Press release from Marketwire
Forent Announces Second Quarter 2012 Financial and Operating Results
Wednesday, August 29, 2012
Forent Announces Second Quarter 2012 Financial and Operating Results07:00 EDT Wednesday, August 29, 2012CALGARY, ALBERTA--(Marketwire - Aug. 29, 2012) - Forent Energy Ltd. (TSX VENTURE:FEN) ("Forent" or the "Company") announced today its second quarter financial results, based on International Financial reporting Standards ("IFRS").The following table provides a summary of Forent's financial and operating results for the three and six months ended June 30, 2012 with comparisons to the three and six months ended June 30, 2011. Forent's financial statements and Management Discussion and Analysis for the three and six months ended June 30, 2012 and 2011 have been filed on SEDAR at www.sedar.com and are available on Forent's website at www.forentenergy.com.All amounts referred to in the press release are in Canadian dollars unless otherwise stated.Selected Financial InformationThree months ended June 30,Six months ended June 30,2012201120122011($)($)($)($)Revenues824,1581,289,5801,714,6142,166,644Net earnings (loss)(692,730)(112,747)(1,742,289)(1,169,230)Net earnings (loss) per share - basic and diluted(0.01)-(0.01)(0.01)Capital expenditures1,266,796778,9762,814,5521,475,817Total assets13,667,84816,156,95613,667,84816,156,956Working capital17,0132,207,42017,0132,207,420Funds provided by operations238,269297,381424,376242,376Financial and Operating Results of the Second Quarter 2012the Company continued to generate positive cash flow in the period amounting to $238,269; annual average oil and gas production decreased by 19 percent compared to 2011; general and administrative expenses decreased 34 percent overall, and fell on a per boe basis by 19 percent to $12.80 per boe; operating expenses decreased 34 percent to $15.39 per boe; and, operating netbacks for the period decreased by 7% to $22.03 per boe. Overview of the Second Quarter 2012The Company had an active second quarter in Nova Scotia drilling South Branch #1, the second well on the Alton Block in Nova Scotia. Forent enjoyed stable oil and gas production over the second quarter, however, third party water volumes at its Mervin, Saskatchewan, salt water disposal facility declined significantly part way through the quarter. Cash flow in the second quarter increased from that received in the first three months of the year, although it was lower than the same quarter of 2011. The Company's share price declined considerably, falling by about 50% by the end of the second quarter, after the results of the South Branch #1 well were announced.Nova ScotiaForent spudded its second exploration well (South Branch #1) on April 19th and completed drilling on April 25th. The well was drilled ahead of schedule resulting in significant cost savings of approximately $300,000 relative to the original budget. The well was positioned on a geophysically determined basement high anomaly where a Gays River reef was anticipated to have been deposited. The well encountered a structurally high basement, however no Gays River reef was detected and no significant hydrocarbon accumulations were observed. As a result, the Company has abandoned the well and recently completed the surface reclamation.While disappointing, the Company is using this information to refine its geological and geophysical models as it continues its exploration endeavors on the Alton Block. It should be recognized that all of the 10 to 15 geophysical anomalies that have been identified on the Alton Block are distinct exploration opportunities, such that a lack of success at any one does not rule out the potential for success at a different location.Montgomery, AlbertaDuring the second quarter the Company continued its efforts to maintain the excellent relationships that it has fostered with the surface rights owners in Montgomery. Forent continues to actively pursue a joint venture partner to share the cost of drilling the initial wells in its highly prospective 29 sections of land.Mervin, SaskatchewanDuring the second quarter of 2012 production averaged slightly more than 140 bbls per day from the Mervin property or about 10 bbls per day greater than the first quarter of 2012. In addition to the oil production, the Company received about 70,000 bbls of third party water for disposal and earned approximately $40,000 in water disposal revenue. We expect production from Mervin to remain relatively stable over the balance of 2012 and for water disposal revenues to increase. We continue to ship most of our production to the US Gulf Coast via rail car and have seen additional revenues of as much as $15 per bbl, as a result of the premium price being offered.Outlook for the balance of 2012Management believes that there is considerable upside in the value of the Company's common shares with successful exploration of its interests at Montgomery, Alberta. The Company has identified more than a dozen conventional drilling locations, including multi-zone, three-way structural closures of significant areal extent, as well as, a number of conventional and unconventional resource play Second White Specs prospects. The Company anticipates completing a farmout agreement in the near future and the drilling of an initial well on the Montgomery lands before the end of 2012.In Nova Scotia, the Company believes that the next step for the Alton Block is a surface geochemical study that can be conducted for approximately $200,000. We are continuing our review of the geological and geophysical data related to the Alton Block, factoring in the results of the two wells drilled earlier this year, in an effort to identify distinctions between the Alton and South Branch locations in order to determine the potential of the three anomalies between the two wells. We intend to look at all alternatives to continue our exploration efforts in Nova Scotia.At Mervin, the Company is continuing its efforts to optimize production and attract additional third party water volumes. The Company is canvasing producers in the area in order to attract additional water volumes and expects that third party water volumes will increase over the coming months. Even with the decline in third party volumes, Forent enjoys significant operating cost savings as a result of owning its own water well and by having its six production wells tied into the facility.As part of our ongoing corporate operations, the board of directors will complete a strategic review, including the potential for the rationalization of assets and where possible, reductions in G&A, in order to maximize shareholder value.Shares of Forent trade on the TSX Venture Exchange under the symbol "FEN.V".Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements such as the estimates of reserves, the references to Forent's exploration program and drilling program and capital expenditures relating to, and timing of, such programs are based on the opinions and estimates at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements. There are uncertainties inherent in forward-looking information, including factors beyond Forent's control, and no assurance can be given that the programs will be completed on time, on budget or at all. In addition, there are numerous uncertainties inherent in estimating reserves, including many factors beyond Forent's control, and no assurance can be given that the indicated level of reserves or the recovery thereof will be realized. Forent undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. Additional information identifying risks and uncertainties that could affect financial results is contained in Forent's filings with Canadian securities regulators, which filings are available at www.sedar.com.FOR FURTHER INFORMATION PLEASE CONTACT: Tom LesterForent Energy Ltd.President, CEO & CFO(403) 262-9444 #email@example.comThe 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 press release.