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Parallel Energy Trust Announces First Quarter 2014 Financial Results and Operations Update

CALGARY, ALBERTA -- (Marketwired) -- 05/12/14 -- Parallel Energy Trust (TSX: PLT.UN)(TSX: PLT.DB) ("Parallel" or the "Trust") is pleased to announce its financial and operating results for the three months ended March 31, 2014. Parallel's unaudited first quarter financial statements and accompanying Management's Discussion and Analysis ("MD&A") will be filed shortly on the SEDAR website at www.sedar.com and on the Trust's website at www.parallelenergy.ca.

Summary of First Quarter 2014 Financial and Operating Results

($000s, except where          Quarter ended   Quarter ended   Quarter ended
 indicated)                   Mar. 31, 2014   Dec. 31, 2013   Mar. 31, 2013
  Natural gas (mcf/day)              14,316          14,842          14,349
  Condensate (bbls/day)               1,669           1,803           1,720
  Natural Gas Liquids
   (bbls/day)                         2,552           2,943           2,692
  Total (@6:1) (boe/day)              6,607           7,220           6,803

Average sales price (US$
 per boe)                             53.71           44.49           41.12

Revenue, net of royalties            28,974          25,274          20,924
Funds from operations(1)             11,492          11,306           8,589
Net income                              731           9,912          (1,716)
Distributions                         8,078           8,028           7,906
Capital expenditures
 excluding acquisitions               5,552             729           5,472

Bank debt outstanding (US$)         157,700         154,000         155,000
Convertible debentures
 (CAD$)                              63,000          63,000          63,000

Unitholder's equity                 294,447         286,481         279,686
(1) Non-GAAP measure. Readers are referred to Advisories at the end of the
    press release for additional information.

First Quarter 2014 Financial and Operating Highlights

During the first quarter of 2014, Parallel:

--  Recorded average daily production of 6,607 boe/day (64% natural gas
    liquids and condensate).

--  Realized an average sales price (prior to hedging) of US$53.71 per boe,
    representing approximately 54% of the WTI benchmark price during the

--  Generated funds from operations of $11.5 million ($0.21 per basic unit).

--  Drilled and completed five wells in the Carson operating area. The
    average 30 day initial production ("IP30") rate for the wells was 50
    boe/day, which results in drilling efficiencies of approximately
    US$14,000 per flowing boe/day.

--  Reported bank debt of US$157.7 million drawn against the Trust's
    borrowing base of US$190 million as at March 31, 2014. In April 2014,
    the Trust's lenders completed their annual review of Parallel's credit
    facility and reaffirmed the Trust's borrowing base of US$190 million.

--  Declared total distributions of $0.15 during the quarter, representing
    $0.05 per unit per month for January, February and March.

As was previously reported by the Trust, many oil and gas producing areas in the United States experienced extreme winter weather conditions between November 2013 and March 2014. These abnormally cold conditions impacted the Trust's Carson and Sneed operating areas and, as a result, Parallel's production in the first quarter of 2014 was lower than forecasted.

Despite lower than forecasted production during the first quarter of 2014, Parallel's generated funds from operations of $11.5 million which was slightly above the Trust's expectations as higher commodity prices more than offset the lower production levels. Commodity prices during the quarter, specifically natural gas and natural gas liquids prices, were positively impacted by the extremely cold winter. Parallel recorded an average realized sales price, before hedges, of US$53.71 per boe during the quarter representing 54% of the WTI benchmark price as compared to an average realized sales price of US$44.49 per boe, or 46% of the WTI benchmark price during the fourth quarter of 2013.

The average IP30 rate for the five wells drilled in the first quarter of 2014 was 50 boe/day, which exceeded the Trust's expectations of 35 to 40 boe/day and resulted in drilling efficiencies of approximately US$14,000 per flowing boe/day as compared to the Trust's forecast of US$20,000 per flowing boe/day.

The Trust's outstanding bank debt of US$157.7 million at March 31, 2014 represents an increase of approximately US$3.7 million during the quarter; however, this was expected as the Trust's drilling program is concentrated in the first half of 2014. As occurred in 2013, Parallel's bank debt is expected to increase in both the first and second quarters of 2014 in accordance with the Trust's planned drilling program, but is forecasted to decline in the third and fourth quarters of 2014 as minimal capital expenditures are planned in the second half of the year.

Operations Update

In the second quarter of 2014 to-date, Parallel has drilled two additional wells in the Carson operating area. These wells have not been on production for 30 days, but initial production rates from the wells indicate that they will be within the Trust's expected range. Based on the wells drilled to date, Parallel believes that the IP30 rate for its planned 2014 drilling program will exceed its expected IP30 rate of 35 to 40 boe/day.

Based on field data, Parallel's average daily production in April 2014 was approximately 7,000 boe/day. During the month of April the Trust continued to experience lingering effects from the aforementioned extreme winter weather including unscheduled maintenance at certain third-party gas processing facilities and on third-party infrastructure. However, for the first nine days of May the Trust's daily production levels averaged approximately 7,400 boe/day based on field data, which is more reflective of the production capacity of the Trust's operating areas. Given that the Trust's production has returned to expected levels and that the drilling results to date have exceeded expectations, Parallel is reconfirming its production guidance of 7,100 to 7,300 boe/day for the full year 2014.

President's Message

"In the first quarter of 2014, our assets experienced the worst winter season in many years. The impact of this severe winter weather exceeded our three to five per cent contingency for downtime during the quarter and, as a result, we recorded lower average daily production levels than expected. However, cash flow for the quarter slightly exceeded our expectations as our lower production levels were more than offset by higher than expected commodity prices. As a result, our goal of having sufficient cash flow to fund the Trust's capital program and pay the $0.05 monthly distribution remains intact."

"Our operating team has done an exceptional job of returning the Trust's production to our expected levels in the second quarter of 2014 and our drilling results to date have exceeded our expectations. In addition, our assets continue to recover after experiencing production issues like those incurred in the first quarter in 2014 and they also continue to exhibit a low production decline rate. Both of these qualities provide further confirmation that we have the ideal asset base for our business model. Looking ahead, we remain well positioned to meet our production and cash flow guidance for the year and we look forward to providing additional updates on our drilling program and production levels as the year progresses."


Established in March 2011, Parallel Energy Trust ("Parallel" or the "Trust") is a Calgary-based distribution-paying energy income trust. Parallel's assets and operations are located in the Mid-Continent Region of the United States and its portfolio consists of mature, liquids-rich natural gas assets. The Trust's business strategy is focused on acquiring and developing long-life, conventional oil and natural gas assets.

Parallel is considered to be a "mutual fund trust" under the Income Tax Act of Canada; however, the Trust is not subject to specified investment flow through ("SIFT") trust taxes as all of its properties are held outside of Canada. Parallel's common units are traded on the Toronto Stock Exchange ("TSX") under the symbol "PLT.UN" and the Trust's debentures are traded on the TSX under the symbol "PLT.DB".

Additional information about Parallel can be found on the Trust's website at www.parallelenergy.ca or in Parallel's annual information form, available on SEDAR at www.sedar.com.


Forward-Looking Information

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" in Parallel's annual information form dated March 21, 2014 (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 and Parallel's expectations and estimates regarding current and future production rates and drilling results. 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.

In this news release, Parallel and its subsidiaries are referred to collectively as the "Trust" or "Parallel" for purposes of convenience.

Non-GAAP Measures

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 workovers and "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.

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