Canada: Progress Energy Reports Third Quarter Results

Progress Energy Resources Corp. announced results for the three months ended September 30, 2011.

Highlights

• On August 2, 2011, closed the $1.07 billion strategic partnership
  transaction with PETRONAS, with Progress receiving 25 percent of the
  total consideration ($267.5 million) in cash and 75 percent ($802.5
  million) in the form of a capital carry;
• On September 12, 2011 announced the results of an independent evaluation
  of DPIIP and Contingent Resource for 139,150 net acres of Progress
  lands in the Town area of the Foothills of British Columbia, with DPIIP
  estimated at 27.3 trillion cubic feet (Tcf) and best estimate of
  Contingent Resource of 8.1 Tcf.  The net present value, reflecting the
  recovery of capital costs using an eight percent discount rate, of the
  best estimate of Contingent Resources is $8.6 billion;
• Drilled a total of 13 wells (11.8 net) in the Quarter of which 12 (10.8
  net) were Montney horizontals.  Six wells (5.3 net) of the drilled
  wells were brought on stream in the Quarter and the balance will be
  brought on stream before year end. The wells were primarily drilled in
  five of the Company’s Montney development pods at Town South, Town
  North, Gundy, Kobes, and Caribou;
• Entered into multi-year agreements with Spectra Energy Corp. to provide
  a total of 370 million cubic feet (mmcf) per day of gathering and
  processing services to support Progress’ Montney growth plans in
  northeast British Columbia;
• Produced 42,937 barrels of oil equivalent (boe) per day in the
  Quarter.  Unplanned outages at major gas processing facilities and the
  shutting in of adjacent Montney wells during completion operations
  impacted production by approximately 1,000 boe per day in the Quarter;
• Generated cash flow of $51.6 million in the Quarter or $0.22 per share,
  diluted; and,
• As at September 30, 2011, Progress was undrawn on its $650 million
  covenant-based credit facility and had a working capital surplus of $91
  million.

“We have set out to establish Progress as a premier investment in the natural gas business,” said Michael Culbert, President and Chief Executive Officer of Progress. “The study completed by our independent reserve evaluator affirms the scope and scale of our North Montney asset while our partnership with PETRONAS provides the capital required to continue to delineate our resource base and position us for long-term growth.”

Cash flow for the Quarter was $51.6 million or $0.22 per share, diluted. Capital investment was $113.8 million. Debt-to-total capitalization as at September 30, 2011 was eight percent. Progress’ average gas price in the Quarter was $3.73 per thousand cubic feet (mcf). The Company’s high heat content gas stream achieves a premium to AECO prices. Royalty rates averaged 12.3 percent in the Quarter which was lower than the same period in 2010 due to the higher proportion of Montney production which benefits from the British Columbia Deep Well Credit Program. Operating costs averaged $5.56 per boe, or $0.93 per mcf, in the Quarter reflecting the Company’s continued focus on operational efficiencies and maximization of volumes through existing facilities.

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Source: Progress Energy, October 28, 2011