Razor Energy Corp. Announces Third Quarter 2020 Results

Razor Energy Corp. Announces Third Quarter 2020 Results

GlobeNewswire

Published

CALGARY, Alberta, Nov. 27, 2020 (GLOBE NEWSWIRE) -- Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) announces its third quarter 2020 financial and operating results. Selected financial and operational information is outlined below and should be read in conjunction with Razor’s unaudited condensed consolidated interim financial statements and management’s discussion and analysis for the quarter ended September 30, 2020 which are available on SEDAR at www.sedar.com and the Company’s website www.razor-energy.com.*Q**3** 2020 HIGHLIGHTS*

*OPER**A**TING*

· Achieved operating expenses of $22.35/boe in the third quarter of 2020, down 24% from the same period in 2019 due to a strict focus on cost reductions and operating efficiencies. For the nine months ended September 30, 2020 Razor operated properties realized operating expenses of $23.49/boe while non-operated property operating expenses averaged $49.03/boe during the same period.
· Production volumes in the third quarter of 2020 averaged 3,573 boe/d, down 18% from the production volumes in the same period of 2019 and down 6% from the second quarter of 2020. Decreased production volumes are the result of reduced spending on well reactivations and repairs, operated well curtailments, and non-operated production interruptions in the Swan Hills and Kaybob areas.
· Reported $5.6 million of funds flow in the third quarter of 2020 compared to $2.6 million of funds flow in the third quarter of 2019. The increase in funds flow was due to the continued focus on reducing operating expenses by the Company and significant decreases in royalties due to low oil prices during 2020 which were partially offset by decreased realized commodity prices.
· Razor continues to operate its natural gas-powered generation 9 MW facility which has reduced its reliance on grid electric power and resulted in savings of $0.5 million in Q3 2020 (Q3 2019 - $0.6 million). Electricity and fuel decreased 15% in Q3 2020 as compared to the same quarter of last year mostly due to a 7% decrease in consumption, 6% decrease in average electricity pool prices and a decreased reliance on compressed natural gas and lower production levels.
· Received approval for $1.5 million in funding under the Alberta government’s Site Rehabilitation Program (“SRP”) to assist with abandonment and reclamation activities.

*CAPI**T**AL*

· Eliminated all operated production related capital investment except for critical end of life expenditures.
· Invested $0.3 million on its capital program in the third quarter of 2020, mainly on the South Swan Hills Co-Produced Geothermal Natural Gas power project.

*STRATEGY*

· In the third quarter, the Company continued the process of selectively restarting its heavy oil and light oil wells which were shut in during the second quarter of 2020 due to lower prices. Razor’s crude oil inventories were reduced by 12,805 barrels and at September 30, 2020, the Company held 8,306 barrels of crude oil in inventory.
· The Company uses in house marketing expertise to take advantage of pricing opportunities and enhance returns.
· Razor implemented cost saving measures by internalizing certain oilfield services through its subsidiary, Blade Energy Services Corp. ("Blade"), which provides services such as crude oil hauling along with earthworks and environmental services. Blade conducted $0.6 million of services on behalf of Razor during Q3 2020 and $1.7 million of services for the nine months ended September 30, 2020.*NEAR AND MEDIUM-TERM OBJECTIVES*

· Renew the Amended Term Loan Facility with the Alberta Investment Management Corporation (“AIMCo”), which matures on January 31, 2021.
· Reduce net debt through continued minimization of capital spending and increased efficiencies to reduce operating and general and administrative costs.
· Actively identify and consider business combinations with other oil and gas producers as well as service companies.
· Continued focus on implementing a technically viable and commercially sustainable solution to recover geothermal waste heat to power.
· Further analyze ancillary opportunities including power generating projects, oil blending, and services integration.

*MANAGEMENT STRA**TEGY AND** OUTLOOK*
Razor’s Amended Term Loan Facility with AIMCo matures on January 31, 2021. AIMCo has indicated their intention to work with the Company to renew the loan.

The Company continues to focus on cost control on its operated properties and the stabilizing effect of reduced operating costs in each area. However, the continued volatility in both West Texas Intermediate (“WTI”) and Edmonton light sweet crude oil differentials has resulted in limited capital spending in 2020. Razor will take a cautious and case-by-case approach to spending for the remainder of 2020 and into 2021, focusing on low risk, low capital opportunities to increase field and corporate netbacks. Production levels will not be a priority with the significant decrease in oil prices resulting from the COVID-19 virus, lowered global demand, and uncertainty related to supply.

In response to the aforementioned decrease in oil prices, during the early part of the second quarter of 2020 Razor shut in all of its operated heavy oil production, along with certain light oil wells which were sub-economic at the time. The Company also built oil inventory in anticipation of improved future crude oil prices.  Since June 2020, WTI pricing and local price differentials have improved as global demand for oil has stabilized as countries gradually ease COVID-19 lockdown restrictions. Starting in the latter part of the second quarter, the Company began the process of restarting its heavy oil and light oil wells which were shut in. During the third quarter, Razor reduced crude oil inventory by 12,805 barrels and at September 30, 2020, the Company held 8,306 barrels of crude oil in inventory.

The Company has restarted all the wells shut in during Q2 2020, actively monitors the economics for all its operated production and anticipates reactivating additional wells as prices further improve. These reactivations have the potential to add over 1,000 boe/d of production. Reactivation timing is dependent on new debt refinancing, positive cash flow from operations, WTI prices and local price differentials all of which have material uncertainty.

The preparation of financial forecasts is challenging at this time. However, Razor anticipates minimal cash flow from operations during the remainder of 2020 and into 2021 if oil prices remain at current levels. The Company is working to protect cash flow by limiting field spending and applying for government assistance programs where available. The Canada Emergency Wage Subsidy (“CEWS”) has provided the Company just over $1.1 million since the subsidy was introduced, $726 thousand in the second quarter and $397 thousand in the third quarter of 2020. The CEWS has been accounted for as a reduction in general and administrative expenses of $684 thousand and a reduction in operating expenses of $440 thousand for the nine months ended September 30, 2020. Razor has also been successful in obtaining approved applications under the Alberta Site Rehabilitation Program (“SRP”) to assist with its abandonment and reclamation activities. The total value of approved applications to date is $1.5 million.

*RAZOR'S RESPONSE TO COVID-19*

Razor is dedicated to ensuring the health, safety and security of its employees, contractors, partners and residents within all its operating areas and communities. The Company has implemented business procedures that comply with Alberta Health Guidelines to protect the well-being of all stakeholders. Razor has successfully transitioned most of its corporate staff back to the head office and the field sites continue to take site specific pre-cautionary measures related to COVID-19. Recently, new directives have been submitted to the public by Alberta Health Services and Razor will endeavour to adhere to published protocols.

*SELECT QUARTERLY HIGHLIGHTS*

The following tables summarizes key financial and operating highlights associated with the Company’s financial performance.
*Three Months Ended Sept 30,
*   *Nine Months Ended Sept 30,
*  
($000's, except for per share amounts and production) *2020*   *2019*   *2020*   *2019*  
*Production*        
Light Oil (bbl/d) *2,047*   2,600   *2,228*   2,669  
Natural gas (mcf/d)^ 1 *4,411*   6,206   *4,538*   4,524  
NGL (boe/d) *791*   734   *865*   866  
Total (boe/d) *3,573*   4,368   *3,849*   4,289  
*Sales volumes*        
Light Oil (bbl/d) *2,186*   2,598   *2,231*   2,756  
Natural gas (mcf/d)^1 *4,411*   6,206   *4,538*   4,524  
NGL (bbl/d) *791*   734   *865*   866  
Total (boe/d) *3,712*   4,367   *3,852*   4,377  
*Oil inventory volumes (**bbls**)* *8,306*   11,378   *8,306*   11,378  
*Revenue*        
Oil and NGLs sales
*11,345*   17,548   *31,717*   60,016  
Natural gas sales *712*   -   *2,078*   -  
Sale of commodities purchased from third parties ^4 *-*   122   *-*   8,576  
Blending and processing income *1,286*   2,395   *3,960*   6,968  
Other revenue *155*   461   *916*   1,000  
Total revenue *13,498*   20,526   *38,671*   76,560  
Cash flows from (used in) operating activities *2,124*   (46 ) *3,837*   12,316  
Per share -basic and diluted *0.10*   -   *0.18*   0.79  
Funds flow ^2 *5,598*   2,639   *3,923*   7,682  
Per share -basic and diluted *0.27*   0.16   *0.19*   0.49  
Adjusted funds flow ^2 *5,562*   2,653   *4,257*   7,654  
Per share -basic and diluted *0.26*   0.16   *0.20*   0.49  
Net income (loss) *(1,838* *)* (6,183 ) *(40,149* *)* (17,720 )
Per share - basic and diluted
*(0.09* *)* (0.38 ) *(1.91* *)* (1.14 )
Dividend paid *-*   -   *263*   -  
Dividends per share *-
*   0.04
  *0.01
*   0.11
 
Weighted average number of shares outstanding (basic and diluted) *21,064*   15,535   *21,064*   16,268  
Gross Capital expenditures *481*   2,518   *1,493*   11,212  
Government Grants *(270* *)* (1,980 ) *(1,121* *)* (4,436 )
*Netback *($/boe)        
Oil and natural gas sales^ 3 *35.31*   43.68   *32.02*   50.23  
Royalties *(1.44* *)* (8.07 ) *(2.79* *)* (7.96 )
Operating expenses *(22.35* *)* (29.34 ) *(26.92* *)* (32.49 )
Transportation and treating *(2.27* *)* (1.82 ) *(1.92* *)* (2.16 )
Operating netback ^2 *9.25*   4.45   *0.39*   7.62  
Gain/ (Loss) on sale of commodities purchased from third parties^4 *-*   0.30   *-*   0.01  
Net blending and processing income ^2 *2.31*   4.11   *2.97*   3.56  
Realized loss on commodity contracts settlement^ 3 *0.79*   (1.64 ) *(1.41* *)* (2.36 )
Other revenues^5 *6.84*   3.07   *5.38*   1.55  
General and administrative *(2.40* *)* (3.24 ) *(3.29* *)* (3.66 )
Impairment *(0.10* *)* -   *(23.47* *)* -  
Interest *(5.03* *)* (3.08 ) *(4.04* *)* (3.07 )
Corporate netback^ 2 *11.66*   3.97   *(23.46* *)* 3.65  

1) Natural gas production and sales volumes include internally consumed natural gas used in power generation.
2) Refer to "Non-IFRS measures".
3) Excludes the effects of financial risk management contracts but includes the effects of fixed price physical delivery contracts.
4) From time to time, Razor purchases commodity products from third parties to fulfill sales commitments, and subsequently sells these products to its customers.
5) Other revenues received during the nine months ended September 30, 2020 include $4.7 million of non-recurring insurance proceeds related to environmental clean-up costs as a result of an injection line failure in 2019 as well as proceeds from business interruption insurance related to a non-operated pipeline being offline for repairs in 2019.

*SELECT QUARTERLY HIGHLIGHTS*

The following tables summarizes key financial and operating highlights associated with the Company’s financial performance.
*September 30,*   *December 31,*  
($000's, except for share amounts) *2020*   *2019*  
Total assets *163,853*   189,158  
Cash *2,635*   1,905  
Long-term debt (principal) *48,505129*   45,876  
Minimum lease obligation *3,887*   5,329  
Net debt 1 *68,442*   66,911  
Number of shares outstanding *21,064,466*   21,064,466  
1) Refer to "Non-IFRS measures".        

*OPER**A**TIONAL UP**D**A**TE*

Sales volumes in the third quarter of 2020 averaged 3,712 boe/d, down 15% from the sales volumes in the same period in 2019. As at September 30, 2020, Razor had 8,306 bbls of light oil inventory (December 31, 2019 - 9,251 bbls) and sold 12,805 bbls during the third quarter of 2020 due to improved crude oil pricing.

Production averaged 3,573 boe/d in Q3 2020 down 18% from the same quarter in 2019, primarily due to reduced spending on well reactivations and repairs. In addition, both operated and non-operated curtailments and voluntary shut-ins due to weaker market pricing further negatively affected production in the quarter. For the first nine months of 2020, production averaged 3,849 boe/d, down 10% as compared to the same period last year, as the Company’s non-operated production was impacted by production curtailments and shut ins in the Swan Hills and Kaybob areas. This was offset by production in the Southern Alberta area due to the Little Rock acquisition, effective September 11, 2019.

Effective July 2018, Razor began utilizing a portion of its own natural gas production to generate electrical power. Natural gas production of internally consumed gas for the three and nine months ended June 30, 2020 was 1,126 mcf/d and 1,317 mcf/d, respectively.

Razor realized an oil price of $49.08/bbl during the third quarter of 2020, which was a 10% discount to the WTI (CAD) price and is an improvement from the 19% discount in Q2 2020 and up from the 14% discount in Q3 2019. These discounts were partially due to lower average oil quality realized by the Company as a result of the Little Rock acquisition in Q3 2019, which added WCS exposure to Razor's oil pricing portfolio, as well as timing of monthly sales contracts. For the nine months September 30, 2020 the Company realized oil price was down 38% from the same period of 2019 mostly due to a lower WTI index price.

During the third quarter of 2020, the Company realized an operating netback of $9.25/boe, up from an operating netback of $4.45/boe in the third quarter of 2019. Realized prices decreased by $8.37/boe, however, and the impact of decreased prices was offset by royalty decreases of $6.63/boe due to significantly lower oil prices and reduced operating expenses of $6.99/boe in comparison to the same period in 2019.

Royalty rates averaged 4% in the third quarter of 2020 as compared to 18% for the same period in 2019. This decrease in royalties is mostly due to the decrease in commodity prices and production volumes. For the first nine months of the year, royalties averaged 9%, down from 16% from the same period last year, mostly due to lower prices and production volumes.

Operating expenses decreased 24%, on a per boe basis, in the third quarter of 2020 compared to the same period in 2019 and was down $4.2 million on a total dollar basis. The Company has limited its well intervention activity in response to the current weak commodity price environment. Workovers and facility expenses averaged $0.41/boe in the third quarter of 2020, down 94% from $6.98/boe in the same quarter of 2019, while fuel and electricity costs were $7.73/boe in both third quarters of 2020 and 2019. Razor operated properties had an operating cost of $23.49/boe for the first nine months of 2020, while non-operated properties had an operating cost of $49.03/boe for the same period.

The top cost drivers, fuel and electricity, labour, property taxes, facility repairs, chemicals and non-operated pipeline repairs accounted for 65% of total operating expenses in the third quarter of 2020 (Q3 2019 – 68%). For the first nine months of 2020, these same top cost drivers accounted for 72% of total operating expenses (2019 – 67%).

Electricity and fuel decreased 15% in Q3 2020 as compared to the same quarter of last year mostly due to a 7% decrease in consumption, a 6% decrease in average electricity pool prices and decreased reliance on compressed gas and lower production levels.

For the first nine months of 2020, the cost of electricity and fuel decreased 10% as compared to the same period of last year, with average electricity pool prices decreasing by 28% and usage increasing by 6%. Razor continues to operate its natural gas-powered generation 9 MW facility which reduced its reliance on grid electric power and resulted in savings of $0.5 million in Q3 2020 (Q3 2019 - $0.6 million). For the first nine months of 2020, the Company incurred electricity savings of $1.7 million (2019 - $1.6 million).

*CAPI**T**AL P**R**OGRAM*

In the third quarter of 2020, due to the volatile commodity price environment, the Company did not initiate any projects related to finding and development capital and expects limited activity in Q4 2020.  

Operated capital investment in the first nine months of 2020 consisted primarily of $0.9 million on the Razor’s Co-Produced Geothermal Natural Gas power project, $0.4 million on field equipment and a variety of project cost adjustments from prior periods, offset by government grants of $1.1 million.

During the third quarter of 2020, Razor invested $0.3 million on its South Swan Hills Co-Produced Geothermal Natural Gas power project.  The Company projects the capital cost of the project to be $37 million, which will generate 21 MW of grid connected power, of which 6MW will emerge from clean power generation. 

*ENVIRONMENTAL, SOCIAL AND GOVERNANCE*

Starting in 2020, Razor has committed to the Alberta Energy Regulator’s (“AER”) Area Based Closure program (“ABC program”), which requires companies to commit to an inactive liability reduction target.  The program encourages the oil and gas industry to abandon and reclaim inactive sites, thereby de-risking future liabilities to the general public. Benefits to companies joining the program include focusing expenditures on end-of-life activities as well as enabling companies to maintain compliance on low risk infrastructure through regular inspection rather than allocating funds to well suspension activities which provide no actual reduction in liability.

Razor’s original spend target in 2020 under the ABC program was anticipated to be $2.3 million but on May 14, 2020, the AER reduced all liability reduction targets for 2020 to zero in response to COVID-19 and the decline in oil prices. Razor’s liability reduction target is $3.1 million in 2021.

Razor has been successful in obtaining approved applications under the Alberta Site Rehabilitation Program (“SRP”). To date, Razor has received approval for $1.5 million in funding to assist with abandonment and reclamation activities.  The Company also expects to receive additional grants in subsequent phases of the SRP.  As at September 30, none of the work related to these approved applications is complete and therefore no decommissioning costs have been recognized related to these projects.

Razor has participated in the energy management program at Energy Efficiency Alberta and has decreased its annual GHG emissions through behind the fence power generation and other energy efficiency programs.  This 9 MW power project has reduced GHG emissions by 6700 tCO2 per annum for a cumulative reduction of approximately 15,000 tCO2 since inception.  Razor’s goal of a lower carbon future will include capturing green energy within the 21 MW Co-Produced Geothermal Natural Gas power project which will eliminate 31,000 tCO2 per annum over an expected minimum 20 year project life.

Razor is actively involved in community engagement and recognizes the importance of supporting charitable organizations in the communities in which the Company operates and its employees live. Since commencing operations in 2017, Razor has supported STARS air ambulance, the Swan Hills school, The Terry Fox Foundation, Kids Cancer Care, Ovarian Cancer Canada, Movember Foundation, Vivo for Healthier Generations and Crohn’s and Colitis Canada.  In addition, the Company has provided sponsorship funds for community engagement, initiatives, and sporting events.

*ABOUT RAZOR*

Razor is a publicly-traded junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, and producing oil and gas from properties primarily in Alberta. The Company is led by experienced management and a strong, committed Board of Directors, with a long-term vision of growth focused on efficiency and cost control in all areas of the business. Razor currently trades on TSX Venture Exchange under the ticker “RZE.V”.

*F**or additional i**n**f**orm**a**tion please **c**o**nt**act:*

Doug Bailey
President and Chief Executive Officer Kevin Braun
Chief Financial Officer

Razor Energy Corp.
800, 500-5th Ave SW Calgary, Alberta T2P 3L5
Telephone: (403) 262-0242
*ww**w**.ra**z**or-energ**y**.**c**om*   

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*R**E**ADER A**D**VISORI**E**S*

*FORWARD-LOOKING STATEMENTS:* This press release may contain certain statements that may be deemed to be forward-looking statements. Such statements relate to possible future events, including, but not limited to, the Company’s ability to continue to operate in accordance with developing public health efforts to contain COVID-19, the Company’s ability to renew the Amended Term Loan Facility, the Company’s objectives, including the Company’s capital program and other activities, including ancillary opportunities such as power generation, oil blending and services integration, restarting wells, future rates of production, anticipated abandonment, reclamation and remediation costs for 2020, possible business combination transactions, assistance from government programs including under the SRP and Canadian Emergency Wage Subsidy, commitments under the ABC program and energy management program and other environmental, social and governance initiatives. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “anticipate”, “believe”, "expect", “plan”, “estimate”, “potential”, “will”, “should”, “continue”, “may”, “objective” and similar expressions. The forward-looking statements are based on certain key expectations and assumptions made by the Company, including but not limited to expectations and assumptions concerning the availability of capital, current legislation, receipt of required regulatory approvals, the timely performance by third-parties of contractual obligation, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, the Company’s growth strategy, general economic conditions, availability of required equipment and services prevailing commodity prices, price volatility, price differentials and the actual prices received for the Company's products. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward- looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry and geothermal electricity projects in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; variability in geothermal resources; as the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), electricity and commodity price and exchange rate fluctuations, changes in legislation affecting the oil and gas and geothermal industries and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. In addition, the Company cautions that COVID-19 may continue to have a material adverse effect on global economic activity and worldwide demand for certain commodities, including crude oil, natural gas and NGL, and may continue to result in volatility and disruption to global supply chains, operations, mobility of people and the financial markets, which could continue to affect commodity prices, interest rates, credit ratings, credit risk, inflation, business, financial conditions, results of operations and other factors relevant to the Company. The duration of the current commodity price volatility is uncertain. Please refer to the risk factors identified in the annual information form and management discussion and analysis of the Company which are available on SEDAR at www.sedar.com. The forward-looking statements contained in this press release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Razor's prospective results of operations, sales volumes, including sale of inventory volumes, production and production efficiency, balance sheet, capital spending, cost and net debt reductions, operating efficiencies, investment infrastructure and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as a set forth in the above paragraph. FOFI contained in this document was approved by management as of the date of this document and was provided for the purpose of providing further information about Razor's future business operations. Razor disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.*NON-IFRS MEASURES: *This press release contains the terms "funds flow", "adjusted funds flow", "net blending and processing income", "net debt", "income (loss) on sale of commodities purchased from third parties", "operating netback" and "corporate netback", which do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable with the calculation of similar measures by other companies. Funds flow represents cash generated from operating activities before changes in non-cash working capital. Adjusted funds flow represents cash flow from operating activities before changes in non-cash working capital and decommissioning obligation expenditures incurred. Management uses funds flow and adjusted funds flow to analyze operating performance and leverage, and considers funds flow and adjusted funds flow from operating activities to be key measures as it demonstrates the Company's ability to generate cash necessary to fund future capital investments and repay debt. Net blending and processing income is calculated by adding blending and processing income and deducting blending and processing expense. Net debt is calculated as the sum of the long-term debt and lease obligations, less working capital (or plus working capital deficiency), with working capital excluding mark-to-market risk management contracts. Razor believes that net debt is a useful supplemental measure of the total amount of current and long-term debt of the Company. Income (loss) on sale of commodities purchased from third parties is calculated by adding sales of commodities purchased from third parties and deducting commodities purchased from third parties. Income (loss) on sale of commodities purchased from third parties may not be comparable to similar measures used by other companies. Operating netback equals total petroleum and natural gas sales less royalties and operating costs calculated on a boe basis. Razor considers operating netback as an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices. Corporate netback is calculated by deducting general & administration, acquisition and transaction costs, and interest from operating netback. Razor considers corporate netback as an important measure to evaluate its overall corporate performance.

*ADVISORY PRODUCTION INFORMATION:* Unless otherwise indicated herein, all production information presented herein is presented on a gross basis, which is the Company's working interest prior to deduction of royalties and without including any royalty interests.

*BARRELS OF OIL EQUIVALENT:* The term "boe" or barrels of oil equivalent may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Additionally, given that the value ratio based on the current price of crude oil, as compared to natural gas, is significantly different from the energy equivalency of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an indication of value.

*Neither* *the* *T**S**X* *V**e**n**ture* *E**x**change* *nor* *its* *R**egulation* *Se**r**vi**c**es* *Pr**o**vider* *(as* *that* *t**erm* *is* *defined* *in* *the* *policies* *of* *the* *T**S**X* *V**e**n**ture* *E**x**change)* *a**c**c**e**p**ts responsibility **f**or the adequacy or a**c**curacy of this n**e**ws release.*

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