Enterra Energy Trust's Funds Increase 60%
Enterra Energy Trust has announced its financial and operating results for the three and six months ended June 30, 2008.
Q2 2008 Significant Accomplishments
- Q2 2008 average production of 10,099 boe per day on target with previous guidance.
- Added substantial revenue and reserve value through revised midstream marketing contracts.
- Established conventional credit facilities with increased borrowing base of $135 million.
- Drilled five oil wells in Canada with 100% success, expected to add 200 - 250 boe per day of initial production.
- Drilled six producing wells and one water disposal well in Oklahoma with 100% success, adding 150 - 200 boe per day.
In the second quarter 2008, the Trust's funds from operations totaled $31.6 million, which is an increase of 60% over the same period last year and an increase of 32% over the first quarter 2008. The increase in funds from operations is primarily the result of higher commodity prices realized.
Enterra reported a net loss of $11.9 million ($0.19 per unit) during the quarter, compared to a net income of $7.9 million ($0.13 per unit) in the same period last year. The second quarter 2008 loss entirely relates to the unrealized mark-to-market loss of $21.5 million on commodity price hedges that was the result of oil prices rising to record levels over the quarter and negatively impacting the value of the financial contracts.
"It is important to note that the hedging loss for the quarter was non-cash, and does not necessarily reflect the expected future cash settlement value of the contracts," explained Blaine Boerchers, Chief Financial Officer of Enterra. "As of June 30, the oil hedged represents less than one third of Enterra's oil production and therefore any actual cash cost of these hedges will be more than offset by higher prices received on the non-hedged production."
Enterra has recently been focusing its price risk management on purchasing floor price options to better maximize its exposure to upside price movements while ensuring sufficient cash flow to achieve budgeted plans.
Capital expenditures during the quarter were $11.8 million. Enterra participated in the drilling of 12 (6.4 net) wells with a 100% success rate. Of these wells, five were drilled late in the second quarter and had not all been tied in by June 30; therefore the new production generated from these wells is expected to positively impact third quarter production.