iq2-september 2014 v3biq.iradesso.ca/main/documents/iq_reports/iq-q2-2014-web.pdf · 2016. 7....
TRANSCRIPT
Q2 2014
I N V E S T O RQ U A R T E R LY
CANADIAN OIL & GAS COMPARISON
RELEASED NOV 2014 / VOLUME 33ISSN 1718-9799 iq.bmir.com
FINANCIAL andOPERATING RESULTSfor 39 Juniors and 33 Intermediates
FEATURING FACT SHEETSfrom Juniors and Intermediates
Small but Strong
Surviving oil juniors are small but strongSome are not only survivors, they're thrivers
While the number of public oil and gas companies operating in Western Canada continues to decline, some of the survivors are getting bigger while others are getting better.
Some of the smallest players have admittedly thrown in the towel over the last few years, but others have joined forces to become stronger or found ways to increase their
production and graduate into the realm of intermediate players.
The high cost of doing business in today's world of horizontal drilling is the primary driver behind the slump in the number of junior players. Companies are exiting the industry while few are waiting on the sidelines to take their places. Even more interesting than the decline in the number of small companies has been the slow but steady increase in the number of intermediate companies thankstohighercashflow,economiesofscaleandaccesstogrowthcapital.
At the end of the second quarter of 2014 there were only 39 conventional producers that operate in the Western Canadian Sedimentary Basin, trade on the TSX or TSX Venture exchange and produce between 500 and 10,000 barrels of oil equivalent (boe/d). This is much lower than the peak over the last 10 years of 94 juniors in the third quarter of 2007, after which the junior sector began its descent. Over the same period, the number of intermediate players has been inching up. In the second quarter of 2014, the number of intermediates hit 33, the highest number over the past 10 years, but only marginally higher than the previous peak of 31 intermediates in the second quarter of 2012.
The slip in the number of junior oil and gas companies and the uptick in the number of intermediate players are just two of the
factsandfiguresinthiseditionofBryanMillsIradesso'siQReport,ourquarterlycomparisonofthefinancialandoperatingresultsofWestern Canada’s junior and intermediate energy producers. Our comparison includes every conventional oil and gas company that operates in the Western Canadian Sedimentary Basin, trades on the TSX or TSX Venture exchange and produces between 500 and 200,000 barrels of oil equivalent per day. We realize this is only a slice of the overall pie, so we've included a list of companies with less than 500 boe/d and companies that operate internationally to ensure investors have a variety of investment opportunities on their radar. Additional players include those operating in the oil sands and companies with unconventional business models.
While the number of traditional players has been declining, it's worthreflectingonthecompaniesthatarenotcapturedbythesenumbers that are key players in the oil and gas game. In an attempt to capture the imagination of investors, Canada's oilpatch is experimenting with different business models. Eagle Energy Trust wasthefirstcrossborderoilandgasincometrustin2010,apeergroup that has grown to include Parallel Energy Trust and Argent Energy Trust. Another business model that has been gathering steam consists of the companies that earn royalty interests. Long-timeplayerFreeholdRoyaltiesLtd.wasjoinedin2014byEncanaspinoffPrairieSkyRoyaltyLtd.We'vedecidednottoincludethesecompaniesinouriQReportbecausetheylacktheoperatingexpenses and capital costs of conventional producers.
The decline in the number of conventional companies included in ouriQReportissignificant,butthischangehasbeenaccompaniedby companies that are doing things bigger and better. The overall number of oil and gas producers has slipped, but we're encouraged by the size and savvy of some of those that remain.
Geoffrey VanderburgEditor,iQReportBryanMillsIradesso
MES
SAG
E FR
OM
TH
E ED
ITO
R
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 1
Suite 2240, 140 - 4th Avenue SWCalgary, AB T2P 3N3
telephone: 403.503.0144toll-free: 1.866.415.1070email: [email protected]
NOVEMBER 2014 / VOL. 33.
EDITORGeoffrey Vanderburg
RESEARCHERS & CONTRIBUTORSJory Debenham, Clayton Goodwin, Darryl Folkerson.
Data provided by CanOils Database Limited and BMIR researchers
PRODUCTION ARTISTAlberto Delbove
Please email us at [email protected] fi ll out the subscription form atiq.bmir.com to ensure you receive yourfree copy of the iQ Report.
R E L E A S E S C H E D U L E
Q3 2014 iQ Report Release:
January 2015
Q22014Review
In the second quarter of 2014, Western Canada's oil and gas producers continued a long trend away from producing more natural gas than oil. While the median natural gas weighting for the juniors ticked up slightly to 41% from 39% in the previous quarter, this still represents a major shift from the median natural gas weighting of 76% in the second quarter of 2009. By comparison, the median natural gas weighting of the intermediates declined to 56% from 58% in the previous quarter. This compares with a median natural gas weighting for the intermediates of 67% in the second quarter of 2009. The juniors are more nimble than the intermediates when it comes to chasing the commodity with the highest returns, but the intermediates don'tfacethesamelevelofurgencythankstotheirmoreefficientproductionperbarrel of oil equivalent.
ThestockmarketwaskindtoWesternCanada'soilandgasproducersinthefirsthalf of 2014. The median junior provided a return of 14% to shareholders including dividendsinthefirstquarterof2014andanother13%inthesecondquarter.Themedianintermediatedidevenbetter,deliveringatotalreturnof16%inthefirstquarter of 2014 and another 21% in the second quarter. Of course, these gains did not last. The markets started giving back their gains in the second half of the year. While medians go up and medians go down, there are always a few losers in an up market and a few winners in a down market. A combination of skill and good luck allow stock pickers to outpace the average producer.
Themediancashflownetbackperboeforthejuniorsandintermediatesmovedinopposite directions in the second quarter of 2014 compared with the same quarter of thepreviousyear.Themediancashflownetbackforthejuniorsdeclinedto$20.76perboeinthesecondquarterof2014comparedwith$24.19perboeinthesamequarterof2013.Themedianintermediate,meanwhile,deliveredacashflownetbackof$25.26perboeinthesecondquarterof2014comparedwithacashflownetbackof$20.37perboeinthesamequarterof2013.Onereasonforthehighercashflownetbackoftheintermediates than the juniors in the second quarter of 2014 is the higher natural gas weighting of the juniors during a time when natural gas prices were relatively strong. Albertanaturalgassettlementpricesweremuchhigherinthefirsthalfof2014thanthey were in 2013, favouring the companies with a higher natural gas weighting. Cash flowisdeterminedbytakingthenetearningsandaddingbacknon-cashexpensessuchas depreciation.
The gap is widening between the median enterprise value of the juniors and the median enterprise value of the intermediates. The enterprise value is determined by adding a company’s market capitalization to its net debt. When we compare enterprise values to production levels for the second quarter of 2014, we see the stockmarketprovidingasignificantpremiumbasedonsize.Thejuniorstradedatanenterprisevalueof$63,793perboecomparedwithanenterprisevalueof$84,139per boe for the intermediates. A strong valuation allows companies to access capital or use equity to complete accretive deals. For intermediates the range of valuations goesfrom$27,674perflowingboeforPerpetualEnergy,whichisperpetuallyatthebottomofthislist,allthewayto$338,190perflowingboeforParamount.Forthejuniors,therangeisevenwider,startingwithanenterprisevalueof$13,856perflowingboeforQuattroto$352,363perboeforQuesterre.
GAS WEIGHTING TRENDS DOWNWARD
MARKETS K IND IN F IRST HALF OF 2014
CASH FLOW IS K ING
ENTERPRISE GAP WIDENS
COMMUNICATIONMATTERS
Information for investors
iq.bmir.com
C O N T E N T S
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M2
1 Q2 2014 REVIEW
4 WHEELING AND DEALING
5 JUNIOR COMPARISON CHARTS 6 Q2 Production (boe/d)
7 Q2 Production Mix - Natural Gas Weighting (%)
8 Change in Production - Q1 2014 to Q2 2014 (%)
9 Change in production per share – Q1 2014 to Q2 2014
10 Enterprise Value Versus Q2 Production ($ per boe/d)
11 Q2 Cash Flow Netback ($/boe)
12 Q2 Operating and Transportation Expenses ($/boe)
13 Q2 General and Administrative Cash Expenses ($/boe)
14 Q2 Depletion, Depreciation and Accretion Expenses ($/boe)
15 Annualized Q2 Cash Flow Multiples
16 Q2 Net Debt to Annualized Cash Flow
17 Investment Returns – Capital Gains and Distributions or Dividends (%)
18 Juniors Listing – Data Table
26 INTERMEDIATE COMPARISON CHARTS 27 Q2 Production (boe/d)
27 Q2 Production Mix - Natural Gas Weighting (%)
28 Change in Production - Q1 2014 to Q2 2014 (%)
28 Change in Production per share - Q1 2014 to Q2 2014
29 Enterprise Value Versus Q2 Production ($ per boe/d)
29 Q2 Cash Flow Netback ($/boe)
30 Q2 Operating and Transportation Expenses ($/boe)
30 Q2 General and Administrative Cash Expenses ($/boe)
31 Q2 Depletion, Depreciation and Accretion Expenses ($/boe)
31 Annualized Q2 Cash Flow Multiples
32 Q2 Net Debt to Annualized Cash Flow
32 Investment Returns - Capital Gains and Distributions (%)
33 Intermediates Listing – Data Table
37 EMERGING CONVENTIONAL COMPANIES WATCH LIST
38 CANADIAN COMPANIES OPERATING ABROAD
40 IQ TRENDS
I N T H I S I S S U E NOVEMBER 2014
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 3
RETURN UNDELIVERABLE CANADIAN ADDRESSES TO:
BRYAN MILLS IRADESSO
2240, 140 4th Avenue SW, Calgary, AB T2P 3N3
ABBREVIATIONS
bbls • barrels of oil
boe • barrels of oil equivalent
boe/d • barrels of oil equivalent per day
mcf • thousand cubic feet
mmcf • million cubic feet
NGLs • natural gas liquids
ASSUMPTIONS
• Barrels of oil equivalent calculated using 6 mcf = 1 boe.
• Net debt has been calculated by including bank debt, debentures, preferred convertible shares and working capital.
• For companies with A/B share structures, B shares have been converted to A shares using end-of-period share prices.
• Exchangeable shares have been converted to common shares using end-of-period exchange ratios.
D I S C L A I M E R
The information used to compile this report is publicly available.
Bryan Mills Iradesso provides the comparison to shine the
spotlight on these segments of the energy industry, and to
communicate the achievements and growth potential of the
oil and gas companies. The iQ Report does not constitute a
solicitation or recommendation for the purchase or sale of any
security; it is provided for information only and is not intended
to serve as investment advice. Bryan Mills Iradesso cannot be
held responsible for accuracy and all readers are encouraged
to conduct their own research. This report is provided by Bryan
Mills Iradesso as a service to the reader without responsibility
for accuracy. Bryan Mills Iradesso must be credited with
developing the iQ Report if any part of it is reproduced. The
companies that have provided a corporate profile for this report
have paid Bryan Mills Iradesso a fee.
34 Crescent Point Energy
35 Delphi Energy
36 Perpetual Energy
I N T E R M E D I AT E S N A P S H OT S
19 Arsenal Energy
20 Canamax Energy
21 Exall Energy
22 Hemisphere Energy
23 Hyperion Exploration
24 Marquee Energy
25 Tamarack Valley Energy
J U N I O R S N A P S H OT S
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M4
JUN
IOR
& IN
TERM
EDIA
TE D
EALS
IQ REPORT CATEGORY CHANGES
• Dejour moved to Juniors from Emerging
• Emerald Bay moved to International from Emerging
DONE DEALS
• AraxEnergyInc.acquiredbyRoseheartyEnergyInc.
• ArrivaEnergyInc.acquiredbyPetrusResourcesLtd.
• Baccalieu Energy Inc. acquired by China Oil And Gas Group Limited
• Capio Exploration Ltd. acquired by Kelt Exploration Ltd.
• Caracal Energy Inc acquired by Glencore Xstrata plc
• CochonProperties,LLCacquiredbyRoosterEnergyLtd.
• Corinthian Exploration Corp. acquired by Legacy Oil + Gas Inc.
• CrocottaEnergyInc.acquiredbyLongRunExplorationLtd.
• Eaglewood Energy Inc. acquired by Transform Exploration Pty Ltd.
• EqualEnergyLtd.acquiredbyPetroflowEnergyCorporation
• Forest Oil Corporation combines with Sabine Oil & Gas LLC
• HeritageOilPlcacquiredbyAlMirqabCapitalSPC
• Kodiak Oil & Gas Corp. acquired by Whiting Petroleum Corporation
• MedalOilCompanyLimitedacquiredbyOandoEnergyResourcesInc.
• PalliserOil&GasCorporationacquiredbyMahaEnergyInc.
• Passport Energy Ltd. merged with Amarok Energy Inc. to createPowderMountainEnergyLtd.
• Privateco acquired by Trident Exploration (WX) Corp. and 1808039 Alberta Ltd.
• RavenwoodEnergyCorp.acquiredbyPetrusResourcesLtd.
• Stream Oil & Gas Ltd. acquired by TransAtlantic Petroleum Ltd.
• Suroco Energy Inc. acquired by Petroamerica Oil Corp.
• VeranoEnergyLimitedacquiredbyParexResourcesInc.
• VerazPetroleumLtd.acquiredbyMomentusEnergyCorp.
wheeling & dealing
TheabovetransactionsonlyaffecttheiQReportcomparisonchartsincaseswherethecompaniesmeetthecriteriaforinclusion in the report. The focus is on public companies. This list is not exhaustive.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 5
junior oil & gas companies
C O M PA R I S O N
INCLUSION CRITERIA
• Primary business must be oil and gas exploration, development and production
• Q22014productionmustfallbetween500and9,999barrelsofoilequivalentperday(boe/d)
• MajorityofproductionmustbefromWesternCanada
• MustbepubliclytradedontheTSXorTSXVentureExchange
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M6
JUN
IOR
CO
MPA
RISO
N
553
561
613
659
659
679
718
758
772
775
849
864
1,440
1,525
1,528
1,563
1,739
2,070
2,437
2,606
3,414
3,538
3,610
3,769
4,105
4,292
4,644
4,722
4,988
5,035
5,203
5,462
6,170
6,371
6,396
6,501
6,558
9,875
9,960
0 2,000 4,000 6,000 8,000 10,000 12,000
Hemisphere
Dejour
Edge
Hawk
Canamax
Anterra
Hyperion
Tuscany
Exall
Traverse
Questerre
LGX
Waldron
Quattro
Shoreline
Yoho
Palliser
Pinecrest
Toscana
Yangarra
Anderson
Strategic
Terra
Artek
Arcan
Arsenal
Manitok
Questfire
Rock
Marquee
Tamarack
Storm
Gear
PineCliff
Spartan
Cardinal
Zargon
Chinook
Raging River
Q2 2014 PRODUCTION (BOE/D)Median = 2,606 boe/d
small players with big potentialProduction numbers tell only part of the story when it comes to identifying investment opportunities in the oil and gas sector. Small oil and gas companies often have the people and prospects to turn their venture into a great investment. Many juniors have the potential to be the next big thing, although in general, they are very small compared to the intermediate and senior players. For our iQ Report, we define juniors as companies with production from 500 barrels of oil equivalent per day (boe/d) to 9,999 boe/d.
Other criteria are included on the previous page.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 7
JUN
IOR
CO
MPA
RISO
N
2
2
3
3
4
5
5
5
7
10
11
18
20
21
25
33
35
38
39
41
41
42
46
49
52
56
57
57
63
66
70
71
72
73
77
78
78
85
96
0 10 20 30 40 50 60 70 80 90 100
Palliser
Hawk
Gear
Arcan
Pinecrest
Raging River
Rock
Exall
Spartan
Anterra
Cardinal
Hemisphere
Tuscany
Arsenal
LGX
Questerre
Strategic
Zargon
Tamarack
Manitok
Edge
Hyperion
Traverse
Yangarra
Chinook
Canamax
Toscana
Marquee
Artek
Dejour
Anderson
Shoreline
Waldron
Yoho
Quattro
Storm
Questfire
Terra
PineCliff
Q2 PRODUCTION MIX — NATURAL GAS WEIGHTING (%)Median = 41%
balancing act between oil and gasOil has been priced higher than natural gas for a long time, but the juniors have historically produced more natural gas than oil, in part because gas is easier to find in the Western Canadian Sedimentary Basin. There has been a trend in the past few years of the juniors increasing their oil weighting, and this quarter, the preference for oil is highlighted with just over 60 percent of the companies reporting less than half of their production coming from natural gas. To calculate our weighting, we include natural gas liquids (NGL) with oil production. Produced liquids get prices that are similar to oil, with much stronger margins than natural gas. As is standard, we convert natural gas into oil equivalence by using a ratio of six thousand cubic feet (mcf) of natural gas to one barrel of oil equivalent (boe). This ratio comes from an energy equivalence at the burner tip.
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M8
JUN
IOR
CO
MPA
RISO
N
(25.1)
(19.7)
(15.0)
(14.7)
(13.2)
(12.6)
(9.1)
(8.9)
(7.2)
(6.8)
(6.1)
(5.8)
(5.1)
(5.1)
(3.4)
(2.4)
(1.6)
(0.9)
(0.9)
1.2
1.5
1.6
1.8
2.0
2.4
2.8
4.3
4.5
7.8
9.8
12.3
12.4
15.4
17.5
24.4
25.1
48.4
52.2
652.8
(100.0) 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0
Questerre
Exall
Hyperion
Waldron
Manitok
Yoho
Artek
LGX
Palliser
Yangarra
Hawk
Toscana
Anterra
Questfire
Pinecrest
Hemisphere
Zargon
Edge
Shoreline
Chinook
PineCliff
Raging River
Rock
Terra
Traverse
Dejour
Cardinal
Arsenal
Storm
Arcan
Tuscany
Strategic
Anderson
Quattro
Tamarack
Marquee
Gear
Canamax
Spartan
CHANGE IN PRODUCTION — Q1 2014 TO Q2 2014 (%)Median = 1.2%
productionfluctuationsHalf of the 39 juniors compared on this chart managed to increase their overall production from Q1 2014 to Q2 2014 offsetting the remaining companies who experienced between 0.9 and 25.1% lower production this quarter. Consistently increasing production is challenging because production from most wells in Western Canada declines at a relatively high rate. These declines need to be replaced before additions can be made. Companies at the bottom of this chart may have sold production recently while companies at the top either acquired production or drilled successful wells.
FORMULAcurrent period avg. production – previous period avg. production
previous period avg. production
Note: Gas production converted to boe at 6 mcf: 1 boe.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 9
JUN
IOR
CO
MPA
RISO
N
(43.8)
(35.0)
(28.6)
(25.1)
(19.7)
(18.5)
(18.0)
(15.7)
(15.2)
(15.0)
(14.5)
(13.7)
(12.4)
(9.9)
(9.2)
(8.9)
(7.2)
(5.1)
(3.4)
(2.5)
(1.9)
(1.8)
(1.7)
(1.2)
(0.9)
(0.9)
(0.7)
0.3
0.6
0.9
1.1
4.5
8.3
9.8
12.5
15.4
15.5
26.6
(50.0) (40.0) (30.0) (20.0) (10.0) 0.0 10.0 20.0 30.0 40.0
Tuscany
Questfire
Hawk
Questerre
Exall
Strategic
Waldron
Yoho
Traverse
Hyperion
Yangarra
Artek
Hemisphere
Manitok
Toscana
LGX
Palliser
Anterra
Pinecrest
Dejour
Terra
Marquee
Zargon
Storm
Edge
Shoreline
Raging River
PineCliff
Rock
Cardinal
Chinook
Arsenal
Tamarack
Arcan
Quattro
Anderson
Gear
Canamax
CHANGE IN PRODUCTION PER SHARE — Q1 2014 TO Q2 2014(%)Median = (2.9)%
losing groundGood deal making, smart operational decisions and successful drilling can allow oil and gas companies to increase production without increasing the number of outstanding shares. The median decrease of 2.9% in the second quarter of 2014 shows that increasing production on a per-share basis is obviously not easy to do and that many of the companies on this chart have not been successful this quarter . Any company that can consistently add production and reserves on a per-share basis will achieve a strong return for investors.
It costs money to increase production, whether it be via drilling or acquisitions. Therefore, junior companies need to deploy their cash flow carefully in order to grow, and they need to augment their cash flow with equity or debt financings in order to sustain their growth.
FORMULAcurrent production per share – previous production per share
previous production per share
Note: Production per share = average production rate for the period divided by basic weighted average shares outstanding during the period.
Gas production converted to boe at 6 mcf: 1 boe.
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M10
JUN
IOR
CO
MPA
RISO
N
13,856
15,922
16,206
27,719
34,223
34,870
37,454
41,105
43,429
44,565
45,596
45,963
46,654
46,930
53,162
55,734
60,658
60,911
61,931
63,793
64,902
65,412
72,456
76,403
77,290
81,116
82,941
84,051
84,694
89,903
91,765
92,525
97,975
102,761
119,599
123,494
163,449
207,137
352,363
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Quattro
Questfire
Terra
Waldron
Palliser
Tuscany
Marquee
Anderson
Shoreline
Toscana
Manitok
Hyperion
Anterra
Hawk
Arsenal
Zargon
Chinook
Strategic
PineCliff
Canamax
Rock
Pinecrest
Artek
Gear
LGX
Arcan
Yangarra
Edge
Exall
Hemisphere
Yoho
Dejour
Tamarack
Traverse
Cardinal
Storm
Spartan
Raging River
Questerre
ENTERPRISE VALUE VERSUS Q2 PRODUCTION ($ PER BOE/D)Median = $63,793 per boe/d
the value of productionThis chart shows each junior company’s enterprise value per flowing barrel of oil equivalent per day (boe/d) of this quarter’s production. We’ve calculated the enterprise value by multiplying the share price on August 29, 2014 by the weighted average number of shares outstanding during Q2 before adding debt and debentures outstanding net of working capital at the end of the quarter. A high number means the markets are placing more value on the production of a particular company, perhaps for reasons such as long life reserves, a higher proportion of oil to gas, high field netbacks, or perceived strong production growth prospects.
FORMULAmarket capitalization + net debt
average production in barrels of oil equivalent
Note: Market capitalization = Aug 29, 2014 share price x Q2 weighted average basic shares outstanding.
Net debt = bank debt + debentures – working capital.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 11
JUN
IOR
CO
MPA
RISO
N
(7.11)
(0.63)
1.40
1.69
6.85
10.26
10.35
10.90
11.00
13.16
14.34
14.46
15.63
15.83
17.57
17.91
19.76
20.24
20.27
20.76
22.28
22.55
23.85
25.68
26.46
26.50
26.89
30.80
31.58
32.51
34.17
34.49
35.66
36.80
37.58
39.76
41.49
42.47
62.10
(20.00) (10.00) 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00
Shoreline
Dejour
Canamax
Waldron
Palliser
Questfire
Terra
Exall
Strategic
Quattro
Edge
Toscana
Yoho
PineCliff
Anderson
Anterra
Artek
Marquee
Arcan
Zargon
Storm
Hyperion
LGX
Chinook
Arsenal
Manitok
Questerre
Hemisphere
Pinecrest
Hawk
Traverse
Yangarra
Tuscany
Gear
Tamarack
Cardinal
Spartan
Rock
Raging River
Q2 CASH FLOW NETBACK ($/BOE)Median = $20.76/boe
margins wideningThis chart demonstrates the amount of cash each company brings in on average for each barrel of oil equivalent it produces. It demonstrates that one company’s boe may be significantly different from another’s. In addition to commodity mix, cash flow netbacks are influenced by spot or hedged prices, cash taxes, royalties, and associated expenses. A number of the companies with the best netbacks on this chart are weighted towards oil production, which returns the highest relative prices in today’s markets. They may also have hedging programs in place that benefit their netbacks. Cash flow is the result of adding back non-cash expenses such as depreciation and future taxes to net earnings. It is a measurement that is not defined by generally accepted accounting principles (GAAP) in Canada. The median cash flow netback decreased this quarter to $20.76 compared with $28.30 /boe in Q1 2014.
FORMULAcash flow from operations
total production in the period
Notes: Total production in the period = average daily production x 91 days in the period
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M12
JUN
IOR
CO
MPA
RISO
N
8.80
9.02
11.24
11.24
12.37
13.56
13.65
13.72
13.98
14.35
14.54
14.79
14.81
15.31
15.83
16.11
17.85
18.03
18.06
18.22
18.33
18.39
18.46
19.67
19.71
20.08
20.89
21.06
21.37
21.48
21.75
22.20
23.43
24.98
27.49
29.18
31.38
33.42
44.88
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00
Yangarra
PineCliff
Storm
Manitok
Traverse
Quattro
Yoho
Anderson
Raging River
Tamarack
Artek
Terra
Rock
Exall
Arcan
Hyperion
Canamax
Questfire
Questerre
Spartan
Toscana
Waldron
Edge
Marquee
Zargon
Hemisphere
Arsenal
Shoreline
Gear
Tuscany
Chinook
Cardinal
Hawk
Pinecrest
Dejour
Strategic
Palliser
LGX
Anterra
Q2 OPERATING AND TRANSPORTATION EXPENSES ($/BOE)Median = $18.22/boe
cost controlCompanies that do a good job of controlling operating and transportation costs earn more money from their production. The ability to be an efficient operator relates to the productivity of wells, the proximity of producing areas, economies of scale, control over facilities and a company’s production methods. Some companies with high operating costs this quarter may be incurring expenses in an operating area that will not increase when production increases for the area, creating the potential for improving economies of scale.
FORMULAoperating expenses including transportation costs
total production in the period
Note: Total production in the period = average daily production x 91 days in the period.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 13
JUN
IOR
CO
MPA
RISO
N
1.36
1.43
1.53
2.02
2.32
2.90
2.94
3.11
3.19
3.23
3.65
3.75
3.81
3.81
4.01
4.13
4.27
4.32
4.56
4.64
4.75
4.90
5.08
5.50
5.55
5.72
5.92
7.52
8.22
8.35
8.52
9.44
9.50
9.56
10.32
10.36
12.16
15.24
17.14
0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 18.00
Yangarra
Raging River
Storm
PineCliff
Rock
Artek
Arsenal
Spartan
Tamarack
Cardinal
Marquee
Quattro
Chinook
Questfire
Hawk
Traverse
Gear
Terra
Toscana
Manitok
Yoho
Waldron
Zargon
Anderson
Palliser
Shoreline
Strategic
Hemisphere
Edge
Hyperion
Tuscany
LGX
Pinecrest
Arcan
Anterra
Exall
Questerre
Dejour
Canamax
Q2 GENERAL AND ADMINISTRATIVE CASH EXPENSES ($/BOE)Median = $4.64/boe
mindingtheofficeGeneral and administrative expenses (G&A) pay for the engineering, geology, accounting, business development and other office-related expenses of oil and gas companies. G&A should be lower per boe for larger companies because many of these costs are fixed and do not increase with the amount of production. A lower amount of G&A per boe is good as long as it isn’t at the cost of growth or of meeting the regulatory and legal requirements of being a public company. Savvy investors should take the time to understand what is happening that causes expenses to be higher than peers and whether or not it will translate into growth that will reward shareholders. Non-cash compensation expenses, mostly stock options and other share or unit-based incentives, often make up a significant portion of compensation packages at junior oil and gas companies. These are not included in this chart.
FORMULAgeneral & administrative expenses
total production in the period
Notes: Total production in the period = average daily production x 91 days in the period.
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M14
JUN
IOR
CO
MPA
RISO
N
7.55
8.13
9.73
10.01
10.13
12.37
12.47
12.88
13.47
14.16
14.31
14.63
14.72
15.20
15.44
15.71
16.58
17.21
18.13
18.42
18.79
19.59
20.15
20.35
20.97
21.50
21.52
21.74
22.61
22.71
23.40
26.08
26.17
27.46
28.71
29.60
29.70
30.30
33.57
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00
Quattro
Questfire
PineCliff
Edge
Terra
Storm
Dejour
Canamax
Artek
Toscana
Hemisphere
Yoho
Traverse
Waldron
Manitok
Shoreline
Yangarra
Hyperion
Palliser
Hawk
Marquee
Anterra
Arsenal
Chinook
Questerre
Anderson
Gear
Zargon
Tamarack
Cardinal
Raging River
Arcan
Rock
Strategic
LGX
Tuscany
Exall
Pinecrest
Spartan
Q2 DEPLETION, DEPRECIATION AND ACCRETION EXPENSES ($/BOE)Median = $18.42/boe
reserves writedownDepletion, depreciation and accretion expenses (DD&A) are an approximation of finding, development and acquisition costs for oil and gas reserves. DD&A expenses are an ongoing writedown of assets as they are used up. Increasing amounts may mean reserves were more expensive to acquire in the first place and as a result are losing value on the company’s books at a faster pace. It’s worth noting that the numbers on this chart have been drawn directly from each company’s income statement. As a result, the amounts include one-time items.
FORMULAdepletion, depreciation & accretion expenses
total production in the period
Note: Total production in the period = average daily production x 91 days in the period.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 15
JUN
IOR
CO
MPA
RISO
N
2.7
2.9
4.0
4.2
4.3
4.3
4.7
5.1
5.5
5.6
5.7
5.7
6.4
6.5
6.6
7.2
7.2
7.4
8.0
8.3
8.3
8.5
8.9
9.2
10.1
10.7
10.8
11.0
13.7
15.2
15.2
16.1
16.1
21.3
36.0
44.9
124.8
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0
Dejour
Shoreline
Tuscany
Quattro
Hawk
Rock
Questfire
Terra
Manitok
Marquee
Arsenal
Hyperion
Pinecrest
Gear
Anderson
Chinook
Yangarra
Anterra
Tamarack
Zargon
Hemisphere
Traverse
Cardinal
Toscana
LGX
Raging River
Artek
PineCliff
Spartan
Arcan
Palliser
Strategic
Storm
Edge
Yoho
Exall
Questerre
Waldron
Canamax
ANNUALIZED Q2 CASH FLOW MULTIPLESEnterprise Value to Annualized Cash Flow Median = 7.4 Market Capitalization to Annualized Cash Flow Median = 4.9
flowingcashThe dark bars on this chart show each company’s enterprise value as it relates to annualized cash flow. The lighter bars indicate the market capitalization to annualized cash flow. The difference between the two bars is each company’s net debt. Therefore, a quick glance at this chart doesn’t only show where a company trades in relation to its cash flow, but also shows debt positions. This calculation of annualized cash flow multiples uses the closing market price on Aug 29, 2014 combined with Q2 2014 weighted average shares outstanding, net debt and cash flow. The values shown on the chart relate to the enterprise value multiples of annualized cash flow denoted by the dark bars.
FORMULAenterprise value
cash flow for period x 4
Note: Enterprise value = (Q2 weighted average basic shares x Aug 29, 2014 share price) + net debt.
For A/B share structure companies, the separate market price of B shares is also factored into the market capitalization.
Market Capitalization to Annualized Cash Flow
Enterprise Value to Annualized Cash Flow
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M16
JUN
IOR
CO
MPA
RISO
N
(19.9)
(1.6)
(0.9)
(0.6)
(0.6)
(0.0)
0.2
0.3
0.3
0.4
0.6
0.8
0.9
0.9
0.9
1.1
1.1
1.3
1.3
1.4
1.5
2.0
2.0
2.3
2.3
2.3
2.5
3.8
4.1
4.3
4.8
5.1
5.5
10.2
11.4
18.7
27.2
(30.0) (20.0) (10.0) 0.0 10.0 20.0 30.0
Canamax
Questerre
PineCliff
Traverse
Spartan
Cardinal
Rock
Quattro
Hemisphere
Raging River
Tuscany
Tamarack
Chinook
Manitok
Storm
Gear
Hawk
Yangarra
Yoho
Terra
Marquee
Arsenal
Artek
LGX
Questfire
Toscana
Zargon
Anterra
Anderson
Hyperion
Pinecrest
Edge
Strategic
Arcan
Palliser
Exall
Waldron
Dejour
Shoreline
Q2 NET DEBT TO ANNUALIZED CASH FLOWMedian = 1.3
The two companies at the top of this graph had negative cash flow for the quarter so they were not included since the multiple of cash flow is not meaningful
The six companies at the bottom of this graph had positive cash positions rather than net debt.
leveraging leverageThis measurement compares, in years, how long it would theoretically take to become debt free if cash flow remained steady year after year and it was 100% dedicated to paying down debt. In times where equity markets aren’t providing capital at a reasonable value, it can be advantageous for companies to use debt to finance growth. Assuming they are creditworthy, companies with lower debt may be better positioned to seize asset-buying opportunities. Companies with higher debt may not have as many options. Companies with negative values on the chart have a positive working capital position that they will be able to use to fund growth.
FORMULAnet debt
cash flow for period x 4
Note: Net debt = bank debt + debentures – working capital.
Convertible debentures make up a portion of the debt load for Anderson, Anterra, Arcan, Exall, Quattro, Shoreline, Toscana and Zargon.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 17
JUN
IOR
CO
MPA
RISO
NINVESTMENT RETURNS – CAPITAL GAINS AND DISTRIBUTIONS OR DIVIDENDS (%)April through June Median = 13% April through August Median = 17%
(64)
(50)
(25)
(24)
(24)
(22)
(17)
(16)
(15)
(7)
(6)
(6)
(6)
1
3
4
5
9
12
17
17
19
22
22
23
24
29
31
31
34
35
38
39
47
53
57
79
87
148
(100) (50) 0 50 100 150 200
Shoreline
Pinecrest
Anterra
Strategic
Artek
Hyperion
Waldron
Palliser
Arcan
Questerre
Terra
Manitok
Zargon
Hemisphere
Dejour
Yoho
Toscana
Exall
Canamax
LGX
Hawk
Marquee
Storm
Yangarra
Anderson
Raging River
Gear
Tamarack
Spartan
PineCliff
Rock
Cardinal
Arsenal
Traverse
Questfire
Quattro
Chinook
Edge
Tuscany
looking upInvestors in the junior oil and gas producers experienced mainly positive returns in the second quarter and subsequent months. The numbers in this chart represent the total return, which includes dividends paid during the quarter. The juniors that paid dividends in Q2 2014 include Arsenal, Cardinal, Toscana and Zargon.
FORMULAcapital gain + total distributions in that period per share or unit
market price at end of the previous period
market price at end of the previous period
Note: Capital gain in period = market price at end of period – market price at end of previous period.
Share price change plus distributions from April through August 2014
Share price change plus distributions from April through June 2014
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M18
JUN
IOR
CO
MPA
RISO
N
CompanyChiefexecutive
Stocksymbol& exchange(T=TSX, V=Venture)
Share priceAug 29/14
($)
Q2/14average daily
production(boe/d)
Q2/14 weighted shares outstanding
(basic) including exchangeable
(000)
Jun 30/14net debt before
debentures($000)
Jun 30/14 debentures
outstanding
Q2/14net income
($000)
Q2/14cash flow
($000)Anderson Brian Dau AXL-T 0.30 3,414 172,550 (656) 90,093 (993) 5,458Anterra Gang Fang AE.A 0.03 679 496,871 13,198 3,550 (132) 1,106Arcan Terry McCoy ARN-V 0.23 4,105 97,860 157,836 152,623 (6,325) 7,573Arsenal Tony van Winkoop AEI-T 9.03 4,292 16,085 82,916 0 (376) 10,334Artek Darryl Metcalfe RTK-T 3.09 3,769 70,587 54,935 0 1,963 6,777Canamax Brad Gabel CAC-V 1.55 659 31,450 (6,698) 0 (1,221) 84Cardinal Scott Ratushny CJ-T 20.62 6,501 37,734 (518) 0 3,780 23,522Chinook Walter Vrataric CKE-T 2.42 9,875 214,226 80,536 0 4,391 23,073Dejour Robert Hodgkinson DEJ-T 0.30 561 163,839 2,770 0 730 (32) Edge Brad Nichol EDE-V 0.22 613 163,815 16,261 0 288 799Exall Roger Dueck EE-T 0.12 772 66,635 35,967 21,435 (882) 766Gear Ingram Gillmore GXE-T 5.46 6,170 70,293 87,635 0 6,420 20,661Hawk Steve Fitzmaurice HWK.A-V 0.48 659 34,686 8,600 0 334 1,949Hemisphere Don Simmons HME-V 0.70 553 68,336 1,912 0 830 1,551Hyperion Trevor Spagrud HYX-V 0.14 718 54,190 25,430 0 207 1,474LGX Trent Yanko OIL-V 0.56 864 88,658 17,117 0 (727) 1,875Manitok Massimo Geremia MEI-V 2.44 4,644 70,390 39,987 0 (9,044) 11,197Marquee Richard Thompson MQL-V 1.17 5,035 112,534 56,911 0 900 9,274Palliser Kevin Gibson PXL-V 0.16 1,739 63,916 49,293 0 (19,346) 1,084PineCliff Philip Hodge PNE-V 2.11 6,371 203,138 (34,047) 0 2,333 9,180Pinecrest Wade Becker PRY-V 0.10 2,070 217,212 114,778 0 407 5,950Quattro Leonard Van Betuw QXP-V 0.55 1,525 34,995 633 1,250 632 1,826Questerre Michael Binnion QEC-T 1.18 849 264,928 (13,518) 0 520 2,077Questfire Richard Dahl Q.A-T 2.60 4,722 13,418 40,298 0 8,172 4,410Raging River Neil Roszell RRX-T 11.00 9,960 179,438 89,333 0 30,238 56,283Rock Allen Bey RE-T 7.69 4,988 39,918 16,775 0 8,292 19,276Shoreline Trevor Folk SEQ-T 0.62 1,528 9,041 43,754 17,000 (6,732) (988) Spartan Richard McHardy SPE-V 4.20 6,396 262,340 (56,406) 0 1,357 24,146Storm Brian Lavergne SRX-V 5.76 5,462 109,842 41,837 0 6,598 11,076Strategic Gurpreet Sawhney SOG-V 0.38 3,538 360,959 78,307 0 (2,717) 3,541Tamarack Brian Schmidt TVE-V 7.46 5,203 60,352 59,490 0 5,243 17,790Terra Cas Morel TT-T 0.37 3,610 19,332 19,332 0 12 3,399Toscana Joseph Durante TEI-T 14.19 2,437 5,537 13,076 16,942 1,250 3,207Traverse Laurie Smith TVL-V 1.25 775 68,275 (5,756) 0 407 2,409Tuscany Robert Lamond TUS-V 0.52 758 38,659 6,334 0 440 2,460Waldron Ernie Sapieha WDN-T 0.28 1,440 57,267 24,163 0 (215) 222Yangarra James Evaskevich YGR-T 3.27 2,606 53,558 41,022 0 2,851 8,180Yoho Brian McLachlan YO-V 2.50 1,563 52,621 11,908 0 500 2,224Zargon Craig Hansen ZAR-T 8.00 6,558 30,128 71,378 53,084 (2,020) 12,390TOTAL 127,979 1,286,123 355,977 38,365 317,583AVERAGE 3,282 32,978 44,497 984 8,143MEDIAN 2,606 24,163 19,218 440 3,541
For A/B share structures, B shares are not shown above, but are included in the calculations for some of our charts. When we calculate market capitalization, we use the A shares outstanding times the A share price, plus the B shares outstanding times the B share price.
Eastern Canada-focused juniors, coalbed methane-focused junior companies, and oil sands-focused junior companies are not included in this comparison.
The June 30, 2014 period represents Edge's first quarter and Yoho's third quarter.
The data was provided by both CanOils database and BMIR researchers.
JUNIOR DATA TABLE
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
OIL FOCUSED INVENTORY Listing: TSX-AEI
Shares outstanding: 16.1 million at June 30, 2014
Share price: $9.03 at August 29, 2014
Market capitalization: $145.4 million
Net debt: $82.9 million at June 30, 2014
Enterprise value (market cap. + net debt): $228.1 million
Q2 2014 average daily production:
Crude oil and NGLs 3,386 bbls/d 79%
Natural gas 5.44 mmcf/d 21%
Total 4,292 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50AEI $26.46
Peer Median$20.80
Recent News:September 15, 2014Arsenal releases operational update. At Princess, Alberta, Arsenal’s current total production was approximately 1,500 boe/day (80% oil).
August 7, 2014Arsenal announces Q2 2014 Results and Increase in Quarterly Dividend. Cash fl ow for the second quarter was $11.6 million or $0.72/share, a 14% increase from Q2 2013.
August 6, 2014Arsenal announces 7.7% increase in its quarterly dividend to $0.07 per common share.
Strategies:• Arsenal is focused on increasing shareholder value through development and
exploration of its projects in North Dakota and Alberta in a balanced and fi nancially responsible manner.
• Arsenal’s production mix in Q2 2014 was 79% crude oil and natural gas liquids and 21% natural gas.
• The Company operates in the US in North Dakota and in Canada in Alberta and British Columbia with activities focused at Stanley and Lindahl in North Dakota and at Princess in Alberta.
— from Arsenal website.
Contact:1900, 639 - 5th Avenue S.W.Calgary, Alberta T2P 0M9
tel 403.262.4854
Directors:Neil MacKay
Tony van Winkoop
William Hews
Harley Kempthorne
Bill Powers
Derek Petrie
Analyst Coverage:Acumen Capital
National Bank Financial
Paradigm Capital
PI Financial
Industrial Alliance
Offi cers:Tony van Winkoop - President & CEO
J. Paul Lawrence - VP, Finance & CFO
Gjoa Taylor - VP, Land
Ron Forth - VP, Engineering
Leo Nolte - VP, Drilling & Completions
Kent Sawatzky - VP, Production
Don Edwards - Corporate Secretary
Evi
North Dakota
Southeast Alberta
Desan
Deep Basin
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 19
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
EXPLOITING QUALITY ASSETSListing: TSXV-CAC
Shares outstanding: 41 million at June 30, 2014
Share price: $1.55 at August 29, 2014
Market capitalization: $64 million
Net surplus: $6.7 million at June 30, 2014
Enterprise value (market cap. + net debt): $57.3 million
Q2 2014 average daily production:
Crude oil and NGLs 293 bbls/d 44%
Natural gas 2.20 mmcf/d 56%
Total 659 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50CAC $1.40
Peer Median$20.80
Recent News:October 29, 2014Canamax announced increased production and cash fl ow for Q2 August 31, 2014. Canamax exited Q2 with a net production rate of just under 1,100 boe/d, which is a 38% increase from the prior quarter end.
September 19, 2014Canamax announced an increased capital expenditure program from June 2014 to December 31, 2014 to approximately $20.5 million from $14 million.
September 16, 2014Canamax announced the listing of 7,951,514 common share purchase warrants of the Company on the TSX Venture Exchange.
Strategies:• Canamax is dedicated to growing shareholder value:
• The Opportunity:
• Top tier technical and fi nancial competence
• Exploit low rish development opportunities
• 2014 Execution:
• Completed fi ve accretive deals ad one farm-in in the last 12 months
• Strong balance sheet - No debt
• Visble Growth:
• Focus on consolidation in core areas
• Top tier technical and fi nancial competence.
— from Canamax October 2014 Corporate Presentation
Contact:Suite 610, 324 - 8th Avenue SWCalgary, Alberta, CanadaT2P 2Z2
tel 587.349.5186investor line 587.349.5187www.canamaxenergy.com
Directors:Kevin Adair
Brad Gabel
Hugh Ross
Mark Shilling
Stuart McDowall
Allan King
Kevin Delaney
Analyst Coverage:Paradigm Capital
Beacon Securities
Offi cers:Brad Gabel - President & CEO
Jeremy Krukowski, P.Eng - Chief Operating Offi cer
Chris Martin, C.A. - VP Finance and CFO
Karen Genoway - Landman
Nabil Khouri, P.Geol - Geologist
Brazeau River
Retlaw
Wapiti
Flood
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M20
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
CRUDE OIL FOCUSListing: TSX-EE
Shares outstanding: 66.6 million June 30, 2014
Share price: $0.12 at August 29, 2014
Market capitalization: $8.0 million
Net debt: $36.0 million (includes $57.4 million debentures) at June 30, 2014
Enterprise value (market cap. + net debt): $65.4 million
Q2 2014 average daily production:
Crude oil and NGLs 730 bbls/d 95%
Natural gas 0.25 mmcf/d 5%
Total 772 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50EE $10.90
Peer Median$20.80
Recent News:October 6, 2014Exall Energy announced revised process to pay out existing credit facility.
September 25, 2014Exall Energy signed agreement for a $35 million debenture to replace existing senior facility; debentures fully secured by Exall’s oil and gas assets, maturing 5 years from the issue date, and bearing interest at 8% per annum.
August 13, 2014Exall Energy corporation announces results for the three and six months ended June 30, 2014. Q2 2014 production average of 772 boe per day for a six month production average of 866 boe per day.
Strategies:• Exall Energy Corporation is focused on building shareholder value in the
oil and gas industry
• The Corporation will enhance shareholder value through exploration and development and selective acquisition opportunities
• Exall rapidly advanced its growth strategy through the successful acquisition of Kingsmere Exploration Ltd. in January 2007
• Exall is expecting to continue to increase its oil production as a result of:
• the Marten Mountain discovery made during the 2010 winterdrilling program;
• a disciplined capital program focused on developing light sweet crude opportunities, and
• existing good production practices and pool optimization strategies
— from Exall website
Contact:Calgary
400, 715 - 5th Avenue S.W.Calgary, Alberta T2P 2X6tel 403.237.7820
Toronto
8 King Street East, Suite 1700Toronto, Ontario M5C 1B5tel 416.368.3949
www.exall.com
Directors:Roger Dueck
Wayne Egan
Bernard Lang
Allan Menzies
Roderick Phipps
Frank Rebeyka
Stephen Roman
Analyst Coverage:Dundee Securities Corporation
D & D Securities
Emerging Equities
StoneCap Securities
Offi cers:Warren Coles - VP, Finance & CFO
Glen Kerr - COO
Janet MacKenzie - VP, Exploration
Mitsue
Bow Island
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 21
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
iQ SNAPSHOTe n e r g y c o r p o r a t i o n
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
Listing: TSXV: HME
Shares outstanding: 75.1 million at June 30, 2014
Share price: $0.70 at August 29, 2014
Market capitalization: $52.5 million
Net debt: $1.9 million at June 30, 2014
Enterprise value (market cap. + net debt): $54.4 million
Q2 2014 average daily production:
Crude oil and NGLs 456 bbls/d 82%
Natural gas 0.58 mmcf/d 18%
Total 553 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50HME $30.80
Peer Median$20.80
Recent News:September 22, 2014 Hemisphere announces record initial production results from the fi nal three wells of its summer drilling program
September 9, 2014Hemisphere appoints Ian Duncan to Chief Operating Offi cer and Ashley Ramsden-Wood to Vice President of Engineering
August 27, 2014Hemisphere releases Q2 fi nancial and operating results
Strategies:Hemisphere Energy Corporation focuses on horizontal development of established, well delineated oil pools
• Ramp up Atlee Buffalo production with aggressive drilling program
• Maintain steady production base at Jenner and pursue growth through infi ll and step-out development drilling
• Pursue additional strategic acquisitions with opportunities that expand the company’s core foundation
— from Hemisphere September presentation
Contact:2000, 1055 West Hastings St.Vancouver, British ColumbiaV6E 2E9
tel 604.685.9255
Investor [email protected]
Analyst Coverage:Canaccord Genuity
Industrial Alliance Securities
Integral Capital Markets
Offi cers:Don Simmons - President & CEO
Dorlyn Evancic - Chief Financial Offi cer
Ian Duncan - Chief Operating Offi cer
Ashley Ramsden-Wood - VP, Engineering
Andrew Arthur - VP, Exploration
David Savage- Consultant, Business Development
James Muraro - Consultant, Geophysics
Directors:Charles O’Sullivan
Don Simmons
Bruce McIntyre
Gregg Vernon
Frank Borowicz
Trutch
Jenner / Atlee
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M22
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
FOCUSED LIGHT OIL RESOURCE PLAYER Listing: TSXV-HYX
Shares outstanding: 54.2 million at June 30, 2014
Share price: $0.14 at August 29, 2014
Market capitalization: $7.6 million
Net debt: $25.4 million at June 30, 2014
Enterprise value (market cap. + net debt): $33.0 million
Q2 2014 average daily production:
Crude oil and NGLs 417 bbls/d 58%
Natural gas 1.81 mmcf/d 42%
Total 718 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50HYX $22.55
Peer Median$20.80
Recent News:August 15, 2014Hyperion announced second quarter results and operations update. 18% increase in operating netback (Q2 2014 - $38.04/boe) quarter over quarter.
July 25, 2014Hyperion announced that Mr. William (Bill) Cromb was appointed as Chief Financial Offi cer of Hyperion effective July 14, 2014.
June 27, 2014Hyperion announced revision to bank line. The lending limit of the revolving operating facility was revised to $28.0 million from $30.0 million.
Strategies:• Hyperion’s strategy is to grow through acquisitions which lead to lower risk, scalable
and repeatable development drilling projects.
• Ownership of high quality base assets that have approximately 21% base decline rate.
• Future focus on improving capital effi ciency at Niton-McLeod with full scale drill program and use of long reach horizontal wells.
• Hyperion holds approximately 51,043 net acres of undeveloped land with excellent tenure.
— from Hyperion May 2014 corporate presentation and website.
Contact:Suite 2110, Royal Bank Building335 - 8th Avenue S.W.Calgary, Alberta T2P 1C9
tel 403.930.0700
Directors:Rod Maxwell
Dan O’Neil
Greg Bay
Greg Turnbull
Trevor Spagrud
Leif Snethun
Offi cers:Trevor Spagrud - President & CEO
Larry Hammond - COO
Tim Gee - VP, Engineering
Steve Horth - Manager, Exploration
William (Bill) Taylor Cromb - CFO
Niton
Garrington
Pembina
Buck Lake
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 23
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
HIGH GROWTH, OIL FOCUSED, DEVELOPMENT AND PRODUCTIONListing: TSXV-MQL
Shares outstanding: 120.3 million at June 30, 2014
Share price: $1.17 at August 29, 2014
Market capitalization: $140.8 million
Net debt: $56.9 million at June 30, 2014
Enterprise value (market cap. + net debt): $197.7 million
Q2 2014 average daily production:
Crude oil and NGLs 2,154 bbls/d 43%
Natural gas 17.29 mmcf/d 57%
Total 5,035 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50MQL $20.24
Peer Median$20.80
Recent News:October 15, 2014Marquee announces operations update and upward revision to 2014 exit guidance. Michichi production increased to approximately 4,000 boe/d. Lloydminster production increased to approximately 700 boe/d.
September 30, 2014Marquee announces the completion of the previously announced disposition of its non-core asset located in the Pembina area of Alberta.
September 25, 2014Marquee announces the sale of a non-core asset in the Pembina area of western Alberta for $14 million and maintains 2014 production guidance.
Strategies:• Scalable, low risk, development stage, oil-prone asset base with a clearly delineated
drilling inventory capable of supporting many years of profi table growth
• Focus on delivering debt-adjusted per share growth in production, reserves, NAV, CF and FCF
• There is distinct value at the current share price as the company trades below its peers with fi nancial fl exibility
• Plan to drill 22 net wells at Michichi and Lloydminster in 2014
— from Marquee October 2014 Corporate Presentation
Contact:1700, 500 - 4th Avenue S.W. Calgary, AB T2P 2V6
tel 403.384.0000
Directors:Richard M. Alexander
Glenn Carley
Dennis Feuchuk
James H.T. Riddell
Dr. William J.F. Roach
Richard Thompson
Gregory G. Turnbull
Analyst Coverage:Acumen Capital
Canaccord Genuity Corp.
Dundee Capital Markets
FirstEnergy Capital Corp
GMP Securities
Haywood Securities Inc.
Macquarie Equity Research
National Bank Financial
Octagon Capital
Peters & Co. Limited
Offi cers:Richard Thompson - President & CEO
Roy Evans - CFO & VP, Finance
Steve Bradford - VP, Land
Rob Lemermeyer - VP, Production
Dave Washenfelder - VP, Exploration
Sam Yip - VP, Engineering
ENERGY LTD.
Lloydminster
Michichi
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M24
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
TARGETED ASSETS, SUSTAINABLE CORPORATE GROWTH Listing: TSXV-TVE
Shares outstanding: 60.5 million at June 30, 2014
Share price: $7.46 at August 29, 2014
Market capitalization: $451.1 million
Net debt: $59.5 million at June 30, 2014
Enterprise value (market cap. + net debt): $510.5 million
Q2 2013 average daily production:
Crude oil and NGLs 3,197 bbls/d 61%
Natural gas 12.03 mmcf/d 39%
Total 5,203 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50TVE $37.58
Peer Median$20.80
Recent News:October 14, 2014Tamarack Valley announced a record current production rate, increased drilling activity and additions to drilling inventory. Current production rate of 7,400 boe/d.
September 30, 2014Tamarack Valley closed its acquisition of 100% of Suncor Energy’s interests in the Wilson Creek area of Alberta for an aggregate purcahse price of $168.5 million, prior to closing adjustments.
September 26, 2014Tamarack Valley closed its bought deal public offering of subscriptions receipts and fl ow-through shares for aggregate gross proceeds of $125,163,000.
Strategies: • Tamarack Valley utilizes a proven, rigorous process to identify opportunities, evaluate risk and measure results.
• Tamarack Valley’s longer term strategy involves the identifi cation and development of assets in four different core areas, which will enable proper risk management while delivering superior rates of return.
• Tamarack is continuing to execute its short term strategy to develop high quality assets that allow the Company to continue to be self-suffi cient, funding growth through internal cash fl ow and debt, enabling per share growth.
— from Tamarack Valley website
Contact:Bow Valley Square 43100, 250 - 6th Avenue S.W.Calgary, Alberta T2P 3H7
tel 403.263.4440
[email protected] www.tamarackvalley.ca
Directors:Floyd Price
Jeff Boyce
David Mackenzie
Dean Setoguchi
Brian Schmidt
Analyst Coverage:Acumen Capital Partners
Alta Corp Capital
Canaccord Genuity
Clarus Securities.
Dundee Capital Markets
GMP Securities
Macquarie Capital
National Bank Financial
Paradigm Capital
Peters & Co.
RBC Dominion Securities
Offi cers:Brian Schmidt - President & CEO
Dave Christensen - VP, Engineering
Ken Cruikshank - VP, Land
Ron Hozjan - VP, Finance & CFO
Kevin Screen - VP, Production & Operations
Scott Reimond - VP, Exploration
Scott Hanson - Operations Manager
Derek Blizzard - Controller
Garrington
LochendQuaich
Buck Lake Heavy Oil
Redwater
Cardium Farm-in Wilson Creek
Hatton
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 25
JUN
IOR
CO
MPA
RISO
NJU
NIO
R C
OM
PARI
SON
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M26
intermediate oil & gas companies
C O M PA R I S O N
INCLUSION CRITERIA
• Primary business must be oil and gas exploration, development and production
• Q22014productionmustfallwithintherangeof10,000to200,000barrelsofoilequivalentperday(boe/d)
• MajorityofproductionmustbefromNorthAmerica
• MustbepubliclytradedontheTSXorTSXVentureExchange
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 27
INTE
RMED
IATE
CO
MPA
RISO
N
10,397
10,744
11,116
11,151
11,381
12,437
12,735
13,911
14,474
14,493
15,029
16,395
20,224
20,585
21,109
22,685
23,270
27,200
27,602
30,574
31,178
36,187
36,342
42,513
66,934
72,302
73,823
74,273
103,987
106,706
109,953
110,165
137,368
0 25,000 50,000 75,000 100,000 125,000 150,000
Delphi
DeeThree
TORC
Journey
Kelt
RMP
Cequence
Bonterra
Spyglass
NuVista
PaintedPony
Surge
Legacy
Paramount
TwinButte
Advantage
Perpetual
Crew
Long Run
Whitecap
Birchcliff
Trilogy
Bellatrix
Lightstream
Baytex
Peyto
Pengrowth
Bonavista
Enerplus
PennWest
Tourmaline
ARC
CrescentPoint
9
10
11
13
13
16
20
20
29
29
35
43
44
47
47
54
56
58
59
60
65
67
67
69
70
80
83
84
85
85
85
90
99
0 10 20 30 40 50 60 70 80 90 100
CrescentPoint
TwinButte
Legacy
Baytex
Surge
TORC
Lightstream
DeeThree
Whitecap
Bonterra
PennWest
RMP
Pengrowth
Journey
Long Run
Spyglass
Crew
Enerplus
Trilogy
ARC
Bellatrix
Bonavista
Delphi
NuVista
Kelt
Paramount
Birchcliff
Perpetual
Cequence
Tourmaline
PaintedPony
Peyto
Advantage
Q1 2014 PRODUCTION (BOE/D)Median = 23,270 boe/d
Q2 PRODUCTION MIX — NATURAL GAS WEIGHTING (%)Median = 56%
bigger peer groupWe define intermediate oil and gas companies as those with production from 10,000 boe/d to 200,000 boe/d. To ensure the peer group is relatively comparable, we restrict the category to companies with conventional oil and gas development and production as their primary business. The majority of their production must be from Canada and their shares must trade on the TSX or TSX Venture Exchange.
oil vs gas The median natural gas weighting of Western Canada’s intermediate oil and gas players decreased slightly this quarter with a median weighting of 56%. In the past there have been intermediate players that produced oil or gas exclusively. Now nearly all the players maintain a mix of oil and natural gas, ranging from a low of 9% natural gas for Crescent Point and Twin Butte to a high of 99% natural gas weighting for Advantage. Oil and natural gas are made comparable by converting natural gas from thousands of cubic feet (mcf) to barrels of oil equivalent (boe) at a ratio of 6:1.
FORMULAaverage natural gas production per day (boe/d)
average total production
(18.7)
(6.3)
(4.1)
(3.7)
(3.3)
(2.9)
(2.1)
(1.8)
(1.7)
(0.6)
0.1
0.5
0.9
3.7
4.2
5.2
5.2
5.6
5.6
7.2
7.8
9.1
9.2
9.7
10.2
12.2
12.5
14.6
15.3
15.9
34.8
54.4
(30.0) (20.0) (10.0) 0.0 10.0 20.0 30.0 40.0 50.0 60.0
NuVista
TwinButte
Legacy
PennWest
Lightstream
Crew
Paramount
Birchcliff
Pengrowth
Spyglass
Peyto
Bonavista
Delphi
Bellatrix
ARC
CrescentPoint
Enerplus
TORC
Perpetual
Tourmaline
Long Run
Surge
Trilogy
Cequence
Advantage
Kelt
Baytex
DeeThree
Whitecap
Bonterra
RMP
PaintedPony
(19.0)
(6.8)
(6.6)
(4.1)
(3.4)
(3.3)
(2.8)
(2.6)
(2.4)
(1.1)
(0.6)
(0.6)
(0.5)
(0.3)
0.1
0.3
0.9
1.7
2.4
3.7
3.8
4.5
4.7
5.0
5.3
8.7
9.6
9.8
11.0
14.5
32.6
53.2
(30.0) (20.0) (10.0) 0.0 10.0 20.0 30.0 40.0 50.0 60.0
NuVista
Legacy
TwinButte
PennWest
Lightstream
Crew
Paramount
Birchcliff
Pengrowth
Peyto
Spyglass
Surge
Whitecap
Bonavista
Bellatrix
Delphi
Long Run
Kelt
CrescentPoint
Tourmaline
ARC
Baytex
Enerplus
TORC
Perpetual
Trilogy
Cequence
Advantage
DeeThree
Bonterra
RMP
PaintedPony
CHANGE IN PRODUCTION — Q1 TO Q2 2014 (%)Median = 5.2%
CHANGE IN PRODUCTION PER SHARE — Q1 2014 TO Q2 2014 (%)Median = 0.6%
building productionIf no effort were made by a conventional oil and gas company to stabilize or increase production, its production would typically decline at rates varying from 20% to 30% per year depending on its commodity mix, depth of wells and age of assets. More than half of the intermediate were able to add production since the previous quarter of 2014. Others had declining production, possibly due to asset divestitures or declining wells.
FORMULAcurrent period avg. production – previous period avg. production
previous period avg. production
Note: Gas production converted to boe at 6 mcf: 1 boe.
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M28
INTE
RMED
IATE
CO
MPA
RISO
N
maintaining production per shareThe biggest challenge oil and gas companies have is to achieve growth on a per-share basis. Although this comparison offers only a quarter-to-quarter snapshot, one can see that many companies have trouble achieving per-share growth. This is because oil and gas production is a capital intensive business that often requires issuing more shares to fund capital programs. 18 of the 33 intermediates increased their production on a per-share basis from the first quarter of 2014 to the second quarter.
FORMULAcurrent production per share – previous production per share
previous production per share
Note: Production per share = average production rate for the period divided by basic weighted average shares outstanding during the period.
Gas production converted to boe at 6 mcf: 1 boe.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 29
INTE
RMED
IATE
CO
MPA
RISO
N
27,674
32,752
36,402
45,363
46,890
47,791
51,634
54,510
57,285
60,640
60,642
61,354
72,390
74,008
77,175
82,507
84,139
93,211
94,332
99,048
99,998
101,972
107,361
120,768
121,897
134,771
134,985
136,378
137,299
154,847
162,924
164,361
338,190
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000
Perpetual
Spyglass
Journey
Cequence
Long Run
TwinButte
Bellatrix
Bonavista
Advantage
Crew
Enerplus
PennWest
Pengrowth
Lightstream
Birchcliff
Delphi
PaintedPony
RMP
Peyto
DeeThree
ARC
Legacy
Tourmaline
Trilogy
NuVista
Surge
Baytex
Kelt
TORC
CrescentPoint
Whitecap
Bonterra
Paramount
ENTERPRISE VALUE VERSUS Q2 PRODUCTION ($ PER BOE/D)Median = $84,139/boe
11.41
14.44
14.46
14.72
16.00
17.46
18.07
19.32
21.21
21.47
21.63
21.90
22.53
23.14
23.52
24.64
25.26
26.57
26.99
29.23
29.51
29.72
30.69
31.12
39.79
41.03
41.82
42.74
44.15
45.80
50.08
50.16
51.47
0.00 10.00 20.00 30.00 40.00 50.00 60.00
NuVista
Delphi
Spyglass
Paramount
Perpetual
Cequence
Pengrowth
Crew
Journey
Bellatrix
Bonavista
Advantage
Enerplus
Tourmaline
Peyto
PaintedPony
TwinButte
Birchcliff
Kelt
Long Run
ARC
Baytex
PennWest
Trilogy
Surge
Legacy
Whitecap
RMP
DeeThree
Lightstream
TORC
CrescentPoint
Bonterra
Q2 CASH FLOW NETBACK ($/BOE)Median = $25.26/boe
makingmoneyflowCash flow netbacks are equivalent to sales margins. They indicate how much cash flow a company generates from each barrel of oil equivalent (boe) of production. Companies with higher netbacks may have a better chance of thriving during periods of lower commodity prices when higher cost production may be uneconomical. The intermediate companies with the highest cash flow netbacks tend to also be the companies with the highest oil weighting. This is indicative of the comparably higher price of oil versus natural gas.
FORMULAcash flow from operations
total production in the period
Note: Total production in the period = average daily production x 91 days in the period.
value per barrelThis graph shows each intermediate company’s enterprise value per flowing barrel of oil equivalent per day (boe/d) of Q2 production. Enterprise value is calculated by multiplying the share price on Aug 29, 2014 by the weighted average number of shares outstanding during Q2 before adding debt and debentures outstanding net of working capital at the end of the quarter. A high number means the markets are placing more value on the production of a particular company, perhaps for reasons such as long life reserves, a higher proportion of oil to gas, high field netbacks, or perceived strong production growth prospects.
FORMULAmarket capitalization + net debt
average production in barrels of oil equivalent
Note: Market capitalization = Aug 29, 2014 share price x Q2 weighted average basic shares outstanding.
Net debt = bank debt + debentures – working capital.
1.88
2.91
7.16
7.37
7.71
8.62
9.64
9.98
10.02
10.41
10.75
11.13
11.48
12.04
12.24
12.64
12.66
12.92
13.98
14.11
14.29
14.80
15.09
15.33
15.76
16.02
17.08
17.43
17.90
18.12
18.55
20.37
22.12
0.00 5.00 10.00 15.00 20.00 25.00
Advantage
Peyto
RMP
Tourmaline
Birchcliff
Bellatrix
Bonavista
Perpetual
Cequence
Trilogy
PaintedPony
ARC
Enerplus
Paramount
Crew
NuVista
Delphi
DeeThree
Bonterra
Kelt
Whitecap
Lightstream
CrescentPoint
TORC
PennWest
Baytex
Long Run
Surge
Journey
Pengrowth
Legacy
Spyglass
TwinButte
Q2 OPERATING AND TRANSPORTATION EXPENSES ($/BOE)Median = $ 12.66 /boe
0.09
0.64
1.00
1.03
1.14
1.19
1.37
1.39
1.50
1.57
1.62
1.89
1.91
1.94
1.97
1.99
2.06
2.12
2.27
2.32
2.35
2.40
2.54
2.63
2.77
2.89
2.96
3.18
3.18
3.35
3.50
3.64
3.99
0.00 1.00 2.00 3.00 4.00 5.00
Peyto
Tourmaline
Kelt
Trilogy
Advantage
Bonavista
Bellatrix
ARC
Whitecap
PaintedPony
RMP
Delphi
Birchcliff
Crew
Enerplus
DeeThree
Surge
Cequence
TORC
TwinButte
Baytex
CrescentPoint
Perpetual
Bonterra
Legacy
Pengrowth
Lightstream
Journey
Paramount
Spyglass
PennWest
Long Run
NuVista
Q2 GENERAL AND ADMINISTRATIVE CASH EXPENSES ($/BOE)Median = $2.06/boe
officecostsThe general and administrative (G&A) cash expenses per boe represent office-related costs per barrel of oil equivalent produced. This number indicates how efficiently oil and gas companies manage their offices. Factors that affect G&A include the number of staff, their salaries and benefits, contractors, service agreements, management fees, lease terms, processes and systems. The size of G&A can also be affected by the method a company uses in accounting for expenses, such as whether or not they are capitalized. Wherever possible we have only included cash G&A expenses and management fees, excluding non-cash items such as share-based compensation.
FORMULAgeneral & administrative expenses
total production in the period
Note: Total production in the period = average daily production x 91 days in the period.
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M30
INTE
RMED
IATE
CO
MPA
RISO
N
fieldcostsTypically heavier oil has higher operating and transportation costs than light oil. Thankfully, natural gas often comes with even lower operating costs, which is important considering the selling price for natural gas is relatively low. Other factors that can influence operating and transportation costs include proximity to pipelines, volumes being produced per well and the cost of secondary and tertiary methods being used to stimulate production.
FORMULAoperating expenses (including transportation costs)
total production in the period
Note: Total production in the period = average daily production x 91 days in the period.
10.47
10.92
11.44
11.45
11.78
12.20
12.36
12.52
12.77
13.71
14.49
15.71
16.37
16.64
17.37
17.40
17.45
19.21
19.39
20.18
20.19
21.15
21.70
21.85
22.20
22.21
23.22
25.93
26.16
28.99
31.77
32.53
33.15
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00
Peyto
Advantage
PaintedPony
Delphi
Birchcliff
Perpetual
Cequence
Bellatrix
Tourmaline
Bonavista
Journey
Enerplus
ARC
Baytex
Kelt
Crew
Trilogy
Spyglass
DeeThree
PennWest
Pengrowth
Long Run
RMP
Paramount
Bonterra
Whitecap
TwinButte
Surge
NuVista
TORC
Lightstream
Legacy
CrescentPoint
Q2 DEPLETION, DEPRECIATION AND ACCRETION EXPENSES ($/BOE)Median = $17.45/boe
4.4
4.4
4.7
4.8
5.2
5.5
6.0
6.2
6.2
6.6
6.8
6.9
7.1
7.2
7.4
7.5
8.0
8.5
8.6
8.8
9.3
9.3
9.4
10.7
10.7
11.0
11.0
12.5
12.7
13.9
15.7
29.3
63.1
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Long Run
Lightstream
Journey
Perpetual
TwinButte
PennWest
RMP
DeeThree
Spyglass
Bellatrix
Legacy
Bonavista
Cequence
Advantage
Enerplus
TORC
Birchcliff
CrescentPoint
Crew
Bonterra
Surge
ARC
PaintedPony
Trilogy
Whitecap
Pengrowth
Peyto
Baytex
Tourmaline
Kelt
Delphi
NuVista
Paramount
ANNUALIZED Q2 CASH FLOW MULTIPLESEnterprise Value to Annualized Cash Flow Median = 8.0 Market Capitalization to Annualized Cash Flow Median = 6.6
reserves come at a costDepletion, depreciation and accretion expenses indicate the finding and development costs for oil and gas reserves. These costs relate mainly to accounting for the production of oil and gas reserves, and the depletion of value from the balance sheet as reserves are produced. Higher amounts mean the value of a company’s reserves is declining more rapidly than companies with lower amounts. This could be because the valuation was high in the first place or the reserves are being produced at a faster pace.
FORMULAdepletion, depreciation & accretion expenses
total production in the period
Note: Total production in the period = average daily production x 91 days in the period.
a range of multiplesAs can be seen by this chart, there is a large spread of cash flow multiples in the intermediate group. Where it would theoretically take some companies only half a decade to produce as much cash flow per share as their share price and net debt per share combined, others would take well over a decade to do the same. These multiples may be a good barometer of current market sentiment towards each of the companies. The cash flow multiples in this report are calculated using the closing market price on Aug 29, 2014 and the Q2 2014 weighted average number of shares outstanding. The numbers on the chart correspond to the dark bars that show multiples of enterprise value to annualized cash flow. The lighter bars simply reflect the market capitalization as a multiple of annualized cash flow without taking debt into account.
FORMULAenterprise value
cash flow for period x 4
Note: Enterprise value = Q2 weighted average basic shares or units x Aug 29, 2014 share price + net debt.
Enterprise Value to Annualized Cash Flow
Market Capitalization to Annualized Cash Flow
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 31
INTE
RMED
IATE
CO
MPA
RISO
N
(1.1)
(0.3)
0.5
0.7
0.7
0.9
0.9
0.9
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.5
1.6
1.8
1.8
1.8
1.9
2.0
2.0
2.4
2.5
2.6
2.7
2.9
3.1
3.4
3.5
3.6
9.5
(2.0) 0.0 2.0 4.0 6.0 8.0 10.0 12.0
Kelt
PaintedPony
RMP
DeeThree
Bonterra
Advantage
Tourmaline
TORC
ARC
Journey
Cequence
CrescentPoint
Bellatrix
Enerplus
Peyto
Crew
Whitecap
Bonavista
Trilogy
TwinButte
Birchcliff
Long Run
PennWest
Surge
Perpetual
Legacy
Lightstream
Delphi
NuVista
Baytex
Pengrowth
Spyglass
Paramount
Q2 NET DEBT TO ANNUALIZED CASH FLOWMedian = 1.6
Q2 TOTAL RETURNS – CAPITAL GAINS AND DISTRIBUTIONS (%)April through June Median: 21% April through August Median: 15%
(12.4)
(9.9)
(9.0)
(7.6)
(7.0)
(6.2)
2.7
3.4
4.9
5.4
6.3
6.6
7.2
7.7
9.3
14.4
14.7
15.3
15.5
18.1
21.6
22.5
23.1
25.7
26.4
26.8
44.7
45.2
51.7
62.8
68.0
69.0
(30.0) (20.0) (10.0) 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
TwinButte
Bellatrix
Cequence
Spyglass
PennWest
Bonavista
Long Run
Peyto
ARC
Tourmaline
Kelt
Pengrowth
Trilogy
Legacy
Baytex
CrescentPoint
Enerplus
Lightstream
Birchcliff
DeeThree
NuVista
TORC
Advantage
Bonterra
Paramount
Crew
Perpetual
Surge
Whitecap
PaintedPony
RMP
Delphi
years of debtWe calculate net debt as bank debt plus debentures net of working capital. Companies with lower debt to cash flow ratios are in a safer position when it comes to having room to manoeuvre with their balance sheets. As debt levels get higher, returns for shareholders get leveraged, but risk also increases and companies can become constrained in their ability to invest in growth. Total net debt for all the intermediate companies including debentures adds to $24.2 billion.
FORMULAnet debt
cash flow for period x 4
Note: Net debt = bank debt + debentures – working capital.
Convertible debentures make up a portion of the debt load for Advantage, Birchcilff, Lightstream, Long Run, Pengrowth, Perpetual and Twin Butte.
moving upIn the most previous quarters, the returns remained fairly stable. The first half of this year showed a strong upswing. These numbers take into account all dividends. Companies that paid dividends this quarter are Arc, Baytex, Bonavista, Bonterra, Crescent Point, Enerplus, Lightstream, Long Run, Pengrowth, Penn West, Peyto, Spyglass, Surge, TORC, Trilogy, Twin Butte and Whitecap.
FORMULAcapital gain + total distributions or dividends over the
period per share or unit
market price at end of the previous period
Note: Capital gain in period = market price at end of current period – market price at end of previous period.
Share price change plus distributions from April through August 2014
Share price change plus distributions from April through June 2014
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M32
INTE
RMED
IATE
CO
MPA
RISO
N
CompanyChiefexecutive
Stocksymbol& exchange(T=TSX, V=Venture)
Share price Aug 29/14
($)2
Q2/14average daily
production(boe/d)4
Q2/14 weighted shares outstanding (basic) including
exchangeable & B shares converted
(000)
Jun 30/14net debt before
debentures($000)
Jun 30/14debentures
outstanding($000)
Q2/14net income
($000)
Q2/14cash flow
($000)Advantage Andy Mah AAV-T 6.72 22,685 169,354 77,285 84,183 24,330 45,201 ARC Myron Stadnyk ARX-T 31.43 110,165 315,917 1,087,000 0 147,400 295,800 Baytex James Bowzer BTE-T 48.62 66,934 135,620 2,441,202 0 36,799 181,039 Bellatrix Raymond Smith BXE-T 8.42 36,342 177,847 379,009 0 38,252 71,013 Birchcliff Jeffery Tonken BIR-T 12.70 31,178 145,145 514,637 48,141 28,087 75,382 Bonavista Jason Skehar BNP-T 14.82 74,273 202,329 1,050,140 0 86,576 146,208 Bonterra George Fink BNE-T 65.84 13,911 31,902 186,044 0 27,614 65,160 Cequence Paul Wanklyn CQE-T 2.33 12,735 210,986 86,087 0 8,876 20,235 CrescentPoint Scott Saxberg CPG-T 45.00 137,368 407,544 2,931,525 0 98,586 627,007 Crew Dale Shwed CR-T 11.15 27,200 122,134 287,622 0 3,792 47,824 DeeThree Martin Cheyne DTX-T 11.20 10,744 84,654 116,064 0 18,133 43,167 Delphi David Reid DEE-T 4.53 10,397 154,746 156,794 0 5,439 13,658 Enerplus Ian Dundas ERF-T 24.89 103,987 204,158 1,224,542 0 39,957 213,211 Journey Alex Verge JOY-T 11.25 11,151 28,280 87,778 0 3,480 21,523 Kelt David Wilson KEL-T 13.66 11,381 122,456 (120,586) 0 3,336 27,956 Legacy Trent Yanko LEG-T 7.83 20,224 161,877 794,799 0 18,818 75,508 Lightstream John Wright LTS-T 6.28 42,513 200,060 1,883,478 6,455 68,195 177,176 Long Run William Andrew LRE-T 5.27 27,602 134,291 519,085 67,463 20,842 73,429 NuVista Jonathan Wright NVA-T 11.65 14,493 135,593 187,019 0 (11,837) 15,053 PaintedPony Patrick Ward PPY-T 14.55 15,029 89,231 (33,772) 0 (18,923) 33,705 Paramount Clay Riddell POU-T 60.30 20,585 98,043 1,049,758 0 53,109 27,569 Pengrowth Derek Evans PGF-T 6.93 73,823 527,141 1,455,400 235,500 (8,800) 121,400 PennWest David Roberts PWT-T 8.45 106,706 492,400 2,386,000 0 143,000 298,000 Perpetual Susan Riddell Rose PMT-T 2.04 23,270 148,835 184,221 156,109 2,549 33,871 Peyto Darren Gee PEY-T 38.53 72,302 153,691 898,703 0 62,159 154,730 RMP John Ferguson RMP-T 8.75 12,437 120,827 102,048 0 18,339 48,368 Spyglass Dan O'Byrne SGL-T 1.57 14,474 128,077 272,960 0 815 19,043 Surge Paul Colborne SGY-T 8.68 16,395 189,969 560,625 0 37,927 59,364 TORC Brett Herman TOG-T 14.60 11,116 92,126 181,169 0 13,494 50,655 Tourmaline Michael Rose TOU-T 55.07 109,953 199,336 827,246 0 66,437 231,552 Trilogy James Riddell TET-T 28.88 36,187 125,634 741,973 0 28,234 102,487 TwinButte Jim Saunders TBE-T 1.90 21,109 345,604 273,929 78,269 7,181 48,520 Whitecap Grant Fagerheim WCP-T 18.41 30,574 229,680 752,882 0 195,045 116,360 TOTAL 1,349,244 23,542,666 676,120 1,267,241 3,581,174 AVERAGE 40,886 713,414 96,589 38,401 108,520 MEDIAN 23,270 514,637 78,269 24,330 65,160
Data provided by CanOils Database and bmir researchers.
INTERMEDIATE DATA TABLE
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 33
INTE
RMED
IATE
CO
MPA
RISO
N
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
ACQUIRE, DEVELOP, EXPLOIT Listing: TSX-CPG NYSE-CPG
Shares outstanding: 420.8 million at June 30, 2014
Share price: $45.00 at August 29, 2014
Market capitalization: $18,935.4 million
Net debt: $2,931.5 million at June 30, 2014
Enterprise value (market cap. + net debt): $21,866.9 million
Q2 2014 average daily production:
Crude oil and NGLs 125,344 bbls/d 91%
Natural gas 72.1 mmcf/d 9%
Total 137,368 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50CPG $50.16
Peer Median$25.26
Recent News:September 23, 2014Crescent Point closes bought deal fi nancing for raising aggregate gross proceeds of approximately $800 million
September 2, 2014 Crescent Point announces consolidated acquisition of conventional oil assets and upwardly revises production guidance for 2014.
August 13, 2014Crescent Point releases second quarter results and upwardly revises 2014 guidance.
Strategies:• Increase recovery factors through infi ll drilling, water fl ood optimization
and improved technology
• Focus on high-quality, large resource-in-place pools with production and reserves upside
• Maintain strong balance sheet, signifi cant unutilized bank line capacity and 3 ½-year hedging program
— from Crescent Point’s September 2013 corporate presentation
Shaunavon
Beaverhill Lake
Viewfi eld Bakken
Alberta Bakken
Uinta Basin
Contact:2000, 585 - 8th Avenue S.W.Calgary, Alberta T2P 1G1
tel 403.693.0020toll-free 888.693.0020
Investor Relations403.767.69591.855.767.6923
Analyst Coverage:AltaCorp Capital
Bank of America Merrill Lynch
Barclays Capital
BMO Nesbitt Burns
Canaccord Genuity
CIBC Wood Gundy
Cormark Securities
Credit Suisse
Desjardins Securities Inc.
Dundee Capital Markets
FirstEnergy Capital
GMP Securities
Goldman Sachs
Haywood Securities
Macquarie Capital Markets Canada
National Bank Financial
Peters & Co.
Royal Bank of Canada
Salman Partners
Scotia Capital
TD Newcrest
Offi cers:Scott Saxberg - President & CEOGreg Tisdale - CFOC. Neil Smith - COOBrad Borggard - VP, Corporate PlanningDerek Christie - VP, Exploration &
GeosciencesTrent Stangl - VP, Marketing
& Investor RelationsSteven Toews - VP, Engineering WestRyan Gritzfeldt - VP, Engineering East
Tamara MacDonald - VP, LandKen Lamont - VP, Finance & TreasurerMark Eade - Corporate SecretaryKent Mitchell - President, Crescent
Point Energy U.S. Corp
Directors:Peter Bannister Ken CugnetHugh GillardGerald RomanzinScott SaxbergGreg TurnbullBob HeinemannRene Amirault
North Dakota Bakken/Three Forks
Flat Lake Bakken
Manitoba Bakken
Viking
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M34
INTE
RMED
IATE
CO
MPA
RISO
N
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
REAL ASSETS WITH REAL GROWTHListing: TSX-DEE
Shares outstanding: 155.2 million at June 30, 2014
Share price: $4.53 at August 29, 2014
Market capitalization: $703.2 million
Net debt: $156.8 million at June 30, 2014
Enterprise value (market cap. + net debt): $860.0 million
Q2 2014 average daily production:
Crude oil and NGLs 3,390 bbls/d 33%
Natural gas 42.0 mmcf/d 67%
Total 10,397 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50DEE $14.44
Peer Median$25.26
Recent News:October 23, 2014Delphi provided operations update. Delphi successfully completed its sixth Montney horizontal well of 2014 in East Bigstone.
September 9, 2014Delphi announced continued Montney success. Delphi completed its tenth horizontal Montney well utilizing a 30 stage slickwater hybrid completion technique.
August 13, 2014Delphi reported quarterly results for the quarter ended June 30, 2014. 10,397 boe/d. 36% over the comparative quarter in 2013.
Strategies:• Signifi cant Montney production growth at East Bigstone:
• Montney production increased to over 60% in Q2/14 from 20% in Q1/13
• Slickwater well performance exceeding Delphi’s expectations
• Cash generating capability increasing with Montney growth• Montney fi eld netback of $34/boe for fi rst half of 2014
• Montney C3+ NGL Yields 100 bbls/mmcf (ave 71% C5+)
• Montney program will accelerate through 2014 and 2015 with:
• Robust economics and shortened payouts
• Signifi cant unbooked value at Bigstone Montney
• Potential to add a second rig in 2015, accelerating the 5 year plan
— from Delphi presentation
Contact:300, 500 - 4th Avenue S.W.Calgary, Alberta T2P 2V6
tel 403.265.6171
Directors:David Reid
Tony Angelidis
Harry Campbell
Robert Lehodey
Andrew Osis
Lamont Tolley
David Sandmeyer
Stephen Mulherin
Analyst Coverage:Macquarie Capital
Maison Placements Canada
National Bank Financial
Peters & Co.
Scotia Capital
Raymond James
Jennings Capital
Offi cers:David Reid - President & CEO
Brian Kohlhammer - Sr. VP, Finance & CFO
Tony Angelidis - Sr. VP, Exploration
Rod Hume - Sr. VP, Engineering
Hugo Batteke - VP, Operations
Michael Galvin - VP, Land
North West Alberta Region
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 35
INTE
RMED
IATE
CO
MPA
RISO
N
iQ SNAPSHOT
This company snapshot has been assembled by BMIR using publicly available information. The snapshot is not endorsed by the company profiled.
Focus of Operations
SUSTAINABLE BASE ASSETS FUEL GROWTHListing: TSX-PMT
Shares outstanding: 149.6 million at June 30, 2014
Share price: $2.04 at August 29, 2014
Market capitalization: $305.3 million
Net debt: $340.3 million (includes $156.1 million debentures) at June 30, 2014
Enterprise value (market cap. + net debt): $645.6 million
Q2 2014 average daily production:
Crude oil and NGLs 3,738 bbls/d 16%
Natural gas 117.2 mmcf/d 84%
Total 23,270 boe/d 100%
Cash fl ow netback:
Oil
Gas
$0 $50PMT $16.00
Peer Median$25.26
Recent News:October 27, 2014Perpetual announced the sale of non-core heavy oil properties and provides East Edson and West Edson operational updates; gross proceeds were $21.6 million.
August 7, 2014Perpetual released second quarter 2014 fi nancial and operating results. Q2 average production of 20,053 boe/day increased seven percent from Q1 production.
July 23, 2014Perpetual announced closing of previously announced senior unsecured notes offering and notice of redemption of 7.25% subordinated convertible debentures.
Strategies:A Spectrum of Opportunity
Perpetual remains focused on its top fi ve strategic properties for 2014
1. Reduce debt and manage downside risk
2. Grow Edson liquids-rich gas production, reserves cash fl ow, inventory and value
3. Maximize value of Mannville heavy oil
4. Maximize cash fl ow from shallow gas
5. Advance and broaden portfolio of high impact opportunities with risk-managed investments
— from Perpetual’s website
Contact:3200, 605 - 5th Avenue S.W.Calgary, Alberta T2P 3H5
tel 403.269.4400toll free 800.811.5522
Directors:Clayton Riddell
Susan Riddell Rose
Karen Genoway
Randall Johnson
Robert Maitland
Geoffrey Merritt
Donald Nelson
Howard Ward
Analyst Coverage:BMO Nesbitt Burns
CIBC World Markets
FirstEnergy Capital
National Bank Financial
Peters & Co.
RBC Capital Markets
Scotia Capital
TD Newcrest
Offi cers:Clayton Riddell - Executive Chairman
Susan Riddell Rose - President & CEO
Cameron Sebastian - VP, Finance & CFO
Vicki Benoit - VP, Production Operations
Jeff Green - VP, Corporate & Engineering Services
Gary Jackson - VP, Land & Acquisitions
Linda McKean - VP, Exploitation
Marcello Rapini - VP, Marketing
Deep Basin
Eastern District
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M36
INTE
RMED
IATE
CO
MPA
RISO
N
Company Ticker Chief Executive Q2 2014 Production
(boe/d)
3MV Energy Corp. TMV-V Dallas Duce 77
Abenteuer Resources Corp. ABU-V Lewis Dillman 22
Aroway Energy Inc. ARW-V Chris Cooper 216
Arctic Hunter Energy Inc. AHU-V Tim Coupland 6
Artisan Energy Corporation AEC-V Rick Ironside 125
Bayshore Petroleum Corp. BSH-V Peter Ho 7
Blackbird Energy Inc. BBI-V Garth Braun 66
Blackdog Resources Ltd. DOG-V David Corcoran 8
Blackhawk Resource Corp. BLR-V David Antony 31
Border Petroleum Ltd. BOR-V Al Kroontje 79
Century Energy Ltd. CEY-V Jimmy McCarroll 1
Desmarais Energy Corp. DES-V Doug Robinson 33
Detector Exploration Ltd. DEX-V Ronald Alexander 80
Donnybrook Energy Inc. DEI-V Malcolm Todd 211
Elkwater Resources Ltd. ELW-V Doug Bailey 183
Firebird Energy Inc. FRD-V Kevin Patterson 4
First Mountain Exploration Inc. FMX-V William Ambrose 33
Forent Energy Ltd. FEN-V Richard Wade 172
Georox Resources Inc. GXR-V Burkhard Franz 185
Golden Coast Energy Corp. GCE-V Gary Schellenberg 5
High North Resources Ltd. HN-V Colin Soares 250
Huntington Exploration Inc. HEI-V Robert Verhelst 61
International Frontier Resources Corp. IFR-V Patrick Boswell 39
Ironhorse Oil & Gas Inc. IOG-V Larry Parks 30
Kallisto Energy Corp KEC-V Robyn Lore 216
KR Investment Ltd. KR-V John Kim 11
Lariat Energy Ltd. LE-V Mike Marrandino 2
Magnum Energy Inc. MEN-V Richard Nemeth 133
Mount Dakota Energy Corp. MMO-V Gary Claytens 5
Nextraction Energy Corp. NE-V Kent Edney 90
Nordic Oil & Gas Ltd. NOG-V Donald Benson 22
Northern Spirit Resources Inc NS-V Kevin Baker 154
Pacific Paradym Energy Inc PPE-V Harry Chew 34
PanTerra Resource Corp. PRC-V Tim de Freitas 98
Paris Energy Inc. PI-V Robert Lamond 14
Pennine Petroleum Corporation PNN-V Jeff Saxinger 11
Petro Viking Energy Inc. VIK-V Irvin Eisler 85
Powder Mountain Energy Ltd. PDM-V Bruce Murray 19
RedWater Energy Corp. RED-V Gary Waters 274
Relentless Resources Ltd. RRL-V Daniel Wilson 88
Saccharum Energy Corp. SHM-V David Pinkman 16
Sahara Energy Ltd. SAH-V Martin Feng 16
Samoth Oilfield Inc. SCD-V Leonard Jaroszuk 9
Standard Exploration Ltd. SDE-V Tom MacKay 82
TrinCan Capital Corp. TRN-V Colin Bowdidge 9
Wescan Energy Corp. WCE-V Gregory Busby 2
emerging conventional companies This is a list of some of the emerging oil and gas companies that trade on the TSX or TSX Venture Exchange and produced less than 500 boe/d in the second quarter of 2014. This list is not exhaustive.
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 37
BRAZILAlvopetroAvantiBrownstoneCanacolGran TierraHRT ParticipacoesPetro Vista
UNITED STATESArgentArsenal AusTex Oil AvantiBNK BrownstoneCaza Oil & GasDejour Doxa Eagle EastWestEmerald BayEnerplus Enhanced EpsilonEqualGale ForceInt’l FrontierIvanhoeJerichoKFG ResourcesLyndenMobius Montana MountainviewNextraction Parallel PetrichorRockefeller HughesRooster Strata-XTerraceWestbridge Zargon
COLOMBIAAvantiAzabache BrownstoneCanacol Gran TierraPacific RubialesParex PetroamericaPetrodoradoPetroNovaPetro VistaPlatinoSintanaSuroco
GUYANACGX
ARGENTINAAmericas PetrogasArPetrolAzabacheCanoel International Energy Crown PointGran TierraMadalena
PERUAmericas PetrogasGran TierraPacific RubialesPetrodorado
TRINIDAD & TOBAGONiko Parex Touchstone
ECUADORCanacolIvanhoe
GUATEMALAPacific Rubiales
PARAGUAYPetrodorado
This map shows the footprint of activities for TSX and TSX Venture listed oil and gas companies with a market capitalization of more than $5millionandlessthan100,000boe/d of production in the second quarter of 2014. If you know a company that meets this criteria that has been left out, please email us at [email protected].
Canadian companiesoperating abroad
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M38
TUNISIACandaxChinookCYGAMDualexSerinusSonde
FRANCELundin PetromanasSterling Vermilion
UKRAINECubSerinus TransEuro
SPAINBNKDundee
TANZANIAOrca
YEMENCalvalleyHornTransGlobe
PAKISTANJuraPanorama Petroleum
PAPUA NEW GUINEAEaglewoodHeritage
UNITED KINGDOMAntrim Iona Ithaca North SeaSerica Sterling VermilionXcite
HUNGARYDualexFalcon
ITALYBRS ResourcesCanoel International Energy CYGAMOrca
ROMANIAEast WestSerinusSterling
INDIABengalEast WestNiko
NAMIBIAEcoEnergulfHRT ParticipacoesOandoSericaWestbridge
SOMALIAAfrica OilHorn
CONGOEnergulfOryx
ANGOLAEmperor
ETHIOPIAAfrica Oil
THAILANDPan Orient
GREECEPetra
ALBANIABankersPetromanasStream
KAZAKHSTANCondorTethys
RUSSIALundin
TAJIKISTANTethys
NEW ZEALANDCanadian OverseasEastWestNew ZealandTAG
CHINAPrimeline
AUSTRALIABengalEmperorFalconGallicPetroFrontierPetromanasStrata-XTerra NovaVermilion
INDONESIACBM AsiaLundinNikoPan Orient
EGYPTEmperorSea DragonTransGlobe
KurdistanEmperorOryxShaMaranWesternZagros
UZBEKISTANTethys
MONGOLIAIvanhoe
MOROCCOEastWestEmperorLongreachSerica
LIBYASonde
LIBERIACanadian OverseasSimba
ISRAELBrownstone
KENYAAfrica OilSimbaTaipanVanoil
POLANDBNKGERMANY
BNK PRD Vermilion
NETHERLANDSLundinSterlingVermilion
ZAMBIAOando
NORWAYLundin
AZERBAIJANGreenfields
BULGARIATransAtlantic
MALAYSIA MALAYSIA MALAYSIA MALAYSIA Lundin
GUINEASimba
SENEGALOryx
NIGERIAMartOandoOracle EnergyOryx
MALISimba
GHANASimba
TURKEYEmperorTransAtlanticPanorama PetroleumValeura
SOUTH AFRICAFalcon
BANGLADESHNiko
MADAGASCARCandaxNikoOyster
DJIBOUTIOyster Oil
BRUNEISerinus Energy
SUDANEmperor
CHADSimba
GEORGIATethys
SEYCHELLESVanoil
JORDANTransEuro
PORTUGALOracle Energy
Q U A R T E R L Y R E P O R T : Q 2 2 0 1 4 39
iQtrendsThe following four-year review helps put the latest results into perspective
This iQ Report not only includes the results of Western Canada’s oil and natural gas companies for second quarter of 2014, it also includes the following review of the results over the past four years to help put the Q2 2014 numbers into perspective.
Junior producers Intermediate producers
NUMBER OF JUNIORS
40
50
60
70
80
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
NUMBER OF COMPANIES WITH PRODUCTION FROM 500 TO 10,000 BOE/D
Junior producersNUMBER OF INTERMEDIATES
15
20
25
30
35
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
NUMBER OF COMPANIES WITH PRODUCTION FROM 10,000 TO 200,000 BOE/D
Intermediate producers
PRODUCTION MIX - NATURAL GAS WEIGHTING (%)
50%
60%
70%
80%
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
AVERAGE GAS PRODUCTION DIVIDED BY AVERAGE TOTAL PRODUCTIONPRODUCTION MIX - NATURAL GAS WEIGHTING (%)
30%
40%
50%
60%
70%
80%
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
AVERAGE GAS PRODUCTION DIVIDED BY AVERAGE TOTAL PRODUCTION
CASH FLOW NETBACK ($/boe)
$0
$10
$20
$30
$40
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
CASH FLOW FROM OPERATIONS DIVIDED BY TOTAL PRODUCTION
NET DEBT TO ANNUALIZED CASH FLOW
0
1
2
3
4
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
NET DEBT DIVIDED BY CASH FLOW FOR PERIOD MULTIPLIED BY FOURNET DEBT TO ANNUALIZED CASH FLOW
0
1
2
3
4
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
NET DEBT DIVIDED BY CASH FLOW FOR PERIOD MULTIPLIED BY FOUR
ENTERPRISE VALUE VS PRODUCTION (boe/d)
$25
$35
$45
$55
$65
$75
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
MARKET CAP PLUS DEBT DIVIDED BY PRODUCTION SHOWN IN THOUSANDSENTERPRISE VALUE VS PRODUCTION (boe/d)
$35
$45
$55
$65
$75
$85
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
MARKET CAP PLUS DEBT DIVIDED BY PRODUCTION SHOWN IN THOUSANDS
CASH FLOW NETBACK ($/boe)
$0
$10
$20
$30
$40
Q22014
Q1Q3Q22013
Q1Q3Q22012
Q1Q3Q22011
Q1Q32010
Q2
CASH FLOW FROM OPERATIONS DIVIDED BY TOTAL PRODUCTION
B R Y A N M I L L S I R A D E S S O • I Q . B M I R . C O M40
Once again CanOils is proud to provide the tools that help Bryan Mills Iradesso researchers to compile the IQ report.
The CanOils Database Evaluate Energy's CanOils service is trusted by over 80 clients. It provides them with every vital piece of information on Canadian Oil & Gas companies including: Financial and Operating Data, M&A deals, Financings, Land Sales, Executive Compensation, Oil Sands Projects and Broker Forecasts. Imagine being able to synthesize this wealth of data into solution-rich reports and download into Excel with one click. Benchmark against your peers, discover new opportunities for business development or the track the industry in minutes not hours.
The Service Financial & Operating Data
For over 400 TSX & TSX-V listed companies, taken from their annual and quarterly reports.
Unique Insight into the Canadian Oil and Gas
Industry.
The Oil Sands CanOils offers an industry-leading service that tracks all mining and in situ projects in Alberta and Saskatchewan.
Track Projects and Approvals.
M&A Comprehensive and daily coverage of all Canadian oil and gas deals, including deal value analysis, land sales, and links to all source data.
Track Opportunities,. Discoveries and more…
Financings Coverage of all Oil & Gas equity and debt financings in the Canadian market. Comprehensive Coverage
Guidance Corporate guidance collated and presented in an easy to access format with unparalleled coverage across the market.
Predict Company performance.
Forecasts Broker Consensus forecasts of production, reserves, capital spending and key financials.
View data On a By Country Basis.
Executive Compensation
See the people behind the companies, track their share holdings and compensation.
View Key Personnel
Powerful Software
Our web-based software allows you to quickly browse all our data sets or build a custom report when you need extra customization then download to Excel in one click.
Simple Yet Powerful
Unlimited Support
Our Calgary team and London-based analysts are available to provide quick answers to any queries and support when you need it.
Responsive Support
For more information or to discuss how we can help you discover opportunities, save time and improve your business call David Swanson on 403-512-1622 or visit http://www.canoils.com
A win, win, win, win, win situation.
For more than 30 years, exceptional reporting in areas of governance, financial integrity and corporate performance has been a hallmark of our winning DNA at Bryan Mills. We outthink so you can outperform.
It’s time to celebrate your winning story. Contact Geoffrey Vanderburg at [email protected] or phone at 403.503.0144 ext.258
• Grand Award, 2013 Sustainabilityand Responsibility Report, PDF Version of Annual Report: ARCAwards, N.Y. • Gold, 2013 CorporateResponsibility Report, InteractiveAnnual Report: ARC Awards, N.Y.• Gold, 2013 Sustainability andResponsibility Report, PDF Vers- ion of Annual Report: ARC Awards• Silver, 2013 Sustainability andResponsibility Report, Interact-tive Annual Report: ARC Awards• Gold, 2014 Communicator Awards, Website • Silver,2014 Communicator Awards,Website • Silver, 2014 Com- municator Awards, CSRMicrosite • Gold, 2014Astrid Awards, 2012 On-line A/R • Gold, 2014 Astrid Awards, Sustain-ability Report • Silver,2014 Astrid Awards,V i ra l Campa ign • Bronze, 2014 Astrid
Aw a rd s , w e b s i t e .
bmir.com