Welcome!

Microsoft Cloud Authors: Elizabeth White, Mihai Corbuleac, Pat Romanski, David Bermingham, Steven Mandel

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
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...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
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...
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...
trust and privacy in their ecosystem. Assurance and protection of device identity, secure data encryption and authentication are the key security challenges organizations are trying to address when integrating IoT devices. This holds true for IoT applications in a wide range of industries, for example, healthcare, consumer devices, and manufacturing. In his session at @ThingsExpo, Lancen LaChance, vice president of product management, IoT solutions at GlobalSign, will teach IoT developers how t...
Digital payments using wearable devices such as smart watches, fitness trackers, and payment wristbands are an increasing area of focus for industry participants, and consumer acceptance from early trials and deployments has encouraged some of the biggest names in technology and banking to continue their push to drive growth in this nascent market. Wearable payment systems may utilize near field communication (NFC), radio frequency identification (RFID), or quick response (QR) codes and barcodes...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus inter...
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
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...
The IETF draft standard for M2M certificates is a security solution specifically designed for the demanding needs of IoT/M2M applications. In his session at @ThingsExpo, Brian Romansky, VP of Strategic Technology at TrustPoint Innovation, will explain how M2M certificates can efficiently enable confidentiality, integrity, and authenticity on highly constrained devices.
There is an ever-growing explosion of new devices that are connected to the Internet using “cloud” solutions. This rapid growth is creating a massive new demand for efficient access to data. And it’s not just about connecting to that data anymore. This new demand is bringing new issues and challenges and it is important for companies to scale for the coming growth. And with that scaling comes the need for greater security, gathering and data analysis, storage, connectivity and, of course, the...
So, you bought into the current machine learning craze and went on to collect millions/billions of records from this promising new data source. Now, what do you do with them? Too often, the abundance of data quickly turns into an abundance of problems. How do you extract that "magic essence" from your data without falling into the common pitfalls? In her session at @ThingsExpo, Natalia Ponomareva, Software Engineer at Google, will provide tips on how to be successful in large scale machine lear...
You think you know what’s in your data. But do you? Most organizations are now aware of the business intelligence represented by their data. Data science stands to take this to a level you never thought of – literally. The techniques of data science, when used with the capabilities of Big Data technologies, can make connections you had not yet imagined, helping you discover new insights and ask new questions of your data. In his session at @ThingsExpo, Sarbjit Sarkaria, data science team lead ...
SYS-CON Events announced today that Ericsson has been named “Gold Sponsor” of SYS-CON's @ThingsExpo, which will take place on June 7-9, 2016, at the Javits Center in New York, New York. Ericsson is a world leader in the rapidly changing environment of communications technology – providing equipment, software and services to enable transformation through mobility. Some 40 percent of global mobile traffic runs through networks we have supplied. More than 1 billion subscribers around the world re...
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...
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...
You deployed your app with the Bluemix PaaS and it's gaining some serious traction, so it's time to make some tweaks. Did you design your application in a way that it can scale in the cloud? Were you even thinking about the cloud when you built the app? If not, chances are your app is going to break. Check out this webcast to learn various techniques for designing applications that will scale successfully in Bluemix, for the confidence you need to take your apps to the next level and beyond.
SYS-CON Events announced today that Fusion, a leading provider of cloud services, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Fusion, a leading provider of integrated cloud solutions to small, medium and large businesses, is the industry's single source for the cloud. Fusion's advanced, proprietary cloud service platform enables the integration of leading edge solutions in the cloud, including cloud...