2012-11-14 23:24:55 -
CALGARY, ALBERTA -- (Marketwire) -- 11/14/12 -- Argosy Energy Inc. ("Argosy" or the "Company")(TSX:GSY) announces its financial and operating results for the three and nine months ended September 30, 2012.
The Company has filed its unaudited interim condensed consolidated financial statements and related Management Discussion and Analysis ("MD&A") for the three and nine months ended September 30, 2012 on www.SEDAR.com. The materials will also be available on the Company's website at www.argosyenergy.com.
Certain selected financial and operational information for the three and nine months ended September 30, 2012 and 2011 are set out below and should be read in conjunction with Argosy's unaudited interim condensed consolidated financial statements and related MD&A for the three and nine months ended September 30, 2012.
HIGHLIGHTS
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Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
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FINANCIAL($000's, except per share
data)
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Oil and gas sales 1,342 2,475 4,763 7,514
Cash flow (1) (384) (321) (2,589) (366)
Per share - basic (0.01) (0.01) (0.09) (0.02)
Per share - diluted (0.01) (0.01) (0.09) (0.02)
Loss and comprehensive loss (995) (1,702) (8,703) (452)
Per share - basic (0.04) (0.08) (0.32) (0.02)
Per share - diluted (0.04) (0.08) (0.32) (0.02)
Capital expenditures (2) 261 7,612 10,984 34,579
Total assets 51,487 74,261 51,487 74,261
Net debt (3) (23,645) (25,181) (23,645) (25,181)
Shareholders' equity 25,362 43,333 25,362 43,333
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COMMON SHARE DATA(000's)
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Weighted average - basic 27,415 21,983 27,415 20,163
Weighted average - diluted 27,415 21,983 27,415 20,163
Issued and outstanding 27,415 22,244 27,415 22,244
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OPERATING(6:1 boe conversion)
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Average daily production
Oil (bbl/d) 87 133 108 108
NGLs (bbl/d) 34 50 39 59
Natural gas (mcf/day) 2,046 2,992 2,209 3,239
Total boe/d 462 682 515 706
Average sales prices
Oil ($/bbl) 77.62 83.04 81.48 88.28
NGLs ($/bbl) 75.36 75.52 83.50 75.34
Natural gas ($/mcf) 2.59 4.09 2.44 4.20
Production and operating cost
($/boe) 23.18 18.97 24.66 13.71
Field netback ($/boe) (4) 5.68 13.62 5.42 19.90
Gross (net) wells drilled
Oil - 1(1) 1(1) 3(3)
Natural gas - - - -
Dry and abandoned - - - -
Total - 1(1) 1(1) 3(3)
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(1) The term "cash flow" should not be considered an alternative to, or
more meaningful than cash flow from operating activities as prescribed
by IFRS as an indicator of the Company's performance. Argosy's
definition of cash flow may not be comparable to that reported by other
companies.
(2) Total capital expenditures, including acquisitions.
(3) Calculated by subtracting the sum of current assets from the sum of
current liabilities (including bank debt) without consideration of
current values of derivative instruments. The term "net debt" is not
prescribed by IFRS; therefore the Company's definition and calculation
may not be comparable to that reported by other companies.
(4) Calculated by deducting operating expenses per boe and royalties per
boe from petroleum and natural gas sales per boe. Field netback is not
a prescribed measure under IFRS and may not be comparable with that
reported by other Companies.
ABOUT ARGOSY ENERGY INC.
Argosy is a junior oil and gas company focused on the exploration for and development of oil and natural gas in western Canada.
The Company's primary asset is a 100% working interest in a 34 section land position within a well- developed portion of the Alberta Basin Bakken prospect trend. Argosy has identified up to 100 development drilling locations on a comprehensive, proprietary 3D seismic base. The Company has drilled one vertical well and two horizontal wells targeting the Wabamun/Big Valley Formation and currently produces approximately100 bbls/d from these wells. On the same land base, the Company has mapped an extension of the Penny area Barons oil pool and has identified an additional 96 development locations on this trend. In addition, the Company currently produces approximately 375 boe/d of natural gas at Claresholm through an 11mmcf/d gas plant (75% working interest). The Company has identified an additional 21 drill-ready natural gas prospects on its land base.
UPDATE
The Big Valley horizontal wells have produced on an intermittent basis since being put on production. Once drilled, a certain amount of experimenting with respect to operating techniques was and will be required to achieve satisfactory results from these wells. As well, production from the new oil wells has been interrupted periodically as the Company gathered information about the geological and production characteristics of the wells. The wells were also shut in for remedial completion and reequipping operations during 2012.
Currently and as at September 30, 2012 the Big Valley wells are shut in to accommodate the removal of rental production and electrical generating equipment with a view to connecting the well sites to the electrical grid and to the installation of Company-owned production equipment. In doing so, the Company's objective is to establish steady production at a lower cost.
The rented production equipment and electrical generation equipment that had previously been used has resulted in higher operating costs for the new oil wells than that which management would consider reasonable over the long run.
Positive horizontal drilling results, continued exploration and corporate financial activity by competitors active in the immediate area further support management's sentiment that the Alberta Bakken constitutes a viable and economic opportunity. However, management continues to believe that further development will require significant capital to achieve its potential. The amount of capital that may be required may well be beyond that which the Company could access at this time.
For the nine month period ended September 30, 2012, the Company reported a net loss of $8.7 million and negative cash flow from operations of $1.9 million, had a working capital deficiency of $1.6 million exclusive of bank debt and had drawn $21.8 million on a Revolving Operating Demand Loan Facility of $22.0 million at September 30, 2012. It is uncertain whether the Company can generate positive cash flow, achieve profitable operations and raise additional capital to fund any reductions in the lines of credit that may be required by any agreement that may be proposed by the Company's bank, fund any possible merger or acquisition opportunities, fund a significant exploration, development or reequipping program and/or meet current obligations and commitments.
The Company has initiated a Strategic Alternatives Process as previously announced on May 11, 2012. Such process is currently ongoing and may include a number of strategic alternatives, such as: a sale of the shares of the Company either in one or a series of transactions or in the form of a financing, a merger, recapitalization, arrangement, amalgamation, a sale of corporate assets, signing of a joint venture agreement, or consideration of other alternatives as the Special Committee sees fit. The Company does not intend to disclose developments with respect to the process unless and until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is required or appropriate.
The Company continues to be in breach of the working capital covenant provision of its Revolving Operating Demand Loan Facility as it was at June 30 and September 30, 2012.
As a result of the covenant breach, the Company is in the process of negotiating a loan extension agreement with its bank. The discussions with the Company's bank in this regard have not yet been concluded. There is no certainty that the lines of credit will be renewed with the same credit limits under the same or similar terms, if at all.
The Company took aggressive steps to drastically reduce general and administrative expenses including reducing staff by approximately half effective June 30, 2012. The effect of this action has had a positive effect on such expenses.
In this press release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (Mcf) of natural gas for one barrel (Bbl) of oil based on an energy equivalency conversion method. Boes may be misleading particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable to the burner tip and does not represent a value equivalency at the wellhead.
Advisory Regarding Forward-Looking Information
This press release contains forward-looking information concerning including but not limited to the Strategic Alternatives Process, the Company's banking arrangements, management's assessment of future plans and operations, capital expenditures and the timing thereof and the results of operations that involve substantial known and unknown risks, uncertainties and assumptions, certain of which are beyond the Company's control. Although Argosy believes that the expectations reflected in the forward-looking statements are reasonable, the forward-looking statements have been based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking information. As such, readers are cautioned not to place undue reliance on the forward-looking information, as no assurance can be provided as to the future results, levels of activity or achievements. Risks include, but are not limited to: uncertainties and other factors that are beyond the control of the Company, risks associated with the oil and gas industry, commodity prices and exchange rate changes, operational risks associated with exploration, development and production operations, delays or changes in plans, risks associated with the uncertainty of reserve obligation to update any forward-looking statements or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Corporation. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Additional information identifying risks and uncertainties is contained in the Company's Annual Information Form as well as other filings of the Company with Canadian securities regulators, which filings are available under the Corporation's profile at www.sedar.com.
Contacts:
Argosy Energy Inc.
Mr. Peter Salamon
President and CEO
Argosy Energy Inc.
Mr. Tom Dalton
Vice President Finance and CFO
Argosy Energy Inc.
2100, 500 - 4th Avenue S.W.
Calgary, Alberta
(403) 269-8846
investor@argosyenergy.com :
www.argosyenergy.com
