SkyWest Energy Corp ("SkyWest", "we", "us", "our" or the "Company") (TSX
VENTURE:SKW) is pleased to announce its financial and operating results for the
second quarter ending June 30, 2011.
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For the For the For the For the
three month three month six month six month
period ended period ended period ended period ended
($ CDN unless otherwise June 30, June 30, June 30, June 30,
noted) 2011 2010 2011 2010
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FINANCIAL
Revenues 7,115,635 140,482 14,098,571 149,756
Funds from (used in)
operations(1) 3,311,137 (448,299) 6,536,579 (521,439)
Per share (basic) 0.02 (0.02) 0.03 (0.03)
Per share (diluted) 0.02 (0.02) 0.03 (0.03)
Net income (loss) 101,808 (3,022,795) (37,654) (3,098,429)
Per share (basic) 0.00 (0.14) (0.00) (0.20)
Per share (diluted) 0.00 (0.14) (0.00) (0.20)
Capital expenditures,
net 3,380,257 547,091 20,984,448 1,188,549
Total assets 114,464,625 33,091,401 114,464,625 33,091,401
Shareholders' equity 75,715,065 27,722,869 75,715,065 27,722,869
Working capital
(deficiency) (15,361,524) 11,946,076 (15,361,524) 11,946,076
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OPERATIONS
Production sales
Oil (bbls/d) 466 9 515 5
Natural gas (mcf/d) 5,042 178 5,352 89
NGL (bbls/d) 87 1 103 -
Total (boe/d @ 6
mcf:1) bbl) 1,394 40 1,510 20
Average pricing
Natural gas ($/mcf) 3.96 4.23 4.10 4.24
Oil ($/bbl) 97.52 75.66 88.45 76.20
NGL ($/bbl) 79.00 48.67 66.87 48.94
Combined ($/boe) 56.11 38.04 51.60 39.73
Expenses
Operating expenses
($/boe) 13.92 16.92 12.94 20.11
Transportation expenses
($/boe) 2.62 - 2.32 -
Royalty expense ($/boe) 4.62 4.47 4.77 5.07
Netback Combined ($/boe) 34.95 16.65 31.57 14.55
Net Cardium sections 35 15 35 15
Common Shares
Outstanding 202,503,548 102,553,407 202,503,548 102,553,407
Total shares, warrants
and options issued 229,453,224 121,574,235 229,453,224 121,574,235
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(1) Funds from operations are calculated as cash flow from operating
activities before the change in non-cash working capital and is a non-
IFRS measurement (see "Non-IFRS measures").
Message to Shareholders
SkyWest is pleased to provide you with our second quarter 2011 operational and
financial results. SkyWest was able to construct and install its main trunk line
infrastructure at Willesden Green through breakup and this enabled us to tie-in
the Willesden Green 1-2 well which was drilled and completed before breakup. We
also constructed the pipeline from 5-24 into the Conoco Alder Gas Plant and
placed the well on production. Our main focus during breakup was spending
capital on key infrastructure for future development. In other areas we focused
on capital efficiency, lowering operating costs and optimizing our existing
production.
RECENT HIGHLIGHTS
-- Significantly increased production and cash flow from Q2 2010. Q2 2011
production volumes averaged 1,394 boepd versus 40 boepd in Q2 2010. In
Q2 2011, production was approximately 40% oil and NGLs which resulted in
67% of the Company's revenues. Generated funds flow from operations of
$3,311,137 in Q2 2011 versus $(448,299) in Q2 2010.
-- Increased Corporate netbacks to $34.95/boe from $16.65/boe in Q2 2010
(an increase of 110%).
-- Decreased operating costs to $13.92/boe in Q2 2011 from $16.92/boe in Q2
2010.
-- Brought our 60% working interest Carrot Creek 9-14 well on production in
the second quarter and the well has exceeded our type curve and averaged
175 bbl/day of oil over the initial 120 days of production.
-- On July 22nd, 2011, brought our 100% working interest 01-02 Willesden
Green well on production which averaged approximately 400 boepd
(approximately 40% oil and NGLs) of production over its first 30 days of
production.
-- Subsequent to June 30th, 2011, SkyWest successfully drilled 3 (1.95 net)
Cardium horizontal wells. All three wells are scheduled to be completed
and on production by the end of September.
-- Current production is approximately 1600 boepd and does not include the
3 (1.95 net) successful Cardium horizontal wells drilled subsequent to
June 30th or our non-operated, 20% working interest, Ricinus D-3 well
which is expected to come back on in late September at approximately 200
net boepd.
Looking Ahead
The Company, and the industry in general, is experiencing a net decline in
production in the second quarter of 2011 due to an extended break-up.
Fortunately, we were able to begin drilling operations in mid July and we have
drilled 3 wells to date, 2 at Carrot Creek and 1 at Willesden Green. 1 well at
Carrot Creek has been completed and results should be released fairly shortly.
The 2nd well at Carrot Creek is expected to be completed in the fourth week of
August or earlier, followed up by the 1 well at Willesden Green. SkyWest will
continue to drill at Willesden Green until the end of 2011 and plans to drill
another 5 wells in this area. We have reduced our drilling operations to one
drilling rig and will provide a guidance update after our three recent Cardium
horizontals have been completed and brought on production.
The Company also plans on recompleting some existing vertical oil wells in
Saskatchewan. Results in the area have been very positive, increasing production
by 10 fold.
SkyWest will be prudent in monitoring debt to cash flow for this year's capital
program. The Company will make the proper adjustments to our program should
commodity prices fall weaker than expected. We are anticipating oil prices to
range from $75.00 to $90.00 a barrel and gas prices ranging from $3.25 to $4.25
per gj for the remainder of the year.
I would like to thank all our shareholders for their continued support. It is
much appreciated and we look forward to the balance of our 2011 drilling
program.
On behalf of the Board of Directors
Mr. Lawrence Urichuk, President and Chief Executive Officer
Information Regarding SkyWest
SkyWest Energy Corp. is a Cardium focused, public oil and gas exploration and
development company, located in Calgary, Alberta with operations in Alberta.
SkyWest currently trades on the TSX Venture Exchange (TSXV) under the Symbol
"SKW".
Statements herein that are not historical facts may be considered forward
looking statements including management's assessment of future plans and
operations, growth expectations within the Corporation, expected initial
production rates from certain new wells, timing of completion of wells and of
production additions, expected size of various plays, construction or expansion
of facilities and the timing thereof and expected costs and the effects thereof,
drilling plans and the effects thereof. These forward-looking statements
sometimes include words to the effect that management believes or expects a
stated condition or result. All estimates and statements that describe the
Corporation's objectives, goals or future plans are forward-looking statements.
Since forward-looking statements address future events and conditions, by their
very nature they involve inherent risks and uncertainties including, without
limitation, risks associated with the Acquisition, oil and gas exploration,
development, exploitation, production, marketing and transportation, loss of
markets, volatility of commodity prices, currency fluctuations, imprecision of
reserve estimates, environmental risks, competition from other producers,
inability to retain drilling rigs and other services, failure to realize the
anticipated benefits of acquisitions, delays resulting from or inability to
obtain required regulatory approvals and ability to access sufficient capital
from internal and external sources. As a consequence, SkyWest's actual results
may differ materially from those expressed in, or implied by, the
forward-looking statements.
Forward-looking statements or information are based on a number of factors and
assumptions which have been used to develop such statements and information but
which may prove to be incorrect. Although SkyWest believes that the expectations
reflected in such forward-looking statements or information are reasonable,
undue reliance should not be placed on forward-looking statements because
SkyWest can give no assurance that such expectations will prove to be correct.
In addition to other factors and assumptions which may be identified in this
document, assumptions have been made regarding, among other things: the impact
of increasing competition; the ability of SkyWest to obtain equipment and
services in a timely and cost efficient manner; drilling results; the ability of
the operator of the projects which SkyWest has an interest in to operate the
field in a safe, efficient and effective manner; field production rates and
decline rates; the ability to replace and expand oil and natural gas reserves
through acquisition, development or exploration; the timing and costs of
pipeline, storage and facility construction and expansion; future oil and
natural gas prices; currency, exchange and interest rates; the regulatory
framework regarding royalties, taxes and environmental matters in the
jurisdictions in which SkyWest operates; and the ability of SkyWest to
successfully market its oil and natural gas products.
Readers are cautioned that the foregoing list of factors and assumptions is not
exhaustive. Additional information on these and other factors that could effect
SkyWest's operations and financial results are included in reports on file with
Canadian securities regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com). Furthermore, the forward-looking statements contained
in this news release are made as at the date of this news release and SkyWest
does not undertake any obligation to update publicly or to revise any of the
included forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable securities
laws.
BOEs
Disclosure provided herein in respect of barrels of oil equivalent (boe) may be
misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:
1 Bbl is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the wellhead.
Skywest Energy Corp (TSXV:SKW)
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