CALGARY, Alberta, July 31, 2018 (GLOBE NEWSWIRE) -- Toscana Energy Income Corporation ("Toscana" or the "Corporation") (TSX: TEI) announces financial and operating results for the second quarter ended June 30, 2018.
Financial and operating results:
This news release summarizes information contained in the Condensed Consolidated Interim Financial Statements (unaudited) and Management’s Discussion and Analysis (“MD&A”) for the three and six month period ended June 30, 2018. This news release should not be considered a substitute for reading the full disclosure documents, which are available under the Corporation’s profile on SEDAR at www.sedar.com and on the Corporation’s website at www.toscanaenergy.ca.
Toscana continues to execute on its strategy to reduce debt by selling non-core gas weighted assets and increase its crude oil exposure in order to partially offset the effect of continued weak natural gas prices.
Following up with $4.7 million of non-core asset sales (200 boe/d) in the first quarter of 2018, the Corporation disposed of non-operated gas weighted gross overriding revenue stream assets producing approximately 200 boe/d for cash proceeds of $7.5 million in the second quarter of 2018. Sale proceeds were used to initially reduce debt to $13.6 million at June 30, 2018 from $24 million at December 31, 2017. In conjunction with the asset sales, the Corporation renewed its Revolving Operating Credit Facility to $20 million. Toscana also extended the maturity date of its Debentures from June 30, 2018 to June 30, 2021, and internalized its management services to provide greater financial flexibility.
As previously announced on July 23, 2018, the Corporation has entered into a share purchase agreement to acquire Cortona Energy Ltd. for aggregate consideration of approximately $12 million, that, provided all necessary approvals are received and the transaction is successfully closed, will add approximately 250 boe/d of light oil and will consolidate the Corporation’s large oil-in-place Barons oil pool. With the acquisition expected to close on or before August 31, 2018, coupled with the oil enhancement work at Clair and Weyburn in the second quarter of 2018, Toscana expects oil and natural gas liquids production mix to increase from 36% to 46% by the fourth quarter of 2018.
The sale of approximately 400 boe/d of gas weighted assets during the first half of 2018 will be replaced by 250 boe/d of high netback(2) light oil upon the closing of the transaction in late August. The transaction is subject to, among other things, approval by Toscana shareholders which will be sought at a special meeting of shareholders scheduled for August 22, 2018. This transaction will not only be beneficial in the short term, but also longer term as the Barons oil pool is optimized and enhanced through secondary recovery strategies.
| Three months ended | Six months ended | |||||||
| June 30 | June 30 | |||||||
| 2018 | 2017 | Change | 2018 | 2017 | Change | |||
| OPERATIONAL | ||||||||
| Average daily production (boe/d) | 1,627 | 2,221 | (27 | %) | 1,697 | 2,234 | (24 | %) |
| Average prices received ($/boe) | 28.09 | 27.22 | 3 | % | 28.69 | 28.55 | 0 | % |
| FINANCIAL | ||||||||
| Petroleum and natural gas revenue, net of royalty expense ($) (1) | 3,727,179 | 5,623,571 | (34 | %) | 8,081,403 | 11,109,305 | (27 | %) |
| Netback ($) (2) | 620,610 | 2,182,198 | (72 | %) | 1,744,371 | 3,926,423 | (56 | %) |
| Netback per boe ($/boe) (2) | 4.19 | 10.80 | (61 | %) | 5.68 | 9.71 | (42 | %) |
| Funds flow from (used-in) operations ($) (2) | (941,138) | 458,258 | (305 | %) | (630,256) | 1,302,556 | (148 | %) |
(1) Includes royalty revenue
(2) Non-IFRS measures
Non-IFRS measures:
Management uses “net asset value”, “netback”, “funds flow from operations”, “unused portion of credit facility”, “credit facility utilization” and “credit facility availability” to analyze operating performance and to determine the Corporation’s ability to fund future capital investment. These terms, as presented, do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable with the calculation of similar measures for other entities. Readers are cautioned regarding the reliability of such measures.
Operating netback typically equals (a) petroleum and natural gas revenue (including royalty revenues), net of royalty expense (b) realized gains and losses on risk management contracts and (c) less operating costs, net of processing income and is generally calculated on a per boe basis. As a non-IFRS measure, operating netback is an indicator of the financial performance of the Corporation. The Corporation uses such term as an indicator of financial performance because such term is commonly utilized by investors to evaluate companies in the energy sector. The Management of the Corporation believes that operating netback is a useful supplemental measure as it provides investors with information on operating margins per barrel of oil equivalent for such periods.
Management calculates funds flow from operations as net earnings (loss) plus the addition of non-cash items (depletion, depreciation, accretion, share-based compensation, gains or losses on the sale of property and equipment and unrealized gains or losses on risk management contracts, gain on dentures amendments, etc.) and settlement of decommissioning liabilities.
As a non-IFRS measure, these measures are an indicator of the financial performance as it demonstrates the Corporation’s ability to generate the cash necessary to fund future capital investments and to repay debt. The Corporation uses such term as an indicator of financial performance because such term is commonly utilized by investors to evaluate companies in the energy sector. The Corporation believes that these measures are a useful supplemental measure as it provides investors with information of what cash is available in such periods.
Forward-Looking Statements:
This news release contains forward‐looking statements and forward‐looking information within the meaning of applicable securities laws. These statements relate to future events or future performance. All statements other than statements of historical fact may be forward‐looking statements or information. More particularly and without limitation, this news release contains forward‐looking statements and information such as the transaction involving the acquisition of Cortona Energy Ltd., the timing associated with the closing of such transaction, receipt of necessary approvals including Toscana shareholder approval and the timing associated with such approvals, the benefits, both short term and long term, associated with the transaction and the ability of the Corporation to realize such benefits, the timing of the Toscana shareholder meeting, the approximate addition of 250 boe/d of light oil as a result of acquiring Cortona Energy Ltd., and the expectation of increasing the oil and natural gas liquids mix from 36% to 46% by the fourth quarter of 2018. Although management of the Corporation believes that the expectations and assumptions on which such forward looking statements and information are based are reasonable, undue reliance should not be placed on the forward‐looking statements and information since no assurance can be given that they will prove to be correct.
The forward‐looking statements and information contained in this news release are made as of the date hereof and no undertaking is given to update publicly or revise any forward‐looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws or the Toronto Stock Exchange. The forward-looking statements or information contained in this news release are expressly qualified by this cautionary statement.
About Toscana Energy Income Corporation
Toscana Energy Income Corporation is a conventional oil and gas producer with the mandate to acquire high quality, long life oil and gas assets including royalties, non-operated working interests and unitized production for yield and capital appreciation.
For further information, please contact:
Joseph S. Durante, Chief Executive Officer
Tel: (403) 410-6793
Fax: (403) 444-0090
SOURCE: Toscana Energy Income Corporation