The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Marketwire

RMP Energy Announces First Quarter 2011 Results

Wednesday, June 08, 2011

RMP Energy Announces First Quarter 2011 Results08:00 EDT Wednesday, June 08, 2011CALGARY, ALBERTA--(Marketwire - June 8, 2011) - RMP Energy Inc. ("RMP" or the "Company") (TSX:RMP) today announced financial and operating results for the three months ended March 31, 2011. The highlights and events in the first quarter of 2011 and subsequent are the following:-- On May 11, 2011, the Company closed the plan of arrangement and acquisition of RMP Energy Ltd., which provided for the recapitalization and restructuring of the Company involving the appointment of a new Board of Directors and Management team with a demonstrated history of value creation for its shareholders. Additionally, the Company changed its name to RMP Energy Inc. -- Exited the quarter with net debt of $19.1 million as compared to March 31, 2010 of $39.1 million. After the recapitalization and restructuring, the Company has only approximately $2 million presently drawn on its committed, revolving bank facility with a credit limit of $60 million and anticipates exiting the year with net debt between $33 million to $36 million, representing only 55% to 60% of its credit borrowing limit.-- The first quarter exploration and development capital program of $24.6 million included the drilling and completion of five (3.8 net) horizontal wells, and a gathering pipeline installation at Waskahigan. Three (3.0 net) wells were drilled at Waskahigan, Alberta targeting the light oil formation. To-date, the Company's delineation drilling of this 100%-owned, Montney light oil resource play has been quite promising. A total of six (6.0 net) horizontal wells have been drilled into the pool; three wells are presently producing with the other wells awaiting tie-in and commissioning of new Waskahigan field infrastructure in early fourth quarter 2011. At Pine Creek, Alberta, two (0.8 net) horizontal Wilrich gas wells were successfully drilled and brought on-stream at the end of the first quarter at rates indicative of a Wilrich "type well", as disclosed by other area operators. These two wells were the earning wells drilled by the operator in connection with the previously- disclosed farm-out of three (1.8 net) sections of land in Pine Creek. The Company's 2011 capital budget of $75 million encompasses the drilling of an additional eight (7.4 net) horizontal wells for the balance of this year, of which six (6.0 net) wells are expected to be drilled at Waskahigan. -- Executed the strategic disposition of its deep mineral rights at Kaybob to an arm's-length party for $10.7 million. The disposition involved the sale of the Company's undeveloped, non-producing deep mineral rights (below the Montney formation) in 17 net sections (10,880 net acres) of acreage. The Company realized a disposition gain in the first quarter for the full proceeds amount as these mineral rights did not have any net book value. -- As a result of successful delineation drilling of the Waskahigan Montney play, the Company's light oil production in the first quarter was 257 Bbls/d as compared to the oil output in the first quarter of 2010 of 64 Bbls/d. RMP expects its light oil production weighting to increase further upon the start-up of its company-owned Waskahigan oil battery facility. In the first quarter, the Company finalized the evaluation and design of the Waskahigan oil battery facility and completed the ordering and procurement of key, major equipment items, in anticipation of an early fourth quarter 2011 start-up. Approximately $2.8 million of related capital was incurred in the first quarter of 2011. -- First quarter production was 2,602 boe/d, weighted 80% natural gas and 20% light oil and NGLs. In the first quarter, the Company experienced a production disruption in its Kaybob operating field. On March 11, 2011, the Company was notified by the operator of the Kaybob South #3 Gas Plant ("K3 Gas Plant") that a mechanical failure had occurred at the K3 Gas Plant. Consequently, the K3 Gas Plant was shut-down and re-started on April 6, 2011. RMP was able to partially mitigate the plant shut-down by re-routing a portion of its gas to another area gas plant during this time period. Notwithstanding, the plant shut-down resulted in approximately 300 boe/d of lower average daily production in the first quarter. Subsequent to the quarter end, on May 5, 2011, the Company was notified by the operator of the K3 Gas Plant that another mechanical failure had occurred at the plant. The K3 Gas Plant was shut down and re-started earlier than anticipated on May 20, 2011 upon completion of a temporary plant modification. The Company has accounted for this intermittent gas plant disruption in its market guided production forecast for fiscal 2011 of 3,400 to 3,600 boe/d. -- For the first quarter, RMP reported cash flow from operations of $3.5 million ($0.05 per fully-diluted share) on revenue of $8.1 million and average daily production of 2,602 barrels of oil equivalent. First quarter 2011 financial and operating highlights are as follows: ----------------------------------------------------------------------------Financial Highlights Three Month Periods Ended: -------------------------------------- March 31, March 31, 2011 2010 % Change --------------------------------------(thousands except share and per boe data) Petroleum & natural gas revenue (1) $ 8,112 $ 11,980 (32)Cash flow from operations (2,3) 3,489 6,357 (45) Per share - basic 0.05 0.10 (50) Per share - diluted 0.05 0.10 (50)Net income (3) 8,353 2,028 312 Per share - basic 0.13 0.03 333 Per share - diluted 0.13 0.03 333 Net debt (4)- period end 19,132 39,115 (51)E&D capital expenditures 24,627 20,678 19 Total capital expenditures (3) 14,073 21,035 (33)Weighted average basic shares 65,787 65,176 1 Weighted average diluted shares 65,970 65,649 - Issued and outstanding shares (5) 65,788 65,176 1 --------------------------------------------------------------------------------------------------------------------------------------------------------Operating Highlights Three Month Periods Ended: -------------------------------------- March 31, March 31, 2011 2010 % Change --------------------------------------Average daily production: Natural gas (Mcf/d) 12,472 18,777 (34) Liquids (Oil and NGLs) (Bbls/d) 523 509 3 Oil equivalent (boe/d) 2,602 3,638 (28)Average sales price: Natural gas ($/Mcf) 4.01 5.37 (25) Liquids (Oil & NGLs) ($/Bbl) 76.60 63.56 21 Oil equivalent ($/boe) 34.64 36.59 (5)Operating expenses ($/boe) 9.65 10.15 (5)Operating netback (6) ($/boe) 19.37 22.74 (15)Wells drilled gross (net) 5 (3.8) 5 (4.5) - ----------------------------------------------------------------------------Notes:(1) Petroleum and natural gas revenue and pricing includes any realized hedging gains or losses from commodity contract settlements. (2) Cash flow from operations or operating cash flow does not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS"). Please refer to the Reader Advisories per below. (3) Comparative net income, cash flow from operations and total capital expenditures for the three months ended March 31, 2010 has been restated for the effect of adopting IFRS. (4) Net debt is not a recognized measure under IFRS. Please refer to the Reader Advisories per below. (5) As of June 7, 2011, common shares outstanding were 84.3 million. (6) Operating netback is not a recognized measure under IFRS. Please refer to the Reader Advisories per below. The Company's unaudited interim financial statements and associated Management's Discussion and Analysis ("MD&A") for the three month period ended March 31, 2011 will be available on RMP's website at within "Investor Relations" under "Financial Reports". Additionally, these documents will be filed, in due course, on the System for Electronic Document Analysis and Retrieval ("SEDAR"). These documents can be retrieved electronically from the SEDAR system by accessing RMP's public filings under "Search for Public Company Documents" within the "Search Database" module at Oil and Natural Gas Liquids Natural Gas and Natural Gas Liquids----------------------------------------------------------------------------Bbl barrel Mcf/d thousand cubic feet per day ----------------------------------------------------------------------------boe barrels of oil equivalent NGLs natural gas liquids ----------------------------------------------------------------------------Bbls/d barrels per day ----------------------------------------------------------------------------boe/d barrels of oil equivalent per day ----------------------------------------------------------------------------Reader AdvisoriesThe information in this news release contains certain forward-looking statements. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "approximate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe", "would" and similar expressions. These statements involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control, including: the impact of general economic conditions; industry conditions; changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; fluctuations in commodity prices and foreign exchange and interest rates; stock market volatility and market valuations; volatility in market prices for oil and natural gas; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions, of reserves, undeveloped lands and skilled personnel; assessments of the value of acquisitions; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry ; geological, technical, drilling and processing problems and other difficulties in producing petroleum reserves; and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits that the Company will derive from them. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The Company's forward-looking statements are expressly qualified in their entirety by this cautionary statement. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements.In this news release, reserves and production data are commonly stated in barrels of oil equivalent ("boe") using a six to one conversion ratio when converting thousands of cubic feet of natural gas ("mcf") to barrels of oil ("bbl") and a one to one conversion ratio for natural gas liquids ("NGLs"). Such conversion may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.As an indicator of the Company's performance, the term cash flow from operations or operating cash flow contained within this news release should not be considered as an alternative to, or more meaningful than, cash flow from operating, financing or investing activities, as determined in accordance with International Financial Reporting Standards ("IFRS"). This term does not have a standardized meaning, nor is it a financial measure, under IFRS. Cash flow from operations is widely accepted as a financial indicator of an exploration and production company's ability to generate cash which is used to internally fund exploration and development activities and to service debt. This measure is widely used by shareholders and investors in the valuation, comparison and investment recommendations of companies within the natural gas and crude oil exploration and production industry. Cash flow from operations, as disclosed within this news release, represents cash flow from operating activities before any asset retirement obligation cash expenditures and before changes in non-cash operating activities working capital. The Company presents cash flow from operations per share whereby per share amounts are calculated consistent with the calculation of earnings per share.Net debt refers to outstanding bank debt plus working capital deficit (excludes current unrealized amounts pertaining to risk management commodity contracts) plus long-term accounts receivables. Net debt is not a recognized measure under IFRS.Operating netbacks refers to realized wellhead revenue less royalties, operating expenses and transportation costs per barrel of oil equivalent ("boe").FOR FURTHER INFORMATION PLEASE CONTACT: Craig StewartRMP Energy Inc.Executive Chairman(403) 215-2940craig.stewart@rmpenergyinc.comORJohn FergusonRMP Energy Inc.President and Chief Executive Officer(403) 215-2940john.ferguson@rmpenergyinc.comORDean BernhardRMP Energy Inc.Vice President, Finance and Chief Financial Officer(403)