News release via Canada NewsWire, Calgary 403-269-7605
Attention Business/Financial Editors:
Canetic Resources Trust announces solid first quarter 2007 financial and
operating results
CALGARY, May 9 /CNW/ - (CNE.UN - TSX; CNE - NYSE) - Canetic Resources
Trust ("Canetic" or the "Trust" or "we") is pleased to announce its operating
and financial results for the three months ending March 31, 2007.
"The first quarter of 2007 marked another quarter of consistent
production and operating results for Canetic," noted Paul Charron, President
and Chief Executive Officer of Canetic. "We remain focused on executing our
capital program and leveraging the extensive inventory of development
opportunities available within our sizeable asset portfolio. We exited the
first quarter ahead of forecast and remain encouraged by the strong results of
our capital program to date."
HIGHLIGHTS OF THE FIRST QUARTER INCLUDE:
<<
- Canetic posted the second consecutive quarter of average daily
production in excess of 80,000 barrels of oil equivalent ("boe") per
day, exiting the quarter ahead of forecast due to strong production
additions from drilling activity during the fourth quarter of 2006
and positive results from optimization and drilling activity during
the first quarter of 2007. Daily production for the quarter averaged
80,027 boe per day, 10 percent higher than the 72,737 boe per day
produced in the first quarter of 2006 and essentially unchanged from
the average of 80,276 boe per day produced during the fourth quarter
of 2006. Canetic currently estimates that at the end of the first
quarter approximately 2,500 boe per day of production remains to be
tied in. It is expected that these volumes will be brought on stream
throughout the remainder of the year.
- Canetic completed the largest first quarter operated development
program in its history, drilling 45 gross (41.1 net) operated wells
with a success rate of 98 percent. Including non-operated activity,
Canetic participated in the drilling of 97 gross (58.7 net) wells
incurring net development expenditures of $148.1 million.
- Funds flow from operations for the first quarter of 2007 totalled
$190.4 million ($0.83 per diluted unit), an increase of 12 percent
from $170.1 million ($0.75 per diluted unit) in the fourth quarter of
2006 and essentially unchanged from $194.7 million ($0.96 per diluted
unit) in the first quarter of 2006.
- Distributions declared during the quarter totalled $129.2 million
($0.57 per unit) resulting in a payout ratio of approximately
68 percent, in line with our target payout ratio of 60 to 70 percent.
- Subsequent to quarter end, Canetic disposed of certain miscellaneous
producing assets in northeast Alberta with approximately 1,000 boe
per day of associated production for total proceeds of $46.1 million.
The transaction closed April 30, 2007.
All unitholders and interested parties are invited to attend our Annual
Meeting on May 9, 2007 at 3:00 p.m. local time at the Hyatt Regency Hotel, 700
Centre Street S.E., Calgary, Alberta.
FINANCIAL AND OPERATING SUMMARY
Three Months Ended March 31
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($millions except per share amounts) 2007 2006(1) change
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FINANCIAL
Gross revenue 366.2 350.3 5%
Funds flow from operations(2) 190.4 194.7 -2%
Per unit - basic 0.84 0.97 -13%
Per unit - diluted 0.83 0.96 -14%
Net earnings (loss) (6.9) 59.2 -112%
Per unit - basic (0.03) 0.29 -110%
Per unit - diluted (0.03) 0.29 -110%
Cash distributions declared 129.2 138.6 -7%
Per unit 0.570 0.690 -17%
Payout ratio(2) 68% 71% -4%
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Capital expenditures
Net development expenditures 148.1 67.0 121%
Net capital expenditures 152.0 2,582.6 -94%
Total assets 5,784.5 4,937.4 17%
Long-term debt 1,348.7 838.1 61%
Net debt (excluding financial
derivatives)(2) 1,397.0 828.0 69%
Unitholders' equity 3,387.4 3,282.2 3%
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Weighted average trust units
outstanding (000s)(1) 226,466 200,705 13%
Trust units outstanding at period
end (000s)(1) 226,938 201,182 13%
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OPERATING
Production(2)
Natural gas (mmcf/d) 220.1 176.1 25%
Crude oil (bbl/d) 36,421 37,625 -3%
Natural gas liquids (bbl/d) 6,916 5,763 20%
Crude oil and NGLs (bbl/d) 43,337 43,388 -
Barrel of oil equivalent
(boe/d) (at) 6:1 80,027 72,737 10%
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Average prices(2)
Natural gas ($/mcf) 7.65 8.94 -14%
Natural gas ($/mcf) (including
financial instruments) 7.88 9.13 -14%
Crude oil ($/bbl) 57.23 54.33 5%
Crude oil ($/bbl) (including
financial instruments) 56.95 51.08 11%
Natural gas liquids ($/bbl) 43.12 46.86 -8%
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Total ($/boe) 50.85 53.52 -5%
Total ($/boe) (including financial
instruments) 51.36 52.22 -2%
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Drilling activity (gross)
Natural gas 46 62 -
Oil 45 37 -
Other 2 2 -
Dry and abandoned 4 2 -
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Total gross wells 97 103 -
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Total net wells 58.7 53.4 -
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Success rate (%) 96% 98% -
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(1) The merger of Acclaim Energy Trust ("Acclaim") and StarPoint Energy
Trust ("StarPoint") has been accounted for as a purchase of StarPoint
by Acclaim. Accordingly, the financial and operating results of
StarPoint have been included from the date of acquisition, January 5,
2006. All disclosures of units and per unit amounts of Acclaim up to
the merger on January 5, 2006 have been restated using the exchange
ratio of 0.8333 of a Canetic unit for each Acclaim unit.
(2) Please refer to the Advisory section regarding forward-looking
statements of this news release for definitions of Non-GAAP terms and
frequently recurring terms and abbreviations. The payout ratio is
calculated as cash distributions divided by funds flow from
operations.
>>
PRESIDENT'S MESSAGE
The first quarter of 2007 marked another solid quarter for Canetic. We
continue to focus on the exploitation of our large asset base and the
extensive development opportunities it provides. The first quarter of 2007
represented the most significant quarterly operated program in our history.
During the quarter Canetic participated in the drilling of 97 gross wells and
incurred $148.1 million in development expenditures. Production additions from
recent drilling and development activity largely mitigated natural production
declines with an estimated 2,500 boe per day awaiting tie in at the end of the
first quarter. Although we have not seen a significant decrease to date, we
remain optimistic that service sector costs will continue to come down
throughout the remainder of the year and that our already strong capital
efficiencies will continue to improve. For the remainder of the year, Canetic
will remain focused on executing an effective capital program and meeting
targeted operational and cost efficiency metrics essential to being a top
performer. We are pleased with the outcome of our efforts to date and remain
solidly on track to deliver consistent and predictable results in future
quarters.
FINANCIAL AND OPERATING RESULTS
Production volumes averaged 80,027 boe per day for the three months ended
March 31, 2007, compared to 72,737 boe per day for the same period in 2006.
The 10 percent increase in average production results from the Samson
acquisition which closed on August 31, 2006. Relative to the fourth quarter of
2006, production volumes were essentially unchanged due to production
additions from our capital programs in the fourth quarter of 2006 and first
quarter 2007.
Canetic's gross revenue increased five percent for the first quarter of
2007 to $366.2 million from $350.3 million for the same period in 2006. The
increase is due to incremental production volumes associated with the Samson
acquisition and our capital program, partly offset by lower combined realized
commodity prices during the quarter.
Funds flow from operations totalled $190.4 million or $0.83 per diluted
unit for the three months ended March 31, 2007, representing a 12 percent
increase from $170.1 million, or $0.75 per diluted unit during the fourth
quarter of 2006. In comparison to the same period in 2006, funds flow from
operations decreased two percent from $194.7 million or $0.96 per diluted
unit. We expect that funds flow from operations, together with borrowings
under our credit facility and proceeds from property dispositions will be
sufficient to finance our operations and planned capital activity. Although
our debt levels may fluctuate from quarter to quarter based on our capital
program, it is our intent to exit 2007 at levels similar to 2006.
Canetic recorded a net loss of $6.9 million or ($0.03) per diluted unit
for the first quarter of 2007. For the same period in 2006, Canetic recorded
net earnings of $59.2 million or $0.29 per diluted unit. The decrease in net
earnings is primarily due to accounting for unrealized gains and losses on
financial derivatives. Net earnings in the most recent quarter reflects a
$45.4 million unrealized hedging loss based on the mark-to-market price of
crude oil and natural gas at March 31, 2007.
The price of West Texas Intermediate crude averaged US$58.27/bbl during
the first quarter of 2007, down eight percent from the average price of
US$63.53/bbl for the same period in 2006 and three percent from an average of
US$60.22 per bbl in the fourth quarter of 2006. For the three months ended
March 31, 2007, we received an average oil price of $57.23/bbl as compared to
$54.33/bbl for the comparable period in 2006. Our average oil price during the
quarter increased eight percent from an average of $53.23/bbl reported during
the fourth quarter of 2006.
Our average natural gas price was $7.65/mcf for the three months ended
March 31, 2007 as compared to $8.94/mcf during the same period in 2006. The
fourth quarter 2006 natural gas price averaged $6.90/mcf. The AECO Daily Index
gas price averaged $7.39/mcf during the quarter, down 2 percent from the
average price of $7.52/mcf for the same period in 2006.
Canetic's first quarter operating costs, net of processing fees and
unit-based compensation, increased to $68.8 million in 2007 compared to
$55.6 million during the same period in 2006. On a unit-of-production basis,
operating costs averaged $9.55 per boe compared to $8.49 per boe a year
earlier, an increase of 12 percent. During the fourth quarter of 2006,
operating costs before unit-based compensation totalled $71.4 million or $9.67
per boe. In general, the industry has been impacted by higher field service
costs including higher energy and fuel costs, labour, trucking and other
related mechanical services.
Canetic's operating netback for the first quarter of 2007 was $31.04 per
boe, a nine percent decrease from $34.10 per boe in the first quarter of 2006.
Canetic's netback was impacted by a 14 percent decrease in the average
realized price of natural gas on a year-over-year basis.
REVIEW OF OPERATIONS
The first quarter of 2007 was marked by the largest and most aggressive
first quarter operated drilling and optimization program in the Trust's
history. During the quarter Canetic drilled 45 gross operated (41.1 net)
wells, comprised of 31 gross (28.8 net) oil wells, 13 gross (11.3 net) gas
wells and one D&A well. In addition, we participated in the drilling of an
additional 14 gross (2.6 net) oil wells and 33 gross (14.0 net) gas wells
operated by third parties, including 15 gross (11.6 net) coalbed methane
wells.
Highlights of the first quarter capital program include:
<<
- Continuation of our successful infill drilling, re-completion and
optimization program in Acheson including completion of a 10 well
drilling program, targeting primarily Detrital oil, with better than
anticipated results. The majority of related production was on-stream
by early April. The success of this program has led to identification
of new prospects to be included in follow-up drilling programs.
- Canetic commissioned its new 20 million cubic feet ("mmcf") per day
gas plant at Willesden Green late in the first quarter. Wells on
production in the new plant include a six well program from the first
quarter in addition to Nordegg and Rock Creek wells that were drilled
late in the fourth quarter of 2006 and completed in the new year. We
plan to continue development in the Willesden Green area through 2007
with a target to maintain the facility at capacity.
- Completion of a successful three well program in the Hoadley area,
including two oil wells and one gas well targeting the Glauconite
formation. The gas well was the first well drilled by Canetic on the
recently acquired Samson assets and has production tested at
approximately 1.6 mmcf per day. Due to the success of this program,
Canetic has elected to proceed with immediate development of
additional prospects on these lands that will be drilled throughout
the remainder of the year.
- Conclusion of a successful drilling program at Clarke Lake targeting
higher risk natural gas in the Slave Point formation. Given the
success of the first well drilled in early February, Canetic elected
to pursue drilling of an additional two well locations resulting in a
total of two successful wells. Canetic anticipates initial production
rates, on a combined basis, of 900 boe per day when related
facilities and infrastructure are put in place at the end of the
second quarter. Canetic expects these wells will provide stable, very
low decline production rates with long-life reserves. As part of the
larger Clarke Lake Slave Point pool that has produced over
1.8 trillion cubic feet of gas to date, these wells have significant
potential for meaningful reserves capture.
- An efficient seven well heavy oil program in the Lloydminster area.
All wells were on production at the end of the quarter with an
average of only eight days from rig release to production. The
program targeted multi-zone horizons in the GP, Sparky and McLaren
formations which resulted in stable initial production of 50 to
55 boe per day per well with additional up-hole opportunities in many
of the wells. Canetic has identified an additional 10 to 15-well
program which will be pursued in the latter part of 2007 or early in
2008.
- Successful completion of Canetic's second horizontal well in the
Tracy Mountain/Davis Creek area of North Dakota. Results of the well
met expectations with initial rates of 200 boe per day and should
result in low decline, long-life reserves capture. Canetic has
identified further opportunities which will be pursued in coming
months.
CAPITAL EXPENDITURES
In 2007, we have continued to increase our focus on exploiting our reserve
base, drilling new wells and optimizing existing production. Capital
expenditures for the quarter were as follows:
Three Months Ended March 31
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Capital Expenditures ($000s) 2007 2006
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Land 1,759 2,782
Geological and geophysical 140 1,133
Drilling and completion 103,679 47,868
Production equipment and facilities 42,495 15,231
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Net development expenditures 148,073 67,014
StarPoint acquisition - 2,511,746
Minor property acquisitions 919 -
Minor property dispositions (2,957) -
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Net capital expenditures 146,035 2,578,760
Office 3,099 352
Asset retirement obligation change in estimate 1,270 925
Capitalized compensation 1,562 2,559
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Total capital expenditures 151,966 2,582,596
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COMMODITY PRICE RISK MANAGEMENT
During the first quarter of 2007, Canetic recorded a realized financial
derivative gain of $3.7 million as compared to a loss of $8.0 million for the
same period in 2006.
Commodity commitments have been put in place for 2007 and beyond as noted
below:
Commodity Contracts
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Natural Gas Q1 Summer Winter
2007 2007 2007-2008
(Apr 1 - (Nov 1 -
Oct 31) Mar 31)
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Fixed Price Volume (Gj/d) 5,000 50,000 2,000
Fixed Price Average ($/Gj) $ 8.47 $ 7.32 $ 8.47
Collars Volume (Gj/d) 100,000 80,000 90,000
Collar Floors ($/Gj) $ 7.70 $ 6.74 $ 7.00
Collar Caps ($/Gj) $ 13.08 $ 9.62 $ 11.23
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Total Volume Hedged (Gj/d) 105,000 130,000 92,000
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Crude Oil 2007 2008
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CDN Denominated Fixed Price Volumes 8,000 250
CDN Denominated Fixed Price Average $ 67.26 $ 72.20
U.S. Denominated Fixed Price Volume 1,500 -
U.S. Denominated Fixed Price Average $ 48.11 -
Collars Volume (bbl/d) 6,000 5,000
Collar Floors ($US/bbl) $ 58.00 $ 63.00
Collar Caps ($US/bbl) $ 80.76 $ 83.23
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Total Volume Hedged (bbl/d) 15,500 5,250
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>>
UPDATE ON PROPOSED TAX LEGISLATION AFFECTING INCOME TRUSTS
On October 31, 2006, the Federal Government announced a proposal to
introduce a new tax on publicly traded income trusts beginning in 2011.
Despite recommendations from the Standing Committee on Finance which sought to
reduce the impact of this proposal, the Government has elected to proceed with
this initiative in a form essentially unchanged from their original proposal.
The 2007 federal budget was tabled in the House of Commons on March 19, 2007.
Certain provisions of this budget, along with the tax proposal, have now been
introduced as Bill C-52 into the House of Commons. The bill is currently at
the second reading stage and is anticipated to move to the Standing Committee
on Finance for review in the upcoming weeks.
Should the legislation be enacted as currently proposed, the Trust will
effectively become subject to tax in 2011 on earnings in excess of available
tax pools ($1.8 billion as at December 31, 2006), in a similar manner as a
corporation.
Canetic continues to review our business and the potential alternatives
available to the Trust in context of the proposed legislation, however, it
remains premature at this time to determine what Canetic's course of action
will be as 2011 approaches. We encourage unitholders to continue to voice
their concerns to the Canadian Government in respect of this proposal.
OUTLOOK
During the first quarter, Canetic remained focused on the continued
exploitation of our broad inventory of development opportunities while
continuing to tie-in volumes related to our successful 2006 fourth quarter
drilling program. We were able to achieve our objective of mitigating
production declines during the quarter and believe the production volatility
that resulted from the loss of Leduc D3a pool production at Acheson and
start-up issues at Mitsue during 2006 are largely behind us. We are continuing
our track record of strong results from our drilling and optimization programs
and continue to add production, including volumes awaiting tie-in, in-line
with our targeted efficiency rate of $22,000 to $24,000 per flowing boe.
Although Canetic continues to experience increasing operating costs on a
unit-of-production basis, we maintain our commitment to managing operational
efficiencies and optimizing field netbacks in all areas where we do business.
Our original estimate of $8.50 to $9.50 per boe operating costs for 2007 was
negatively impacted by cold weather and associated repairs and maintenance
during the first quarter of 2007. As we continue to experience higher field
costs throughout our asset base reflecting the historically high levels of
industry activity, considerable effort and focus is being given to operational
efficiencies which will help to control operating costs on a
unit-of-production basis. We currently estimate operating costs to average
$9.00 to $10.00 per boe for the remainder of 2007.
Despite the disposition, effective April 30, 2007, of approximately 1,000
boe per day of production, which was not originally included in our previous
production guidance, we believe the strength of our development program will
enable us to increase the lower end of our previous production guidance of
75,500 to 80,000 boe per day by 1,000 boe per day to reflect revised guidance
of 76,500 to 80,000 boe per day for the full year 2007. Given current
commodity prices, this production target should result in a payout ratio of 65
to 70 percent at current distribution levels of $0.19 per unit per month. The
balance of funds flow from operations will be utilized to fund a significant
portion of our 2007 capital expenditure program. Canetic currently expects
that average production volumes for the second quarter of 2007 will decline by
approximately two to three percent over the quarter as a result temporary
production outages related to turnarounds and maintenance activities
anticipated to be undertaken by Canetic and other third party operators of
Canetic utilized facilities during the quarter.
We remain excited about the future prospects of Canetic. Our continuing
strategy has always been to build a significant asset base and a team of
people that could generate long-term value for our unitholders. We believe
that we have created an entity that is well positioned for the long-term, with
significant asset depth and diversity, extensive development opportunities and
a quality team of people to exploit those opportunities. Our current focus is
to develop our assets and extract the promised value for our unitholders,
however, we will continue to look for new and innovative ways to bring new
value and opportunity to the portfolio and position our Trust to excel in
today's continually changing environment.
Canetic's complete first quarter 2007 unaudited Financial Statements and
Notes and Management's Discussion and Analysis ("MD&A") are available on
Canetic's website at www.canetictrust.com or on SEDAR at www.sedar.com or on
EDGAR at www.edgar.com.
All references are to Canadian dollars unless otherwise indicated.
Natural gas volumes recorded in thousand cubic feet ("mcf") are converted to
barrels of oil equivalent ("boe") using the ratio of six (6) thousand cubic
feet to one (1) barrel of oil ("bbl"). BOE's may be misleading, particularly
if used in isolation. A BOE conversion ratio of 6 mcf: one (1) bbl is based on
an energy equivalent conversion method primarily applicable at the burner tip
and does not represent a value equivalent at the wellhead.
ADVISORY
Certain statements contained in this news release constitute
forward-looking statements or information (collectively "forward-looking
statements") within the meaning of applicable securities laws. All statements
other than statements of historical fact may be forward looking statements.
Statements relating to "reserves" are deemed to be forward-looking statements
as they involve the implied assessment, based on certain estimates and
assumptions, that the reserves described can be profitably produced in the
future.
The use of any of the words "anticipate", "continue", "estimate",
"expect", "may", "will", "project", "could", "should", "believe", "intend",
"propose", "budget" and similar expressions are intended to identify
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in such forward-looking statements.
We believe the expectations reflected in the forward-looking statements are
reasonable but no assurance can be given that these expectations will prove to
be correct and such forward-looking statements are not guarantees of future
performance and should not be unduly relied upon. These statements speak only
as of the date of this news release.
In particular, this news release contains forward-looking statements
pertaining, directly or indirectly, to the following: business strategies;
production volumes; reserves volumes; operating and other costs and expenses;
commodity prices; future cash distribution levels and taxability; payout
ratios; capital spending including timing, allocation and amounts of capital
expenditures and the sources of funding thereof; sources of funding operations
and distributions; debt levels; estimates of cash flow and funds flow from
operations; the timing for bringing wells on stream; and future tax treatment
of income trusts such as the Trust and unitholders.
The forward-looking statements contained in this news release are based
on a number of expectations and assumptions that may prove to be incorrect. In
addition to other assumptions identified in this news release, assumptions
have been made regarding, among other things: that the Trust will continue to
conduct its operations in a manner consistent with past operations; the
continuance of existing (and in certain circumstances, proposed) tax and
royalty regimes; the general continuance of current industry conditions; the
accuracy of the estimates of the Trust's reserve volumes; the ability of
Canetic to obtain equipment, services and supplies in a timely manner to carry
out its activities; the ability of Canetic to market oil and natural gas
successfully; the timely receipt of required regulatory approvals; the ability
of Canetic to obtain financing on acceptable terms; currency, exchange and
interest rates; future oil and gas prices and future cost assumptions. No
assurance can be given that these factors, expectations and assumptions will
prove to be correct.
The actual results could differ materially from those anticipated in
these forward-looking statements as a result of the risk factors set forth
below and elsewhere in this news release: volatility in market prices for oil
and natural gas; risks and liabilities inherent in oil and natural gas
including operations, exploration, development, exploitation, production,
marketing and transportation risks; uncertainties associated with estimating
oil and natural gas reserves; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands and skilled personnel; incorrect
assessments of the value of acquisitions; geological, technical, drilling and
processing problems; risks and uncertainties involving geology of oil and gas
deposits; unanticipated operating results or production declines; fluctuations
in foreign exchange, currency or interest rates and stock market volatility;
changes in laws and regulations changes including but not limited to those
pertaining to income tax, environmental and regulatory matters; failure to
realize the anticipated benefits of acquisitions; health, safety and
environmental risks; and the other factors described in Canetic's public
filings from time to time (including under "Risk Management" in the MD&A dated
May 9, 2007 and under "Risk Factors" in its Annual Information Form) available
in Canada at www.sedar.com and in the United States at www.sec.gov. Readers
are cautioned that this list of risk factors should not be construed as
exhaustive.
The forward-looking statements contained in this news release are
expressly qualified by this cautionary statement. Canetic undertakes no
obligation to publicly update or revise any forward-looking statements except
as expressly required by applicable securities law.
NON-GAAP MEASURES
This news release refers to certain financial measures that are not
determined in accordance with GAAP. These measures as presented do not have
any standardized meaning prescribed by GAAP and therefore they may not be
comparable with calculations of similar measures for other companies or
trusts.
Management uses funds flow from operations, which we define as net
earnings plus non-cash items before deducting non-cash working capital and
asset retirement costs incurred to analyze operating performance and leverage.
Readers should refer to the "Funds Flow From Operations" section of the MD&A
for a reconciliation of funds flow from operations.
We use the term net debt, which we define as long-term debt and working
capital, to analyze liquidity and capital resources. Readers should refer to
the "Liquidity and Capital Resources" section of the MD&A for a reconciliation
of net debt.
We use the term payout ratio, which we define as cash distributions to
unitholders divided by funds flow from operations, to analyze financial and
operating performance. Readers should refer to the "Cash Distributions"
section of the MD&A for the calculation of payout ratio.
We use the terms operating and cash netbacks to analyze margin and cash
flow on each boe of production. Operating and cash netbacks should not be
viewed as an alternative to cash flow from operating activities, net earnings
per trust unit or other measures of financial performance calculated in
accordance with GAAP. Readers should refer to the "Netbacks" section of the
MD&A for a reconciliation of operating and cash netbacks.
We use the term total capitalization, which we define as net debt
including convertible debentures plus unitholders' equity, to analyze
leverage. Total capitalization is not intended to represent the total funds
from equity and debt received by the Trust. Readers should refer to the
"Liquidity and Capital Resources" section of the MD&A for a reconciliation of
total capitalization.
Management believes that, in conjunction with results presented in
accordance with GAAP, these measures assist in providing a more complete
understanding of certain aspects of the Trust's results of operations and
financial performance. Investors are cautioned however, that these measures
should not be construed as an alternative to measures determined in accordance
with GAAP as an indication of our performance.
ADDITIONAL INFORMATION
Additional information regarding the Trust and its business operations,
including the Trust's annual information form for the year ended December 31,
2006, is available on the Trust's SEDAR company profile at www.sedar.com or
the EDGAR company profile at www.edgar.com.
Canetic is one of Canada's largest oil and gas royalty trusts. Canetic
trust units and debentures are listed on the Toronto Stock Exchange under the
symbols CNE.UN, CNE.DB.A, CNE.DB.B, CNE.DB.C, CNE.DB.D, and CNE.DB.E and the
trust units are listed on the New York Stock Exchange under the symbol CNE.
<<
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
($CDN thousands) 2007 2006
-------------------------------------------------------------------------
(unaudited)
ASSETS
Current Assets
Accounts receivable $ 251,405 $ 261,498
Prepaid expenses and deposits 30,189 34,647
Financial derivative asset 4,493 -
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286,087 296,145
Property, plant and equipment, net of
amortization 4,573,181 4,597,654
Goodwill 922,024 922,024
Deferred financing charges, net of amortization - 8,996
Financial derivative asset 3,161 6,157
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Total assets $5,784,453 $5,830,976
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LIABILITIES AND UNITHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 273,659 $ 260,206
Income taxes payable 11,632 10,979
Distributions payable 43,117 51,933
Convertible debentures 1,490 1,697
Financial derivative liability 42,236 1,124
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372,134 325,939
Bank debt 1,348,711 1,289,678
Convertible debentures, net of deferred
transaction costs 250,403 258,959
Other long-term liabilities 4,846 7,272
Financial derivative liability 5,797 -
Future income taxes 221,572 250,339
Asset retirement obligations 193,620 191,874
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2,397,083 2,324,061
Commitments and guarantees
UNITHOLDERS' EQUITY
Capital 4,240,983 4,224,470
Convertible debentures 6,584 6,584
Deficit (860,197) (724,139)
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3,387,370 3,506,915
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Total liabilities and unitholders' equity $5,784,453 $5,830,976
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CONSOLIDATED STATEMENTS OF EARNINGS,
COMPREHENSIVE INCOME AND DEFICIT
Three Months Ended March 31
-------------------------------------------------------------------------
($CDN thousands except per unit amounts)
unaudited 2007 2006
-------------------------------------------------------------------------
REVENUE
Petroleum and natural gas sales $ 366,209 $ 350,346
Royalty expense (66,783) (67,124)
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299,426 283,222
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EXPENSES
Operating 69,052 56,611
Transportation 7,158 4,444
General and administrative 11,970 13,798
Interest on bank debt 15,889 9,186
Interest on convertible debentures 4,898 660
Depletion, depreciation and amortization 176,440 150,518
Accretion of asset retirement obligations 3,863 2,451
Loss on financial derivatives 41,705 3,095
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330,975 240,763
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(Loss) earnings before taxes (31,549) 42,459
Current income taxes 1,888 12
Capital taxes 2,201 2,714
Future income tax recovery (28,768) (19,462)
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NET (LOSS) EARNINGS AND
COMPREHENSIVE (LOSS) INCOME (6,870) 59,195
Deficit, beginning of period (724,139) (363,712)
Distributions declared (129,188) (138,634)
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Deficit, end of period $ (860,197) $ (443,151)
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Net (loss) earnings per unit
Basic $ (0.03) $ 0.29
Diluted $ (0.03) $ 0.29
Weighted average units outstanding
Basic 226,466 200,705
Diluted 228,475 203,016
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31
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($CDN thousands) unaudited 2007 2006
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OPERATING ACTIVITIES
Net (loss) earnings $ (6,870) $ 59,195
Adjustments for:
Unit-based compensation (153) 6,973
Depletion, depreciation and amortization 176,440 150,518
Accretion of asset retirement obligations 3,863 2,451
Unrealized (gain) loss on financial
derivatives 45,416 (4,934)
Future income tax recovery (28,768) (19,462)
Accretion of deferred transaction costs 440 -
Asset retirement costs incurred (3,387) (3,456)
Changes in non-cash operating working capital 4,488 (83,773)
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191,469 107,512
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FINANCING ACTIVITIES
Proceeds from bank debt 59,033 90,548
Proceeds from issuance of units, net of
issue costs - 4,339
Distributions to unitholders (117,886) (132,879)
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(58,853) (37,992)
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INVESTING ACTIVITIES
Acquisition of petroleum and natural gas
properties (919) -
Disposition of petroleum and natural gas
properties 2,957 -
Capital expenditures (134,654) (69,520)
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(132,616) (69,520)
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Cash beginning and end of period $ - $ -
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The Trust paid the following cash amounts:
Interest paid $ 22,730 $ 13,442
Capital taxes paid $ 7,402 $ 6,446
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>>
%SEDAR: 00023165E %CIK: 0001349237
/For further information: or to receive a complete copy of Canetic's
first quarter operating and financial results, including the MD&A and
Financial Statements free of charge, please visit our website at
www.canetictrust.com or contact Canetic investor relations by email at:
Info(at)canetictrust.com or toll free telephone at 1-877-539-6300./
(CNE.UN. CNE)
CO: Canetic Resources Trust
CNW 16:32e 09-MAY-07
