Financial Highlights

  • As at June 30, 2016, we were in compliance with all of our financial covenants under our lending agreements. Senior Debt to EBITDA was 3.9 times, relative to a 5.0 times limit. Our Net Debt was $566 million, a decrease from $2.1 billion at December 31, 2015. In 2016, we closed several asset dispositions for total proceeds of approximately $1.3 billion, which led to a significant improvement in our balance sheet and a reduction in long-term debt. This disposition activity resulted in compliance with all financial covenants at June 30 and as we expect to remain compliant as we move forward, we have removed the going concern note included in our first quarter 2016 financial statements.

  • On June 30, 2016, we had excess cash totaling $374 million from disposition proceeds that we can offer to our lenders at our discretion. We anticipate applying this cash to reduce our outstanding debt balance during the second half of the year. Assuming these proceeds were offered to lenders as a pro rata pre-payment, pro-forma Senior Debt to EBITDA at June 30, 2016 would have been 2.3 times.

  • Production in the second quarter averaged 63,568 boe per day, ahead of our expectations, primarily due to continued strong production results from our last winter drilling program. Additionally, fewer wells were shut-in than previously anticipated, which also contributed to our production results coming in ahead of expectations. Production in our core areas was approximately 24,000 boe per day in the second quarter.

  • Operating costs per boe, net of carry, were $12.70 during the second quarter as we successfully progressed on a number of strategies to reduce operating costs, with a specific focus on reducing repair & maintenance and workover activities. Additionally, we continued to benefit from cost reductions across the industry and efficiencies within our organization resulting in actual costs coming in below our estimates. In the first half of 2016, we deferred several discretionary expenses, primarily turnarounds and workover activities, into the second half of the year, which contributed to our operating costs coming in ahead of expectations thus far in 2016.

  • During the second quarter of 2016, we closed several asset dispositions for total proceeds of approximately $1.3 billion. These dispositions included our interests in Slave Point, all of our Saskatchewan properties, and several non-core Alberta assets. We plan to sell the remainder of our non-core assets, with associated production of approximately 20,000 boe per day, by the end of the year.

  • Subsequent to the end of the second quarter, we have entered into agreements to sell certain non-core assets as we continue to progress through our disposition initiatives. Estimated proceeds from these dispositions total approximately $75 million with associated average production of approximately 6,000 boe per day. These dispositions would reduce our pro-forma Net Debt to $491 million.

  • In the second half of this year, we plan to resume our development activities in our core areas. We are increasing our full year 2016 capital budget by approximately $40 million to $90 million, plus $15 million allocated for decommissioning expenditures. We expect the accelerated second half development program will increase our 2016 exit production by approximately 3,000 boe per day.

  • We expect full year 2016 production to average 55,000 – 57,000 boe per day in total, prior to the effect of additional dispositions, and 22,000 – 24,000 boe per day in our core areas. Full year operating costs are expected to average between $13.50 and $14.50 per boe and full year G&A costs are expected to average between $2.50 and $2.90 per boe.