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Press release from Marketwire

Celtic Provides 2011 Guidance

Wednesday, November 17, 2010

Celtic Provides 2011 Guidance09:00 EST Wednesday, November 17, 2010CALGARY, ALBERTA--(Marketwire - Nov. 17, 2010) - Celtic Exploration Ltd. (TSX:CLT) ("Celtic" or the "Company") is pleased to provide forecasted 2011 financial and operating expectations.Advisory Regarding Forward-Looking StatementsThis document contains expectations, beliefs, plans, goals, objectives, assumptions, information and statements about future events, conditions, results of operations or performance that constitute "forward-looking information" or "forward-looking statements" (collectively, "forward-looking statements") under applicable securities laws. Undue reliance should not be placed on forward-looking statements. Forward-looking statements 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 the Company and described in the forward-looking statements. We caution that the foregoing list of risks and uncertainties is not exhaustive. Events or circumstances could cause actual dates to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. The forward-looking statements contained in this document are made as of the date hereof and the Company does not intend, and does not assume any obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.Non-GAAP Financial MeasurementsThis document may contain the terms "funds from operations", "operating netback" and "production per share" which do not have a standardized meaning prescribed by Canadian GAAP and therefore may not be comparable with the calculation of similar measures by other companies. Funds from operations and operating netbacks are used by Celtic as key measures of performance. Funds from operations and operating netbacks are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net earnings or other measures of financial performance calculated in accordance with GAAP. Operating netbacks are determined by deducting royalties, production expenses and transportation expenses from oil and gas revenue. Funds from operations are determined by adding back settlement of asset retirement obligations and change in non-cash operating working capital to cash provided by operating activities. The Company calculates funds from operations per share using the same method and shares outstanding which are used in the determination of earnings per share.Other MeasurementsAll dollar amounts are referenced in Canadian dollars, except when noted otherwise. Where amounts are expressed on a barrel of oil equivalent ("BOE") basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet per barrel and sulphur volumes have been converted to oil equivalence at 0.6 long tons per barrel. The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. References to oil in this discussion include crude oil and natural gas liquids ("NGLs"). NGLs include condensate, pentane, propane, butane and ethane. References to gas in this discussion include natural gas and sulphur.2011 GuidanceCeltic continues to remain optimistic about its future prospects. Celtic is opportunity driven and is confident that it can continue to grow the Company's production base by building on its current inventory of development prospects and by adding new exploration prospects. Celtic will endeavor to maintain a high quality product stream that on a historical basis receives a superior price with reasonably low production costs. In addition, the Company takes advantage of royalty incentive programs in order to further increase netbacks. Celtic will continue to focus its exploration efforts in areas of multi-zone hydrocarbon potential, with emphasis on liquids-rich natural gas reservoirs.Celtic's Board of Directors has approved an initial capital expenditure budget in the amount of $180.0 million for 2011. Capital expenditures are expected to be reduced by proceeds on disposition of certain non-core properties. For budgeting purposes, in its forecasting for 2011, the Company has assumed the disposition of approximately 700 BOE per day of production for gross proceeds of $50.0 million. Celtic is currently accepting bids on approximately 1,500 BOE per day of production and expects to finalize actual asset sales by early January 2011. Capital spending for 2011 is expected to be financed by property dispositions, funds from operations, available bank credit lines and common share issuances, if necessary.After forecasting risked production discoveries, timing of production on-stream dates resulting from the Company's planned capital expenditures for 2011, estimated decline rates on existing and new volumes, Celtic expects production in 2011 to average between 20,800 and 21,200 BOE/d. The production mix is expected to be 21% oil and 79% gas. At the mid-level of the range of this production forecast, this represents an estimated 19% increase from the average production of 17,700 BOE/d forecasted for 2010. Celtic expects to exit 2011 with production of approximately 23,000 BOE/d.Celtic expects to achieve continued improvement in production expenses for 2011. In 2009, production expense averaged $10.26 per BOE. In 2010, the Company is forecasting production expense to average $8.72 per BOE, a decrease of 15% compared to 2009. In 2011, Celtic expects production expense to average $7.95 per BOE, a decrease of 9% from the 2010 estimate. These improvements in production expense reflect the Company's concerted effort to focus on its development prospects at Kaybob, Alberta and its exploration efforts in new plays, also in west central Alberta. The Company's average commodity price assumptions for 2011 are US$75.00 per barrel for WTI oil, US$4.50 per MMBTU for NYMEX natural gas, $3.90 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of US$0.980. These prices compare to forecasted average 2010 prices of US$78.00 per barrel for WTI oil, US$4.40 per MMBTU for NYMEX natural gas, $3.77 per GJ for AECO natural gas and a US/Canadian dollar exchange rate of US$0.964.After giving effect to the aforementioned production and commodity price assumptions, funds from operations for 2011 is forecasted to be approximately $150.0 million or $1.66 per share ($1.63 per share, diluted) and net earnings are forecasted to be approximately $11.0 million or $0.12 per share ($0.12 per share, diluted).Changes in forecasted commodity prices and variances in production estimates can have a significant impact on estimated funds from operations and net earnings. Please refer to the advisory regarding forward-looking statements shown above.Sensitivities to changes in commodity prices would affect forecasted 2011 funds from operations and net earnings as follows:Change in AECO natural gas price of $1.00 per GJ would affect funds from operations by $33.2 million ($0.37 per share) and earnings by $23.7 million ($0.26 per share); Change in WTI oil price of US$10.00 per barrel would affect funds from operations by $8.9 million ($0.10 per share) and earnings by $6.4 million ($0.07 per share); and Change in US/Canadian dollar exchange rate of US$0.05 per CAD would affect funds from operations by $10.7 million ($0.12 per share) and earnings by $7.7 million ($0.08 per share). Bank debt, net of working capital, is estimated to be $172.0 million by the end of 2011 or approximately 1.1 times forecasted 2011 funds from operations.Celtic's capital expenditure budget for 2011 will see the Company participate in the drilling of approximately 38 to 40 (36 to 38, net) wells during the year, of which over 90% will be horizontal wells. Approximately 40% to 45% of the wells expected to be drilled in 2011 will be in the Kaybob area of Alberta. The remaining budgeted wells are expected to be drilled in west central Alberta where the Company has been active on various new exploration plays. Wells drilled at Kaybob will have shorter on-stream lead time than wells drilled in the new exploration plays, where longer on-stream lead times are expected due to construction of infrastructure. These assumptions have been considered while preparing Celtic's forecasted production for 2011. Celtic continues to evaluate and pursue potential property acquisitions that would complement its existing asset base and completion of such acquisitions would be over and above the Company's planned capital expenditure budget.Celtic is excited about the growth prospects being generated in the Company and remains optimistic about the Company's ability to deliver continued per share growth in production, reserves, net asset value and funds from operations. Given the Company's strong inventory of drilling locations, we look forward to continued growth in 2011 and beyond.The information set out herein under the heading "2011 Guidance" is "financial outlook" within the meaning of applicable securities laws. The purpose of this financial outlook is to provide readers with disclosure regarding Celtic's reasonable expectations as to the anticipated results of its proposed business activities for 2011. Readers are cautioned that this financial outlook may not be appropriate for other purposes.Share InformationThe Company is authorized to issue an unlimited number of common shares and an unlimited number of preferred shares. The Company's shareholders approved a two-for-one stock split effective May 6, 2010. All references to common shares in this press release are on a post stock split basis. As at November 16, 2010, there were 90.3 million common shares outstanding. There are no preferred shares outstanding.As at November 16, 2010, directors, employees and certain consultants have been granted options to purchase 7.3 million common shares of the Company at an average exercise price of $8.07 per share.The Company's common shares trade on the TSX under the symbol "CLT".FOR FURTHER INFORMATION PLEASE CONTACT: David J. WilsonCeltic Exploration Ltd.President and Chief Executive Officer(403) 201-5340ORSadiq H. LalaniCeltic Exploration Ltd.Vice President, Finance and Chief Financial Officer(403) 215-5310ORSuite 500, 505 - 3rd Street SW,Celtic Exploration Ltd.Calgary, Alberta, Canada T2P 3E6www.celticex.com