange rates and interest rates, volatile economic and business conditions, the ability of management to execute its business plan; the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand; risks and uncertainties involving geology of oil and gas deposits; risks inherent in Trilogy's marketing operations, including credit risk; the uncertainty of reserves estimates and reserves life; the uncertainty of estimates and projections relating to future production, costs and expenses; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; Trilogy's ability to secure adequate product transmission and transportation; Trilogy's ability to enter into or renew leases; health, safety and environmental risks; the ability of Trilogy to add production and reserves through development and exploration activities; weather conditions; the possibility that government policies, regulations or laws, including without limitation those relating to the environment and taxation, may change or regulatory approvals may be delayed or withheld; risks associated with existing and potential future lawsuits and regulatory actions against Trilogy; uncertainty regarding aboriginal land claims and co-existing local populations; hiring/maintaining staff; the impact of market competition; and other risks and uncertainties described elsewhere in this document or in Trilogy's other filings with Canadian securities authorities.The forward-looking statements and information contained in this news release are made as of the date hereof and Trilogy undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.Refer to Trilogy's Management's Discussion and Analysis for additional information on forward-looking information.OIL AND GAS ADVISORYThis news release contains disclosure expressed as "Boe", "Boe/d", "Mcf/d", "MMcf/d", "Bbl" and "Bbl/d". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas 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 well head.FOR FURTHER INFORMATION PLEASE CONTACT: Trilogy Energy Corp. J.H.T. (Jim) Riddell President and Chief Executive Officer (403) 290-2900 or Trilogy Energy Corp. J.B. (John) Williams Chief Operating Officer (403) 290-2900 or Trilogy Energy Corp. M.G. (Michael) Kohut Chief Financial Officer (403) 290-2900 or Trilogy Energy Corp. 1400 - 332 - 6th Avenue S.W. Calgary, Alberta T2P 0B2 (403) 290-2900 (403) 263-8915 (FAX) www.trilogyenergy.com