CALGARY, May 9 /CNW/ - Breaker Energy Ltd. ("Breaker" or "Company") (TSX: WAV.A and WAV.B) is pleased to announce its financial and operating results for the quarter ended March 31, 2007.
Financial and Operating Summary
Quarter Ended
March March %
31, 31, Change
2007 2006
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Financials ($000s except per share amounts)
Petroleum sales 9,650 2,840 240
Natural gas sales 9,906 4,938 101
Processing sales 199 - nm
Total petroleum and natural gas revenue 19,755 7,778 154
Funds from operations(1) 9,210 3,510 163
Per share basic 0.26 0.16 63
Per share diluted 0.25 0.16 56
Net earnings (loss)(2) (187) 425 nm
Per share basic (0.01) 0.02 nm
Per share diluted (0.01) 0.02 nm
Capital expenditures(3) 19,937 7,390 170
Net debt 46,402 12,402 274
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Operating, General and Administrative (G&A)
Production:
Crude oil (bbls per day) 1,683 500 237
Natural gas (mcf per day) 14,746 6,817 116
Total (boe per day) (6:1) 4,141 1,637 153
Average realized price:
Crude oil ($ per bbl) 63.72 65.05 (2)
Natural gas ($ per mcf) 7.46 7.90 (6)
Combined average (incl. processing
revenue) ($ per boe) 53.01 52.80 -
Netback ($ per boe)
Petroleum and natural gas sales 53.01 52.80 -
Royalties (11.53) (9.96) 16
Operating expenses (10.07) (11.59) (13)
Transportation expenses (1.76) (1.92) (8)
Operating netback 29.65 29.33 (1)
G&A expenses (2.76) (3.30) (16)
Interest expense (1.39) (0.50) 178
Corporate netback 25.50 25.53 -
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Common Shares (000s)
Shares outstanding, end of period 35,124 20,464 72
Weighted average Class A shares 34,984 19,564 79
Weighted average Class B shares 900 900 nm
Conversion of Class B shares
- weighted average(4) 1,613 1,875 (14)
Weighted average basic shares
outstanding(4) 36,597 21,439 71
Stock option dilution (treasury method)(5) 435 857 (49)
Weighted average diluted shares
outstanding(4 & 5) 37,032 22,296 66
(1) Management uses funds from operations (before changes in non-cash
working capital) to analyze operating performance and leverage. Funds
from operations as presented does not have any standardized meaning
prescribed by Canadian GAAP and, therefore, may not be comparable
with the calculation of similar measures for other entities.
(2) The net loss reflects an unrealized loss on commodity derivatives of
$350,536.
(3) Capital expenditures includes cash additions for the period,
acquisition additions, and capitalized general and administrative
expense.
(4) For the period ended March 31, 2007 the Class B shares are converted
at the quarter-end Class A share price of $5.58 and added to the
Class A shares to calculate basic shares outstanding. For the period
ended March 31, 2006 the Class B shares are converted at the
quarter-end Class A share price of $4.80.
(5) In computing the net loss per diluted share for the quarter ended
March 31, 2007, nil shares were added to the weighted average number
of shares outstanding because they were anti-dilutive.
Breaker's achievements in the first quarter of 2007 include the following:
- Production growth of more than 153 percent to 4,141 boe per day from
the first quarter 2006 average of 1,637 boe per day. Breaker's 13-15
Girouxville well was shut in for a portion of the quarter in
accordance with its MRL guidelines resulting in a reduction of average
oil production of approximately 200 barrels per day for the quarter.
Company production in April reached approximately 4,500 boe per day
based on field estimates;
- On a per share basis production grew by more than 47 percent from
76.4 boe per million shares in the first quarter of 2006 to 113.2 boe
per million shares in the first quarter of 2007. Breaker has
consistently grown production per share in all ten consecutive
quarters since its initial public offering in 2004;
- Funds from operations grew 163 percent to $9.2 million in the first
quarter of 2007 from $3.5 million in the first quarter of 2006. On a
per share basis funds from operations grew by 63 percent to $0.26 per
basic share in the first quarter of 2007 from $0.16 per basic share in
the first quarter of 2006;
- Reduced operating costs by more than 13 percent to $10.07 per boe in
the first quarter of 2007 from $11.59 per boe in the same period of
2006;
- Maintained access to a significant land base in the Western Canada
Sedimentary Basin, which was approximately 345,000 net acres at the
end of the first quarter of 2007. This was primarily achieved through
a combination of acquisitions, farm-ins and participation at land
sales;
- Realized an average operating netback (defined as revenue per boe;
less royalties per boe, operating costs per boe and transportation
costs per boe) of $29.65 per boe in the first quarter of 2007;
- Breaker's bank line is $71 million and management forecasts a
conservative level of leverage at year-end with a debt to annualized
fourth quarter cash flow ratio of 0.9. At the end of the quarter
Breaker's debt to annualized first quarter cash flow ratio was 1.3;
- Breaker drilled 13 gross (11.75 net) wells in the first quarter, its
most active winter yet, achieving a 77 percent success rate. The bulk
of this activity was at East Prairie, where production has been
increased by more than 60 percent to a current rate of approximately
1,300 boe per day, up from approximately 800 boe per day in the fourth
quarter of 2006;
- Winter activity at East Prairie included: the discovery and
delineation of new light oil pools with internally estimated original
oil in place of 5-10 million bbls gross, and significant gas wells
including a 100 percent working interest well currently producing at
approximately 2.5 mmcf per day;
- Breaker drilled its first horizontal light oil well at Irricana under
budget, encountering over 1,400 metres of net dolomite pay.
The Company is excited as it looks forward to the second quarter. In Irricana Breaker plans to complete its first horizontal light oil well using multi-frac technology and will drill and complete a second well using the same methods. In addition, Breaker plans to recomplete several wells at Irricana and drill three wells at Medicine Hat. In Girouxville Breaker plans to drill 2 gross (1.5 net) deep, light oil exploration wells. Breaker re-iterates its guidance of average production of 4,750 boe per day and exit production of 5,250 boe per day in 2007.
Financial Statements and Management's Discussion and Analysis
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Breaker has filed with Canadian securities regulatory authorities its audited financial statements for the quarter ended March 31, 2007 and the accompanying Management's Discussion and Analysis. These filings are available for review at www.sedar.com.
Breaker Energy Ltd. is a junior oil and gas company focused on creating shareholder value by growing per share production and reserves through acquisitions and a focused exploration, development and exploitation plan.
Breaker has 35,123,674 Class A shares and 900,000 Class B shares outstanding.
Breaker Energy trades on the TSX under the symbols WAV.A and WAV.B.
FORWARD-LOOKING STATEMENTS -
This press release contains forward-looking statements concerning the Company's expectations of future production, cash flow, earnings and expansion of its oil and gas property interests and concerning the Company's exploration and development drilling, seismic operations, regulatory applications, payout estimates, capital expenditures, number and drilling locations for 2007, seismic acquisitions and facility upgrades. These statements are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), acquisitions, commodity price, price and exchange rate fluctuation and uncertainties resulting from competition from other producers and ability to access sufficient capital from internal and external sources. Additional information on these and other risk factors that could affect the Company's operations and/or financial results are included in the Company's reports on file with Canadian securities regulatory authorities.
The forward-looking statements or information contained in this news release are made as of the date hereof and the Company undertakes no obligation 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.
Oil and Gas Advisory
This press release contains disclosure expressed as "Boe/d". Boe means barrel of oil equivalent and Boe/d means Boe per day. All oil and natural gas equivalency volumes have been derived using the ratio of 6,000 cubic feet of natural gas to 1 barrel of oil. Boe equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of 6,000 cubic feet of natural gas to 1 barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.
In this press release: (i) mmboe means million boe; (ii) boe/d means boe per day; (iii) bbls/d means barrels per day; (iv) mcf means thousand cubic feet; (v) mmcf means million cubic feet; (vi) mcf/d means thousand cubic feet per day; and (vii) mmcf/d means million cubic feet per day.
The TSX does not accept responsibility for the adequacy or accuracy of
this release.
%SEDAR: 00021180E