Tamarack Valley Energy Ltd. Announces 2016 Financial and Operating Results with Record Fourth Quarter 2016 Production and Board Appointment
Tamarack Valley Energy Ltd. (TSX:TVE) ("Tamarack" or the "Company") is pleased to announce its financial and operating results for the three and twelve months ended December 31, 2016, along with the appointment of Mr. Ian Currie to Tamarack's Board of Directors.
2016 Financial and Operating Highlights
2016 In Review
This past year was one of true transformation and unprecedented growth for Tamarack, demonstrating continued success in the execution of its strategy while navigating through another challenging year for commodity markets. The Company increased annual production volumes by 22% to 10,344 boe/d (54% liquids), compared to 8,448 boe/d in 2015 as a direct result of higher production volumes from its successful 2016 drilling program, capital efficiencies that exceeded expectations, and the impact of the strategic Penny and Redwater / Wilson Creek acquisitions that closed in July. Tamarack achieved record production of 11,453 boe/d during the fourth quarter of 2016, a 6% increase over the 10,790 boe/d produced in the third quarter of 2016, and higher than the Company's target 2016 exit rate of 11,000 boe/d.
Year-end 2016 net debt totaled $52 million, a reduction of $46 million from year-end 2015, resulting in a net debt to fourth quarter 2016 annualized funds from operations ratio of 0.6 times, a significant improvement over the 1.5 times ratio at December 31, 2015. Tamarack's debt reduction focus during the first half of 2016 positioned the Company to close two key acquisitions in July of 2016, which added approximately 1,900 boe/d of predominantly light oil and natural gas liquids production. The first was comprised of a producing, light oil pool at Penny (the "Penny Acquisition") in southern Alberta, and the second was the consolidation of assets with significant key infrastructure at Redwater/Wilson Creek (the "Redwater / Wilson Creek Acquisition"). The assets acquired through these transactions outperformed during 2016, producing 25% more to date than originally forecast with decline rates much shallower than expected. In addition, after investing approximately $90 million in 2016 on these assets ($84 million for the acquisition and approximately $6 million for capital), the independent year end 2016 reserves evaluation reflected $110 million of PDP before-tax net present value of future net revenue (discounted at 10%) ("NPV10BT") and $247 million of 2P NPV10BT value, increases of 1.2 and 2.7 times, respectively.
The Company's strong balance sheet and previous experience with Viking oil in Alberta, set the stage for the Viking Acquisition which closed on January 11, 2017, and elevated Tamarack to the position of an intermediate producer and one of the largest land bases within the Saskatchewan / Alberta light oil Viking fairway. The Viking Acquisition, similar to each of the Company's transactions completed to date, incorporates Tamarack's strategy of adding high-quality, oil-weighted assets which, on a half cycle basis, can achieve a capital cost payout of 1.3 years or less while maintaining balance sheet flexibility. The Company's inventory of identified, high-quality drilling locations that pay out in 1.5 years or less at current strip prices now totals over 800 net locations, fueling longer-term organic growth with forecast production and cash flow per share growth anticipated in 2017 and beyond. The actions and strategic decisions Tamarack made during 2016 have contributed to securing the Company's long-term future sustainability and financial flexibility, while clearly demonstrating the strength of Tamarack's unique returns-based growth model.
To date in the first quarter of 2017, Tamarack is pleased to confirm that it has drilled 35 (32.1 net) horizontal Viking light oil wells, 8 (7.3 net) extended reach horizontal Cardium light oil wells, 3 (3.0 net) heavy oil wells in Hatton and one net Notikewin liquids-rich natural gas well. This is the most active quarter in the Company's history for drilling and capital activity, and Tamarack is pleased with the operational and safety performance the team has achieved thus far. Of these wells, a total of 27 (25.1 net) new wells are currently on production, which includes 22 (20.5 net) horizontal Viking light oil wells, 3 (2.6 net) extended reach horizontal Cardium light oil wells, one net heavy oil well in Hatton and one net Notikewin liquids-rich natural gas well. Production additions from each of these new wells are contributing to the Company's current production of approximately 19,750 boe/d and Tamarack remains on target to meet its average first half production guidance range of 18,500 to 19,000 boe/d.
Tamarack anticipates completing its first half drilling program early in the second quarter, pending surface access, by fracture stimulating and equipping for production the remaining 20 (18.3 net) wells, bolstering the Company's positive production momentum through the first half of 2017.
New Board Member Appointment
Tamarack is pleased to announce the appointment of Mr. Ian Currie to its Board of Directors. Mr. Currie is a professional engineer with over 30 years of oil and gas experience, and is currently the President and CEO of Spur Petroleum Ltd., a privately-held oil and gas exploration and production company. Previously he served as President and CEO of Spur Resources, Ltd. from 2006 until its acquisition by Tamarack in January, 2017. Prior thereto, he was Vice President, Operations at Profico Energy Management from its inception in 2000 until its acquisition in 2006, and held senior operational roles with Renaissance Energy Ltd. since 2002.
Tamarack also confirmed it has filed its Annual Information Form ("AIF") today on SEDAR, which includes information pursuant to the requirements of National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") of the Canadian Securities Administrators relating to reserves data and other oil and gas information. In addition, the AIF contains a pro-forma summary of the Viking Acquisition reserves evaluation with an effective date of January 31, 2017, combined with a modified look-ahead summary performed by GLJ Petroleum Consultants, Ltd ("GLJ") on Tamarack's year end 2016 reserves effective January 31, 2017. The AIF can be accessed either on Tamarack's website at www.tamarackvalley.ca or under the Company's profile on SEDAR at www.sedar.com.
The Company has also filed its audited consolidated financial statements for the year ended December 31, 2016 ("Financial Statements") and management's discussion and analysis ("MD&A") on SEDAR. Selected financial and operational information is outlined above and should be read in conjunction with the Financial Statements, which were prepared in accordance with IFRS, and the related MD&A. These documents are also accessible on Tamarack's website at www.tamarackvalley.ca or under the Company's profile on SEDAR at www.sedar.com.
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company committed to long-term growth and the identification, evaluation and operation of resource plays in the Western Canadian Sedimentary Basin. Tamarack's strategic direction is focused on two key principles - targeting repeatable and relatively predictable plays that provide long-life reserves, and using a rigorous, proven modeling process to carefully manage risk and identify opportunities. The Company has an extensive inventory of low-risk development oil locations in the Pembina, Wilson Creek, Garrington and Lochend Cardium fairway and the Redwater shallow Viking play in Alberta. With a balanced portfolio and an experienced and committed management team, Tamarack intends to continue to deliver on its promise to maximize shareholder return while managing its balance sheet.
SOURCE: Tamarack Valley Energy Ltd.
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