Peyto Exploration & Development Corp. press release
Pine Cliff Energy Ltd. Announces First Quarter Results
TSX - Toronto Stock Exchange · Natural Gas · Natural Gas Liquids · Oil · Canada
CALGARY, May 28 /CNW/ - Pine Cliff Energy Ltd. (www.pinecliffenergy.com) (TSX-V:PNE) is pleased to announce its financial and operational results for the three months ended March 31, 2009.
Highlights
For the three months ended March 31 December 31 March 31 2009 2008 2008 FINANCIAL ($) Revenue - Oil and Gas 193,725 295,944 143,116 Cash Flow from Operations (229,307) (68,211) (204,923) Per Share Basic and Diluted (0.01) 0.00 0.00 Net Loss (498,532) (6,423,691) (317,113) Per Share Basic and Diluted (0.01) (0.14) (0.01) Capital Expenditures and Acquisitions 119,786 1,067,843 281,388 Total Assets 4,966,907 5,570,015 12,221,650 Working Capital 1,903,038 2,316,982 7,937,179 Shareholders' Equity 4,644,004 5,044,701 12,003,398 OPERATIONS Oil and NGL's - Barrels Per Day 1 2 4 Average Price ($ per barrel) 48.06 53.46 56.91 Natural Gas - MCF Per Day 392 453 168 Average Price ($ per MCF) 5.32 6.92 8.17 Total Barrels of Oil Equivalent (BOE) Per Day(1) 64 77 32 (1) Barrels of oil equivalent (BOE) are calculated using a conversion ratio of 6 MCF to 1 barrel of oil. The conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and as such may be misleading if used in isolation.
Report to Shareholders
Pine Cliff Energy Ltd. ("Pine Cliff" or "the Company") is pleased to report its operating and financial results for the three months ended March 31, 2009.
Pine Cliff realized disappointing drill results in Argentina during 2008 and the potential negative political and economic changes in Argentina continue to provide a difficult environment in which to operate. In addition, positive changes in the Canadian energy sector may mean a domestic focus has once again become more favourable than an international focus.
With due consideration given to these factors, the Board of Directors and Management recognize that there is a need to evaluate the overall direction for the Company and are presently assessing various options and opportunities available to add value on behalf of shareholders.
Operations
During the fourth quarter of 2008, Pine Cliff participated in drilling one natural gas well (15 percent working interest) in the Sundance area of Alberta. The well averaged approximately 320 MCF per day net to the Company during the fourth quarter and anticipated production for 2009 is estimated between 150 to 200 MCF per day net to Pine Cliff.
Pine Cliff is giving consideration to participating in one gross exploration well (0.25 net) in the Laguna de Piedra concession, a property in Argentina which the Company has deemed highly prospective. Drilling is expected to take place in late 2009 or early 2010. The Company's share of the costs to drill well is expected to be approximately $500,000.
Financial:
The Company is currently focused on decreasing general and administrative (G&A) expenses and has reduced its consulting services and other international expenses in the second quarter of 2009. As a majority of the G&A expenses relate to its South American activities, a significant reduction in these costs is anticipated.
As of March 31, 2009, Pine Cliff had positive working capital of $1,907,037. These funds will be used to cover the Company's budgeted 2009 capital expenditures of $750,000 in relation to the drilling of its Laguna de Piedra Concession as well as miscellaneous capital costs in respect of its Canadian oil and gas operations.
Outlook
Pine Cliff is indeed operating within challenging circumstances. However, the Board of Directors and management remain optimistic that it will be able to take advantage of the many opportunities that are available and continue to believe that a domestic perspective may once again be more economic than in foreign jurisdictions. As such, the Company will take an aggressive approach in Canada with regard to pursuing acquisitions and other opportunities to add value.
FORWARD-LOOKING INFORMATION
Certain statements contained in this press release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this press release includes, but is not limited to: expected cash provided by continuing operations; future capital expenditures, including the amount and nature thereof; oil and natural gas prices and demand; expansion and other development trends of the oil and natural gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: the risks of foreign operations; foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived therefrom. Except as required by law, Pine Cliff disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
The forward-looking information contained herein is expressly qualified by this cautionary statement.
Quarterly Financial and Operational Highlights
2009 2008 1st 4th 3rd 2nd 1st Financial ($) Revenue - Oil and Gas 193,725 295,944 129,537 138,415 143,116 Cash Flow from Operations (229,307) (68,211) (305,368) (224,141) (204,923) Per Share Basic and Diluted (0.01) (0.00) (0.01) (0.00) (0.00) Net Loss (498,532) (6,423,691) (505,953) (295,111) (317,113) Per Share Basic and Diluted (0.01) (0.14) (0.01) (0.01) (0.01) Capital Expenditures and Acquisitions 119,786 1,067,843 1,511,745 2,516,214 281,388 Total Assets 4,966,907 5,570,015 11,621,915 12,043,617 12,221,650 Working Capital 1,903,038 2,316,982 3,440,165 5,278,074 7,937,179 Shareholders' Equity 4,644,004 5,044,701 11,400,311 12,043,617 12,003,398 Operations Oil and liquids (barrels per day) 1 2 1 - 4 Natural Gas (MCF per day) 392 453 146 142 168
2007 4th 3rd 2nd 1st Financial ($) Revenue - Oil and Gas 112,685 95,160 176,590 198,515 Cash Flow from Operations (234,653) (172,281) (262,144) (115,860) Per Share Basic and Diluted (0.01) (0.01) (0.01) (0.00) Net Loss (381,561) (383,540) (346,274) (270,109) Per Share Basic and Diluted (0.01) (0.01) (0.01) (0.01) Capital Expenditures and Acquisitions 193,350 174,289 233,648 2,196,476 Total Assets 12,445,994 4,173,333 3,946,888 4,211,984 Working Capital 8,378,110 (314,684) 182,319 602,650 Shareholders' Equity 12,205,066 3,371,089 3,749,025 4,008,304 Operations Oil and liquids (barrels per day) 2 1 5 7 Natural Gas (MCF per day) 182 163 226 226
Production Three months ended March 31, December 31, March 31, 2009 2008 2008 Crude oil and NGLs (barrels per day) 1 2 4 Natural gas (MCF per day) 392 453 168 Total BOE per day(1) 64 77 32 (1) Barrels of oil equivalent (BOE) are calculated using a conversion ratio of 6 MCF to 1 barrel of oil. The conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and as such may be misleading if used in isolation.
During the fourth quarter the Company completed and placed on production one gross (0.15 net) natural gas well. The well averaged approximately 320 MCF per day net to the Company during the fourth quarter. Production for 2009 from this well is 258 MCF per day net to the Company. The Company has an expected annual decline rate of approximately 20 percent on its other production.
Revenue
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Revenue: Oil and gas sales 193,725 295,944 143,116 Average Realized Prices Crude oil and NGLs (per barrel) 48.06 53.46 56.91 Natural gas (per MCF) 5.32 6.92 8.17
Revenue from petroleum and natural gas sales for Q1 2009 increased by $50,609 from Q1 2008 due to increased production volumes. A decrease in revenue from Q4 2008 to Q1 2009 was primarily due to lower production volumes and reduced commodity prices for natural gas. The Company did not have hedging agreements in either 2009 or 2008 and presently does not have any future hedging agreements.
Royalties
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Crown royalties 44,556 74,834 34,130 Gross overriding royalties 4,796 10,204 2,738 Total royalty expense 49,352 85,038 36,868
Crown royalties are higher in the first quarter of 2009 compared to the first quarter of 2008 due to higher production volumes and revenue. Gross overriding royalties are also higher for the same reason. Crown and gross overriding royalties were lower for Q1 2009 compared to Q4 2008 due to lower commodity prices and production volumes in Q1 2009.
Interest Income
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Interest income 5,781 13,580 68,168
The Company maintains both Canadian and U.S. investment accounts that pay interest at prime less various percentages as long as the Company maintains certain minimum account balances. The Company was earning interest at higher rates and on an increased cash balance throughout the first quarter of 2008. Interest income for Q1 2009 and Q4 2008 decreased significantly due to the lower cash balance on hand as $5,377,000 was spent on capital projects in Canada and Argentina in 2008.
Production Costs
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Production costs 57,809 49,159 26,249 $ per BOE(1) 10.08 7.27 9.55 (1) Barrels of oil equivalent (BOE) are calculated using a conversion ratio of 6 MCF to 1 barrel of oil. The conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and as such may be misleading if used in isolation.
Production costs were higher in Q1 2009 versus Q1 2008 due to higher production volumes that result in higher compression and processing costs. The increase in production costs in the first quarter of 2009 compared to the fourth quarter of 2008 was due to gas compression and processing cost adjustments.
General and Administrative
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 G&A expense 324,997 339,344 282,129
General and administrative expenditures were similar between Q1 2009 and Q4 2008. The increase in G&A expenses in Q1 2009 compared to Q1 2008 is primarily due to continuous disclosure costs and contractor fees for services provided to the Company's South American activities. The majority of the G&A expenses pertain to the Company's operations in Argentina. With the unsuccessful completion of the three-well drill program on the Canadon Ramirez Concession, the Company's Board of Directors and management are reviewing the Company's involvement in Argentina and have reduced its consulting services and other international expenses in Q2 2009. Pine Cliff does not have any employees at the present time but has engaged Bonterra Energy Corp. (Bonterra Corp) a related party (see Related Party section), to provide management services and engage the services of consultants on a contract or temporary basis. Pine Cliff's subsidiary CanAmericas Energy Ltd. (CanAmericas) has also engaged the consulting services of an individual professional as senior management and officer of CanAmericas.
Foreign Exchange Loss (Gain)
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Foreign exchange loss (gain) 7,043 (71,892) (2,310)
The Company maintains foreign denominated bank accounts to facilitate its foreign operations. The loss on foreign exchange in Q1 2009 relates to the appreciation of the Canadian dollar with the Argentine pesos. The first and fourth quarter gain on foreign exchange relates to the depreciation of the Canadian dollar with the U.S. dollar.
Stock-Based Compensation
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Stock based compensation 97,834 68,081 115,445
The Company has a stock-based compensation plan. The Company records a compensation expense over the vesting period based on the fair value of options granted to employees of the management company (see section "Related Party Transactions"), directors and service providers in respect of the Company. No new options were issued in the first quarter of 2009. Of the options outstanding as of March 31, 2009, $42,500 of stock-based compensation is remaining to be expensed in 2009.
Depletion, Depreciation, and Accretion and Dry Hole Exploration Costs
During the first quarter of 2009, the Company expensed $106,540 (2008 - $65,469) for depletion, depreciation and accretion of its property and equipment. The increase is related to increased production volumes in the first quarter of 2009. The fourth quarter of 2008 had a slightly higher depletion, depreciation and accretion amount of $129,129 due to slightly higher production. The fourth quarter of 2008 also had $6,171,140 of capital costs expensed to dry hole costs as the three well exploration program on the Canadon Ramirez Concession in Argentina was unsuccessful. No amounts were expensed to dry hole costs in 2009.
Income Taxes
The Company follows the liability method of accounting for income taxes under which the income tax provision is based on the temporary differences in the accounts calculated using income tax rates expected to apply in the year in which the temporary differences will reverse. The Company has sufficient tax pools such that it is not liable for current income tax. However the Company is subject to a one percent Argentina capital tax on assets in Argentina. These amounts are deductible from future income earned in Argentina.
The Company has the following tax pools which can be used to reduce future taxable income:
Rate of Utilization % Amount Undepreciated capital costs 25 $ 393,268 Foreign exploration expenditures 10 5,815,989 Share issue costs 20 71,018 Canadian exploration expenditures 100 392,110 Canadian development expenditures 30 544,084 Canadian oil and gas expenditures 10 575,231 Non-capital loss carry forward(x) 100 4,098,164 $11,889,864 (x) $377,869 expires 2026, $929,726 expires 2027, $1,955,891 expires in 2028 and $834,678 expires in 2029
Non-Controlling Interest
A private foreign company (Foreign Corp.) owns seven percent of CanAmericas Energy Ltd. (CanAmericas), a 93 percent owned subsidiary of Pine Cliff. In 2008, losses in CanAmericas exceeded the non-controlling interest investment and therefore none of CanAmericas' loss in 2009 was allocated to the non-controlling interest.
Loss
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Loss 498,532 6,423,691 317,113 Loss per share 0.01 0.14 0.00
The increase in the first quarter loss of 2009 compared to Q1 2008 was predominantly due to decreased interest income, increased depletion costs and increased general and administrative costs. The decrease in the Q1 2009 loss compared to Q4 2008 loss was predominantly due to the provision for dry hole costs of $6,171,140 relating to the unsuccessful exploration drill program on the Canadon Ramirez Concession in the fourth quarter of 2008.
Cash Flow from Operations
Three months ended March 31, December 31, March 31, ($) 2009 2008 2008 Cash flow from operations (229,307) (68,211) (204,923) Cash flow from operations per share (0.01) (0.00) (0.00)
Cash flow deficiency increased in the first quarter of 2009 compared to Q1 2008 as the Company had decreased interest income, increased general and administrative costs and increased production costs which were partially offset by higher oil and gas sales and a reduction in non-cash working capital adjustments. The reduction in cash flow from Q1 2009 compared to Q4 2008 was primarily due to decreased oil and gas sales.
Related Party Transactions
Pine Cliff has a management agreement with Bonterra Corp, a wholly owned subsidiary of Bonterra Oil & Gas Ltd. (a company with common directors and management with Pine Cliff), to have Bonterra Corp provide executive services (President and CEO, CFO and COO), accounting services, oil and gas administration and office administration. The management fee consists of a monthly fee of $10,000 (2008 - $19,800), three percent of net earnings before income taxes plus minor general and administrative expenses incurred by Bonterra that were specifically attributable to Pine Cliff. Total fees for 2009 were $30,000 (2008 - $59,400). As at March 31, 2009, amounts owing to Bonterra Corp were $64 (December 31, 2008 - $592).
Commitments
The Company has a related party management agreement with Bonterra Corp that can be cancelled by giving 90 days notice.
Liquidity and Capital Resources
As of March 31, 2009, Pine Cliff had positive working capital of $1,907,037 (December 31, 2008 - $2,316,982). These funds will be used to cover the Company's budgeted 2009 capital expenditures of $750,000 in relation to the drilling of its Laguna de Piedra Concession if it is drilled in 2009 as well as miscellaneous capital costs in respect of its Canadian oil and gas operations. The Company is currently focusing on reducing general and administrative expenses related to its Argentina operations.
The following consolidated financial statements and notes to the consolidated financial statements have been provided for further details.
Consolidated Balance Sheets
As at March 31, 2009 (unaudited) and December 31, 2008
2009 2008 Assets Current Cash $ 2,013,898 $ 2,624,556 Accounts receivable 92,979 107,200 Prepaid expenditures 37,114 29,602 2,143,991 2,761,358 Property and Equipment (Note 5) Property and equipment 3,998,337 3,878,550 Accumulated depletion and depreciation (1,175,421) (1,069,893) Net Property and Equipment 2,822,916 2,808,657 $4,966,907 $5,570,015 Liabilities Current Accounts payable and accrued liabilities $240,954 $444,376
Asset Retirement Obligations 81,950 80,938 Non-Controlling Interests (Note 4) - - 322,904 525,314 Commitments Shareholders' Equity Share capital (Note 7) 14,588,722 14,588,722 Contributed surplus 820,802 722,968 Deficit (10,765,521) (10,266,989) Accumulated other comprehensive income - - 4,644,003 5,044,701 $4,966,907 $5,570,015