CST: 27/08/2016 17:13:10   

Lightstream Announces Fourth Quarter and Year-End 2015 Results

176 Days ago

CALGARY, ALBERTA--(Marketwired - Mar 3, 2016) - Lightstream Resources Ltd. (the "Company" or "Lightstream") (TSX:LTS) announces fourth quarter and year-end 2015 financial and operating results. Our audited financial statements and management's discussion and analysis for the year ended December 31, 2015 will be available on the system for electronic analysis and retrieval at www.sedar.com and on Lightstream's website at www.lightstreamresources.com.

Three months ended December 31, Year ended December 31,
($000s, except where noted) 2015 2014 % Change 2015 2014 % Change
Financial
Oil and natural gas sales 94,421 186,861 (49) 460,576 1,107,824 (58)
Funds flow from operations 1 30,083 89,278 (66) 193,623 572,232 (66)
Per share - basic ($) 1 0.15 0.45 (67) 0.98 2.86 (66)
- diluted ($) 1,2 0.15 0.44 (66) 0.96 2.82 (66)
Adjusted Net Income (loss) 1 27,847 160,386 (83) (144,227) 249,922 -
Per share - basic ($) 1 0.14 0.81 (83) (0.73) 1.25 -
- diluted ($)1,2 0.14 0.80 (83) (0.73) 1.23 -
Dividends 1 - 19,247 - - 92,266 -
Per share ($) 1 - 0.10 - - 0.46 -
Capital Expenditures 3 11,925 121,124 (90) 106,571 471,820 (77)
Net capital expenditures 1 13,353 123,194 (89) 95,045 (240,636) -
Total debt 1,4 1,627,752 1,646,862 (1)
Basic common shares, end of period (000) 198,322 197,304 1
Operations
Average daily production (boe/d)
Oil and NGL (bbl/d) 19,662 27,299 (28) 22,670 31,684 (28)
Natural gas (mcf/d) 51,588 55,037 (6) 52,334 52,418 -
Total (boe/d) 5 28,260 36,472 (23) 31,392 40,420 (22)
Average realized prices
Oil and NGL ($/bbl) 45.77 66.81 (31) 49.38 88.00 (44)
Natural gas ($/mcf) 2.45 3.76 (35) 2.72 4.71 (42)
Total (boe/d) 36.32 55.69 (35) 40.20 75.09 (46)
Operating netback
($/boe except where noted) 1,5
Oil, NGL and natural gas revenue 36.32 55.69 (35) 40.20 75.09 (46)
Royalties 4.74 8.76 (46) 4.50 11.06 (59)
Production expenses 12.51 13.47 (7) 12.59 14.14 (11)
Transportation expenses 0.27 0.31 (13) 0.29 0.44 (34)
Operating netback 18.80 33.15 (43) 22.82 49.45 (54)
Realized gain on hedging contracts 8.29 4.35 91 8.19 0.65 -
Operating netback including hedging1 27.09 37.50 (28) 31.01 50.10 (38)

FOURTH QUARTER 2015 HIGHLIGHTS

  • Fourth quarter average production was 28,260 boepd (70% light oil and liquids weighted), a decrease of 7% from the previous quarter.
  • Our operating netback was $18.80/boe, prior to commodity hedges, a 15% decrease from the previous quarter, primarily due to lower realized oil prices. Including realized gains on commodity hedging contracts, our netback was $27.09/boe.
  • Funds flow from operations was $30 million ($0.15 per basic share), 33% below the third quarter of 2015, primarily due to lower commodity prices and production.
  • Capital expenditures for Q4 2015 totaled $12 million (before asset acquisitions and divestitures "A&D"), consistent with our reduced capital program.
  • We recorded a non-cash impairment charge to property, plant and equipment of $370 million ($270 million after tax) in the fourth quarter reflecting lower future commodity prices as estimated by our external reserve evaluator and a change in discount rates applicable to future cash flows.
  • Our semi-annual borrowing base re-determination was completed during the fourth quarter which resulted in a reduction of the borrowing base from $750 million to $550 million providing us with ~$195 million in available liquidity at year-end. Assuming current economic conditions persist, management anticipates the borrowing base could be further reduced at the next re-determination. Management is pursuing various strategies to mitigate this potential liquidity risk.

YEAR-END 2015 HIGHLIGHTS

  • Annual average production was 31,392 boepd (72% light oil and liquids weighted), a decrease of 22% from our average 2014 production level of 40,420 boepd (78% light oil and liquids weighted).
  • Our operating netback was $22.82/boe, prior to commodity hedges, a decrease of 54% primarily due to lower realized oil prices but partially offset by lower royalties and production expenses. Including commodity hedging, our netback was $31.01/boe.
  • Funds flow from operations decreased to $194 million ($0.98 per basic share) from $572 million in the prior year, 66% lower, due primarily to lower commodity prices and production.
  • Capital expenditures of $107 million for 2015 were 77% lower than the previous year. This significant reduction reflects our curtailed capital program and commitment to spend within cash flow to preserve our long-term asset value.
  • 2015 capital spending represented 55% of funds flow from operations. The resulting $87 million surplus cash was applied to reduce our total debt.
  • In July 2015, we issued a total of US$650 million in second lien notes ("Secured Notes"). US$450 million of the secured notes were issued in exchange for US$546 million of senior unsecured notes ("Unsecured Notes"), which were cancelled resulting in a gain of $103 million. A further US$200 million of Secured Notes were issued for cash proceeds, which were applied to reduce the amount outstanding under our secured termed credit facility ("Credit Facility").
  • We reported a net loss of $946 million ($4.75 per basic share) for the year-ended 2015, which included a non-cash impairment charge of $661 million (after tax), compared to a net loss of $446 million in 2014 which included a non-cash impairment charge of $518 million (after tax). The impairment charges are primarily due to the drop in the forecasts of future commodity prices used by our external reserve evaluator and for 2015, a change in discount rates applicable to future cash flows.

OPERATING SUMMARY

AVERAGE DAILY PRODUCTION
Three months ended
December 31, 2015
Year ended
December 31, 2015
Business Unit Oil &NGL (bbl/d) Gas (Mcf/d) Total (boe/d) Oil &NGL (bbl/d) Gas (Mcf/d) Total (boe/d)
Bakken 9,579 4,934 10,401 10,859 5,439 11,765
Cardium 8,332 40,636 15,105 9,816 40,517 16,569
Alberta/BC 1,751 6,018 2,754 1,995 6,378 3,058
19,662 51,588 28,260 22,670 52,334 31,392
Q4 2015 DRILLING ACTIVITY
Drilled Completed On Production Inventory 6
Business Unit Gross Net Gross Net Gross Net Gross Net
Bakken 1.0 0.5 1.0 0.5 - - 1.0 0.5
Cardium 1.0 0.3 3.0 1.8 3.0 1.8 2.0 0.8
Alberta/BC - - - - - - - -
Total 2.0 0.8 4.0 2.3 3.0 1.8 3.0 1.3
2015 DRILLING ACTIVITY
Drilled Completed On Production Inventory 6
Business Unit Gross Net Gross Net Gross Net Gross Net
Bakken 14.0 7.7 17.0 10.7 21.0 14.3 1.0 0.5
Cardium 14.0 10.3 21.0 15.2 21.0 16.3 2.0 0.8
Alberta/BC - - - - - - - -
Total 28.0 18.0 38.0 25.9 42.0 30.6 3.0 1.3

Total production for the three months ended December 31, 2015 decreased 23% from 2014 volumes due to natural well declines exceeding new well production, given our reduced development capital program. The 22% decrease from 2014 volumes was primarily due to the disposition activity at the end of 2014 which represented 6,315 boepd, combined with the reduction in our developmental capital program compared to 2014. Natural gas production has remained largely unchanged from 2014 due to the 3 net liquids-rich Falher gas wells brought on-stream in 2015 in the Cardium business unit.

We brought a total of 14 Bakken wells on production in 2015 compared to 26 wells in 2014. Production in the area averaged 10,401 boepd during the fourth quarter of 2015 representing a 7% decrease from Q3 2015 production and a 26% decrease from Q4 2014 volumes. This was due to continued attenuation of investment in the Bakken given the current challenging economic environment.

In the Cardium business unit, production for the fourth quarter averaged 15,105 boepd, 6% below Q3 2015 production due to third party facility and pipeline restrictions and a 19% decrease from Q4 2014 production volumes due to our conservative capital investment. We brought on two Cardium wells during the fourth quarter of 2015 compared to 13 in Q4 2014 with a total of 16 wells being brought on-stream in the area for the year. Subsequent to year-end, we brought one additional Falher well on production.

In our AB/BC business unit we experienced higher downtime from third party facility restrictions which resulted in production volumes of 2,754 boepd. This represents an 8% decrease from Q3 2015. Fourth quarter 2015 production was 30% lower than fourth quarter 2014 production as a result of limited new well activity in the area.

FINANCIAL SUMMARY

Our strategy for 2015 was to execute a restricted capital program and preserve our long-term asset value until commodity prices and service costs could generate returns that meet or exceed our investment hurdles. Capital spending for the year of $107 million, before A&D, and a drilling program of 18 net wells reflect our 2015 commitment to spend within cash flow and reduce debt, which was achieved even at an average WTI price of US$48.80/bbl.

Funds flow from operations was $194 million, a 66% decrease from 2014 funds flow of $572 million, but exceeded capital spending by $87 million with surplus cash applied to reduce total debt. Our average operating netback was $22.82/boe, a 54% decrease from 2014, mainly attributable to lower commodity prices partially offset by lower royalties and production expenses.

Realized oil and NGL prices were significantly lower in 2015 than 2014 as global oil supply continued to outweigh demand, while a weaker Canadian dollar relative to the U.S. dollar partially offset the impact of these lower prices. Light oil differentials were relatively consistent with 2014 and, while variable, we expect less volatility in the near-term and have hedged a portion of our production to help protect against large swings in the differential in the event current circumstances change.

We recognized a net loss for the year ended 2015 of $946 million due mainly to non-cash impairment charge to property, plant and equipment of $905 million, primarily as a result of reduced commodity prices and a change in discount rates. Impairment losses related to PP&E can be reversed in future periods if the estimated recoverable amount of the asset exceeds the carrying value. The weakening Canadian dollar against the U.S. dollar in 2015 also contributed a $189 million non-cash expense to the net loss which was partially offset by lower depletion and depreciation, lower royalties, lower production expenses, a higher income tax recovery, and a gain on the exchange of our Unsecured Notes.

CURRENT OUTLOOK

Lightstream is committed to preserving the long-term value of our assets through the downturn of this commodity cycle. We are restricting capital spending until the macroeconomic environment supports capital investment and will continue to review our asset base for optimization and EOR opportunities. We had $195 million of available liquidity as of year-end 2015 which is well in excess of our previously announced 2016 first half cash flow from operations deficit of approximately $22 million. Our next borrowing base review is expected to be completed by the end of April 2016. Assuming current economic conditions persist, management anticipates the borrowing base could be reduced at the next re-determination.

Late in 2014 we announced our initiative to sell all or part of our Bakken business unit in order to reduce debt and transform our balance sheet. We are continuing to pursue this initiative, as well as other asset sales and strategies in order to improve our long-term capital structure and liquidity.

2015 FOURTH QUARTER AND YEAR-END FINANCIAL RESULTS CONFERENCE CALL

Lightstream management will be hosting a conference call for investors, financial analysts, media and any interested persons on March 4, 2015, at 9:00 a.m. (Mountain Time) (11:00 a.m. Eastern Time) to discuss Lightstream's 2015 fourth quarter and annual financial and operating results.

The investor conference call details are as follows:

Live call dial-in numbers: 1-416-340-2216 / 1-800-355-4959

Replay dial-in numbers: 1-905-694-9451 / 1-800-408-3053

Passcode: 4082576

http://www.gowebcasting.com/7222

NOTES

  1. Non-GAAP measure. See "Non-GAAP Measures" below.
  2. Consists of common shares, stock options, deferred common shares, incentive shares and convertible debentures as at the period end date.
  3. Prior to asset acquisitions and dispositions.
  4. Total debt includes secured termed credit facility outstanding plus accounts payable less accounts receivable, prepaid expense and long-term investments plus the full value outstanding on the secured notes, unsecured notes and convertible debentures converted to Canadian dollars using the period end exchange rate of 0.72 at December 31, 2015 (December 31, 2014 - 0.86).
  5. Six Mcf of natural gas is equivalent to one barrel of oil equivalent ("boe").
  6. Inventory refers to the number of wells pending completion and/or tie-in at December 31, 2015.

Lightstream Resources Ltd. is an oil and gas exploration and production company focused on light oil in the Bakken and Cardium resource plays. We are committed to delivering industry leading operating netbacks, strong cash flows and consistent operating results through leading edge technology applied to a multi-year inventory of existing and emerging resource play opportunities. Our long-term strategy is to efficiently develop our assets and deliver an attractive dividend yield.

Natural gas volumes have been converted to barrels of oil equivalent ("boe"). Six thousand cubic feet ("Mcf") of natural gas is equal to one barrel of oil equivalent based on an energy equivalency conversion method primarily attributable at the burner tip and does not represent a value equivalency at the wellhead. Boes may be misleading, especially if used in isolation.

Non-GAAP Measures. This press release contains financial terms that are not considered measures under IFRS, such as funds flow from operations, funds flow per share, adjusted net income, adjusted net income per share, dividends, dividends per share, net capital expenditures, total debt, operating netback and operating netback after hedging. Profitability relative to commodity prices per unit of production is demonstrated by an operating netback. Operating netback reflects revenues less royalties, transportation costs, and production expenses divided by production for the period and operating netback including hedging reflects the impact of crude oil and natural gas derivative contracts on the operating netback. These measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to those reported by other companies. These measures are commonly utilized in the oil and gas industry and are considered informative for management and stakeholders as they help evaluate performance and demonstrate the ability to generate sufficient cash to fund future growth opportunities, pay dividends and repay debt.

These measures should not be viewed as an alternative to cash flow from operations, net income or other measures of financial performance calculated in accordance with IFRS. Further information and reconciliations to the most directly comparable IFRS financial measures in respect of these non-GAAP measures is set forth in our MD&A.

Forward Looking Statements. Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to our capital budget for 2016, financial results, results from operations, operating plans and objectives, the relative stability of near term light oil differentials, the sufficiency of our financial resources to fund our operations, the timing and possible outcome of the next borrowing base re-determination and the pursuit of strategic initiatives. The forward-looking statements are based on information currently available as well as certain expectations and assumptions concerning anticipated financial performance, business prospects, strategies and regulatory developments. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to access to capital, commodity price and exchange rate fluctuations, risks associated with the oil and gas industry in general (e.g., operational risks in production; delays or changes in plans with respect to capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, reliance on industry partners, availability of equipment and personnel, changes in applicable regulatory regimes and health, safety and environmental risks)and general economic conditions. Certain of these risks are set out in more detail in our Annual Information Form which has been filed on SEDAR and can be accessed at www.sedar.com. Except as may be required by applicable securities laws, Lightstream assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Lightstream Resources Ltd.
John D. Wright
President and Chief Executive Officer
403.268.7800
Lightstream Resources Ltd.
Peter D. Scott
Senior Vice President and Chief Financial Officer
403.268.7800
Lightstream Resources Ltd.
Annie C. Belecki
General Counsel
403.268.7800
403.218.6075
ir@lightstreamres.com
www.lightstreamresources.com