President’s Message

To Our Valued Shareholders & Partners                            03/15/2017

The year 2016 will be remembered as one of the most challenging years the oil and gas industry has faced. Global oversupply of crude oil continued to weigh on the market, ultimately pushing prices below US$28/bbl in early 2016. (17 February 2016 Oil prices have fallen again, sinking below $28 a barrel. The price of Brent crude fell to $27.67 a barrel at one point, its lowest since 2003, while US crude fell as low as $28.36)

As the year unfolded, resource play development in North America was increasingly challenged, funds from operations declined materially, and balance sheet strength and liquidity became of paramount importance. We were not immune to these challenges. The decline in global crude oil prices significantly stressed our business model. To ensure the long-term viability and success of our Company, we needed to respond in a prudent fashion to this rapidly changing environment. Our priorities shifted from growing our Company to hanging onto our position. We undertook several steps to preserve strong levels of financial liquidity in 2016, adjusting the level and timing of capital spending, reducing staffing levels and suspending expenditures.

We remain committed to preserving financial liquidity through this downturn, and will continue to target exploration and development capital partners at a level that complements our funds to minimize any decrease in our value. While the commodity price environment has required us to recalibrate our business model, it has not had an impact on the core values which drive our business decisions and the ethics we hold as a Company. We believe that by acting as a responsible Company in all aspects of our operations, we create long-term value for all shareholders. We focus on opportunities for personal growth, and to improve where we operate in east central Alberta.

Crude oil and natural gas development can provide significant benefits to communities, landowners, suppliers and shareholders, often in areas where limited economic development opportunities exist. In the end, everyone benefits from environmentally responsible development that produces reliable energy at a reasonable cost. Developing crude oil and natural gas resources requires long-term commitment. Cooperation with a broad range of engaged partners is important to achieve enduring success in resource development. Accordingly, we have continued our focus on value. Our development program will remain flexible and allows for adjustments to spending based on changes in the commodity price environment. 

Our longevity is due to our dedicated and talented team of Consultants who align with our strategy and business ethics, who consistently execute on our projects and drive the creation of value. Complementing our leadership Team and committed Consultants, it is important to recognize that our Board of Directors is an indispensable source of guidance and support.

We look forward to executing our plan for 2017/ 2018 for the ongoing benefit of all involved and we thank you for your continued support and understanding during in these difficult times.

 

On behalf of the Board of Directors,         Chadd Radke, President and CEO