Petrobank Energy & Resources Ltd. (PBG.TO) Tuesday outlined its 2012 strategic objectives and capital plan, aiming to bring the Kerrobert project to commerciality. Capital expenditures in 2012 are expected to be about C$34 million, with approximately half the capital plan considered to be discretionary.
The Calgary, Canada-headquartered company also said recent project planning had shown that a full field development may be optimal for the Dawson field, versus the original plan to implement a multi-stage development.
Capital expenditures in 2012 at Kerrobert are expected to be approximately C$10 million. Break-even cash flow at the Kerrobert project is estimated to occur at less than 1,000 barrels of oil production per day at current commodity prices. The company plans to provide an operational update for the Kerrobert project in the first quarter of 2012.
At Dawson, two demonstration well-pairs had been drilled, with both production wells and one injector well completed. The Kerrobert demonstration project's facilities had been moved to the Dawson site. The company said it has deferred further work on the project until the second quarter of 2012 when the permanent grid power would be tied into the site, avoiding temporary costs.
The regulatory application for the commercial project at Dawson is expected to be submitted by mid-2012. Capital expenditures in 2012 at Dawson are expected to be approximately C$10-C$12 million, including the completion of the demonstration project and on-going capital once operational. The timing of these capital expenditures is discretionary.
At Conklin, operations had been fully suspended while at May River, activity would focus on the company's regulatory hearing on March 6, 2012.
Providing its view on other opportunities, the company plans to drill several stratigraphic wells at Plover and Luseland, near the Kerrobert project, and acquire seismic to further delineate these assets for future development.
Petrobank said its 59 percent owned subsidiary, PetroBakken Energy Ltd., intends to institute a dividend re-investment plan or DRIP in early 2012. Petrobank has elected to participate in the DRIP at a 50 percent level, which, based on current dividend levels, is expected to result in the receipt of over $52.5 million of cash and $52.5 million of PetroBakken common shares per year, paid monthly.
Petrobank expects to fund its 2012 capital expenditure program with dividends received, available credit and cash from operations.
The company announced the passing away of Louis Frank, one of its founders and directors.
On November 14, the company had announced results for the third quarter reporting a 19 percent growth in oil and natural gas sales from continuing operations to C$272.3 million from C$228.5 million last year. Net income from continuing operations, adjusted for gains on derivative financial liabilities, for the three months ended September 30 dropped to C$4.7 million from C$22.3 million in the prior year. The drop was primarily due to a foreign exchange loss compared to a gain in the comparative period, partially offset by higher revenue as a result of higher pricing.
PetroBakken's production for the third quarter decreased 3 percent from last year and averaged 39,074 barrels of oil equivalent per day. PetroBakken's operating netback (excluding hedging activity) of $50.04 per boe in the third quarter increased 15 percent over the prior year period.
Funds flow from operations for the third quarter increased 6 percent to C$147.4 million or C$1.37 per share.
Capital expenditures were C$302.6 million in the third quarter, up four percent from a year ago. The increase was attributable to PetroBakken's drilling program, partially offset by decreased spending at the company's Heavy Oil Business Unit, which acquired Baytex Energy Corp.'s 50 percent working interest in the Kerrobert project for C$18.1 million in the third quarter of the prior year. PetroBakken drilled 96 (70.1 net) wells in the third quarter. Capital expenditures for the Heavy Oil Business Unit totalledC$30.8 million in the third quarter, including $20.0 million on facilities, drilling and completion expenditures.
PBG.TO is currently trading at C$9.29, up C$0.52 or 5.93%, on the Toronto Stock Exchange. Over the past year, the stock traded in a range of C$5.57 - C445.20.
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