Sabretooth has provided a financial update on its first quarter 2009 results and additional details on its 2009 capital budget.
First Quarter Results
In the first quarter of 2009 the Company averaged approximately 1,602 boe/d of production, with a net back price of $22.85 per boe, calculated by subtracting royalties, operating and transportation costs from revenues. Sabretooth's net income was $3.4 million and the Company spent approximately $4.8 million on capital projects and land acquisitions. Cash flow from operations after G&A and interest expense was $1.9 million. Sabretooth has filed its financial statements for the three month period ending March 31, 2009 and related management's discussion and analysis on SEDAR (www.sedar.com).
Sabretooth is in a strong financial position in these times of economic uncertainty. Sabretooth has a working capital deficit of only $11.5 million on total bank lines of $45 million (does not include ABCP asset or liability which are both non-current). Sabretooth's cash flow is insulated from North American low natural gas prices through a hedge that the Company has entered into. Our hedge of 6,000 GJ/day at a price of $7.85 from April 1, 2009 to March 31, 2010 currently has a mark to market value of approximately $6.6 million as of the date of this press release. The hedge accounts for approximately 60% of Sabretooth's current production.
Sabretooth's plans in 2009 are to continue to strengthen the Company's balance sheet.
In the first quarter of 2009 Sabretooth, and its 71% owned subsidiary HFG Holdings Inc. ("HFG"), deepened a vertical well in the Sinclair area to the Montney formation. Based on prospective pay on logs, this well has been cased for a future completion. This well held three expiring sections in which the Company held an interest and earned an interest in an additional two gross sections of land. Subsequent to the deepening operation a drilling rig was moved into Sinclair and the next Montney well is anticipated to spud when weather conditions allow in June. Sabretooth also plans to drill a third Montney well at Sinclair in 2009.
Sabretooth and HFG finished drilling, completing and testing its first horizontal Montney well at Red Creek in the first quarter of 2009 as press released on February 19, 2009. Recorders were run in March for pressure buildup and will be pulled in May for analysis.
The non-conventional Montney undeveloped land holdings of Sabretooth and HFG total approximately 40,480 net acres, of which the Companies' northeast British Columbia Montney land holdings accounting for approximately 80% of that number. Sabretooth's total consolidated undeveloped land holdings at March 31, 2009 were approximately 145,250 net acres.
Share Buy Back
In January 2009, Sabretooth purchased 200,000 shares for $84,000 as part of the Company's normal course issuer bid. These shares were cancelled in the first quarter of 2009. Sabretooth has renewed its Normal Course Issuer Bid for 2009 and is able to buy back a total of 1,923,025 shares representing approximately 5% of the issued and outstanding shares of Sabretooth.
As a result of the Asset Backed Commercial Paper ("ABCP") restructuring being completed, Sabretooth and the National Bank of Canada have entered into a new credit facility. The new facility allows Sabretooth to borrow up to $18.1 million (75% of the $24.2 million face value of Sabretooth's ABCP). The new facility has a three year life with Sabretooth having the option to extend to a seven year life which reflects the expected maturity dates of the ABCP the Company holds.
Sabretooth now has a $40.0 million operating facility, a $5.0 million development facility and the $18.1 million ABCP facility.
In the following three quarters of 2009, Sabretooth, through its subsidiary HFG, plans to drill three Montney exploration wells in the Sinclair and Mica areas of Alberta and British Columbia. Sabretooth will operate these wells on behalf of HFG who will hold a 99.9% interest in these wells. The first wells at Sinclair and Mica will be drilled as pilot holes which will allow the wells to be drilled out horizontally at a later date if the logging, testing and other reservoir results are favourable. Sabretooth has moved a drilling rig into the Sinclair area and anticipates spudding the first well in June pending weather and surface access conditions.
Sabretooth also plans to drill a development horizontal well at Gordondale following the results of Sabretooth's Montney success in that area.
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