Welcome!

News Feed Item

PetroShale Announces Second Quarter 2014 Results and Significant Reserves Increase

CALGARY, ALBERTA -- (Marketwired) -- 08/26/14 -- PetroShale Inc. ("PetroShale" or the "Company") (TSX VENTURE: PSH)(OTCQX: PSHIF) is pleased to announce its financial and operating results for the second quarter ended June 30, 2014, along with increases to the Company's U.S. reserves. The Company's unaudited consolidated financial statements and corresponding Management's Discussion and Analysis (MD&A) for the three and six month periods ended June 30, 2014, are available on SEDAR at www.sedar.com, on the OTCQX website at www.otcqx.com, and on PetroShale's website at www.petroshaleinc.com. Copies of the materials can also be obtained upon request without charge by contacting the Company directly.

Q2 Highlights:


--  Reported production for the quarter of 298 boe/d (Company interest,
    gross of royalty) weighted 95% to light crude oil and liquids (232 boe/d
    net of royalty interest), an 89% increase over the same period in 2013;

--  Commissioned an updated interim reserves report on PetroShale's U.S.
    properties which demonstrates a 525% increase in proved plus probable
    ("P+P") booked reserves over the December 31, 2013 report, as well as an
    increase of 425% in the net present value (discounted at 10%) of the P+P
    reserves;

--  Realized strong operating netbacks of $57.86 per boe (Company interest,
    gross of royalty, and excluding the impact of hedging - $74.18 per boe
    net of royalty interest and excluding hedging), which reflects the
    Company's high quality production, combined with a strong pricing
    environment;

--  Generated $2.1 million in revenue net of royalties during the period, an
    increase of 98% over the previous quarter, and 101% higher than the same
    period in 2013, reflecting the growth in the Company's production
    supported by a strong commodity price environment;

--  Increased the capacity of the subordinated loan facility provided by the
    Company's two largest shareholders from U.S.$20 million to U.S.$30
    million, which enhances PetroShale's ongoing financial flexibility to
    fund further acquisitions and capital programs;

--  Completed a private placement of 5 million common voting shares at a
    price of $1.30 per share, raising gross proceeds of $6.5 million, which
    were used to repay outstanding debt and to fund capital expenditures;

--  Subsequent to quarter end, purchased additional properties in North
    Dakota through a variety of transactions, for total cash consideration
    of U.S.$4.4 million; and

--  As at June 30, 2014, PetroShale was participating in 8 gross (1.3 net)
    wells that were in the process of being either drilled or completed.
    Currently, that activity has increased to 13 gross (2.0 net) wells.

Results of Oil and Gas Activities



For the three months ended                     June 30, 2014  June 30, 2013
----------------------------------------------------------------------------
Sales volumes
  Oil and natural gas liquids (Bbl/d)                    283            151
  Natural gas (Mcf/d)                                     90             45
----------------------------------------------------------------------------
Barrel of oil equivalent (Boe/d)                         298            158
Barrel of oil equivalent, net of royalty
 (Boe/d)                                                 232            122

Operating Netbacks ($/Boe)
  Revenue                                      $       98.82  $       93.37
  Royalties                                           (21.79)        (21.36)
  Realized hedge loss                                  (0.70)             -
  Operating costs                                     (11.80)        (11.38)
  Production taxes                                     (7.37)         (3.33)
----------------------------------------------------------------------------
Operating netback                              $       57.16  $       57.30
----------------------------------------------------------------------------
Operating netback prior to hedging             $       57.86  $       57.30
----------------------------------------------------------------------------
Operating netback prior to hedging, on a net
 of royalty basis                              $       74.18  $       74.30
----------------------------------------------------------------------------


Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $824,000 for the three month period ended June 30, 2014 compared to $412,000 for the quarter ended June 30, 2013, an increase of 100%. For the second quarter ended June 30, 2014 the Company reported a net loss of $578,000 ($0.02 per share), compared to a loss of $605,000 ($0.02 per share) for the three month period ended June 30, 2013.

U.S. Reserves Update As at June 30, 2014:

The reserves data in this press release is based upon an evaluation by Netherland, Sewell & Associates, Inc. ("NSAI") with respect to PetroShale's assets in the United States, with an effective date of June 30, 2014. The reserves data summarizes PetroShale's crude oil and natural gas reserves in the United States and the net present values of future net revenue for these reserves using forecast prices and costs, not including the impact of any price risk management activities. The Reserve Report was prepared in accordance with the standards contained in the COGE Handbook and the reserve definitions contained in NI 51-101 and CSA 51-324.

U.S. Reserves Highlights:


--  P+P reserves in the U.S. as at June 30, 2014 increased by 525% to 4,100
    Mboe (3,223 Mboe net of royalty) compared to December 31, 2013;

--  Total U.S. proved reserves increased 516% to 3,124 Mboe (2,452 Mboe net
    of royalty);

--  Before tax net present value (discounted at 10%) ("NPV10") of the
    Company's U.S. P+P reserves totaled U.S.$63.5 million at June 30, 2014,
    an increase of 425% over the U.S.$12.1 million NPV10 as at December
    31,2013; and

--  The NPV10 of total proved reserves increased 376% from U.S.$10.7 million
    to U.S.$51.0 million.

Gross Company Interest Reserves

UNITED STATES OIL & GAS ASSETS AS AT JUNE 30, 2014


                                               RESERVES
                                  OIL         NATURAL GAS         BOE
                              Gross     Net   Gross     Net   Gross      Net
RESERVES CATEGORY           (Mbbls) (Mbbls)  (MMcf)  (MMcf)  (Mboe)   (Mboe)
PROVED:
  Developed Producing         378.3   291.8   369.6   284.6   439.9    339.2
  Developed Non-Producing      20.0    15.3    23.6    18.0    23.9     18.3
  Undeveloped               2,335.9 1,840.0 1,944.3 1,526.2 2,659.9  2,094.4
----------------------------------------------------------------------------
TOTAL PROVED                2,734.2 2,147.0 2,337.4 1,828.8 3,123.8  2,451.8
PROBABLE                      848.8   670.8   762.8   600.4   975.9    770.9
----------------------------------------------------------------------------
TOTAL PROVED PLUS PROBABLE  3,583.0 2,817.8 3,100.3 2,429.2 4,099.7  3,222.7
----------------------------------------------------------------------------
Columns may not add due to rounding.

Net Present Value of Future Net Revenue

UNITED STATES OIL & GAS ASSETS AS AT JUNE 30, 2014


                               BEFORE INCOME TAXES DISCOUNTED AT (%/year)
                           -------------------------------------------------
                                  0%        5%       10%       15%       20%
                                (USD      (USD      (USD      (USD      (USD
RESERVES CATEGORY             $000s)    $000s)    $000s)    $000s)    $000s)
                          --------------------------------------------------
PROVED:
  Developed Producing       19,510.7  14,472.3  11,685.0   9,944.6   8,757.6
  Developed Non-Producing    1,003.7     849.5     743.2     666.6     609.0
  Undeveloped               93,254.2  57,811.4  38,538.4  26,688.7  18,736.6
----------------------------------------------------------------------------
TOTAL PROVED               113,768.6  73,133.2  50,966.5  37,299.9  28,103.1
PROBABLE                    31,833.6  19,417.5  12,568.6   8,344.5   5,527.9
----------------------------------------------------------------------------
TOTAL PROVED PLUS PROBABLE 145,602.2  92,550.7  63,535.2  45,644.4  33,631.0
----------------------------------------------------------------------------
Columns may not add due to rounding.

Pricing Assumptions - Forecast Prices and Costs:

Following are select crude oil and natural gas price and inflation rate assumptions used by NSAI as of June 30, 2014 in estimating the U.S. reserves data using forecast prices and costs.


----------------------------------------------------------------------------
                                NSAI Average
                                         GAS                      OIL
                                   U.S. Henry Hub              WTI Crude
                                      Gas Price                   Oil
                                     ($US/MMBtu)               ($US/bbl)
                            -----------------------  -----------------------
                            -----------------------  -----------------------
At June 30, 2014
----------------------------------------------------------------------------
2014                            $             3.960      $             94.75
2015                            $             4.180      $             93.18
2016                            $             4.550      $             91.92
2017                            $             5.030      $             94.24
2018                            $             5.460      $             95.96
2019                            $             5.760      $             97.29
2020                            $             5.920      $             98.88
2021                            $             6.100      $            100.74
2022                            $             6.260      $            102.61
2023                            $             6.440      $            104.55
2024                            $             6.730      $            106.44
2025                            $             6.865      $            108.57
2026                            $             7.002      $            110.74
2027                            $             7.142      $            112.95
2028                            $             7.285      $            115.21
Thereafter:                          2% per year              2% per year

Message to Shareholders:

For the first half of 2014, the team at PetroShale continued to focus on the execution of our strategy centered around acquiring and consolidating working interests ("WI") in the most prolific and attractive areas of the North Dakota Bakken.

This strategy is proving successful and during the second quarter, we purchased an additional working interest of approximately 9.5% in two of our existing wells in Stockyard Creek, and acquired an interest in two additional acreage parcels in McKenzie County. At the end of the quarter, we were participating in 8 gross (1.3 net) wells that were in the process of being either drilled or completed. Subsequent to the end of the quarter, we further expanded our asset base by acquiring additional properties in North Dakota through several transactions. Currently, our drilling and completions activity has increased to 13 gross (2.0 net) wells. With continued drilling activity by our partners in North Dakota, along with pursuing additional acquisitions, we intend to grow production, leading to enhanced revenue, cash flows, and greater reserves bookings over time.

We were extremely pleased with the significant increases in reserves and net present values reflected in our updated U.S. reserves report as at June 30, 2014. Compared to December 31, 2013, our total proved reserves on the U.S. assets increased by 516% from 0.5 million boe, to more than 3.1 million boe. On a P+P basis, U.S. booked reserves increased 525% from 0.7 million boe to approximately 4.1 million boe. The underlying value of the U.S. reserves are reflected in higher NPV10 values: our U.S. assets total proved reserve value increased 376% to $51.0 million, and the P+P NPV10 rose 425% to $63.5 million. Over a six month period, we have significantly enhanced the volume and value of our asset base for shareholders.

In June, we strengthened our financial position with the closing of a private placement of 5 million common voting shares at a price of $1.30 per share, and generated gross proceeds of $6.5 million. Directors and officers of the Company demonstrated their continued commitment and belief in the strategy by subscribing for approximately 3.4 million of these 5 million shares. We used the net proceeds to repay a portion of our outstanding debt, which along with the extension of our subordinated loan facility, affords us greater financial flexibility as we strive to pursue additional acquisitions and grow our asset base in the North Dakota Bakken.

PetroShale is well positioned for growth, and we look forward to keeping our shareholders updated on our ongoing activities and expansion.

((signed))

M. Bruce Chernoff, Executive Chairman and CEO

About PetroShale

PetroShale is a growing oil company engaged in the acquisition, development and consolidation of interests in the most prolific areas of the North Dakota Bakken.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Note Regarding Forward-Looking Statements and Other Advisories

Company interest means, in relation to the Company's interest in production and reserves, the Company's working interest (operating and non-operating) before the deduction of royalties payable and including such entity's royalty interest in production and reserves. Where volumes of reserves and production have been presented, they have been presented as company working interest, gross of royalties, except where otherwise noted. All operating netbacks referenced in this press release are Company working interest, except where otherwise noted. All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.

Within this press release, references are made to terms commonly used in the oil and natural gas industry. The terms "funds flow", "netback", "operating netback" or "EBITDA" in this press release are not recognized measures under IFRS and therefore may not be comparable to performance measures presented by others. Funds flow represents cash flow from (used in) operating activities prior to change in non-cash working capital and settlement of decommissioning obligations. PetroShale uses "netback" as a key performance indicator and it is used by the Company to evaluate the operating performance of its petroleum and natural gas assets and is determined by deducting royalties, production, taxes, and operating expenses from petroleum and natural gas revenue. EBITDA means net income (loss) before taxes, depletion and depreciation, impairments, finance expense, foreign exchange gain or loss, share-based compensation and other non-cash charges to income. Management believes that in addition to net income (loss) and cash flow from (used in) operating activities, funds flow, netback and EBITDA are useful supplemental measures as they assist in the determination of the Company's operating performance, leverage and liquidity. Readers are cautioned, however, that these measures should not be construed as an alternative to net income (loss) or cash flow from (used in) operating activities determined in accordance with IFRS as an indication of our performance.

This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to aspects of management focus, objectives, strategies and business opportunities. The forward-looking information is based on certain key expectations and assumptions made by the Company's management, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; business prospects and opportunities; the availability and cost of financing, labor and services; the impact of increasing competition; ability to market oil and natural gas successfully; and the Company's ability to access capital.

Statements relating to "reserves" are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.

Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because the Company can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits the Company will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on the Company's future operations and such information may not be appropriate for other purposes.

Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect our operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). These forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Oil and Gas Advisories:

Where amounts are expressed on a barrel of oil equivalent ("boe") basis, natural gas volumes have been converted to boe using a ratio of 6,000 cubic feet of natural gas to one barrel of oil (6 Mcf: 1 Bbl). This boe conversion ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value. In this release, mboe refers to thousands of barrels of oil equivalent, while mbbls refers to thousands of barrels of oil, and mmcf refers to millions of cubic feet of natural gas.

This press release contains estimates of the net present value of the future net revenue from our reserves. Such amounts do not represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of the crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
We’ve worked with dozens of early adopters across numerous industries and will debunk common misperceptions, which starts with understanding that many of the connected products we’ll use over the next 5 years are already products, they’re just not yet connected. With an IoT product, time-in-market provides much more essential feedback than ever before. Innovation comes from what you do with the data that the connected product provides in order to enhance the customer experience and optimize busi...
In his session at 18th Cloud Expo, Sagi Brody, Chief Technology Officer at Webair Internet Development Inc., will focus on real world deployments of DDoS mitigation strategies in every layer of the network. He will give an overview of methods to prevent these attacks and best practices on how to provide protection in complex cloud platforms. He will also outline what we have found in our experience managing and running thousands of Linux and Unix managed service platforms and what specifically c...
In his session at @ThingsExpo, Chris Klein, CEO and Co-founder of Rachio, will discuss next generation communities that are using IoT to create more sustainable, intelligent communities. One example is Sterling Ranch, a 10,000 home development that – with the help of Siemens – will integrate IoT technology into the community to provide residents with energy and water savings as well as intelligent security. Everything from stop lights to sprinkler systems to building infrastructures will run ef...
Redis is not only the fastest database, but it has become the most popular among the new wave of applications running in containers. Redis speeds up just about every data interaction between your users or operational systems. In his session at 18th Cloud Expo, Dave Nielsen, Developer Relations at Redis Labs, will shares the functions and data structures used to solve everyday use cases that are driving Redis' popularity.
Many private cloud projects were built to deliver self-service access to development and test resources. While those clouds delivered faster access to resources, they lacked visibility, control and security needed for production deployments. In their session at 18th Cloud Expo, Steve Anderson, Product Manager at BMC Software, and Rick Lefort, Principal Technical Marketing Consultant at BMC Software, will discuss how a cloud designed for production operations not only helps accelerate developer...
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, will discuss how leveraging the Industrial Interne...
The increasing popularity of the Internet of Things necessitates that our physical and cognitive relationship with wearable technology will change rapidly in the near future. This advent means logging has become a thing of the past. Before, it was on us to track our own data, but now that data is automatically available. What does this mean for mHealth and the "connected" body? In her session at @ThingsExpo, Lisa Calkins, CEO and co-founder of Amadeus Consulting, will discuss the impact of wea...
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
Increasing IoT connectivity is forcing enterprises to find elegant solutions to organize and visualize all incoming data from these connected devices with re-configurable dashboard widgets to effectively allow rapid decision-making for everything from immediate actions in tactical situations to strategic analysis and reporting. In his session at 18th Cloud Expo, Shikhir Singh, Senior Developer Relations Manager at Sencha, will discuss how to create HTML5 dashboards that interact with IoT devic...
Struggling to keep up with increasing application demand? Learn how Platform as a Service (PaaS) can streamline application development processes and make resource management easy.
Up until last year, enterprises that were looking into cloud services usually undertook a long-term pilot with one of the large cloud providers, running test and dev workloads in the cloud. With cloud’s transition to mainstream adoption in 2015, and with enterprises migrating more and more workloads into the cloud and in between public and private environments, the single-provider approach must be revisited. In his session at 18th Cloud Expo, Yoav Mor, multi-cloud solution evangelist at Cloudy...
Artificial Intelligence has the potential to massively disrupt IoT. In his session at 18th Cloud Expo, AJ Abdallat, CEO of Beyond AI, will discuss what the five main drivers are in Artificial Intelligence that could shape the future of the Internet of Things. AJ Abdallat is CEO of Beyond AI. He has over 20 years of management experience in the fields of artificial intelligence, sensors, instruments, devices and software for telecommunications, life sciences, environmental monitoring, process...
The demand for organizations to expand their infrastructure to multiple IT environments like the cloud, on-premise, mobile, bring your own device (BYOD) and the Internet of Things (IoT) continues to grow. As this hybrid infrastructure increases, the challenge to monitor the security of these systems increases in volume and complexity. In his session at 18th Cloud Expo, Stephen Coty, Chief Security Evangelist at Alert Logic, will show how properly configured and managed security architecture can...
Unless you don’t use the internet, don’t live in California, or haven’t been paying attention to the recent news… you should be aware that self-driving cars are on their way to becoming a reality. I have seen them – they are real. If you believe in the future reality of self-driving cars, then continue reading on. If you don’t believe in the future possibilities, then I am not sure what to do to convince you other than discuss the very real changes that will roll out with the consumer producti...
A critical component of any IoT project is the back-end systems that capture data from remote IoT devices and structure it in a way to answer useful questions. Traditional data warehouse and analytical systems are mature technologies that can be used to handle large data sets, but they are not well suited to many IoT-scale products and the need for real-time insights. At Fuze, we have developed a backend platform as part of our mobility-oriented cloud service that uses Big Data-based approache...