Winstar Resources Reports '09 Financial Results
Winstar Resources announced its operating and financial results for the fourth quarter and year ended December 31, 2009. All dollar values are expressed in Canadian dollars unless otherwise stated. As a result of the sale of Winstar's Canadian assets, effective September 1, 2009, the results from the Canadian segment of operations are presented as "discontinued operations" in this press release, and are consistent with GAAP.
During 4Q 2009, and for the whole year, the Company generated the following operational and financial results:
- Oil and gas production from continuing operations amounted to 1,816 boepd, which was 44% higher than production from continuing operations in 4Q 2008, reflecting the increase in oil and gas sales from Chouech Essaida.
- Total funds from operations from continuing and discontinued operations for Q4 were $7.7 million which are a 50% increase over Q4 2008 reflecting higher production and commodity prices. Funds from operations during 2009 grew each quarter totaling $20.6 million for the 12 month period.
- The Company generated Q4 earnings from continuing and discontinued operations of $1.5 million, compared with a $3.8 million loss in Q4 2008.
- The Company established a revolving $10 million line of credit with HSBC Canada and EDC (Export Development Canada), a prestigious and unique relationship.
- At year end, the Net Asset Value (NAV) after tax, at a discount rate of 10%, was essentially unchanged from 2008 at $240.3 million ($7.02/share), compared with 2008 at $248.3 million ($7.25/share).
During 4Q 2009, recorded earnings were $1.5 million compared with a net loss of $3.8 million during 4Q 2008.
During the 12 month period, the Company recorded net earnings from continuing operations of $1.4 million. When the net loss of $8.0 million from discontinued operations is included, the Company reported a net loss of $6.6 million during the 12 month period of 2009. The net loss from discontinued operations reflected the $2.2 million impairment on assets disposed of, as well as the $4.9 million future income tax expense related to the disposition of existing tax pools, which were transferred as part of the Canadian asset disposition.
The beginning of 2010 finds Winstar in an advantageous position and geared for growth, particularly in Tunisia. With its 100% interest ownership in the Chouech Essaida and Ech Chouech concessions, the Company owns world class assets in Tunisia's Silurian and Triassic plays, as identified through the 3D seismic interpretations. The favorable tax and royalty rate agreements with the Tunisian government in these concessions encourage Winstar to concentrate efforts here.
A strong working capital position, an unused $10 million line of credit and funds from operations allow Winstar to take advantage of these future developmental and exploratory opportunities. In an effort to escalate work in Ech Chouech, Winstar is looking for partners to spread the risk and share the rewards, as a possible alternative to funding these programs through cash flow.
Plans in 2010 focus on those opportunities where the greatest rate of return can be achieved; and generally, that will be in Tunisia, specifically the Chouech Essaida and Ech Chouech concessions. The increase of production is paramount in funding future activity. In early 2010, Winstar resumed significant scale operations with a re-entry and sidetrack drilling operation at the existing well, Chouech Essaida No.8 (CS No.8). After some operational difficulties the production casing has been set, the drilling rig moved off location and well completion operations are underway. Preliminary indications are that the potential zones encountered are very similar to the original nearby CS No.8 and test results are expected by mid April. The drilling rig has moved to spud the development well, Chouech Essaida No.11 (CS No.11). This well has been identified as an opportunity to add material incremental production and reserves due to its advantageous, geologic structural position compared to the offset producing wells. Later this year, Winstar is considering the prospect of deepening of an existing well to test the Silurian Acacus geologic horizon and then continuing with the Triassic development drilling program at Chouech Essaida.
While the 2010 capital spending focus will be in Tunisia, Winstar will not lose sight of its European assets. In Romania, Winstar continues to move forward with its regional interpretational study of the Satu Mare exploration concession and expects to become operational as early as the fourth quarter of 2010. The Company will continue to look for partners for its Igal exploration permit in Hungary.