Realized prices up, OpEx and G&A down
Manitok Energy (ticker: MEI) announced second quarter results today, showing a net loss of $8.6 million, or ($0.03) per share.
Manitok reported second quarter production of 5,556 BOEPD, 38% of which was light oil and liquids. This means production is up 55% year-over, as Q2 2016 production averaged 3,587 BOEPD.
Manitok improved its average realized sales price this quarter, receiving $30.29/BOE, up from $29.89/BOE in Q1 2017 and $27.11/BOE in Q2 2016. Expenses declined on a per-unit basis, with operating expenses dropping by 4% to $14.87/BOE and G&A dropping by 45% to $2.79/BOE.
Two acquisitions in Q2
Manitok had several major transactions during Q2.
In June the company closed its acquisition of Craft Oil in an all-stock deal. Manitok paid 56.9 million shares to acquire Craft’s holdings, including $4.5 million in cash, $0.9 million in working capital surplus and 250 BOEPD of production. The two companies have complimentary assets in the Peace River Arch area of Alberta. When both operations are combined, Manitok will be producing 675 BOEPD from the Peace River Arch area.
In May, the company amended the terms of its Lease Issuance and Drilling Commitment Agreement with an Alberta based royalty company.
According to the press release, Manitok has agreed to:
- The early surrender of approximately 148,000 acres of undeveloped leased lands located mostly in the northern end of the Entice block in Manitok’s Beiseker and Strathmore areas and the payment of cash consideration of approximately $1,998,520, with $350,000 having been paid immediately on the execution of Agreement and the remainder to be paid by Manitok following the completion of its previously announced plan of arrangement with Craft Oil Ltd. which is anticipated to be closed on or about June 6, 2017;
- Assign its existing gross overriding royalty (“GORR”) on Section 28-41-07 W5M at Willesden Green, Alberta, grant a 4% GORR on its working interests on developed and undeveloped lands at Willesden Green, Alberta and grant a 4% GORR on its working interest on undeveloped lands at Stolberg, Alberta, and related tax pools; and
- Convey its proprietary interest in various 2D and 3D seismic data sets and related tax pools while obtaining a concurrent 15 year seismic data license to such 2D and 3D seismic data.
In the amended Agreement, the royalty company has agreed to:
- Adjust the remaining drilling and completion expenditure commitment from $56.0 million to $24.0 million, with $8 million required by December 31, 2017 and the remainder by August 31, 2018;
- Conditional upon closing of the arrangement, extend the primary term on 1,554 hectares (3,885 acres) of undeveloped land at Wayne, Alberta that were previously due to expire on June 15, 2017; the renewed primary term will extend these leases for an additional three (3) years; and
- Adjust the agreement terms to provide Manitok with the option to extend the primary term associated with all undeveloped leased lands within the Agreement (expiring on April 30, 2018) for an additional thirty-two (32) months to December 31, 2020 at $600/hectare with no capital commitment in the future, versus the previous $400/hectare plus future capital commitment.
Finally, Manitok agreed to merge with Calgary-based Questfire Energy Corp (ticker: Q/A) to form a new intermediate energy producer.
The transaction value is approximately $55.4 million, including an additional $51.8 million used to pay for Questfire’s bank and infrastructure-backed debt, as well as other Questfire obligations.
The combined companies represent over 10,600 BOEPD of production and a 2P-reserves value of 57 MMBOE. Following the combination, the companies will hold a total of 429,000 undeveloped acres.
