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PetroShale Announces Financial and Operating Results for First Quarter 2019 and Provides Operational Update


CALGARYMay 27, 2019 /CNW/ – PetroShale Inc. (“PetroShale” or the “Company”) (TSXV: PSH, OTCQX: PSHIF) is pleased to announce our financial and operating results for the three month period ended March 31, 2019.

The Company’s unaudited consolidated interim financial statements and corresponding Management’s Discussion and Analysis (MD&A) for the period will be available on SEDAR at www.sedar.com, on the OTCQX website at www.otcqx.com, and on PetroShale’s website at www.petroshaleinc.com.  Copies of the materials can also be obtained upon request without charge by contacting the Company directly.  Please note, currency figures presented herein are reflected in Canadian dollars, unless otherwise noted. 

FIRST QUARTER 2019 HIGHLIGHTS

  • Production averaged 5,036 barrels of oil equivalent per day (“Boe/d”) (84% liquids) in the first quarter of 2019, an increase of 52% over the same period in 2018. On a weighted average fully diluted basis, first quarter production per share grew by 29% over the first quarter of 2018.
  • Revenue totaled $21.3 million in the first quarter, an increase of 11% over the same period in 2018, due to higher production volumes.
  • Adjusted EBITDA was $9.6 million in the first quarter, 12% lower than the same period in 2018, primarily stemming from lower realized commodity prices.
  • Net loss of $0.8 million ($0.00 per share) was realized in the first quarter of 2019 compared to net income of $2.4 million ($0.01 per share) in the same period of 2018.
  • Operating netback prior to the impact of hedging was $23.86 per Boe for the first quarter of 2019, compared to $42.09 in the first quarter of 2018, reflecting a lower realized oil price coupled with higher per unit operating costs.
  • Capital expenditures totaled $46.6 million for the first quarter with approximately 95%, or $44.6 million, directed to drilling, completions and construction activities and the balance of approximately $2.0 milliondirected towards acquisitions of additional land and working interests in PetroShale’s core operating areas.

FINANCIAL & OPERATING REVIEW 

Three months ended

FINANCIAL
(in thousands, except per share & share data)

March 31,
2019

March 31,
2018

Oil and natural gas revenue

$

21,326

$

19,273

Net income (loss)

(996)

2,351

Per share – diluted

(0.00)

0.01

Adjusted EBITDA(1)

9,581

10,910

Capital expenditures

46,615

53,692

Net debt(1)

213,904

126,818

Common shares outstanding

Weighted average – basic

191,758,236

157,605,212

Weighted average – diluted

191,758,236

162,832,577

OPERATING

Sales volumes

Crude Oil (Bbl/d)

3,584

2,779

Natural gas (Mcf/d)

4,892

1,669

NGLs (Bbl/d)

636

258

Barrels of oil equivalent (Boe/d)(2)

5,036

3,315

Average realized prices

Crude Oil ($/Bbl)

$

64.10

$

74.02

Natural gas ($/Mcf)

0.73

1.76

NGLs ($/Bbl)

5.69

21.30

Barrels of oil equivalent ($/Boe)

$

47.06

$

64.59

Operating netback ($/Boe) (1) (2)

Revenue

$

47.06

$

64.59

Royalties

(9.04)

(12.40)

Realized loss on derivatives

(3.67)

Operating costs

(8.71)

(4.15)

Production taxes

(3.55)

(5.01)

Transportation expense

(1.90)

(0.94)

Operating netback(1)

$23.86

$

38.42

Operating netback prior to hedging(1)

$23.86

$

42.09

(1)

See “Non-IFRS measures”

(2)

See “Oil and Gas Advisories”

MESSAGE FROM THE CEO

The first quarter of 2019 was active as we invested $44.6 million for drilling, completions, pads, facilities and artificial lift in our South Berthold and Antelope areas that included drilling six (5.4 net) wells and fracing two (1.5) net wells. PetroShale also successfully acquired land and working interests within our core South Berthold area for approximately $2.0 million, further strengthening our existing portfolio of high-quality assets in the heart of the North Dakota Bakken / Three Forks play.

Our average quarterly production was 52% higher in the first quarter of 2019 compared to the same period in 2018 as a result of new wells that were brought on-line during 2018.  Average production in the first quarter of 2019 was 16% lower relative to the fourth quarter of 2018 due to downtime at certain wells to install artificial lift and/or shut-ins for offset fracing. Currently these wells are back on-line and will contribute to higher production volumes in the second quarter of 2019.

During the first quarter, the Company’s realized oil prices decreased to an average of $64.10 per Bbl compared to $74.02 per Bbl in the same period of 2018 and $64.89 per bbl  in the fourth quarter of 2018 as a result of lower WTI benchmark prices.  Bakken crude oil price differentials narrowed significantly in the first quarter of 2019 to US$6.35 per Bbl from US$9.61 per Bbl in the fourth quarter of 2018 following a return of refinery capacity and a reduction of Canadian oil supply as a result of Alberta production cuts.

Adjusted EBITDA for the first quarter totaled $9.6 million, 12% lower than the first quarter 2018 and 18% lower than the fourth quarter 2018, reflecting softer prices, lower netbacks and reduced production levels during the period.  Operating netbacks for the first quarter of 2019 averaged $23.86 per Boe, compared to $25.57 per Boe in the fourth quarter of 2018 and $42.09 per Boe (prior to hedging) in the first quarter of 2018, reflecting the commodity price environment coupled with higher operating costs associated with workover activity on both operated and non-operated wells.

Operations Update and Outlook

Our current production has increased to approximately 6,200 Boe/d, which is in line with previously provided guidance of 5,000-6,000 Boe/d on average during the first half of 2019.

Our operated drilling rig continues to do well and will finish drilling four (2.3 net) wells this week and then commence the drilling of three (1.5 net) wells next month. Also, this week we finished fracing three (2.85 net) wells and will commence fracing two (2 net) wells in June and another 4 (2.2 net) wells in August.  These wells and two wells at Primus East are forecasted to be on-line and producing at various times during the second half of the year.  All of this activity will lead to higher production that is expected to average between 10,000 and 11,000 Boe/d over the second half of the year with an expectation to exit 2019 at approximately 11,000 Boe/d.

PetroShale continues to stay active as we carry out our development plans with a focus on strong operational execution and value creation in the heart of the Bakken play.

As always, we wish to thank PetroShale’s employees, directors and shareholders for your continued support and look forward to updating you on our progress and achievements in the future.

((signed))

Mike Wood
President & CEO

About PetroShale

PetroShale is an oil company engaged in the acquisition, development and production of top-tier oil-weighted assets in the North Dakota Bakken / Three Forks.



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