Gear Energy Ltd. Announces Third Quarter 2017 Operating Results

Gear Energy Ltd. Announces Third Quarter 2017 Operating Results

CALGARY, AB, Nov. 08, 2017 Gear Energy Ltd. (“Gear” or the “Company”) (TSX:GXE) is pleased to provide the following third quarter operating update to shareholders. Gear’s Interim Financial Statements and related Management’s Discussion and Analysis (“MD&A”) for the period ended September 30, 2017 are available for review on Gear’s website at www.gearenergy.com and on www.sedar.com.

Financial Summary

 

Three months ended

Nine months ended

(Cdn$ thousands, per boe amounts)

Sep 30,

2017

Sep 30,

2016

Jun 30,

2017

Sep 30,

2017

Sep 30,

2016

FINANCIAL

 

 

 

 

 

Cash flow from operations (1)

9,960

6,864

10,248

28,937

19,181

  Per weighted average basic share

0.05

0.04

0.05

0.15

0.17

  Per weighted average diluted share

0.05

0.04

0.05

0.14

0.17

Cash flow from operating activities

9,197

9,793

5,362

26,804

18,415

Net income (loss)

(2,705)

(2,470)

3,001

3,282

(11,496)

  Per weighted average basic share

(0.01)

(0.01)

0.02

0.02

(0.10)

  Per weighted average diluted share

(0.01)

(0.01)

0.01

0.02

(0.10)

Capital expenditures

10,513

7,034

6,161

35,458

8,300

Net acquisitions (2)

1,635

58,141

127

1,695

57,687

Net debt outstanding (1)

44,568

41,791

43,409

44,568

41,791

Weighted average shares, basic (thousands)

193,158

168,926

192,922

192,975

113,711

Weighted average shares, diluted (thousands)

193,158

168,926

208,971

209,430

113,711

Shares outstanding, end of period (thousands)

194,968

190,472

192,935

194,968

190,472

 

 

 

 

 

 

OPERATING

 

 

 

 

 

Production

 

 

 

 

 

  Heavy Oil (bbl/d)

4,054

3,854

3,887

3,894

4,133

  Light and Medium Oil (bbl/d)

1,290

716

1,412

1,263

240

  Natural gas liquids (bbl/d)

279

145

322

273

49

  Natural gas (mcf/d)

5,415

4,232

5,334

5,316

2,261

  Total (boe/d)

6,525

5,420

6,510

6,316

4,799

Average prices

 

 

 

 

 

  Heavy oil ($/bbl)

44.00

37.74

44.72

43.96

32.56

  Light oil ($/bbl)

53.12

51.60

59.64

57.76

51.60

  Natural gas liquids ($/bbl)

27.28

20.04

28.11

26.51

20.04

  Natural gas ($/mcf)

1.52

2.43

2.91

2.46

2.04

Netback ($/boe)

 

 

 

 

 

  Commodity and other sales

40.41

36.08

43.77

42.05

31.75

  Royalties

(4.50)

(3.97)

(4.96)

(4.49)

(2.94)

  Operating costs

(16.57)

(16.33)

(17.78)

(16.89)

(15.12)

  Operating netback (1)

19.34

15.78

21.03

20.67

13.69

  Realized risk management gains (losses)

0.11

3.03

(0.77)

(0.61)

6.59

  General and administrative

(2.06)

(2.13)

(2.13)

(2.37)

(2.97)

  Interest

(0.81)

(0.94)

(0.83)

(0.84)

(1.31)

  Transaction costs

(1.97)

(1.13)

  Other

(0.07)

(0.37)

  Corporate netback (1)

16.58

13.77

17.30

16.78

14.50

 

 

 

 

 

 

TRADING STATISTICS

($ based on intra-day trading)

 

 

 

 

 

High

0.86

0.78

0.94

1.26

0.82

Low

0.65

0.54

0.60

0.60

0.25

Close

0.82

0.75

0.74

0.82

0.75

Average daily volume (thousands)

326

492

253

377

301

(1) Cash flow from operations, net debt, operating netback and corporate netback are non-GAAP measures and additional information with respect to these measures can be found under the heading “Non-GAAP Measures” in Gear’s MD&A.

(2) Net acquisitions exclude non-cash items for decommissioning liability and deferred taxes and is net of post-closing adjustments.

QUARTERLY HIGHLIGHTS

  • Drilled 13 gross (13 net) wells with 100 per cent success with development capital expenditures during the third quarter totaling $10.5 million. In addition, Gear closed a minor acquisition for $2.0 million in Wildmere, Alberta.

        Paradise Hill McLaren

  • Drilled ten McLaren heavy oil wells in the third quarter at Paradise Hill for an average all-in cost to drill, complete, and equip of approximately $650,000 per well. Initial results are averaging as expected between 70 to 80 barrels of oil per day per well. 
  • Paradise Hill production averaged approximately 1,100 barrels of oil per day and generated approximately $2.9 million of cash flow from operations through the third quarter. With the completion of the 2017 Paradise drilling program early in the fourth quarter, there are now 28 horizontal wells on production currently producing over 1,700 barrels of oil per day for the month of October 2017.

        Wildmere GP

  • Drilled three dual-lateral GP heavy oil wells in the third quarter at Wildmere for an average all-in cost to drill, complete, and equip of approximately $800,000 per well. For the month of October 2017, these three wells produced approximately 135 barrels of oil per day per well.

        Fourth quarter expected capital activities

  • The current budget includes plans to drill six more wells through the fourth quarter with four of those completed to date. Full year 2017 will include the drilling of 33 gross (33 net) new wells and capital expenditures continue to be forecasted at approximately $45 million. 
  • Realized quarterly cash flow from operations of $10.0 million, a three per cent decrease from the second quarter cash flow of $10.2 million. The small decrease in quarterly cash flow was primarily due to lower realized prices partially offset by a decrease in operating costs.
  • Average production for the third quarter of 6,525 boe per day was stable from the second quarter with the majority of new wells coming on late in the quarter and into October. With the bulk of summer drilling now on production, October sales have averaged over 7,200 boe per day providing a solid foundation for the fourth quarter which is currently forecast to average between 7,300 and 7,400 boe per day, yielding forecasted production growth of approximately 18 per cent over the fourth quarter of 2016.
  • Operating costs for the third quarter decreased by seven per cent from the second quarter to $16.57 per boe. Fourth quarter operating costs per boe are expected to decline further as production grows through the end of the year.
  • Third quarter net debt of $44.6 million is a slight increase over the second quarter amount of $43.4 million. Gear continues to maintain a strong balance sheet with a net debt to annualized cash flow ratio of 1.1 times for the third quarter and a forecasted total 2017 net debt to cash flow ratio at or under 1.0 times.
  • Gear expects to release its 2018 capital budget and guidance in December 2017.
By | 2018-03-19T21:53:34+00:00 November 8th, 2017|2017 News Release, News Release|Comments Off on Gear Energy Ltd. Announces Third Quarter 2017 Operating Results

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