CALGARY, ALBERTA--(Marketwire - Aug. 10, 2011) -
THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO ANY UNITED STATES NEWSWIRE SERVICES OR OTHERWISE FOR DISTRIBUTION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAWS.
Parallel Energy Trust (TSX:PLT.UN) ("Parallel" or the "Trust") is pleased to report its financial and operating results for the second quarter ended June 30, 2011. Parallel's full unaudited financial statements and accompanying Management's Discussion and Analysis will be filed shortly on the SEDAR website (www.sedar.com) and on the Trust's website at www.parallelenergy.ca.
Highlights for the period ended June 30, 2011
- The Trust completed its initial public offering of $342 million and purchased a 51% interest in a liquids-rich natural gas property in the West Panhandle Field in Texas on April 21, 2011. On May 3, 2011, the underwriters exercised their over-allotment option of $51.3 million and the Trust purchased an additional 8% interest in the property, to hold a 59% interest.
- Production for the period from April 21 to June 30, 2011 averaged 3,218 boe/day. During May 2011, there was an outage at a gas plant which processes approximately 2/3 of the Trust's volumes. Without the outage, production would have averaged approximately 3,650 boe/day for the period.
- Five gross wells (three net wells) were drilled during the quarter. All wells are currently on production.
- The Trust entered into several costless collars which fixed the floor price for WTI oil price of US$105.00 for 600 bbls/day and US$106.40 for an additional 200 bbls/day and also fixed the floor price for natural gas at US$4.20 per day for 2,000 mmbtu/day. The costless collars are in place through April 2012.
- Funds from operations was $6.3 million ($27.63 per boe). Cash flow was impacted by the plant outage during May 2011; without the plant outage, cash flow for the period would have exceeded distributions.
- Distributions announced during the quarter totaled $0.175 per unit, being a distribution of $0.10 for the period from April 21 to May 31 and $0.075 for the month of June.
|Summary of Results for the period ended June 30, 2011|
|($000s except were indicated)|
|Natural gas (mcf/day)||6,588|
|Total (@6:1) (boe/day)||3,218|
|Revenue, net of Royalties||9,621|
|Funds from Operations (1)||6,313|
|Capital Expenditures (excluding purchase of 59% interest)||3,217|
|Unutilized portion of committed bank facility||48,000|
(1) Non-GAAP measure. Readers are referred to Advisories at the end of the press release for additional information.
Production for July based on field data was approximately 3,800 boe/day, representing a 13% increase in production from approximately 3,350 boe/day at the time the preliminary prospectus for the initial public offering was filed in March. The Trust has established its capital expenditure plans for 2011 and now expects to spend approximately US$9.7 million on drilling for 2011, somewhat less than what was contemplated in the reserve report included in the Final Prospectus dated April 21, 2011. Production is anticipated to average 4,100 boe/day for the July to December period, with an anticipated exit rate of 4,350 boe/day. Capital expenditures and the resulting production profile will be, in part, dependent on commodity prices.
Based on current commodity prices, Parallel's existing commodity hedges and anticipated production levels, the current distribution level of $0.075 per unit per month would represent a distribution payout of approximately 80% of funds from operations for the remainder of 2011. Once production levels are at the 4,350 boe/day rate, assuming all other variables are unchanged from current expectations and assuming no commodity hedges in place, funds from operations at a WTI oil price in the US$80 to US$85 range would be sufficient to fund both the capital required to maintain production at that level and a distribution of $0.075 per unit per month. Current commodity hedges are in place through April 2012.
"We are very pleased with our first quarter of operations" said Dennis Feuchuk, CEO of the Trust "Recognizing that we are still in the early stages of our multi-year program to fully exploit our asset, Parallel and the operator now have a greater understanding of the field. We have been able to increase production, and at very attractive metrics. Even at current commodity price levels, which are significantly below levels at our initial public offering, we believe that our distribution is sustainable with sufficient cash flow and debt capacity to continue to grow production."
The Trust also confirms that its cash distribution to be paid on September 15, 2011, in respect of the period from and including August 1, 2011 to August 31, 2011, to unitholders of record on August 31, 2011 will be $0.075 per trust unit. The ex-distribution date is August 29, 2011.
ABOUT PARALLEL ENERGY TRUST
Parallel's objectives are to create stable, consistent returns for investors through the acquisition and development of conventional oil and natural gas reserves and production with unexploited low risk potential in certain regions of the United States, and to pay out a portion of available cash to holders of trust units on a monthly basis. The trust units of Parallel are listed on the Toronto Stock Exchange under the symbol "PLT.UN".
Parallel is a "mutual fund trust" under the Income Tax Act (Canada) (the "Tax Act"). The Trust will not be a "SIFT trust" (as defined in the Tax Act), provided that the Trust complies at all times with its investment restriction which precludes the Trust from holding any "non-portfolio property" (as defined in the Tax Act). Further information relating to Parallel and the trust units is set out in Parallel's final prospectus dated April 14, 2011.
This news release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Parallel, including, without limitation, those listed under "Risk Factors" and "Notice to Investors-Forward-Looking Statements" in Parallel's final prospectus filed April 14, 2011 (collectively, "forward-looking information"). Forward-looking information in this news release includes, but is not limited to, Parallel's objectives and status as a mutual fund trust and not a SIFT trust, Parallel's expectations and estimates regarding capital expenditure plans, current and future production rates, commodity prices and foreign exchange rates, funds from operations and distributions. Parallel cautions investors in Parallel's securities about important factors that could cause Parallel's actual results to differ materially from those projected in any forward-looking statements included in this news release. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that the expectations set out in Parallel's final prospectus or herein will prove to be correct and accordingly, prospective investors should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this press release and Parallel does not assume any obligation to update or revise them to reflect new events or circumstances.
This press release contains the term "funds from operations". This term is not a recognized measure under Canadian generally accepted accounting principles (GAAP). Parallel believes that in addition to net income, funds from operations is a useful supplemental measurement. Funds from operations provides an indication of the funds generated by the Trust's principal business activities and is defined as "cash from operating activities" prior to "change in non-cash working capital related to operating activities" in the Statement of Cash Flows.
Oil and Gas Measures and Definitions
This press release contains disclosure expressed as "boe" and "boe/day". All oil and natural gas equivalency volumes have been derived using the ratio of six thousand cubic feet of natural gas to one barrel of oil. Equivalency measures may be misleading, particularly if used in isolation. A conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.