Tamarack Valley Energy Ltd. Announces Record Second Quarter 2018 Production, Increased 2018 Production Guidance and Strong Capital Efficiencies Through First Half 2018
Calgary, Alberta – August 9, 2018 – Tamarack Valley Energy Ltd. (“Tamarack” or the “Company”) is pleased to announce its financial and operating results for the three and six months ended June 30, 2018. Selected financial and operational information is outlined below and should be read in conjunction with Tamarack’s unaudited condensed consolidated interim financial statements (“Financial Statements”) for the three and six months ended June 30, 2018 and related management’s discussion and analysis (“MD&A”) which are available on SEDAR at www.sedar.com and on Tamarack’s website at www.tamarackvalley.ca.
Tamarack posted another strong quarter in Q2 2018 marked by record production, strong capital efficiencies and free cash flow generation. To date, the Company is tracking ahead of 2018 forecasts, and as a direct result of this outperformance has increased its 2018 annual production guidance to the range of 23,500 to 24,000 boe/d (64 to 66% liquids) from 22,500 to 23,500 boe/d. In addition, the Company’s strong operational execution provides flexibility to allocate capital to projects such as the Veteran waterflood in the latter half of 2018 that will benefit Tamarack into 2019 and 2020 through lower production decline rates without impacting the current year’s volumes. As such, the Company has elected to accelerate approximately $28 million of capital into late 2018 from its preliminary $250 million capital budget for 2019.
The current 2018 capital program, accelerated 2019 capital and current normal course issuer bid (“NCIB”) program is expected to be fully funded within projected adjusted operating field netbacks (previously referred to as “adjusted funds flow”; see Non-IFRS Measures) at current strip prices, staying consistent with strategy. Tamarack’s unwavering commitment to value creation on a per share basis is clearly demonstrated by maintaining sustainability while executing ongoing share repurchases in the open market. Tamarack continues to purchase and cancel shares under its NCIB and purchase shares to be held in trust and used to settle share-based compensation awards. Taking this disciplined, per share approach to managing the business further aligns Tamarack with its shareholders.
Q2 2018 Financial and Operating Highlights
- Achieved record corporate production in Q2/18 of 23,853 boe/d, an increase of 1% over Q1/18 volumes of 23,532 boe/d and an increase of 23% from Q2/17 volumes of 19,336 boe/d.
- Oil and natural gas liquids (“NGL”) weighting was 63% in Q2/18 compared to 59% in the same period of 2017, an increase of 7%, which contributed positively to the Company’s higher netbacks year-over-year.
- Total adjusted operating field netbacks increased 81% to $61.0 million in Q2/18 ($0.27 per share basic and $0.26 per share diluted), from $33.7 million in Q2/17 ($0.15 per share basic and diluted).
- Operating netbacks (excluding the effects of hedging) in Q2/18 were $34.15/boe, an increase of 11% over $30.70/boe in Q1/18 and were 55% higher than $22.09/boe in Q2/17. The operating netback increase in Q2/18 relative to Q2/17 is primarily due to a 12% decrease in net production and transportation costs, a 7% increase in oil and NGL weighting and a 40% increase in the combined average realized prices for oil and NGL.
- Net production and transportation expenses in Q2/18 were 12% lower at $10.48/boe compared to $11.85/boe in Q2/17.
- Maintained healthy net debt to annualized Q2/18 adjusted operating field netback ratio of 0.7 times at the end of Q2/18, compared to 1.1 times at the end of Q2/17, and was drawn $157 million on the Company’s $290 million revolving credit facility (the “Facility”).
- Invested $52.7 million in total capital expenditures or $47.7 million net of dispositions. Capital activities included drilling, completing and equipping one (1.0 net) Cardium oil well, eight (6.5 net) Viking oil wells and one (1.0 net) Penny oil well. The Company also completed and brought on production eight (8.0 net) Viking oil wells that were drilled in late Q1/18 and drilled six (6.0 net) Cardium oil wells, 18 (17.8 net) Viking oil wells and one (1.0 net) Penny oil well that will be brought on production in the third quarter of 2018.
- Reduced share dilution by purchasing and cancelling 1,081,000 outstanding common shares at a total cost of $4,421,000 under the NCIB helping offset the impact of option issuances on share capital. In addition, Tamarack spent $4,000,000 to purchase 970,000 outstanding common shares that are held in trust and used to settle restricted share units (“RSU’s”) upon exercise.
Read More: http://www.tamarackvalley.ca/wp-content/uploads/2018/08/TVE-Press-Release-Q2-2018-August-9-2018-final.pdf