Sonde Resources Corp. Announces Year End 2012 Financial and Operating Results and Provides Update on Current Activities

Thu Mar 21, 2013 4:33pm EDT

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Marketwire

Sonde Resources Corp.

March 21, 2013 - 04:32:55 PM

Sonde Resources Corp. Announces Year End 2012 Financial and Operating Results
and Provides Update on Current Activities

CALGARY, ALBERTA--(Marketwire - March 21, 2013) - Sonde Resources Corp.
("Sonde" or the "Company") (TSX:SOQ) (NYSE MKT:SOQ) announced today the
release of its financial and operating results for the year ended December 31,
2012. The Management's Discussion and Analysis and financial statements for
the year ended December 31, 2012 can be viewed on the System for Electronic
Document Analysis and Retrieval (SEDAR) at www.sedar.com, and in the Company's
Annual Report on Form 40-F, available on the Securities and Exchange
Commission's Electronic Document Gathering and Retrieval System (EDGAR) at
www.sec.gov. Shareholders have the ability to receive a hard copy of the
Company's complete audited financial statements free of charge upon request.

In addition, Sonde announced it has filed its Statement of Reserves Data and
Other Oil and Gas Information for the year ended December 31, 2012 (the
"Statement of Reserves Data"), as mandated by National Instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities. The Statement of Reserves
Data is included in the annual information form of Sonde for the year ended
December 31, 2012 (the "AIF"). A copy of Sonde's AIF may be obtained on SEDAR.

Sonde will be hosting a conference call on Friday, March 22, 2013 at 2:00 p.m.
MDT to provide a report on the Year End 2012 results and an update on current
activities. Mr. Jack Schanck, President and CEO will host the call. All
interested parties may join the call by dialing 416-340-2216 or 888-226-1792.
Please dial-in 15 minutes prior to the call to secure a line. The conference
call will be archived for replay on the Sonde website within 48 hours of this
conference call. 

Mr. Jack Schanck, Sonde's President and Chief Executive Officer, said, "2012
was a year filled with challenge and adversity for Sonde and its stakeholders.
I am extremely proud of the Company's employees for the outstanding work that
they performed under these difficult conditions. While 2012 was difficult,
many important milestones were achieved to lay the groundwork for what will be
a promising future for Sonde." 

Mr. Schanck expanded "Sonde's executive officers are working diligently to
formally close the Viking farm-out transaction. The closing of this
transaction is a top priority for the Company as it would bring a significant
amount of value to our shareholders by removing the uncertainty surrounding
Sonde's ability to execute. We have held a series of discussions with Viking
and Joint Oil targeted to assure Joint Oil that all parties will be advantaged
by this agreement. I remain encouraged that this transaction will formally
close in the near future."

Mr. Schanck concluded with "Although the formal closing of the Viking farm-out
is our top priority, the Company continues to accumulate large, consolidated
blocks of undeveloped acreage in promising plays such as the Duvernay, Montney
and Wabamun, and to prepare for a number of possible scenarios upon conclusion
of the Western Canada strategic alternatives process. While this process
prevents the Company from committing to a 2013 capital program, management is
encouraged by the strength of the Company's unleveraged balance sheet and by
the liquids rich drilling and development opportunities that may be available
to the Company upon conclusion of this process." 

North Africa Update

The Company has submitted the farm-out to Joint Oil for approval. The Company
and Viking have held a series of discussions with Joint Oil, the Tunisian
Minister of Industry and the Tunisian National Oil Company ("ETAP") since the
farm-out agreement was executed with Viking. Joint Oil has established some
conditions for securing its approval to the assignment to Viking. Some of
these conditions are acceptable to the Company and Viking, while others remain
subject to negotiation. Discussions continue with the expectation that an
agreement can be concluded which is acceptable to all parties. While we
believe the farm-out should be approved on its merits alone, no assurance can
be made that Joint Oil will approve it or that the farm-out will close. The
farm-out can be terminated by the Company or Viking or mutually extended after
March 31, 2013.

Western Canadian Strategic Alternatives

FirstEnergy Capital Corp. ("FirstEnergy") opened a dataroom on January 9, 2013
for parties interested in gathering more information regarding the Western
Canadian property packages. Bids were due on March 19, 2013. The Board of
Directors and Management are in the process of evaluating the bids and is
receiving advice from FirstEnergy. The Company will announce the results of
the strategic alternatives process, and any resulting future plans, as they
are finalized.

2012 Operating Highlights 

Bill Dirks, Sonde's Chief Operating Officer added, "We have worked diligently
to set the stage to react to the outcome of our Western Canadian strategic
alternatives process. Our key operational goals are to maximize value from
existing production, prepare for near-term drilling of our oil-oriented
resource plays, and develop new exploration concepts to ensure Sonde's future
growth. We have permitted or are in final permitting stages for horizontal
wells at Michichi (Detrital oil play, 3 locations), Eaglesham (Wabamun oil
play, 2 locations), Sturgeon Lake (Duvernay oil play, 1 location), Windfall
(Duvernay oil play, 1 location) and Ante Creek North (Duvernay and Montney oil
plays, 1 location each). Sonde's undeveloped acreage in these plays is
enviable (Duvernay, 95,742 acres net, Montney, 44,488 acres net, Wabamun,
50,736 acres net and Detrital/Banff 46,677 acres net). 85% of this acreage has
been purchased within the past 18 months, and as such, there are no immediate
land expiry issues."

Western Canada Drilling Program

During the twelve months ended December 31, 2012, Sonde drilled and stimulated
three short radius horizontal oil wells in Michichi (2 wells in the Detrital
play, and 1 in the Banff). These wells, in addition to the 13-17 Detrital
horizontal well brought online in February, 2012, are all producing. This
activity has set the stage for additional horizontal infill drilling at
Michichi, where Sonde has high-graded another 20 horizontal locations on its
land (19 Detrital and 1 Banff locations).

During the twelve months ended December 31, 2012, Sonde spudded and completed
its initial Montney oil well, the 4-19-67-25W5, in Ante Creek North. An
extended test confirmed the previously announced short-term production data,
with high water cuts (approx. 95%) throughout the production period. The well
is capable of approximately 120 boe/d hydrocarbon production; however, it
provides insufficient production to support the required pipeline and
processing infrastructure on its own. If Sonde can prove an extension to this
pool with follow-up drilling, the 4-19 can be tied-in as part of a future
development plan. Proved or probable Montney reserves were added in 2012 as a
result of drilling the Ante Creek North license.

Sonde continued its well re-activation program concentrated on an extensive
portfolio of suspended wells. Sonde performed 77 net work overs and
recompletions in the twelve months ended December 31, 2012. 

Sonde has tested the previously announced waterflood play in the Drumheller
Mannville "I" pool. Sonde is very encouraged by the test results, and the play
has contributed significantly to the Company's 46% year over year (2011 to
2012) increase in oil reserves. 

Reserves

The Company's proved plus probable reserves were 9,447 Mboe at December 31,
2012 compared to 9,507 Mboe at December 31, 2011. The Company's 2012 drilling
program focused on oil and liquids rich targets, shifting the ending reserve
mix from 27% to 37% liquids. The Company's 2012 independent reserve report
included a 46% increase in proved and probable oil reserves, from 1,983 Mbbl
of working interest oil at year-end 2011 to 2,893 Mbbl at year-end 2012. 

This increase is attributable primarily to a significant addition of probable
oil reserves for the Mannville "I" pool waterflood, which was initiated by the
Company with a five well pilot project in early 2012. Oil reserves have also
increased due to drilling efforts in the Michichi Detrital/Banff pool, and the
Montney exploration well drilled at Ante Creek North.

The Company's 2012 proved and probable natural gas reserves declined 14%, from
41,518 mmcf of working interest gas at year-end 2011 to 35,553 mmcf of gas at
year-end 2012. This decrease is attributable to a combination of lower
forecast natural gas prices and other economic factors, plus a decreased
emphasis in 2012 on gas-oriented projects. Complete details regarding the
Company's reserves are contained in the Company's AIF.

Capital Expenditures

Capital expenditures from continuing operations for the year ended December
31, 2012 were $37.6 million compared to $63.7 million for the year ended
December 31, 2011. The decrease in capital expenditures from continuing
operations of $26.1 million is primarily due to a $15.3 million decrease in
drilling and completions expenditures and a $6.7 million decrease in
exploration and evaluation asset purchases. 

Of these capital expenditures, $6.4 million related to the North Africa
operation. These costs related to the acquisition and processing of 513 square
kilometers of 3-D seismic ($3.4 million), pre-drilling planning costs ($0.9
million) and capitalized general and administrative costs ($3.1 million),
offset by $1.0 million of farm-out proceeds. 

2012 Financial Highlights 

Mr. Kurt Nelson, Sonde's Chief Financial Officer, said "Sonde is currently
unlevered, has an undrawn credit facility of $30.0 million and has working
capital of approximately $17.2 million. The extension of the Joint Oil Block
three well exploratory commitment to December 23, 2015 and the pending closing
of the Viking farm-out, if completed, is anticipated to alleviate the
liquidity pressure imposed upon the Company by its North African asset. The
resulting flexibility is anticipated to allow the Company to react quickly and
decisively upon conclusion of the Western Canada strategic alternatives
process."

Net income for the year ended December 31, 2012 was $21.5 million compared to
a net loss of $40.6 million for the year ended December 31, 2011. The increase
in net income from 2012 to 2011 of $62.1 million is comprised of the following
major components: 



----------------------------------------------------------------------------
Net Loss - 2011                                                      $(40.6)
Decrease in petroleum and natural gas sales(1)                        (10.1)
Increase in operating expense                                          (1.6)
Increase in exploration and evaluation expense                        (21.4)
Decrease in depletion and depreciation expense                          3.9 
Decrease in share based compensation                                   (4.1)
Decrease in property, plant and equipment impairment                   18.0 
Decrease in decommissioning losses                                      0.8 
Increase in gains from asset dispositions                              73.2 
All others                                                              3.4 
----------------------------------------------------------------------------
Net Income - 2012                                                    $ 21.5 
----------------------------------------------------------------------------
(1) Petroleum and natural gas sales and realized gains on financial         
    instruments net of royalties and transportation.                        



For the twelve months ended December 31, 2012, petroleum and natural gas
sales, net of transportation and royalties was $24.9 million, consisting of
$8.9 million in natural gas, $15.6 million in crude oil and $4.3 million in
natural gas liquids sales, less $0.6 million of transportation costs, $3.3
million of royalties and $0.1 million in realized losses on commodity
derivatives. 

The Company realized an average sales price of $33.09 per boe during the
twelve months ended December 31, 2012, compared to $39.67 per boe for the same
period in 2011, exclusive of royalties and transportation, representing a
decrease of 16.6%.

Operating netback declined to $7.7 million for the year ended December 31,
2012 from $19.4 million for the year ended December 31, 2011 primarily due to
decreased petroleum and natural gas sales and higher well work over expense.
Operating netback averaged $8.88 per boe in 2012 versus $19.04 per boe in
2011.

In February, 2012 Sonde sold 26,240 gross acres (24,383 net) in its Kaybob
Duvernay play in Alberta for aggregate proceeds of $75 million, resulting in a
net gain of $73.4 million. 

4th Quarter and Year End Financial and Operational Review



----------------------------------------------------------------------------
($ thousands                                                                
 except share,                                                              
 per share and                                                              
 operating                                                                  
 amounts)           Quarter ended December 31        Year ended December 31 
                                            %                             % 
                      2012       2011  change       2012       2011  change 
----------------------------------------------------------------------------
Financial                                                                   
 Petroleum and                                                              
  natural gas                                                               
  sales(1)           6,792      9,445     (28)    24,896     34,952     (29)
 Funds from                                                                 
  (used for)                                                                
  operations(2)        123      3,155     (96)    (1,317)     7,597    (117)
 Funds from                                                                 
  (used for)                                                                
  operations per                                                            
  share (2)(3)    $   0.01   $   0.05     (80)  $  (0.02)  $   0.12    (117)
 Net (loss)                                                                 
  income            (3,870)   (36,500)     89     21,483    (40,571)    153 
 Net (loss)                                                                 
  income per                                                                
  share - basic   $  (0.01)  $  (0.58)     98   $   0.34   $  (0.65)    152 
 Capital                                                                    
  expenditures       4,232     19,657     (78)    37,581     63,720     (41)
 Working capital                                                            
  surplus                                                                   
  (deficit)         17,187    (20,907)    182     17,187    (20,907)    182 
 Shares                                                                     
  outstanding at                                                            
  period end        62,301     62,301      --     62,301     62,301      -- 
----------------------------------------------------------------------------
Operating                                                                   
 Natural gas                                                                
  (mcf/d)            8,940     12,186     (27)     9,725     12,187     (20)
 Natural gas                                                                
  liquids                                                                   
  (bbl/d)              189        293     (35)       202        227     (11)
 Crude oil                                                                  
  (bbl/d)              572        587      (3)       554        538       3 
----------------------------------------------------------------------------
 Total                                                                      
  production                                                                
  (boe/d)            2,251      2,911     (23)     2,376      2,796     (15)
----------------------------------------------------------------------------
Realized Prices                                                             
 Natural gas                                                                
  ($/mcf)         $   3.50   $   3.93     (11)  $   2.51   $   4.04     (38)
 Natural gas                                                                
  liquids                                                                   
  ($/bbl)         $  56.35   $  51.64       9   $  58.38   $  62.79      (7)
 Crude oil                                                                  
  ($/bbl)         $  72.69   $  91.73     (21)  $  76.62   $  88.22     (13)
----------------------------------------------------------------------------
 Total ($/boe)    $  37.14   $  40.13      (7)  $  33.09   $  39.67     (17)
----------------------------------------------------------------------------
(1) Petroleum and natural gas sales and realized gains on financial         
    instruments net of royalties and transportation.                        
(2) Non-GAAP measure reconciled in our MD&A filed on http://www.sedar.com/  
(3) Basic and diluted.                                                      



Sonde Resources Corp. is a Calgary, Alberta, Canada based energy company
engaged in the exploration and production of oil and natural gas. Its
operations are located in Western Canada, and offshore North Africa. See
Sonde's website at www.sonderesources.com to review further detail on Sonde's
operations. 

Non-IFRS Measures - This document contains references to funds from (used for)
operations and funds from (used for) operations per share, which are not
defined under IFRS as issued by the International Accounting Standards Board
and are therefore non-IFRS financial measures that do not have any
standardized meaning prescribed by IFRS and are, therefore, unlikely to be and
its comparable to similar measures presented by other issuers. Management of
the Company believes funds from (used for) operations and funds from (used
for) operations per share are relevant indicators of the Company's financial
performance, ability to fund future capital expenditures. Funds from (used
for) operations should not be considered an alternative to or more meaningful
than cash flow from operating activities, as determined in accordance with
IFRS, as an indicator of the Company's performance. In our MD&A, a
reconciliation has been prepared of funds from (used for) operations to cash
flow from operating activities, the most comparable measure calculated in
accordance with IFRS. 

Boe Presentation - Reserve information is commonly reported in units of barrel
of oil equivalent ("boe"). For purposes of computing such units, natural gas
is converted to equivalent barrels of oil using a conversion factor of six
thousand cubic feet to one barrel of oil. This conversion ratio of 6:1 is
based on an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the wellhead. Such
disclosure of boe's may be misleading, particularly if used in isolation.

Forward Looking Information - This news release contains "forward-looking
information" within the meaning of applicable Canadian securities laws and
"forward looking statements" within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995. These statements include, among others, those
concerning the pending closing of the Viking farm-out, the potential outcomes
of the Company's planned Western Canada strategic review process, proposed
exploration and development activities, key operational goals for 2013 and
sources of liquidity and estimate of reserves. There can be no assurances that
the Western Canada strategic review process will result in a transaction on
terms and conditions acceptable to Sonde or at all. Additionally, there are
risks and uncertainties associated with securing the approval of Joint Oil for
the Viking farm-out. Such forward-looking information or statements are based
on a number of risks, uncertainties and assumptions which may cause actual
results or other expectations to differ materially from those anticipated and
which may prove to be incorrect. Assumptions have been made regarding, among
other things, market and operating conditions, management's expectations
regarding future growth, plans for and results of exploration and development
activities, availability of capital, future commodity prices and
differentials, capital and other expenditures and timing for receipt of
governmental approvals for the Viking farm-out and the ability of the Company
to negotiate acceptable terms for such approval. Actual results could differ
materially due to a number of factors, including, without limitation, changes
in market conditions, operational risks in development, exploration and
production; commodity price volatility; the uncertainty of reserve estimates;
risks and uncertainties involving geology of oil and gas deposits; the
uncertainty of estimates and projections in relation to production; volatility
in the capital markets and changes in the availability of capital generally;
risks in conducting foreign operations, including political and fiscal
instability and the possibility of civil unrest or military action; changes in
government policies or laws; risk that government approvals may be delayed or
withheld; and commercial risks relating to the closing of the Viking farm-out.
Additional assumptions and risks relating to the Company and its business and
affairs, including assumptions and risks relating to the estimation of
reserves, are set out in detail in the Company's AIF, available on SEDAR at
www.sedar.com, and the Corporation's annual report on Form 40-F on file with
the U.S. Securities and Exchange Commission.

Although management believes that the expectations reflected in the
forward-looking information or forward-looking statements are reasonable,
prospective investors should not place undue reliance on forward-looking
information or forward-looking statements because Sonde can provide no
assurance those expectations will prove to be correct. Sonde bases its
forward-looking statements and forward-looking information on information
currently available and do not assume any obligation to update them unless
required by law.

FOR FURTHER INFORMATION PLEASE CONTACT: 
Sonde Resources Corp.
Kurt A. Nelson
Chief Financial Officer
(403) 503-7944
(403) 216-2374 (FAX)


Sonde Resources Corp.
Suite 3200, 500 - 4th Avenue S.W.
Calgary, Alberta, Canada T2P 2V6
www.sonderesources.com