StonePoint Energy Inc. Announces Year End Financial and Operating Results and Activity Update
StonePoint Energy Inc. (TSX VENTURE:STO) (“StonePoint” or the “Company“) is pleased to announce it has filed on SEDAR its audited financial statements and related management’s discussion and analysis (“MD&A”) for the year ended December 31, 2014 as well as its Annual Information Form (“AIF”). The financial statements, MD&A and the AIF will be available for review on SEDAR at www.sedar.com as well as the Company’s website at www.stonepointenergy.com.
The fourth quarter saw StonePoint close its recapitalization of Blackdog Resources allowing the Company to immediately begin work on executing its growth strategy. Prior to year end, the Company built an initial position in the Valhalla area which currently consists of five sections (3.0 net) of highly prospective Montney lands. In addition, the Company participated in the re-completion of an existing vertical well in which three metres of perforations in the Mid-Montney were fracture stimulated. The well production tested for approximately two days with a final gross rate of 0.7 MMcf per day and a flowing tubing pressure of 300 psi. The well’s performance is a positive indication of the potential of the Montney zone and the Company is currently working on plans for a follow up horizontal well.
The Company has also accumulated a small exploration position targeting the Dunvegan Formation in the Valhalla/Elmworth area. Plans to drill a horizontal well in 2015 are ongoing with an anticipated spud date in the third quarter.
StonePoint had a positive cash position of approximately $15 million at the end of 2014 and is anticipating a capital budget of $3.5 – $4.0 million for the second half of 2015. It is expected that with a successful Dunvegan well the Company will be in a favourable cash flow position in later 2015 with sufficient funds to pursue further drilling opportunities.
StonePoint’s current inventory of drilling opportunities includes the following:
|Upper Mid Montney||12/9.9|
|Lower Mid Montney||6/3.4|
As previously released, the Company has Proven plus Probable gross reserves of 2,218 MBoe; Total Proved gross reserves of 1,029 MBoe; and Proved Developed Producing gross reserves of 281 MBoe, an increase of a 399%, 270% and 646% respectively over comparable December 31, 2013 reserve balances. This translates into a year end net asset value of $0.14 per share based on Trimble Engineering Associates Ltd.(“Trimble”) January 1, 2015 price forecast discounted at 10%.
With continued weakness in commodity prices, the Company has evaluated a number of potential acquisitions both corporate and asset-based and is beginning to see the quality of offerings improve. We anticipate continued weakness in the commodity price environment and believe that prices will begin moving towards purchase price multiples that are more attractive through the balance of the year.
StonePoint also announces that it has set June 3rd, 2015 as the date for its annual and special meeting of shareholders. In addition to the annual business to be conducted at the meeting, it is expected that shareholders will be asked to consider certain special business including passing a special resolution approving a reduction in the stated capital of the Company. This will provide StonePoint greater flexibility to buy back some of its outstanding common shares pursuant to a normal course issuer bid that the Company intends to proceed with subject to shareholders approving the reduction in the stated capital and the receipt of customary stock exchange approval. Further details in respect of the business to be conducted at the annual and special meeting, including the proposed reduction of stated capital, will be set forth in the information circular to be sent to shareholders in respect of the meeting and which will be available under the Company’s profile on SEDAR atwww.sedar.com.
The Company is also pleased to provide an updated corporate presentation available on its website at www.stonepointenergy.com.
Forward Looking Statements
This news release may include forward-looking statements including opinions, assumptions, estimates, and, more particularly, statements concerning the Company’s drilling inventory, plans and timing for drilling of additional wells, second half 2015 capital expenditure budget and anticipation that the Company will be in a favourable cash position in later 2015 with sufficient funds to pursue further drilling opportunities.
When used in this document, the words “will,” “anticipate,” “believe,” “estimate,” “expect,” “intent,” “may,” “project,” “should,” and similar expressions are intended to be among the statements that identify forward-looking statements.
The forward-looking statements are founded on the basis of expectations and assumptions made by StonePoint. Forward-looking statements are subject to a wide range of risks and uncertainties, and although StonePoint believes that the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will be realized. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including, but not limited to, regulatory and third party approvals not being obtained in the manner or timing anticipated, the ability to implement corporate strategies, the state of domestic capital markets, the ability to obtain financing, volatility of commodity prices, changes in general market conditions and other factors more fully described from time to time in the reports and filings made by StonePoint with securities regulatory authorities.
Except as required by applicable securities laws, StonePoint does not undertake any obligation to publicly update or revise any forward-looking statements.
Reserves disclosure herein is based on independent evaluation report dated February 2, 2015 prepared by Trimble effective as at December 31, 2014 (the “Trimble Report“). The net present value of future net revenue of reserves does not represent the fair market value thereof.
Net Asset Value
Net asset value calculation is based on proved plus probable reserves at a 10% discount rate of $14.3 million, approximately $15 million net cash on hand at December 31, 2014, no value attributed to undeveloped land and 214.4 million common shares outstanding.
The drilling locations disclosed herein include proved locations, probable locations and unbooked locations. Proved and probable locations are derived from the Trimble Report and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Of the 55 gross drilling locations identified herein, four are proved locations, three are probable locations and 48 are unbooked locations. Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on our evaluation of applicable geological, seismic, engineering, production and reserves information. There is no certainty that we will drill all unbooked drilling locations and, if drilled, there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been de-risked by existing wells in relatively close proximity to such unbooked drilling locations, other unbooked drilling locations are further away from existing wells where management has less information about the characteristics of the reservoir and, therefore, there is more uncertainty whether wells will be drilled in such locations and, if drilled, there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.
Well test rates disclosed herein are not determinative of the rates at which the well will continue to produce and decline thereafter and are not necessarily be indicative of long-term performance or ultimate recovery.
Barrels of Oil Equivalent
Barrels of oil equivalent may be misleading, particularly if used in isolation. A Boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.
Oil and Natural Gas Liquids
|Bbl||barrels||Mcf||thousand cubic feet|
|Bbl/d||barrels per day||Mcf/d||thousand cubic feet per day|
|NGLs||natural gas liquids||MMcf/d||Million cubic feet per day|
|Boe||barrels of oil equivalent|
|Boe/d||barrels of oil equivalent per day|
|MBoe||thousands of barrels of oil equivalent|
|Liquids||light oil, heavy oil, and NGLs|
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.