Financial Highlights

Delivering on Expectations for Production and Costs

  • Production averaged 41,233 boe per day, ahead of expectations, primarily due to continued high reliability of our base production. Production in our core areas averaged approximately 21,911 boe per day.

  • Operating costs per boe, net of carry, were $13.40 due to a continued focus on cost controls. Wet weather also caused delays in certain discretionary expenses, including turnarounds and workovers, into the fourth quarter.

  • Funds flow from operations of $32 million ($0.06 per share) was supported by strong production volumes and lower-than-expected operating costs.

Back to Work in the Field

  • Capital expenditures were $13 million during the third quarter of 2016 as we restarted field operations with a four rig program. During the quarter, we drilled two wells in the Cardium, 11 wells in the Alberta Viking, and two gross wells in the Peace River area. Our second half development plan remains on time and on budget and is expected to increase our exit volumes by approximately 3,000 boe per day.

Further Steps in Strengthening the Balance Sheet

  • We closed several asset dispositions for total proceeds of approximately $75 million and associated production of approximately 6,000 boe per day. The Company remains on track to generate total disposition proceeds in the second half of the year between $100 million and $200 million, inclusive of the sales closed in the third quarter.

  • As a result of the asset dispositions closed in the third quarter, with associated production of approximately 6,000 boe per day, and additional dispositions anticipated in the fourth quarter, we are adjusting our full year 2016 production guidance to 52,000 – 55,000 boe per day from 55,000 – 57,000 boe per day. We are maintaining annual production guidance in our Core Areas at 22,000 – 24,000 boe per day. Our full year 2016 capital budget remains unchanged at $90 million, plus $15 million allocated for decommissioning expenditures. Full year guidance is unchanged for both operating costs at $13.50 – $14.50 per boe and for G&A costs at $2.50 – $2.90.

  • In September 2016, we offered $448 million of net proceeds received from dispositions during the year for prepayment of outstanding senior notes. The note holders accepted $437 million which was subsequently prepaid in October 2016. The remaining $11 million was used to repay indebtedness on our syndicated bank facility. This prepayment reduced the outstanding principal on our senior notes to approximately $139 million, lowered the average interest rate on our debt, and reduced the number of noteholders from 36 down to two.

  • As at September 30, 2016, Net Debt was $484 million which included the reduction in long-term debt from the pre-payment completed in October 2016. Additionally, we were in compliance with all of our financial covenants under our lending agreements with Senior Debt to EBITDA of 1.95 times, relative to a 4.5 times limit.

  • In 2016, we recorded a non-cash charge totaling $108 million (2015 – nil) on certain office lease commitments. We will require less office space in the future as we have limited the size and scope of our operations this year.