Eagle Energy Inc. (TSX:EGL) ("Eagle") is pleased to report its financial and operating results and its reserves information for the year ended December 31, 2016.
Richard Clark, Chief Executive Officer, commented, "Eagle closed out 2016 with strong reserve metrics, production exceeding the upper end of our guidance range, monthly operating costs at the lower end of our guidance range and ending debt levels as expected. In addition, with our March 13, 2017 announcement of a new four year secured term loan with White Oak Global Advisors, LLC, we have expanded our borrowing capacity by 24% and established a foundation upon which we can execute our new growth strategy over the next four years and accelerate the development of our low risk drilling inventory."
Eagle's reserves data and other oil and gas information is included in its Annual Information Form dated March 16, 2017 for the year ended December 31, 2016 ("AIF"). The audited consolidated financial statements, management's discussion and analysis and AIF have been filed with the securities regulators and are available online under Eagle's issuer profile on SEDAR at www.sedar.com and on Eagle's website at www.EagleEnergy.com.
Highlights for the Year ended December 31, 2016
Eagle achieved the following results in 2016:
Term Loan Financing - $CA 87 million ($US 65 million) - closed March 13, 2017
Highlights of 2017 Budget
On March 13, 2017, Eagle announced its 2017 budget, with the following highlights:
Eagle's 2017 guidance for its capital budget, average production and monthly operating costs together with resulting funds flow from operations, ending net debt and field netback (excluding hedges) (based on management's assumptions) remains unchanged from what Eagle previously announced on March 13, 2017.
(1) The 2017 capital budget of $22.8 million consists of $US 12.5 million for Eagle's operations in the United States and $6.6 million for Eagle's operations in Canada.
(2) 2017 production is forecast to consist of 84% oil, 3% NGLs and 13% natural gas. These numbers include working interest and royalty interest volumes.
(3) Operating expense guidance is stated on a per month basis rather than per boe basis due to the mostly fixed nature of the costs.
(4) 2017 funds flow from operations is expected to be approximately $16.0 million based on the following assumptions:
(a) average production of 3,900 boe/d (the mid-point of the guidance range);
(b) pricing at $US 55.46 per barrel WTI oil, $US 3.36 per Mcf NYMEX gas, $CA 2.79 per Mcf AECO and $US 19.41 per barrel of NGL (NGL price is calculated as 35% of the WTI price);
(c) differential to WTI is $US 3.18 discount per barrel in Salt Flat, $US 3.50 discount per barrel in Hardeman, $CA 11.50 discount per barrel in Dixonville and $CA 8.00 discount per barrel in Twining;
(d) average operating costs of $2.2 million per month ($US 0.8 million per month for Eagle's operations in the United States and $1.2 million per month for Eagle's operations in Canada), the mid-point of the guidance range; and
(e) a foreign exchange rate of $US 1.00 equal to $CA 1.30.
(5) This figure assumes average operating costs of $2.2 million per month (the mid-point of the guidance range) and a $US 55.46 WTI price. Field netback is a non-IFRS financial measure. Refer to the section below titled "Non-IFRS Financial Measures".
Updated Dividend Strategy
Concurrent with embarking on a more growth oriented strategy, on March 13, 2017, Eagle announced the suspension of its dividend following the payment of its February dividend. The February dividend of $0.005 per common share of Eagle that was previously declared on February 15, 2017 for shareholders of record on February 28, 2017 will still be paid on March 23, 2017.
Previously, Eagle focused on a sustainable business model with capital expenditures using less than 100% of its annual cash flow to deliver total returns to its shareholders through both dividends and modest production growth. However, Eagle's capital budget for 2017, a year in which Eagle plans to build the platform for future reserves and production growth, requires 145% of Eagle's 2017 expected cash flow. This decision makes the payment of a dividend neither sustainable nor sensible. When Eagle has successfully implemented this capital intensive phase of its growth, the Board may consider reinstating an appropriate dividend.
Year-end Reserves Information
An independent evaluation of Eagle's U.S. reserves was conducted by Netherland, Sewell & Associates, Inc. and of Eagle's Canadian reserves by McDaniel & Associates Consultants Ltd. These reserves evaluation reports are effective December 31, 2016 and were prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Details regarding Eagle's reserves and oil and gas assets are set forth in Eagle's AIF.
2016 Year-End Reserves Report - Highlights
About Eagle Energy Inc.
Eagle is an oil and gas corporation with shares listed for trading on the Toronto Stock Exchange under the symbol "EGL".
All material information about Eagle may be found on its website at www.EagleEnergy.com or under Eagle's issuer profile at www.sedar.com.
SOURCE: Eagle Energy Inc.
The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.