Edge Resources looks to Q4 with confidence despite Q3 decline

3rd Mar 2014 13:21

Edge Resources reported a decline in both production and sales during the third quarter, but said both sales and cash flow were back on track two months into the fourth. Production in the three months ended December 31st averaged 491 barrels of oil equivalent per day (boepd) compared to 538 boepd in the second, due to the purposely restricted level of production undertaken to mitigate the impact of a fall in the price of WTI oil and a severe widening of the heavy oil discount, both of which have subsequently reversed. Sales were around C$1.9m for the third quarter (2012: C$2.3m) and $6.8m for the nine months to December 31st 2013 (2012: C$6.6m).The group said that both WTI and Canadian Heavy Oil prices had since returned to more "normal" levels, which, when combined with the lower cost operation, were anticipated to allow the company to be "even more profitable going forward".Brad Nichol, President and Chief Executive of Edge said: "We are very pleased with our operations during the third quarter and in particular the outcome of our drilling programme. The only disappointment in that quarter was a temporary pricing issue that has already been resolved. "The company's performance in the current quarter is benefiting enormously from (i) additional production volumes, (ii) a recovery in the oil price, (iii) a reversal of the seasonal widening of the heavy oil discount - which had a greater market impact than usual this time around and (iv) a market improvement in near-term natural gas prices." He added: "This latest drilling campaign has the combined production from the new wells exceeding our original expectations, with more expected as production increases come through. The company is now enjoying strong cash flow that should allow us to simultaneously reduce debt and build up our cash resources to fund future drilling."The share price fell 9.47% to 6.45p by 13:20 Monday. NR