Provident Reports Results, Reserves
Provident Energy Trust announced its 2009 fourth quarter interim and audited 2009 annual financial and operating results, 2009 reserves information and the March cash distribution of $0.06 per unit.
"We are proud of Provident's accomplishments in 2009," said Provident's President and Chief Executive Officer, Tom Buchanan. "Provident generated cash flow of $264 million and achieved a payout ratio of 74 percent. In addition, we successfully repositioned the Upstream business for higher impact growth through the sale of approximately 6,200 boed of non-strategic properties. In Midstream, we focused on expansion of our infrastructure assets through both strategic acquisitions and internal development. Provident also improved its flexibility, efficiency and competitiveness by reducing debt and streamlining the organizational structure. As a result, Provident is very well positioned to execute value-driven growth opportunities in both business units."
- Consolidated funds flow from continuing operations decreased 49 percent to $264 million ($1.01 per unit) in 2009, compared to $518 million ($2.03 per unit) in 2008, due primarily to significantly lower commodity prices, higher extraction premiums and reduced oil and gas production, reflecting the sale of non-strategic upstream assets and natural declines.
- Unitholder distributions totaled $0.75 per unit resulting in a payout ratio of 74 percent for 2009, compared to 68 percent in 2008 when Provident distributed $1.38 per unit.
- Bank debt was reduced by 48 percent to $265 million at the end of 2009, from $505 million at the end of 2008. At December 31, 2009, Provident had a total capacity of $1.03 billion in its revolving term credit facility. Following the recent completion of the West Central Alberta asset disposition, Provident's outstanding bank debt is approximately $80 million and the credit facility now has a total capacity of $980 million.
- During the second half of 2009, Provident Upstream undertook an asset rationalization initiative designed to reposition Provident's portfolio for growth by monetizing non-core properties. Provident divested non-strategic assets in Southeast and Southwest Saskatchewan and Lloydminster for total consideration of $323 million. Proceeds from these divestitures were used to repay long term debt.
- During the first quarter of 2010, Provident completed the sale of its West Central Alberta operating area for cash consideration of $177 million, after normal closing adjustments. Proceeds from this sale have also been applied to the revolving term credit facility.
- Production decreased 22 percent to approximately 21,600 barrels of oil equivalent per day (boed) in 2009, down from approximately 27,700 boed in 2008 due to the disposition of non-strategic assets, natural declines and the impact of the reduced 2009 capital program.
- Funds flow from operations in the Upstream business was $102 million in 2009 a decrease of 70 percent from $339 million in 2008, reflecting substantially lower oil and natural gas prices and lower production compared to the previous year.
- Capital spending totaled $91 million in 2009, down 57 percent from $209 million in 2008. The 2009 capital program was focused primarily on crude oil drilling and completion activities, facilities in Northwest Alberta and the implementation of the waterflood enhanced recovery program in the Peace River Arch / Dixonville area. During the year, Provident drilled 12.3 net oil and natural gas wells with a 98 percent success rate.
- Total proved plus probable oil and gas reserves at year-end decreased 29 percent to 70 mmboe from 98 mmboe in 2008, primarily due to asset dispositions and production during the year. Total proved plus probable reserve life index (RLI) increased to 12.5 years in 2009 from 10.0 years in 2008. Total proved plus probable reserves adjusted to exclude the West Central Alberta assets that were sold in the first quarter of 2010 are 56 mmboe, while proved plus probable RLI following this disposition is 14.6 years.
- Finding and development (F&D) costs, excluding revisions and including future development costs (FDC) were $13.01 per boe of proved reserves in 2009 and $18.87 per boe of proved reserves when revisions are included. F&D costs, excluding revisions and including FDC were $12.71 per boe of proved plus probable reserves in 2009 and were not determinable for proved plus probable reserves when revisions are included, as downward probable reserve revisions exceeded additions.
- Three year average finding, development and acquisition (FD&A) costs, excluding revisions and including FDC were $39.09 per boe of proved reserves in 2009 and $41.67 per boe of proved reserves when revisions are included. Three year average FD&A costs, excluding revisions and including FDC were $23.06 per boe for proved plus probable reserves in 2009 and $32.68 per boe of proved plus probable reserves when revisions are included.
2009 Fourth Quarter Summary
"Provident delivered strong results in the fourth quarter of 2009," said Tom Buchanan. "We achieved a fourth quarter payout ratio of 62 percent, reflecting a substantial recovery in year-over-year NGL prices and the continuing growth in Provident's commercial services business line."
- Funds flow from operations decreased 7 percent to $76 million ($0.29 per unit) in the quarter, compared to $82 million ($0.32 per unit) in the fourth quarter of 2008, reflecting stronger margins in the Midstream business unit offset by lower production and funds flow in the Upstream business unit.
- Payout ratio was 62 percent in the fourth quarter of 2009, an improvement from 95 percent in the fourth quarter of 2008.
- Provident Midstream delivered adjusted EBITDA of $61 million in the fourth quarter of 2009, up 62 percent from $38 million in the fourth quarter of 2008, reflecting stronger NGL margins and increased fee-for-service revenues, partially offset by lower sales volumes.
- Provident Upstream oil and natural gas production decreased 38 percent to approximately 16,800 boed in the fourth quarter of 2009, from approximately 26,800 boed in the fourth quarter of 2008, due primarily to the sale of non-strategic assets during the last half of the year and natural declines.
- Provident Upstream delivered funds flow from operations of $21 million in the fourth quarter of 2009, down 56 percent from $47 million in the fourth quarter of 2008 due to lower production and natural gas prices, partially offset by higher crude oil prices.