TORONTO, May 14, 2012 /CNW/ - (TSX: SCP) - Sprott Resource Corp. ("SRC" or the "Company") today announced financial results for the three-months ended March 31, 2012.
"During the quarter, we completed a US$50 million investment in Independence Contract Drilling, Inc. ("ICD"), a newly formed company that will provide land-based contract drilling services in the U.S. through a fleet of technologically advanced, newly constructed drill rigs," said Kevin Bambrough, President and CEO of Sprott Resource Corp. "This investment puts us in a position to capitalize on the emerging importance of shale oil and gas resource opportunities and their impact on domestic oil and gas production in the U.S."
"Waseca Energy Inc. ("Waseca") continued to increase its output during the quarter, achieving an exit rate of production of 4,005 barrels of oil per day ("boe/d"), an improvement from 3,746 boe/d and 1,559 boe/d at December 31, 2011 and March 31, 2011, respectively," said Paul Dimitriadis, Chief Operating Officer, Sprott Resource Corp.
"Subsequent to the end of the first quarter, One Earth Farms Corp. ("One Earth Farms") began seeding operations in Southern Alberta, seeding approximately 34 thousand acres to date" commented Steve Yuzpe, Chief Financial Officer of the Company. "In total, One Earth Farms expects to farm approximately 94,000 acres in 2012."
SRC 2011 Net Asset Value
The following table outlines SRC's net asset value as at March 31, 2012 and reflects the value at which individual items are carried on SRC's balance sheet as at such date.
|(in thousands)||Mar. 31, 2012|
|Cash and Cash Equivalents1||$||3,124|
|Other current assets||1,013|
|Consolidated investment in:3|
|OEOG (defined below)||10,593|
|One Earth Farms||46,149|
|Fair value investment in:|
|WestFire (defined below)4||147,347|
|Guide (defined below)5||36,725|
|Union Agriculture Group6||44,570|
|Potash Ridge (defined below)7||9,900|
|VA Uranium Holdings, Inc.||4,029|
|Equity investment in:|
|Stonegate Agricom (defined below)8||16,593|
|Less: Current Liabilities10||(53,357)|
|Less: Non-Current Liabilities||(11,751)|
SRC Q1 2012 Financial Highlights
Achievements by SRC Subsidiaries and Investees for the three-months ended March 31, 2012 (and to the date hereof):
One Earth Farms
About Sprott Resource Corp.
SRC is a Canadian-based company, the primary purpose of which is to invest and operate in natural resources through its subsidiaries. Through acquisitions, joint ventures and other investments, SRC seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. SRC is well positioned to draw upon the considerable experience and expertise of both its Board of Directors and Sprott Consulting LP (SCLP), of which Sprott Inc. is the sole limited partner. Pursuant to a management services agreement between SCLP and SRC, SCLP provides day-to-day business management for SRC as well as other management and administrative services. SRC invests and operates through Sprott Resource Partnership (SRP), a partnership between SRC and Sprott Resource Consulting Limited Partnership, an affiliate of SCLP which is the managing partner of SRP.
Forward Looking Statements
This news release contains forward-looking statements including those relating to expected land to be farmed and harvested by One Earth Farms. Forward-looking information looks into the future and provides an opinion as the effect of certain events and trends on the business of SRC. Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. These forward looking statements are based on current expectations and various estimates, factors and assumptions including the successful crop harvest by One Earth Farms. All forward-looking information is inherently uncertain and subject to a variety of risks, uncertainties and other factors that may cause SRC's actual results, performance or achievements to be materially different from those expressed or implied from such information, including general economic, market and business conditions; changes in environmental and other regulations; weather risk associated with farming operations; operational risk associated with farming; commodity price changes; and other risks, which are beyond the control of the Company or its subsidiaries.
SRC has attempted to identify important factors that could cause its results, performance and achievements to differ materially from those contained in the forward-looking information contained in this news release. However, there can be other factors that cause results, performance and achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on the forward-looking information contained in this news release. SRC does not intend, and does not assume any obligation, to update these forward-looking information contained in this news release except as required by law. For a description of additional material factors that could cause the Company's actual results to differ materially from the forward-looking statements, please see the risks and uncertainties set out in the "Forward-Looking Statements" section and "Risk Factors" section in the Company's Annual Information Form for the year ended December 31, 2011.
Non-GAAP Financial Measures
Throughout this press release, the Company uses the term "netback". This term does not have any standardized meaning as prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other issuers. Netback is calculated on a per boe basis as oil and gas sales, less royalties and operating and transportation expenses. Netback is used by management to measure operating results on a per boe basis to better analyze performance against prior periods on a comparable basis.
Information Regarding Disclosure on Oil and Gas Information
Where amounts are expressed in a barrel of oil equivalent ("boe"), or barrel of oil equivalent per day ("boe/d"), natural gas volumes have been converted to barrels of oil equivalent on the basis that 6 thousand cubic feet ("mcf") is equal to one barrel of oil. Use of the term boe may be misleading, particularly if used in isolation. This boe conversion ratio is based on an energy equivalence methodology, and does not represent a value equivalency. Indeed, the energy and value relationships may differ widely with market conditions. The conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
The future net revenue estimates in this news release do not represent fair market value.