Sonde Resources Corp. ("Sonde" or the "Company") (TSX:SOQ) (NYSE
MKT:SOQ) announced today the release of its financial and operating
results for the second quarter ended June 30, 2013. The
Management's Discussion and Analysis and Financial Statements for
the quarter ended June 30, 2013 can be viewed on the System for
Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com, and on the Securities and Exchange Commission's
Electronic Document Gathering and Retrieval System (EDGAR) at
www.sec.gov. Shareholders have the ability to receive a hard copy
of the Company's complete second quarter financial statements free
of charge upon request.
Sonde will be hosting a conference call on Friday, August 2,
2013 at 1:30 p.m. MDT to provide a report on the second quarter
2013 results. Mr. Kurt Nelson, Chief Financial Officer, will host
the call. All interested parties may join the call by dialing
416-340-8018 or 866-223-7781. Please dial-in 15 minutes prior to
the call to secure a line. The conference call will be archived for
replay on the Sonde website within 48 hours of this conference
call.
North Africa
On December 27, 2012, the Company entered into a farm-out
agreement with Viking Exploration and Production Tunisia Limited
("Viking") covering the Joint Oil Block. The farm-out agreement was
executed by Sonde and Viking on July 31, 2013. Formal closing
remains conditioned upon obtaining all of the necessary consents
and approvals. The steps for consent and approval have already been
discussed and the appropriate forms are being prepared which will
assign the respective interests to Viking and Sonde. As the
appropriate instruments are completed, Joint Oil will notify the
parties and the parties will have twenty-one days to fund the
US$50.995 bank guarantee. Expectations are that the formal closing
will occur in mid to late September. Please see Sonde's July 31,
2013 news release for further information.
Toufic Nassif, President of Sonde North Africa, reiterated his
earlier comments "The execution of the Viking farm-out is a
milestone to the development of the Joint Oil Block and looks
forward to working with Viking and Joint Oil to realize the full
potential of the Block." Mr. Nassif further added, "Joint Oil has
worked closely with Sonde on the process necessary to accept the
Viking farm-out and such process is limited to the approval of the
formal instruments. Joint Oil has assured Sonde that everything is
in place to formalize the Viking farm-out once the bank guarantee
is in place."
Mr. Kerry Brittain, Sonde's Chairman of the Board, stated "The
execution of the Viking farm-out is a significant milestone to
unlocking the unrealized potential of the North Africa assets for
Joint Oil, Sonde and Viking. The farm-out shifts the three well
exploratory obligation, or the US$45 million penalty, to Viking and
takes Sonde one step closer to seeing the development of this
significant resource. Perhaps of equal importance, the Viking
farmout will provide management with the opportunity to focus on
the Western Canada Strategic Alternatives process announced
earlier. I and the Sonde Board want to personally thank Sonde's
management and employees for their persistence and dedication in
completing the Viking farm-out under difficult circumstances."
Western Canada
Western Canada Strategic Alternatives Process
On January 9, 2013, Sonde announced that it had initiated a
process to explore and evaluate potential strategic alternatives to
enhance shareholder value with regard to Sonde's Western Canadian
production and exploratory acreage. A step in the strategic
alternative process was the sale of Sonde's undeveloped Montney
license (which included some Duvernay rights) which resulted in
realizing approximately $65 per net acre with an average cost of
approximately $23 per net acre. The loss Sonde recorded was related
to the net book value of the recently drilled Montney well. By
selling the non-producing well with the acreage the Company has
exited this play. Current market conditions for cash transactions
have remained soft but the cash sale was insurance in the event
that the Viking farm-out was not executed.
Sonde retains undeveloped acreage in the Duvernay (54,648 acres
net), Wabamun (50,736 acres net) and Detrital/Banff (46,677 acres
net) plays. Of these lands, 85% have been purchased within the past
18 months, and as such, there are no land expiry issues. These land
positions are typically large, consolidated and 100% working
interest holdings with outstanding characteristics and growth
potential.
2013 Western Canada Drilling Program
No wells were drilled during the three and six months ended June
30, 2013 due to the strategic alternatives process discussed
above.
During the three and six months ended June 30, 2013, Sonde
continued its well re-activation program. Sonde performed 13 and 27
net workovers and recompletions during the three and six months
ended June 30, 2013.
Second Quarter Financial and Operational Review
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Q2 Q1 % Q2 %
(CDN$ thousands, except where
otherwise noted) 2013 2013 Change 2012 Change
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Financial
Petroleum & natural gas sales(1) 6,071 6,607 (8) 5,487 11
Net loss (4,857) (5,412) (10) (28,030) (83)
Net loss per share - basic and
diluted (0.08) (0.09) (11) (0.45) (82)
Funds from (used for) operations
(2) 593 (472) 226 (1,267) (147)
Funds from (used for) operations
per share(2) 0.01 (0.01) 200 (0.02) 110
Capital expenditures 1,090 2,025 (46) 7,632 (86)
Working capital surplus 20,366 15,063 35 34,865 (42)
Average shares outstanding 62,301 62,301 - 62,301 -
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Production
Natural gas (mcf/d) 7,423 7,934 (6) 9,665 (23)
Crude oil (bbl/d) 461 549 (16) 554 (17)
Natural gas liquids (bbl/d) 161 188 (14) 191 (16)
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Total (boe/d) 1,858 2,059 (10) 2,356 (21)
----------------------------------------------------------------------------
Pricing
Natural gas ($/mcf) 3.90 3.30 18 2.10 86
Crude oil ($/bbl) 83.58 79.58 5 67.10 25
Natural gas liquids ($/bbl) 49.72 57.03 (13) 61.07 (19)
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Average sales price ($/boe) 40.59 39.12 4 29.33 38
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(1) Petroleum and natural gas sales and realized losses on
financial instruments net of royalties and transportation.
(2) Non-IFRS measure reconciled in our MD&A filed on
www.sedar.com
For the three months ended June 30, 2013, funds from operations
was $0.6 million compared to funds used for operations of $1.3
million for the same period in 2012. This was primarily the result
of a 9% increase in petroleum and natural gas revenue, a 12%
decrease in operating expense and an 84% decrease in well workover
expense.
For the three months ended June 30, 2013, production averaged
1,858 boe/d, compared to 2,059 boe/d for the three months ended
March 31, 2013 and 2,356 boe/d for the three months ended June 30,
2012. The decrease in production during the three months ended June
30, 2013 compared to the three months ended March 31, 2013 and June
30, 2012 is due to natural decline, significant third-party natural
gas processing plant outages in Central Alberta, weather related
access issues and constrained capex due to the Western Canada
strategic alternatives process.
The success of the Company's ongoing operations are dependent
upon a number of factors, including but not limited to, the price
of energy commodity products, the Company's ability to manage price
volatility, increasing production and related cash flows,
controlling costs, availability of experienced service industry
personnel and equipment, capital spending allocations, the ability
to attract equity investment, the results of Sonde's Western Canada
strategic alternatives process, hiring and retaining qualified
personnel and managing political and government risk, particularly
with respect to its interests in North Africa.
Non-IFRS Measures - This document contains references to funds
from (used for) operations and funds from (used for) operations per
share, which are not defined under IFRS as issued by the
International Accounting Standards Board and are therefore non-
IFRS financial measures that do not have any standardized meaning
prescribed by IFRS and are, therefore, unlikely to be comparable to
similar measures presented by other issuers.
Management of the Company believes funds from (used for)
operations and funds from (used for) operations per share are
relevant indicators of the Company's financial performance, and
ability to fund future capital expenditures.
Funds from (used for) operations should not be considered an
alternative to or more meaningful than cash flow from operating
activities, as determined in accordance with IFRS, as an indicator
of the Company's performance. In our MD&A, a reconciliation has
been prepared of funds from (used for) operations to cash (used in)
provided by operating activities, the most comparable measure
calculated in accordance with IFRS.
Boe Presentation - Production information is commonly reported
in units of barrel of oil equivalent ("boe"). For purposes of
computing such units, natural gas is converted to equivalent
barrels of oil using a conversion factor of six thousand cubic feet
to one barrel of oil. This conversion ratio of 6 mcf:1 bbl is based
on an energy equivalency conversion method primarily applicable at
the burner tip and does not represent a value equivalency at the
wellhead. Such disclosure of boe's may be misleading, particularly
if used in isolation. Additionally, given the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency of 6 mcf:1 bbl,
utilizing a conversion ratio of 6 mcf:1 bbl may be misleading as an
indication of value. Readers should be aware that historical
results are not necessarily indicative of future performance.
Natural gas production is expressed in thousand cubic feet ("mcf").
Oil and natural gas liquids are expressed in barrels ("bbl").
Forward-Looking Information - This news release contains
"forward-looking information" within the meaning of applicable
Canadian securities laws and "forward looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. These statements include, among others, the timing of the
closing of the Viking farm-out agreement, the potential outcomes of
the Company's Western Canada strategic review process, proposed
exploration and development activities and sources of liquidity.
There can be no assurances that the Western Canada strategic review
process will result in a transaction on terms and conditions
acceptable to Sonde or at all.
Such forward-looking information or statements are based on a
number of risks, uncertainties and assumptions which may cause
actual results or other expectations to differ materially from
those anticipated and which may prove to be incorrect. Assumptions
have been made regarding, among other things, market and operating
conditions, management's expectations regarding future growth,
plans for and results of exploration and development activities,
availability of capital, future commodity prices and differentials,
and capital and other expenditures.
Actual results could differ materially due to a number of
factors, including, without limitation, changes in market
conditions, operational risks in development, exploration and
production; commodity price volatility; the uncertainty of reserve
estimates; risks and uncertainties involving geology of oil and gas
deposits; the uncertainty of estimates and projections in relation
to production; volatility in the capital markets and changes in the
availability of capital generally; risks in conducting foreign
operations, including political and fiscal instability and the
possibility of civil unrest or military action; changes in
government policies or laws; risk that government approvals may be
delayed or withheld; and commercial risks related to the Joint Oil
Block. Additional assumptions and risks relating to the Company and
its business and affairs, including assumptions and risks relating
to the estimation of reserves, are set out in detail in the
Company's AIF, available on SEDAR at www.sedar.com, and the
Corporation's annual report on Form 40-F on file with the U.S.
Securities and Exchange Commission.
Although management believes that the expectations reflected in
the forward-looking information or forward-looking statements are
reasonable, prospective investors should not place undue reliance
on forward-looking information or forward-looking statements
because Sonde can provide no assurance those expectations will
prove to be correct. Sonde bases its forward-looking statements and
forward-looking information on information currently available and
do not assume any obligation to update them unless required by
law.
Sonde Resources Corp. is a Calgary, Alberta, Canada based energy
company engaged in the exploration and production of oil and
natural gas. Its operations are located in Western Canada and
offshore North Africa. See Sonde's website at
www.sonderesources.com to review further detail on Sonde's
operations.
Contacts: Sonde Resources Corp. Kurt A. Nelson Chief Financial
Officer (403) 503-7944 (403) 216-2374 (FAX)
www.sonderesources.com
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