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Company Edge Resources Inc.
TIDM EDG
Headline

Quarterly and Half Yearly Results

Released 07:00 30-Nov-2012
Number 3826S07

RNS Number : 3826S
Edge Resources Inc.
30 November 2012
 



 

 

FOR IMMEDIATE RELEASE

TSX Venture Exchange Symbol: EDE

AIM Exchange Symbol: EDG                                                                                          November 30, 2012

EDGE RESOURCES INC.                                                                                                  Calgary, Alberta

 

 

Edge Resources Announces Quarterly and Half Yearly Results

 

 

Edge Resources Inc. ("Edge" or the "Company") is pleased to announce its unaudited second quarter results for the three month period ended September 30, 2012 ("Q2 2012") and its unaudited half yearly results for the six month period ended September 30, 2012 ("HY 2012").

 

For the six months ended September 30, 2012:

 

Period Highlights

 

·      C$4.5 million investment from Henderson Global Investors in March 2012 to fund the initial phase of drilling oil prospects in both Primate and Grand Forks

 

·      Dual listing on AIM of the London Stock Exchange in July 2012

 

·      Sales volumes increased to 693 boe/d in Q1 2012 (307boe/d Q1 2011) and 716 boe/d in H1 2012 (333 boe/d H1 2011);

 

·      Primate, Saskatchewan:

 

Successful drilling and completion of two oil wells ahead of schedule;

 

Discovery of new heavy oil pool in the McLaren Pool;

 

Subsequent proprietary 3D Seismic programme initiated

 

·      Grand Forks, Alberta:

 

Acquired 395 acres of mineral land rights, resulting in total acreage of 3,782 net acres (12% increase)

 

 

Brad Nichol, President & CEO of Edge, commented, "We are extremely pleased with Edge's performance since our AIM listing in July, which has broadened our investor base and increased liquidity.  Edge has remained true to its strategy of focusing on operating in a conventional, shallow arena with properties that offer exceptional economic returns and low risk profile.   As commodity prices have demanded, our near-term focus continues to be on oil and the superior returns this commodity currently offers; and thus, the remainder of the 2013 capital program will concentrate on oil assets.  The Company expects to drill a number of these conventional oil wells on its existing lands in the coming months.  Edge has secured significant debt facilities with a major Canadian bank, recently closed an equity financing and has initiated a relationship with a major institutional capital partner, all of which will allow continual measured growth."

 

To view the Company's full Q2 2012 and HY 2012 statements, please go to the company website (www.edgeres.com).

 

For more information, visit the company website: www.edgeres.com or contact:

 

 

Brad Nichol - President,CEO

Tel: +1 (403) 767 9905

 

Merchant Securities Limited (Nominated Advisor and Broker)

Lindsay Mair/Scott Mathieson

Tel: +44 (0)20 7628 2200

 

 

Buchanan (Financial PR)

Tim Thompson/Tom Hufton

Tel: +44 (0)20 7466 5000

 

 

 

About Edge Resources Inc.

 

Edge Resources is focused on developing a balanced portfolio of oil and natural gas assets from properties in Alberta and Saskatchewan, Canada.  Management has consistently focused on:

 

1.       Shallow, vertical, conventional programs with reduced capital, operational and geological risks

2.       Very high or 100% working interests and fully operated assets

3.       Pools and horizons with exceptionally high reserves in place

 

The management team's very high drilling success rate is based on the safe, efficient deployment of capital and a proven ability to efficiently execute in shallow formations, which gives Edge Resources a sustainable, low-cost, competitive advantage.

 



Condensed Interim Balance Sheets

(amounts in Canadian dollars)

(unaudited)

 




September 30,


September 30,


March 31,


Note


2012


2011


2012

Assets








Current assets








Cash and cash equivalents



5,178


36,855


64,885

Accounts receivable



1,234,668


878,236


995,747

Deposits and prepaid expenses



175,284


131,472


71,942

Fair value of derivative instruments



120,728


-


95,341

Total current assets



1,535,858


1,046,563


1,227,915

Non-current assets








Fair value of derivative instruments



84,346


-


12,741

Exploration and evaluation assets



374,981


144,926


67,879

Property, plant and equipment

3


35,764,584


21,433,466


34,689,533

Total non-current assets



36,223,911


21,578,392


34,770,153

Total assets



37,759,769


22,624,955


35,998,068

Liabilities








Current liabilities








Accounts payable and accrued liabilities



2,695,509


3,342,785


1,470,423

Bank debt

4


9,076,063


4,476,207


10,669,376

Loans payable

5


1,160,438


1,040,110


1,100,274

Total current liabilities



12,932,010


8,859,102


13,240,073

Loans payable

5


7,466,027


-


7,115,068

Decommissioning provisions



6,437,000


3,590,000


5,495,000

Total liabilities



26,835,037


12,449,102


25,850,141

Shareholders' Equity








Share capital



27,247,163


22,409,494


24,093,398

Warrants



339,232


772,282


386,860

Contributed surplus



1,589,584


928,654


1,358,281

Deficit



(18,251,247)


(13,934,577)


(15,690,612)

Total shareholders' equity



10,924,732


10,175,853


10,147,927

Total liabilities and shareholders' equity



37,759,769


22,624,955


35,998,068

 

 

 



Condensed Interim Statements of Net Loss and Comprehensive Loss

(amounts in Canadian dollars)

(unaudited)

 



Six months ended

12 months ended



September 30,

September 30,

March 31,


Note

2012

2011

2012






Revenue





Oil and natural gas sales


4,294,681

2,458,586

5,966,278

Royalties


(752,638)

(277,963)

(804,422)

Revenue, net of royalties


3,542,043

2,180,623

5,161856

Other income





Realized gain on financial derivatives


256,648

-

6,869

Unrealized gain (loss) on financial derivatives


96,992

-

 

108,082

Gain on disposition of oil and natural gas interests


300,000

-

 

-

Other income


37,349

173,354

223,305

Total income, before expenses


4,233,032

2,353,977

5,500,112

Expenses





Operating


2,381,382

667,415

1,865,323

Transportation


261,296

126,197

306,316

General and administrative


1,424,901

1,061,193

2,808,344

Depletion and depreciation

3

1,787,100

531,800

1,742,800

Finance expense


659,201

248,732

693,472

Stock-based compensation


183,675

116,157

160,362

Capital taxes


96,112

-

-

Total expenses


6,793,667

2,751,494

7,653,664

Loss before income taxes


(2,560,635)

(397,517)

(2,153,552)

Deferred income tax recovery


-

129,363

129,363

Net loss and comprehensive loss for the period


(2,560,635)

(268,154)

 

(2,024,189)

Net loss and comprehensive loss per share





Basic and diluted


(0.03)

(0.00)

(0.03)

 

 

 



Condensed Interim Statements of Changes in Shareholders' Equity

(amounts in Canadian dollars)

(unaudited)

 


Share Capital

Warrants

Contributed surplus

Deficit

Total Equity

 

 

Balance at April 1, 2011

18,848,895

 

 

385,215

812,497

(13,666,423)

6,380,184

Issue of equity for cash

3,602,049

339,439

-

-

3,941,488

Issue of flow-through shares for cash

498,700

-

-

-

498,700

Share issue costs, cash paid

(363,159)

-

-

-

(363,159)

Share issue costs, non-cash

(47,628)

47,628

-

-

-

Flow-through share premium

(129,363)

-

-

-

(129,363)

Stock-based compensation

-

-

116,157

-

116,157

Net loss for the period

-

-

-

(268,154)

(268,154)

Balance at September 30, 2011

22,409,494

772,282

928,654

(13,934,577)

10,175,853







Issue of equity for cash

1,250,000

-

-

-

1,250,000

Issue of common shares in lieu of services

31,250

-

-

-

31,250

Issue of common shares for repayment of loans payable

500,000

-

-

-

500,000

Share issue costs, cash paid

(66,096)

-

-

-

(66,096)

Share issue costs, non-cash

(31,250)

-

-

-

(31,250)

Non-cash fair value related to warrants expired

-

(385,422)

385,422

-

-

Stock-based compensation

-

-

44,205

-

44,205

Net loss for the period

-

-

-

(1,756,035)

(1,756,035)

Balance at March 31, 2012

24,093,398

386,860

1,358,281

(15,690,612)

10,147,927







Issue of common shares for cash

3,250,000

-

-

-

3,250,000

Issue of common shares in lieu of services

81,250

-

-

-

81,250

Share issue costs, cash paid

(96,235)

-

-

-

(96,235)

Share issue costs, non-cash

(81,250)

-

-

-

(81,250)

Stock-based compensation

-

-

183,675

-

183,675

Non-cash fair value related to warrants expired

-

(47,628)

47,628

-

-

Net loss for the period

-

-

-

(2,560,635)

(2,560,635)

Balance at September 30, 2012

27,247,163

339,232

1,589,584

(18,251,247)

 10,924,732

 



Condensed Interim Statements of Cash Flows

(amounts in Canadian dollars)

(unaudited)

 



Six months ended

12 months ended



September 30,

September 30,

March 31,


Note

2012

2011

2012






Cash flows provided by (used for):





Cash flows generated from (used in) operating activities





Net loss for the period


(2,560,635)

(268,154)

(2,024,189)

Adjustments for:





Unrealized loss (gain) on financial derivatives


(96,992)

-

(108,082)

Gain on disposition of oil and natural gas interests


(300,000)

-

-

Depletion and depreciation


1,787,100

531,800

1,742,800

Deferred income tax recovery


-

(129,363)

(129,363)

Accretion expense


74,000

37,877

89,877

Stock-based compensation


183,675

116,157

160,362

Exploration and evaluation expenditures


-

-

77,047

Changes in non-cash items


54,414

189,640

283,117

Net cash generated from (used in) operating activities


(858,438)

477,957

 

91,569

Cash flows used in investing activities


 

 



Exploration and evaluation assets expenditures


(516,076)

(25,634)

(26,634)

Property, plant and equipment expenditures


(1,785,177)

(3,023,208)

(5,061,999)

Acquisition of oil and natural gas interests


-

-

(10,575,276)

Proceeds from disposition of oil and natural gas interests


300,000

-

-

Changes in non-cash items


828,409

(1,432,724)

(3,430,044)

Net cash used in investing activities


(1,172,844)

(4,481,566)

(19,092,953)

Cash flows from financing activities


 

 



Proceeds from (repayment of) bank debt, net


(1,593,313)

301,207

6,494,376

Proceeds from (repayment of) loans payable, net


-

(600,931)

6,893,863

Proceeds from issuance of equity


3,250,000

4,440,188

5,690,188

Share issuance costs


(96,235)

(363,159)

(429,255)

Changes in non-cash items


411,123

96,692

250,630

Net cash from financing activities


1,971,575

3,873,997

18,899,802

Net change in cash and cash equivalents


(59,707)

(129,612)

(101,582)

Cash and cash equivalents, beginning of period


64,885

166,467

166,467

Cash and cash equivalents, end of period


5,178

36,855

64,885

Cash and cash equivalents is comprised of:





Balances with banks


5,178

36,855

64,885

 



Notes to the Condensed Interim Financial Statements

Three and six months ended September 30, 2012

(amounts in Canadian dollars)

(unaudited)

 

1.      Going Concern

 

These condensed interim financial statements have been prepared on a going concern basis which presumes that the Company will be able to discharge its obligations and realize its assets in the normal course of business.  The Company had a net loss and comprehensive loss of $2.6 million in the six month period ended September 30, 2012.  As at September 30, 2012, the Company had a working capital deficiency of $11.5 million that includes $9.1 million in bank debt and excludes $0.1 million in derivative assets.  The Company had unused credit lines of $2.9 million related to its revolving credit facility and $6.5 million related to its development/acquisition facility at September 30, 2012.  At September 30, 2012, the Company was compliant with its lender's covenants.

 

Management has been and continues to be active in seeking alternative sources of funding to help pay current liabilities and to continue with its planned capital expenditure program.  The Company plans to fund future exploration and development activities with funds raised during May 2012 and by way of future potential financings if the terms are appropriate.

 

Management considers the Company is a going concern and has prepared the financial statements on a going concern basis.

 

2.      Basis of preparation

 

These condensed interim financial statements are unaudited and have been prepared in accordance with International Accounting Standard ("IAS") 34, "Interim Financial Reporting" using accounting policies consistent with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). Certain information and disclosures normally included in the annual financial statements prepared in accordance with IFRS have been condensed or omitted.

 

The condensed interim financial statements should be read in conjunction with the Company's audited annual financial statements as at and for the year ended March 31, 2012 and the notes thereto.

 

3.       Property, plant and equipment


Oil and natural gas interests

Corporate and other

Total





Cost




Balance at April 1, 2011

17,530,514

29,572

17,560,086

Acquisition of oil and natural gas interests

10,575,276

-

10,575,276

Capital expenditures

5,047,773

14,226

5,061,999

Transfers from exploration and evaluation assets

125,436

-

125,436

Change in decommissioning provisions

3,370,000

-

3,370,000

Balance at March 31, 2012

36,648,999

43,798

36,692,797

Capital expenditures

1,775,902

9,275

1,785,177

Transfers from exploration and evaluation assets (note 4)

208,974

-

208,974

Change in decommissioning provisions (note 8)

868,000

-

868,000

Balance at September 30, 2012

 

39,501,875

53,073

39,554,948

Accumulated depletion and depreciation and impairment losses




Balance at April 1, 2011

251,000

9,464

260,464

Depletion and depreciation expense

1,734,000

8,800

1,742,800

Balance at March 31, 2012

1,985,000

18,264

2,003,264

Depletion and depreciation expense

1,782,000

5,100

1,787,100

Balance at September 30, 2012

 

3,767,000

23,364

3,790,364






 

Oil and

natural gas Interests

Corporate and other

Total





Net carrying value:




At September 30, 2011

21,412,206

21,260

21,433,466

At March 31, 2012

34,663,999

25,534

34,689,533

At September 30, 2012

35,734,875

29,709

35,764,584

 

4.      Bank debt

 

As at September 30, 2012, the Company had lending facilities with a Canadian chartered bank, consisting of a $12.0 million revolving demand credit facility, and a $6.5 million demand development/acquisition facility, of which $9.1 million ($8.0 million under bankers' acceptances and $1.1 million under the prime-based lending) and $Nil were drawn, respectively.  The revolving facility is a borrowing base facility that is determined based on, among other things, the Company's current reserve report, results of operations, current and forecasted commodity prices and the current economic environment.  The revolving credit facility contains standard commercial covenants for facilities of this nature.  The Company also has available a risk management facility which allows the Company to conduct certain financial risk management options.  The interest rates on the facilities are bank prime plus 0.75% per annum and bank prime plus 1.25% per annum, respectively.  Bankers' acceptances are subject to a 2% acceptance fee plus an applicable market interest rate.  The facilities are secured by a $50 million demand debenture and a general security agreement covering all assets of the Company.  The revolving credit facility provides that advances may be made by way of direct advances, bankers' acceptances, or standby letters of credit/guarantee.  Advances on the development/acquisition facility are subject to bank approval; however they are generally limited to the lesser of the estimated development/acquisition cost and the bank's internal valuation of associated reserves.  Repayments for the revolving facility are interest only, and repayments for the development/acquisition line are determined by the bank based on their evaluation of the specific circumstances, both subject to the bank's right of demand.

 

The only financial covenant on the revolving facility is a requirement for the Company to maintain a current ratio (as defined in the credit agreement) of not less than 1.0:1.0, and such ratio is to be tested at the end of each fiscal quarter.  The Company was in compliance with this financial covenant as at September 30, 2012.  A condition of the risk management facility is the Company must not hedge greater than 50% of its oil and natural gas production.  At September 30, 2012, the Company has hedged approximately 44% of its production and is in compliance with this covenant.

 

The regular interim review for the lending facilities is scheduled for January 2013.

 

5.       Loans payable

 

As at September 30, 2012, the Company has loans payable with principal amounts totalling $8.0 million, which bear's interest as to $7.0 million at 10% per annum and $1.0 million at 12% per annum, and are secured against the assets of the Company as a second charge.  Any interest and principal repayments for the loans payable are subject to the bank's prior approval.  The loans payable are due to a company that is also a shareholder of the Company.

 

The following table summarizes changes in the loans payable:

 


10% loan

12% loan

Total


due January 2014

due January 2013


Principal




Balance April 1, 2011

-

1,500,000

1,500,000

Amount loaned

7,500,000

-

7,500,000

Amount repaid in cash

-

(500,000)

(500,000)

Amount repaid with common shares

(500,000)

-

(500,000)

Balance March 31, 2012 and September 30, 2012

7,000,000

1,000,000

8,000,000

Interest




Balance April 1, 2011

-

70,849

70,849

Amount paid in cash

(5,205)

(100,932)

(106,137)

Interest expense

120,273

130,357

250,630

Balance March 31, 2012

115,068

100,274

215,342

Interest expense

350,959

60,164

411,123

Balance, September 30, 2012

466,027

160,438

626,465





Total loan payable at September 30, 2011

-

1,040,110

1,040,110

Total loan payable at March 31, 2012

7,115,068

1,100,274

8,215,342

Total loan payable at September 30, 2012

7,466,027

1,160,438

8,626,465

 

Copies of the report will be available from the Company's office and also from the Company's website www.edgeres.com.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Quarterly and Half Yearly Results - RNS