Connacher Announces Q2 2015 Results

CALGARY, Aug. 12, 2015 /CNW/ - Connacher Oil and Gas Ltd. (CLC - TSX; "Connacher" or the "Company") announces its financial and operating results for the quarter-ended June 30, 2015 ("Q2 2015") (all amounts are in Canadian dollars unless otherwise noted).

As previously announced, the Company closed its recapitalization transaction on May 8, 2015. Further information relating to the accounting impact of the transaction is available in the Q2 2015 Condensed Interim Financial Statements and Management's Discussion and Analysis available on SEDAR.

Q2 2015 Highlights

• Q2 2015 revenue, net of royalties, decreased 39% to $71.3 million (Q2 2014 - $116.4 million), primarily due to the decline in crude oil prices, partially offset by higher sales volumes
• In Q2 2015, production and operating costs decreased 35% to $20.1 million (Q2 2014 - $31.0 million), primarily as a result of lower natural gas costs and the realization of operating cost reduction initiatives
• Q2 2015 blending costs decreased 31% to $18.3 million (Q2 2014 - $26.4 million), primarily due to lower diluent pricing, partially offset by higher diluent volumes associated with increased bitumen production
• Q2 2015 adjusted EBITDA decreased to $2.6 million (Q2 2014 - $23.3 million), primarily due to lower revenue, net of royalties, partially offset by lower blending and operating costs
• In Q2 2015, the Company generated net income of $442.8 million (Q2 2014 - net loss of $10.0 million), primarily due to the net gain on the Recapitalization transaction; recognition of an unrealized gain on the Convertible Notes; lower blending and operating costs; and lower risk management contract losses
• Q2 2015 funds flow used was $12.5 million (Q2 2014 - funds flow of $1.1 million). The decrease in funds flow in Q2 2015 was primarily due to lower revenue, net of royalties, partially offset by lower interest on long-term debt as the second lien senior notes were exchanged for common shares as part of the Recapitalization
• In Q2 2015, capital expenditures totaled $5.0 million (Q2 2014 - $25.9 million). The reduction in capital expenditures was due to the continued delay of the completion of the SAGD+® process commercial project implementation at Algar and of the mini-steam expansion project at Pod One and deferral of discretionary maintenance capital in light of the decrease in crude oil pricing
• Q2 2015 and YTD 2015 production increased 9% and 11% to 14,951 bbl/d (Q2 2014 - 13,689 bbl/d) and 15,014 bbl/d (YTD 2014 - 13,562 bbl/d), respectively. Production increases were primarily attributable to the Company's six infill wells at Pod One that were brought on production since Q3 2014
• In Q2 2015 and YTD 2015, the Company railed approximately 53% (Q2 2014 - 37%; YTD 2014 - 47%) of its dilbit sales to locations outside of Alberta

Q2 2015 Financial and Operating Highlights

On February 2, 2015, the Company provided a forecast for 2015 in the context of its Recapitalization. The Q2 2015 Management's Discussion and Analysis provides updated guidance with respect to sales and production, bitumen netback, general and administrative expenses, and capital expenditures for the second half of 2015 (the "Revised Forecast").

About Connacher

Connacher is a Calgary-based in situ oil sands developer, producer, and marketer of bitumen. The Company holds a 100 per cent interest in approximately 440 million barrels of proved and probable bitumen reserves and operates two steam-assisted gravity drainage facilities located on the Company's Great Divide oil sands leases near Fort McMurray, Alberta.

Forward Looking Information

This press release may contain forward looking information. Forward looking information is based on management's expectations regarding the Company's future financial position; the Company's future growth, results of operations and production, future commodity prices (including the commodity price protection afforded by the use of risk management contracts) and foreign exchange rates; future capital and other expenditures (including the amount, nature, and sources of funding thereof), plans for and results of drilling activity; environmental matters; business prospects and opportunities; and future economic conditions. Forward looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: that cash flows from operations and the new capital received under the Corporation's first lien credit facility and new second lien convertible notes may not provide adequate funds to fund the Company's operating losses and capital plan; the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of geological interpretations; the uncertainty of estimates and projections relating to production, costs and expenses; and health, safety and environmental risks), risk of commodity price and foreign exchange rate fluctuations, risks associated with the impact of general economic conditions, risks and uncertainties associated with maintaining the necessary regulatory approvals and securing the financing to proceed with the operation and continued expansion of the Great Divide oil sands project.  

Reported average production levels may not be reflective of sustainable production rates and future production rates may differ materially from the production rates reflected in this press release due to, among other factors, difficulties or interruptions encountered during the production of bitumen.

Additional risks and uncertainties affecting Connacher and its business and affairs are described in further detail in Connacher's AIF for the year ended December 31, 2014. Although Connacher believes that the expectations in such forward looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. Any forward looking information included in this press release is expressly qualified in its entirety by this cautionary statement. Any forward looking information included herein is made as of the date of this press release and Connacher assumes no obligation to update or revise any forward looking information to reflect new events or circumstances, except as required by law.

SOURCE Connacher Oil and Gas Ltd.