Alberta brief Aug 3: 7 Generations, CNRL continue strong performance in low price environment

Also in brief: CNRL delivers strong 2nd quarter results, Kinder Morgan Canada launches $200 million bought deal preferred share offering

Seven Generations Energy Ltd.continued its strong financial and operating performance in second quarter of 2017, generating funds from operations of $268.1 million, or 73 cents per share, up 36 and 11 per cent compared to the second quarter of 2016, according to a press release.

“Since the second quarter of 2014, prior to our initial public offering, 7G’s production has grown seven fold, and the company achieved a number of milestones in the second quarter. Condensate production surpassed 54,000 barrels per day and natural gas production averaged more than 400 million cubic feet per day,” said Marty Proctor, 7G’s President

Second quarter production was 165,200 boe/d. Record volumes marked a 41 per cent increase compared to one year earlier. 7G’s liquids-to-gas ratio continued at the high end of the forecast range, averaging 59 per cent, with the condensate-to-gas ratio averaging 132 barrels per million cubic feet of natural gas production.

“In June, 7G’s production surpassed 1 billion cubic feet equivalent per day (Bcfe/d). This growth has been the result of strong support from our stakeholders who have enabled 7G to create one of Canada’s top 10 producers in a remarkably short time. Our asset base, balance sheet, market access and commitment to stakeholder service differentiates 7G as we continue on our path of profitable growth,” said Proctor.

Recent well results indicate expansion of top-tier inventory

Two wells drilled along the boundary between the Nest 2 and Nest 1 areas, completed with 60-stages, have produced about 2.5 times more condensate than the average of 7G’s Nest 2 wells.

These two wells have averaged about 1,900 bbls of condensate per day in the first 90 days of production, with one of the two wells yielding more than 200,000 bbls of cumulative condensate production to date.

On the southern portion of the lands acquired in mid-2016, 7G recently drilled a 40-stage well that has delivered strong natural gas production in its first 60 days, averaging about 15.5 MMcf/d of natural gas and 550 bbls/d of condensate.

These wells provide an early indication that 7G’s top-tier inventory may be significantly expanded, and offer a balance of gas-weighted and liquids-weighted drilling opportunities.

Kinder Morgan Canada launches $200 Million bought deal preferred share offering

Kinder Morgan Canada Limited announced it has entered into an agreement with a syndicate of underwriters led by Scotiabank, CIBC Capital Markets, RBC Capital Markets and TD Securities who have agreed to purchase from Kinder Morgan Canada, 8,000,000 cumulative redeemable minimum rate reset preferred shares at a price of $25.00 per share for distribution to the public, according to a press release.

Kinder has granted the underwriters an option, exercisable at any time up to 48 hours prior to the closing of the offering, to purchase up to an additional 2,000,000 Series 1 Preferred Shares at a price of $25.00 per share.

They intend to use the proceeds from the offering to finance the development, construction and completion of the Trans Mountain Expansion Project and Base Line Terminal project as well as potential future growth opportunities, to repay indebtedness and for general corporate purposes.

Closing of the offering is expected on Aug. 15, 2017, subject to customary closing conditions.

CNRL delivers strong 2nd quarter results

Canadian Natural Resources Limited announced its second quarter results, according to a press release.

“Our balanced and diverse portfolio delivered strong results in the second quarter of 2017. Funds flow from operations was significant at $1.7 billion, a strong result given the downward pressure on crude oil prices throughout the quarter. The Horizon Phase 2B expansion and acquired Athabasca oil sands volumes drove 27 per cent growth in crude oil production volumes and 16 per cent growth on a BOE basis, when compared with the second quarter of 2016,” said  Steve Laut, President of Canadian Natural.

Based upon strong results in the first half of the year, CNRL has increased the mid-point of its 2017 annual liquids and BOE production guidance by 11,000 bbl/d and 3,000 BOE/d respectively, while decreasing its 2017 capital program by approximately $180 million.

“In the quarter, CNRL closed the transformational acquisition of the Athabasca Oil Sands Project, as our teams effectively and efficiently transitioned all assets and personnel to Canadian Natural.The closing went as expected as we took over operatorship of the AOSP mines on June 1, 2017. In our first month of operating the mines results were strong, with AOSP production of approximately 202,300 bbl/d net to Canadian Natural,” said Laut.

Based upon strong results in the first half of the year, CNRL has increased the mid-point of its 2017 annual liquids and BOE production guidance by 11,000 bbl/d and 3,000 BOE/d respectively, while decreasing its 2017 capital program by approximately $180 million.

“Results from our strong balanced asset base including conventional, Horizon and AOSP helped us to achieve record monthly production of over 1,000,000 BOE/d in June 2017. At Horizon, operations continue to be strong and disciplined, with second quarter production at roughly 191,000 bbl/d of synthetic crude oil (“SCO”), above our second quarter corporate guidance of 180,000 bbl/d to 188,000 bbl/d. Operating costs were once again lower than targeted at just over $22.00/bbl of SCO, similar to the record levels achieved in the first quarter of 2017,” said Tim McKay, CNRL CEO.