Market Overview

Fortress Energy Announces Third Quarter 2012 Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - Nov. 27, 2012) -

THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO ANY UNITED STATES NEWS SERVICES.

Fortress Energy Inc. ("Fortress" or the "Company") (TSX:FEI) today announces its financial and operating results for the three and nine months ended September 30, 2012. The Company's financial statements, management's discussion and analysis and notes to the financial statements for the three and nine months ended September 30, 2012 are available on the Company's website (www.fortressenergy.ca) or SEDAR (www.sedar.com).

Financial and Operating Summary



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Three months ended Nine months ended
September 30, September 30,
($000's except per share amounts) 2012 2011 2012 2011
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Financial
Natural gas sales 147 254 617 539
Funds from (used in) operations (1) (890) (1,290) (2,923) (2,616)
Per share - basic (0.02) (0.02) (0.05) (0.05)
Per share - diluted (0.02) (0.02) (0.05) (0.05)
Net loss (1,176) (2,549) (4,006) (4,980)
Per share - basic (0.02) (0.05) (0.07) (0.09)
Per share - diluted (0.02) (0.05) (0.07) (0.09)
Working capital (deficiency) (1) (3,609) 113 (3,609) 113
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Operations
Average production:
Natural gas (Mcf/d) 391 553 541 353
Natural gas liquids (bbl/d) 9 11 13 8
Total (Mcfe/d) 445 619 619 402
Average sales price:
Natural gas ($/Mcf) 2.55 3.52 2.33 3.75
Natural gas liquids ($/bbl) 68.16 74.33 76.30 80.64
Total ($/Mcfe) 3.60 4.47 3.64 4.91
Operating netback (1) ($/Mcfe) 0.69 1.61 0.99 2.03
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(1) The terms "funds from operations", "operating netback" and "working
capital" are not recognized measures under IFRS. Management believes
that in addition to net income, funds from operations and operating
netback are useful supplemental measures as they provide an indication
of the results generated by the Company's principal business activities
before the consideration of how those activities are financed. Investors
are cautioned, however, that these measures should not be construed as
alternatives to net income determined in accordance with IFRS. The
Company's method of calculating funds from operations may differ from
that of other companies, and, accordingly it may not be comparable to
measures used by other companies. The Company calculates funds from
operations by taking cash flow from operating activities as determined
under IFRS before changes in non-cash operating working capital and
abandonment expenditures. Operating netback is calculated on a per Mcfe
basis taking petroleum and natural gas sales and deducting royalties,
operating expenses and transportation expenses. Working capital is
calculated as current assets less current liabilities.



CORPORATE HIGHLIGHTS

The following are the highlights to date:

On March 1, 2012, Fortress signed a purchase and sale agreement to acquire 100 percent of the shares of a Brazilian private oil and gas company. The consideration to be paid shall be, at the election of the vendors, their pro rata share of either a cash payment of US$37,000,000 or a cash payment of US$30,000,000 plus a grant of a gross overriding royalty right. The Company paid a deposit of US$1,000,000 on the signing of the purchase and sale agreement. The oil and gas interests to be acquired include a 100 percent working interest in 7 exploration blocks located in the Reconcavo Basin, covering an area of approximately 200 sq km and a 100 percent working interest in three onshore producing oil fields: Bom Lugar, located in the Reconcavo Basin, Jiribatuba, located in the Camamu Basin and Aracaju, located in the Sergipe Basin.

The Company is in receipt of all necessary regulatory approvals to consummate the transaction including the approval of the ANP (Agencia Nacional do Petroleo, Gas Natural e Biocombustiveis) in Brazil permitting the Brazilian private company to complete a reorganization prior to the sale of the shares to Fortress, and permitting Fortress to purchase and own the shares. Closing is also subject to the satisfaction of the other conditions set out in the purchase and sale agreement.

The Company had previously disclosed that it had entered into a letter of intent with a private equity syndicate to raise $55,000,000 to fund the acquisition price and a portion of the planned capital program. The Company expected this financing to close in September 2012 with the acquisition to close in October 2012. Despite its best efforts, the Company was not able to bring this financing to a successful conclusion. The Company continues to work on alternatives to complete the financing requirements. There can be no assurance that financing will be available or sufficient to meet these requirements.

Natural Gas, Crude Oil and Natural Gas Liquids (NGL) Conversions

Certain crude oil and NGL volumes have been converted to cubic feet equivalent (cfe) on the basis of one barrel (bbl) to six thousand cubic feet (Mcf). Cfe may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the well head.

Caution to Reader

This news release contains forward-looking information, including without limitation statements concerning the pending acquisition of the private Brazilian oil and gas company and the Company's ability to close the acquisition and complete the related financing and continue as a going concern. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Fortress at the time of preparation, may prove to be incorrect. The actual results achieved in future periods will vary from the information provided herein and the variations may be material. There are risks associated with the forward-looking statements including there can be no assurance that the acquisition and the related financing will be complete. Consequently, there is no representation by Fortress that it will complete the Brazil transaction or pursue any of the future courses of action or alternatives.

The common shares of Fortress have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares of Fortress have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

FOR FURTHER INFORMATION PLEASE CONTACT:
Fortress Energy Inc.
Mr. J. Cameron Bailey
President and Chief Executive Officer
(403) 398-3345 extension 2450
(403) 398-3351 (FAX)
cbailey@fortressenergy.ca


Fortress Energy Inc.
Mr. Jamie Jeffs, CA
Chief Financial Officer
(403) 398-3345 extension 2470
jjeffs@fortressenergy.ca


Fortress Energy Inc.
Ms. Jocelyn Tochor
Corporate Manager
(403) 398-3345 extension 2466
jtochor@fortressenergy.ca
www.fortressenergy.ca

 

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