Welcome!

.NET Authors: Pat Romanski, Elizabeth White, ChandraShekar Dattatreya, Trevor Parsons, Peter Silva

News Feed Item

Rock Energy Reports Financial and Operating Results for Third Quarter of 2012

CALGARY, ALBERTA -- (Marketwire) -- 11/08/12 -- Rock Energy Inc. (TSX:RE) ("Rock" or the "Company") announces its financial and operational results for the three and nine months ended September 30, 2012. Rock has filed its unaudited condensed interim Consolidated Financial Statements for the period ended September 30, 2012 and related Management's Discussion and Analysis ("MD&A"). Copies of Rock's materials may be obtained on www.sedar.com and on its website at www.rockenergy.ca

Certain selected financial and operations information for the three and nine months ended September 30, 2012 and the 2011 comparatives are set out below and should be read in conjunction with Rock's unaudited condensed interim Consolidated Financial Statements and MD&A.

CORPORATE SUMMARY


----------------------------------------------------------------------------
----------------------------------------------------------------------------
                       Three Months  Three Months  Nine Months  Nine Months 
                              Ended         Ended        Ended        Ended 
                          September     September    September    September 
                           30, 2012      30, 2011     30, 2012     30, 2011 
----------------------------------------------------------------------------
                                                                            
Crude oil and natural                                                       
 gas revenue ($000)     $    10,988   $    13,928  $    33,765  $    47,189 
                                                                            
Funds from operations                                                       
 ($000) (1)             $     3,711   $     3,993  $    10,432  $    12,461 
 Per share - basic      $      0.09   $      0.10  $      0.27  $      0.35 
           - diluted    $      0.09   $      0.10  $      0.27  $      0.34 
                                                                            
Net income (loss)                                                           
 ($000)                 $    (2,186)  $       459  $    (5,862) $    (1,927)
 Per share - basic      $     (0.06)  $      0.01  $     (0.15) $     (0.05)
           - diluted    $     (0.06)  $      0.01  $     (0.15) $     (0.05)
                                                                            
Capital expenditures                                                        
 ($000)                 $     7,395   $    15,057  $    22,701  $    56,144 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                              As at         As at                           
                          September     September                           
                           30, 2012      30, 2011                           
----------------------------------------------------------------------------
                                                                            
Working capital                                                             
 (deficiency) including                                                     
 bank debt and                                                              
 excluding commodity                                                        
 price contracts ($000) $     2,614   $   (31,939)                          
                                                                            
Common shares                                                               
 outstanding             39,101,582    38,786,315                           
Options outstanding       2,905,435     2,551,094                           
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                              Three         Three  Nine Months  Nine Months 
                       Months Ended  Months Ended        Ended        Ended 
                          September     September    September    September 
OPERATIONS                 30, 2012      30, 2011     30, 2012     30, 2011 
----------------------------------------------------------------------------
                                                                            
Average daily                                                               
 production                                                                 
 Crude oil and natural                                                      
  gas liquids (bbls/d)        1,720         2,094        1,716        2,331 
 Natural gas (mcf/d)          3,131         4,608        3,360        4,998 
 Total (boe/d)                2,242         2,862        2,276        3,164 
                                                                            
Average product prices                                                      
 Crude oil and natural                                                      
  gas liquids                                                               
  (Cdn$/bbl)            $     64.94   $     63.68  $     67.37  $     65.59 
 Natural gas (Cdn                                                           
  $/mcf)                $      2.47   $      3.92  $      2.28  $      4.00 
 Combined (Cdn$/boe)    $     53.27   $     52.90  $     54.15  $     54.63 
                                                                            
Field netback                                                               
 (Cdn$/boe) (1)         $     18.43   $     20.71  $     18.83  $     20.68 
                                                                            
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Funds from operations, funds from operations per share and field netback
    are not terms prescribed by IFRS so are considered non-GAAP measures.   
    Funds from operations represents cash generated from operating          
    activities before changes in non-cash working capital and               
    decommissioning expenditures. Rock considers funds from operations a key
    measure as it demonstrates the Company's ability to generate the cash   
    necessary to fund future growth through capital investment. Funds from  
    operations per share is calculated using the same share basis which is  
    used in the determination of net income (loss) per share. Field netback 
    is calculated as crude oil and natural gas revenues after deducting     
    royalties, op erating costs and transportation costs, resulting in an   
    approximation of initial cash margin in the field on crude oil and      
    natural gas production. Rock's use of these non-GAAP measurements may   
    not be comparable with the calculation of similar measures for other    
    companies.                                                              

During the third quarter of 2012 Rock completed the following:


--  Drilled 10 (10.0 net) wells, nine (9.0 net) successful oil wells and one
    (1.0 net) dry and abandoned well at Mantario; 
--  Averaged 2,242 boe per day (77% crude oil and liquids and 23% natural
    gas) of production; 
--  Spent a total of $7.4 million on capital expenditures; and 
--  Generated funds from operations for the quarter of $3.7 million ($0.09
    per share). 

Rock generated a field netback of $18.43 per boe in the third quarter of 2012 compared to $19.11 per boe in the second quarter of 2012. Rock's realized price in the third quarter of 2012 was $53.27 per boe compared to $53.34 per boe in the second quarter of 2012. The WTI-WCS price differential during the third quarter was US $21.72 per barrel. Though the differential narrowed to less than US $10.00 per barrel in October, it has recently widened to US $25.00 - US $30.00 per barrel as the BP Whiting refinery shuts down for a planned upgrade. This modification to the refinery will take 3 to 4 months and we expect the differential to be adversely impacted during that time. However, once the project is complete, the refinery will have expanded its capacity to refine heavy oil and we are projecting a sustained narrowing of the differential beyond the first quarter of next year in to the range of US $15.00 - US $20.00 per barrel. To manage the volatility in this price, Rock is actively engaged in a hedging program and is shipping up to 1,000 barrels per day by rail.

Operating costs increased to $25.69 per boe in the third quarter of 2012 compared to $22.34 per boe in the previous quarter. This increase in costs can be attributed to unscheduled battery maintenance that affected both our Onward and Medicine River facilities. In addition to the extra cost, the company experienced a reduction in production during the maintenance operations, so the impact was felt on both absolute and per boe measures. Going forward Rock expects to reduce our operating costs as more low cost production is brought on at Mantario and the installation of water handling and disposal facilities are completed in the Lloydminster and Neilburg areas.

Capital expenditures for the third quarter of 2012 were $7.4 million including the drilling and equipping of the nine wells at Mantario, one well at Edam, and the installation of water disposal facilities in Lloydminster and Neilburg.

During the third quarter of 2012 Rock's daily production averaged 2,242 boe per day, and currently the Company is producing over 2,600 boe per day.

Area Activity Update

Mantario

During the third quarter of 2012 Rock drilled nine (9.0 net) wells at Mantario. One exploration well was dry and abandoned, one well failed to encounter the primary target but was successful in a secondary zone, and seven wells were cased as oil producers in the primary zone. The seven wells have been completed and put on production during October. These wells are currently producing over 450 barrels per day and when combined with the original wells, Mantario is contributing over 800 barrels per day to Rock's total production. The eighth well which will be producing from a different formation will be on production by late November. The information provided by the drilling of the most recent wells has allowed the Company to refine the pool mapping and management has estimated that there is an additional 40-60 drilling locations on this new discovery.

In addition to the drilling activity, Rock evaluated and subsequently released the lands previously held under a farm-out agreement. The Company acquired another 7.75 sections of land at crown land sales which brings Rock's total land position at Mantario to 15,200 net acres (23.75 sections).

During the fourth quarter of 2012, the Company plans to shoot an additional 30 square kilometers of 3D seismic and drill another exploration well.

Onward

The water-flood project at Onward was focused on optimizing injection patterns, and upgrading the fluid handling capacity at the battery during the third quarter. The Company is currently installing new inlet and treating equipment and we expect the work to be completed by the middle of November. Once completed, the fluid capacity of the battery will have been expanded by 50%, allowing us to increase the pumping rates on our producing wells and further optimize our production.

Greater Lloydminster Area

Rock drilled one successful step out exploration well at Edam during the third quarter of 2012. The well is currently producing 50 to 70 barrels per day and with this success we have now identified 6 to 8 follow up locations. Rock has completed the installation of water injection facilities at Lloydminster and Neilburg and in addition to reduced operating costs we expect to begin the implementation of high volume lift ("HVL") programs at these two sites. HVL is a production technique to increase production rates and recovery factors in conventional heavy oil wells that has been successfully deployed by a number of heavy oil operators in the Lloydminster area.

Outlook

For the remainder of 2012 Rock is maintaining its previously announced guidance for production. However, the capital budget will increase slightly to $32 million as we initiate activities for 2013. For the remainder of the year, the Company will be focused on completing the 3D seismic survey at Mantario and drilling four exploration wells in our core areas. Assuming that for the remainder of 2012 crude oil prices average US $90.00 WTI per barrel and natural gas at AECO averages of CDN $3.25 per mcf with an exchange rate of 1.00 CDN$:US$ the Company would generate cash flow of $15 million (or $0.39 per share) and have $2 million of net debt by year-end 2012.

The Board of directors have approved a preliminary capital budget for 2013 of $30 million to drill 22 wells. The capital budget will be focused on the continued delineation of the pool at Mantario by drilling 11 more 40 acre step out locations and two horizontal wells. In addition, the Company plans to drill five wells in the greater Lloydminster region and complete the two HVL projects. At Onward, the capital will be limited to further water injection conversions and additional facility upgrades as most of the pool development capital was spent in 2012.

This capital budget is expected to increase the Company's average production for the year by over 25 percent to 2,900 boe per day, and our oil weighting to 85 percent.

Assuming that for 2013 crude oil prices average US $90.00 WTI per barrel, the WTI-WCS differential averages US $20.00 per barrel and natural gas at AECO averages CDN $3.00 per mcf with an exchange rate of 1.00 CDN$:US$ the Company would generate cash flow of $22 million (or $0.56 per share) and have $11 million of net debt by the end of 2013 (0.4 times fourth quarter annualized cash flow).

Rock has established a strong platform for growth. That platform is made up of a significant inventory of over 130 drilling locations, an active exploration program and a strong balance sheet. Rock's foundation of funds flow, cash and significant debt capacity allow the Company to pursue complementary acquisitions or mergers as well as considering additional expansions to the planned 2013 capital program as new exploration and development opportunities are identified.

Advisory Regarding Forward-Looking Information and Statements

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "will", "expects", "believe", "plans", "potential" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this press release contains forward looking statements and information concerning Rock's 2012 and 2013 average production, expected costs, capital spending plans and timing thereof, forecasted cash flow, growth prospects and the Company's drilling plans.

The forward-looking statements and information in this press release are based on certain key expectations and assumptions made by Rock, including prevailing commodity prices and exchange rates; applicable royalty rates and tax laws; future well production rates; reserve and resource volumes; the performance of existing wells; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; and the receipt, in a timely manner, of regulatory and other required approvals. Although Rock believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Rock can give no assurance that they will prove to be correct. There is no certainty that Rock will achieve commercially viable production from its undeveloped lands and prospects.

Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the oil and gas industry in general such as: operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; marketing and transportation of petroleum and natural gas and loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to realize the anticipated benefits of acquisitions; ability to access sufficient capital from internal and external sources; stock market volatility; and changes in legislation, including but not limited to tax laws, royalty rates and environmental regulations.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect the operations or financial results of Rock are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

The forward-looking statements and information contained in this press release are made as of the date hereof and Rock undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Contacts:
Rock Energy Inc.
Allen J. Bey
Chief Executive Officer
403-218-4380

Rock Energy Inc.
John H. Van de Pol
President and Chief Financial Officer
403-218-4380
www.rockenergy.ca

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.

@ThingsExpo Stories
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example t...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happens, where data lives and where the interface lies. For instance, it's a mix of architectural styles ...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and assessments, including a decade of leading incident response and digital forensics. He is co-author of t...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges. In his session at @ThingsExpo, Jeff Kaplan, Managing Director of THINKstrategies, will examine why IT must finally fulfill its role in support of its SBUs or face a new round of...
One of the biggest challenges when developing connected devices is identifying user value and delivering it through successful user experiences. In his session at Internet of @ThingsExpo, Mike Kuniavsky, Principal Scientist, Innovation Services at PARC, described an IoT-specific approach to user experience design that combines approaches from interaction design, industrial design and service design to create experiences that go beyond simple connected gadgets to create lasting, multi-device experiences grounded in people's real needs and desires.
Enthusiasm for the Internet of Things has reached an all-time high. In 2013 alone, venture capitalists spent more than $1 billion dollars investing in the IoT space. With "smart" appliances and devices, IoT covers wearable smart devices, cloud services to hardware companies. Nest, a Google company, detects temperatures inside homes and automatically adjusts it by tracking its user's habit. These technologies are quickly developing and with it come challenges such as bridging infrastructure gaps, abiding by privacy concerns and making the concept a reality. These challenges can't be addressed w...
The Domain Name Service (DNS) is one of the most important components in networking infrastructure, enabling users and services to access applications by translating URLs (names) into IP addresses (numbers). Because every icon and URL and all embedded content on a website requires a DNS lookup loading complex sites necessitates hundreds of DNS queries. In addition, as more internet-enabled ‘Things' get connected, people will rely on DNS to name and find their fridges, toasters and toilets. According to a recent IDG Research Services Survey this rate of traffic will only grow. What's driving t...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective storage designed to handle the massive surge in back-end data in a world where timely analytics is e...
We are reaching the end of the beginning with WebRTC, and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) i...
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect at Hookflash, will walk through the shifting landscape of traditional telephone and voice services ...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Architect for the Internet of Things and Intelligent Systems at Red Hat, described how to revolutioniz...
Bit6 today issued a challenge to the technology community implementing Web Real Time Communication (WebRTC). To leap beyond WebRTC’s significant limitations and fully leverage its underlying value to accelerate innovation, application developers need to consider the entire communications ecosystem.
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from hardware to software, or as we like to say, it’s an Internet of many different things. The difference ...
Cloud Expo 2014 TV commercials will feature @ThingsExpo, which was launched in June, 2014 at New York City's Javits Center as the largest 'Internet of Things' event in the world.