CALGARY, ALBERTA--(Marketwired - Nov. 27, 2015) - Forent Energy Ltd. (TSX VENTURE:FEN) ("Forent" or the "Company") is pleased to announce that it has filed its Financial Statements and Management's Discussion & Analysis, for the nine months ended September 30, 2015, with applicable securities regulatory authorities in Canada. Copies of these documents can be accessed under the Company's profile on the SEDAR website at www.sedar.com and on the Company's website www.forentenergy.com. Also, the Company has updated its corporate presentation and has made it available on its website.
Some people may view these times in the energy business with pessimism. Lack of or limited pipelines make it difficult for Canadian crude to get to world markets and achieve world price. Capital programs that would expand or maintain world oil supplies have been dramatically reduced. Cash flows are down, netbacks have narrowed or disappeared, equity markets have essentially dried up, bankers are nervous and more discerning and some bank lines are being called. Does the world no longer need crude oil? The need for gasoline still appears to exist.
We are not immune to the effects of low oil prices. It has hurt our cash flow and we have reduced compensation to the members of our team in order to reduce our overhead. Forent believes that this current economic environment creates an opportunity. Assets are available to purchase and with few potential buyers. We believe this is the time to acquire assets with large oil in place and long life reserves, positioning ourselves for the future.
We have a Board of Directors with great experience and significant ownership in the company which, when combined with management ownership approaches 50% of the outstanding shares. We are highly motivated and enthusiastic about building the assets of Forent during this time of low product prices.
CRUDE OIL ACQUISITION
Earlier this November, we announced the signing of a purchase and sale agreement to acquire oil weighted production in the Company's core area of Twining near Three Hills, Alberta. When this deal closes in December it will result in the addition of 250 boe/d, which will more than double the Company's current production.
The purchase metrics are excellent and include over 70 gross sections of land (20 net) which have over 30 infill drilling locations identified for future development.
The Acquisition is summarized as follows:
- Average production 250 boe/d (68% oil and liquids)
- Purchase price of $16,000(2) per flowing boe
| |
|
|
|
|
| Reserves Category |
|
MBOE(1) |
|
Acquisition cost per BOE(2) |
| Proved Developed producing |
|
486.4 |
|
$8.22 |
| Total Proved |
|
616.2 |
|
$6.49 |
| Proved plus probable |
|
1,748.7 |
|
$2.29 |
| (1) |
Acquisition gross reserves (before royalties) by Sproule based on a July 31, 2015, mechanical update of the Sproule December 31, 2014 reserve report, prepared in accordance with NI 51-101. |
| (2) |
Based on $4.0 million closing purchase price |
Forent benefits from the Acquisition as follows:
- An increase of 100% to Forent's current production level
- An increase of 62% to Forent's proved developed producing reserves
- An increase of 108% to Forent's total proved plus probable producing reserves
- An increase of 2,000% to Forent's net land holdings in the Twining area
- The Acquisition is expected to lower Forent's general and administration per boe by 50%
Forent's team has identified significant upside including:
- 34 gross development drilling locations
- Stimulation of existing wells to enhance production
- Operational and facility synergies to improve efficiencies
FINANCIAL
Forent's revenue, net of royalties, for the three months ended September 30, 2015 was $523,000 compared with $1.0 million in the prior year quarter. Q3 2015 funds outflow from operations was $362,000 compared with funds flow of $111,000 in Q3 2014. For the nine months ended September 30, 2015, Forent's revenues net of royalties was $1.7 million compared with $2.6 million in the prior year period. Funds outflow from operations for the nine month period was $1.1 million compared with funds flow of $261,000 for the same period in 2014.
Forent's net debt (calculated as bank debt and current liabilities less current assets) at September 30, 2015, was $5.2 million compared with net debt of $5.8 million at the beginning of the year. The Company has access to a credit facility of $7.0 million of which $5.1 million was drawn at the end of the quarter.
PRODUCTION
The Company's production remains steady as oil and natural gas sales during the third quarter averaged 210 boe/d compared with 221 boe/d in Q3 2014. Oil and natural gas sales for the nine month period averaged 217 boe/d compared with 193 boe/d for the same period in 2014.
OUTLOOK
What is ahead for our company? More carefully considered acquisitions. Our strong technical team with the guidance and support of our Board of Directors positions us to survive the downturn in prices and to use this time as an opportunity to acquire prime assets as we build the company.
ADVISORY: Certain information in this news release, including the operations at the Company's properties, constitute forward-looking statements under applicable securities laws. Although Forent believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because Forent can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The forward-looking statements contained in this news release are made as at the date of this news release and the Corporation does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects are forward-looking statements. Although the Company believes the expectations expressed in such forward looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. Investors are cautioned that any such statements are not guarantees of future performance and those actual results or developments may differ materially from those projected in the forward-looking statements. For more information on the Company, Investors should review the Company's registered filings which are available at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of any offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.
BOE presentation:
Barrel ("bbl") of oil equivalent ("boe") amounts may be misleading particularly if used in isolation. All boe conversions in this report are calculated using a conversion of six thousand cubic feet of natural gas to one equivalent barrel of oil (6 mcf=1 bbl) and is based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
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