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Equal Energy Ltd. (EQU) SEC Filing 10-Q Quarterly report for the period ending Sunday, March 31, 2013

Equal Energy Ltd.

CIK: 1492832 Ticker: EQU

Exhibit 99.1

Equal Energy Reports First Quarter 2013 Results and Declares Second Quarter Dividend

OKLAHOMA CITY — /CNW/ — May 9, 2013, Equal Energy Ltd. (NYSE:EQU) (TSX:EQU.TO) reported its first quarter 2013 financial results, including higher production from its liquids rich natural gas Hunton property in central Oklahoma (“Central Oklahoma”). Equal’s Board of Directors has approved the company’s second quarterly dividend payment of US$0.05 per share on its common shares, payable on June 30, 2013, to shareholders of record at the close of business on June 3, 2013.

For the first quarter of 2013, Equal’s production was from its Central Oklahoma properties. Year-earlier US production also included other properties that were subsequently sold. For additional transparency, Equal’s first quarter 2013 disclosure includes certain comparisons of the same Oklahoma operations in the same period of 2012. Equal has completed the move of its headquarters to Oklahoma City, from Calgary, as of March 15, 2013. The company now reports financial results in US currency and according to U.S. GAAP.

Central Oklahoma Highlights

 

   

Q1 2013 production averaged 6,280 boe/d, up 4% from 6,040 boe/d (net of royalties)

 

   

Current production rates are averaging around 6,500 boe/d

 

   

Three wells spudded during first quarter, all were producing by mid-April

 

   

100% drilling success rate, with all three wells performing at or above production type curve

 

   

Average capital expenditures for the first three new wells drilled, including infrastructure costs, in 2013 were $2.7 million, down 8% from $2.9 million per well drilled in early 2012

“Our new strategy of focusing on the Hunton play in central Oklahoma is paying off,” said Don Klapko, President and Chief Executive Officer. “We continue to target average production of 6,400 boe per day for the full year 2013.”

Equal expects to achieve our central Oklahoma growth target by drilling up to seven additional Hunton wells in the remaining nine months of 2013, building on our perfect success rate so far this year. Commodity prices relative to last year appear to be moving in our favor for the planned wells remaining in 2013. We will re-assess our drilling program after the sixth well is drilled to ensure proper capital efficiency hurdles are being achieved.

Equal has also added attractive hedges for 2013 and 2014 as a result of an improved price environment for natural gas during the first quarter, and a strengthening of prices for certain NGL components subsequent to the quarter end. The improving prices, some of them now locked in, combined with meeting our production targets increases our confidence that we will achieve our 2013 cash flow budget of $33 million. Budgeted cash flow doesn’t include estimates of balance sheet items or cash flow from discontinued operations.

Three Hunton Wells Spudded in Q1 2013 Are Now Producing

Equal, which continues to run its one-rig drilling program, spudded three wells during the first quarter of 2013 with a 100% success rate. The first well was completed and initiated production during the quarter; the second and third wells were drilled from the same pad and were completed back to back in April. The three wells are currently producing at a combined rate of 250 boe per day, net to Equal. Hunton wells typically take an average of 90 days to reach peak production and generally maintain that peak rate for around 18 months.

Capital expenditures for the first three wells of 2013, including infrastructure costs, were $8.1 million or $2.7 million per well, comparing favorably with expected average Hunton well costs of $2.8 million per well. Cost savings have been realized by drilling multiple wells from a single pad, improved drilling efficiencies and importantly, employees’ and contractors’ continued focus on cost reduction.

Equal’s fourth well of 2013 is drilled, and drilling on the fifth well is underway from the same pad. When the rig is finished drilling the fifth well, both wells will be completed for production.

Balance Sheet and Liquidity Remain Strong; Equal Adds Hedges in 2013 and 2014

In the first quarter of 2013, Equal generated cash flow before balance sheet changes, a non-GAAP financial measure reconciled to a GAAP financial measure later in this release, of $7.1 million. At March 31, 2013, Equal had $21.5 million of cash on hand and CAD $125 million, or the USD equivalent, available on its credit facility.

Further solidifying its budgeted 2013 cash flow of $33 million, Equal has entered into swap contracts to hedge certain components of its NGL production for the remainder of 2013. Conway NGL hedges include 300 barrels per day of propane (April – December) and 200 barrels per day of natural gasoline (May – December), also referred to as C5+, at $0.91 and $2.00 per gallon, respectively. Additionally, Equal added another 2,000 mmbtu per day of Nymex natural gas at $4.34 per mmbtu for 2014 (1,932 mcf/d at $4.49). Mcf converted using rate of 1.035 mmbtu to one mcf.

 

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The following information was filed by Equal Energy Ltd. (EQU) on Thursday, May 9, 2013 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Ticker: EQU
CIK: 1492832
Form Type: 10-Q Quarterly Report
Accession Number: 0001193125-13-211367
Submitted to the SEC: Thu May 09 2013 5:03:27 PM EST
Accepted by the SEC: Thu May 09 2013
Period: Sunday, March 31, 2013
Industry: Crude Petroleum And Natural Gas

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