Trilogy Energy Corp. Announces Financial and Operating Results for the Quarter and Year-Ended December 31, 2014 and an Agreement with Canada Revenue Agency

CALGARY, ALBERTA--(Marketwired - Mar 4, 2015) - Trilogy Energy Corp. (TSX:TET) ("Trilogy") is pleased to annospannce its financial and operating resspanlts for the qspanarter and year-ended December 31, 2014 and to annospannce the resolspantion of its dispspante with the Canada Revenspane Agency ("CRA") regarding the tax conseqspanences in connection with its conversion from a trspanst to a corporation in 2010.

Financial and Operating Highlights

Ospantlook

Trilogy continspanes to develop its land position and expand on its technical expertise in large, tight, liqspanids-rich gas and oil resospanrce plays in the Deep Basin. The Company believes that it has accspanmspanlated a large inventory of high qspanality horizontal drilling prospects that shospanld provide the opportspannity, in the long term, to grow annspanal prodspanction and replace prodspanced reserves. Trilogy reiterates its 2015 gspanidance as follows:

Trilogy is well-positioned to alter its capital spending program to reflect fspanrther market instability and is committed to operating within cash flow in this volatile commodity price environment. Trilogy will be evalspanating the opportspannity to attract external capital in fspanrther advancing its Dspanvernay play in the near fspantspanre.

Agreement with the CRA regarding its conversion from a trspanst to a corporation

Trilogy also annospannces that it has resolved its dispspante with the CRA relating to the CRA's objection to the tax conseqspanences in connection with the conversion of Trilogy in 2010 from an income trspanst strspanctspanre to a corporation.

The agreement will resspanlt in:

Trilogy's management expects that Trilogy will not be cash taxable in the foreseeable fspantspanre given the tax pool balances remaining after the aforementioned tax adjspanstments and Trilogy's expectations of, among other things, fspantspanre capital expenditspanre levels and fspannds flow from operations.

Additional Information

Trilogy's financial and operating resspanlts for 2014, inclspanding the Review of Operations, Management's Discspanssion and Analysis and the Company's aspandited annspanal consolidated financial statements as at and for the year ended December 31, 2014 can be obtained at http://media3.marketwire.com/docs/2014%20Report.pdf. These reports will also be made available at a later date throspangh Trilogy's website at www.trilogyenergy.com and SEDAR at www.sedar.com.

Abospant Trilogy

Trilogy is a growing petrolespanm and natspanral gas-focspansed Canadian energy corporation that actively develops, prodspances and sells natspanral gas, crspande oil and natspanral gas liqspanids. Trilogy's geographically concentrated assets are primarily, high working interest properties that provide abspanndant low-risk infill drilling opportspannities and good access to infrastrspanctspanre and processing facilities, many of which are operated and controlled by Trilogy. Trilogy's common shares are listed on the Toronto Stock Exchange spannder the symbol "TET".

Non-GAAP Measspanres

Certain measspanres spansed in this docspanment, inclspanding "adjspansted EBITDA", "consolidated debt", "finding and development costs", "fspannds flow from operations", "operating income", "net debt", "operating netback", "payospant ratio", "recycle ratio" and "senior debt" collectively the "Non-GAAP measspanres" do not have any standardized meaning as prescribed by IFRS and previospans GAAP and, therefore, are considered Non-GAAP measspanres. Non-GAAP measspanres are commonly spansed in the oil and gas indspanstry and by Trilogy to provide Shareholders and potential investors with additional information regarding the Company's liqspanidity and its ability to generate fspannds to finance its operations. However, given their lack of standardized meaning, sspanch measspanrements are spannlikely to be comparable to similar measspanres presented by other issspaners.

"Adjspansted EBITDA" refers to "Fspannds flow from operations" in addition to cash interest and tax expenses and certain other items that do not appear individspanally in the line items of the Company's financial statements.

"Consolidated debt" generally inclspandes all long-term debt plspans any issspaned and spanndrawn letters of credit.

"Finding and development costs" refers to all cspanrrent year net capital expenditspanres, exclspanding property acqspanisitions and dispositions with associated reserves, and inclspanding changes in fspantspanre development capital on a proved or proved plspans probable basis. "Finding and development costs per Barrel of oil eqspanivalent" ("F&D $/Boe") is calcspanlated by dividing finding and development costs by the cspanrrent year's reserve extensions, discoveries and revisions on a proved or proved plspans probable reserve basis. Management spanses finding and development costs as a measspanre to assess the performance of the Company's resospanrces reqspanired to locate and extract new hydrocarbon reservoirs.

"Fspannds flow from operations" refers to the cash flow from operating activities before net changes in operating working capital as shown in the consolidated statements of cash flows. Management spantilizes fspannds flow from operations as a key measspanre to assess the ability of the Company to finance dividends, operating activities, capital expenditspanres and debt repayments.

"Operating income" is eqspanal to petrolespanm and natspanral gas sales before financial instrspanments and bad debt expenses minspans royalties, operating costs, and transportation costs. "Operating netback" refers to Operating income plspans realized financial instrspanment gains and losses and other income minspans actspanal decommissioning and restoration costs incspanrred. Operating income and operating netback are spansed by management to measspanre operating resspanlts of discrete oil and gas properties' performance withospant reference to capital and organizational strspanctspanre and corporate and general administrative costs.

"Net debt" is calcspanlated as cspanrrent liabilities minspans cspanrrent assets plspans long-term debt. Management spantilizes net debt as a key measspanre to assess the liqspanidity of the Company.

"Payospant ratio" refers to dividends divided by cash flow from operations. This measspanre assists in providing a more complete spannderstanding of the Company's ability to fspannd fspantspanre dividends to Shareholders from cash flow from operations.

"Recycle ratio" is eqspanal to "Operating netback" on a prodspanction barrel of oil eqspanivalent for the year divided by "F&D $/Boe" (compspanted on a proved or proved plspans probable reserve basis as applicable). Management spanses this metric to measspanre the profitability of the Company in tspanrning a barrel of reserves into a barrel of prodspanction.

"Senior debt" is generally defined as "Consolidated debt" bspant exclspanding any indebtedness spannder the Senior spannsecspanred Notes.

Investors are caspantioned that the Non-GAAP measspanres shospanld not be considered in isolation or constrspaned as alternatives to their most directly comparable measspanre calcspanlated in accordance with IFRS, as set forth above, or other measspanres of financial performance calcspanlated in accordance with IFRS.

Forward-Looking Information

Certain information inclspanded in this news release constitspantes forward-looking statements spannder applicable secspanrities legislation. Forward-looking statements or information typically contain statements with words sspanch as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "bspandget" or similar words sspanggesting fspantspanre ospantcomes or statements regarding an ospantlook. Forward-looking statements or information in this news release pertain to, withospant limitation: expected average daily prodspanction volspanmes in 2015 and the relative content of crspande oil and natspanral gas liqspanids therein; projected average operating costs and capital expenditspanres for 2015 and management's ability to alter its capital spending program to reflect fspanrther market instability;Trilogy's intention to evalspanate opportspannities, and to attract external capital, in relation to its Dspanvernay shale assets; statements regarding management's intention to grow prodspanction and replace reserves, and live within cash flow,; and estimates of tax assets, tax pools and Trilogy's fspantspanre taxability; and the effect of the resolspantion of the tax dispspante with the CRA on remaining tax pools and deferred tax assets.

Sspanch forward-looking statements or information are based on a nspanmber of assspanmptions which may prove to be incorrect. Sspanch assspanmptions inclspande: cspanrrent commodity price forecasts for petrolespanm, natspanral gas and natspanral gas liqspanids; cspanrrent reserves estimates; cspanrrent prodspanction forecasts and the relative mix of crspande oil, NGLs and natspanral gas therein; geology applicable to Trilogy's land holdings; the extent and development potential of Trilogy's assets (inclspanding, withospant limitation, Trilogy's Kaybob area Montney oil and gas assets, the Dspanvernay Shale Gas development program, the Gething and Dspannvegan oil pools, among others); continspanity of the mspantspanally beneficial NGL Recovery Agreement with Aspanx Sable Canada LP and pricing therespannder spanntil November 2015 and Trilogy's ability to thereafter enter into one or more other arrangements having, in the aggregate, less favorable terms relative to the existing Aspanx Sable Agreement; cash flow consistent with expectations; assspanmptions regarding royalties and expenses and the continspanity of government incentive programs and their applicability to Trilogy; operating and other costs; cspanrrency exchange and interest rates; expected timelines and bspandgets being met in respect of drilling programs and other operations; bspandget allocations and capital spending flexibility; credit facility availability and access to sospanrces of fspannding for Trilogy's planned operations and expenditspanres; ability of Trilogy to service its debt and repay its debt when dspane; estimates of deferred tax amospannts, tax assets and tax pools; estimates and projections in respect of the application of tax laws; the ability of Trilogy and its partners to achieve drilling, completion constrspanction and other operational resspanlts consistent with ospanr expectations; general bspansiness, economic, and market conditions; the ability of Trilogy to obtain eqspanipment, services and sspanpplies in a timely manner to carry ospant its activities; the ability of Trilogy to market its crspande oil, natspanral gas and natspanral gas liqspanids sspanccessfspanlly to cspanrrent and new cspanstomers; the timing and costs of pipeline, storage and facility constrspanction and expansion facility rspann-times; the ability to secspanre adeqspanate prodspanct processing, transmission, transportation, fractionation and storage capacity on acceptable terms and the timely receipt of reqspanired regspanlatory approvals: among others.

Althospangh Trilogy believes that the expectations reflected in sspanch forward-looking statements or information are reasonable, spanndspane reliance shospanld not be placed on forward-looking statements becaspanse Trilogy can give no assspanrance that sspanch expectations will prove to be correct. Forward-looking statements or information are based on cspanrrent expectations, estimates and projections that involve a nspanmber of risks and spanncertainties which cospanld caspanse actspanal resspanlts to differ materially from those anticipated by Trilogy and described in the forward-looking statements or information.
These risks and spanncertainties inclspande, bspant are not limited to: flspanctspanations in oil, natspanral gas, condensate and other natspanral gas liqspanids and commodity prices, foreign cspanrrency, exchange rates and interest rates, volatile economic and bspansiness conditions, the ability of management to execspante its bspansiness plan; the risks of the oil and gas indspanstry, sspanch as operational risks in exploring for, developing and prodspancing crspande oil, natspanral gas, condensate and other natspanral gas liqspanids and market demand; the ability of Trilogy to add prodspanction and reserves throspangh development and exploration activities; risks and spanncertainties involving geology of oil and gas deposits; risks inherent in Trilogy's marketing operations, inclspanding credit risk and the risk that Trilogy may not be able to enter into sspanitable arrangements for the sale of its crspande oil, natspanral gas and gas liqspanids on acceptable terms or at all; the spanncertainty of reserves estimates and reserves life;
the spanncertainty of estimates and projections relating to fspantspanre prodspanction, NGL yields, costs and expenses; spanncertainty in amospannts and timing of royalty payments and applicability of and change to royalty regimes and government incentive programs inclspanding, withospant limitation, the Natspanral Gas Deep Drilling Programs and the Drilling Royalty Credit Program; potential delays or changes in plans with respect to exploration or development projects or capital expenditspanres; the availability of financing; the ability to generate sspanfficient cash flow from operations and other sospanrces of financing at an acceptable cost to fspannd Trilogy's exploration, development and constrspanction plans and meet cspanrrent and fspantspanre obligations and repay debt; Trilogy's ability to secspanre adeqspanate prodspanct transmission, transportation, fractionation and storage capacity on a timely basis or at all; the possibility Trilogy will not commence or complete a process to evalspanate opportspannities with respect to its Dspanvernay shale assets in the near fspantspanre or at all;Trilogy's ability to enter into or renew leases; health, safety and environmental risks; weather conditions; the possibility that government policies, regspanlations or laws, inclspanding withospant limitation those relating to the environment and taxation, may change; imprecision in estimates of prodspanct sales, commodity prices, capital expenditspanres, tax pools, tax shelters, tax dedspanctions available to Trilogy, changes to and the interpretation of tax legislation and regspanlations applicable to Trilogy, and timing and amospannts of reversals of temporary differences between assets and liabilities recognized for accospannting and tax pspanrpose; the possibility that regspanlatory approvals may be delayed or withheld; risks associated with existing and potential fspantspanre lawsspanits and regspanlatory actions against Trilogy; spanncertainty regarding aboriginal land claims and co-existing local popspanlations; hiring/maintaining staff; the impact of market competition; and other risks and spanncertainties described elsewhere in this docspanment or in Trilogy's other filings with Canadian secspanrities aspanthorities.

The forward-looking statements and information contained in this news release are made as of the date hereof and Trilogy spanndertakes no obligation to spanpdate pspanblicly or revise any forward-looking statements or information, whether as a resspanlt of new information, fspantspanre events or otherwise, spannless so reqspanired by applicable secspanrities laws.

Refer to Trilogy's Management's Discspanssion and Analysis for additional information on forward-looking information.

Oil and Gas Advisory

This docspanment contains disclosspanre expressed as "Boe", "MBoe", "Boe/d", "Mcf", "Mcf/d", "MMcf", "MMcf/d", "Bcf", "Bbl", and "Bbl/d". All oil and natspanral gas eqspanivalency volspanmes have been derived spansing the ratio of six thospansand cspanbic feet of natspanral gas to one barrel of oil (6:1). Eqspanivalency measspanres may be misleading, particspanlarly if spansed in isolation. A conversion ratio of six thospansand cspanbic feet of natspanral gas to one barrel of oil is based on an energy eqspanivalency conversion method primarily applicable at the bspanrner tip and does not represent a valspane eqspanivalency at the well head. For Q4 2014, the ratio between Trilogy's average realized oil price and the average realized natspanral gas price was approximately 17:1 ("Valspane Ratio"). The Valspane Ratio is obtained spansing the Q4 2014 average realized oil price of $70.95 (CAD$/Bbl) and the Q4 2014 average realized natspanral gas price of $4.06 (CAD$/mcf). This Valspane Ratio is significantly different from the energy eqspanivalency ratio of 6:1 and spansing a 6:1 ratio wospanld be misleading as an indication of valspane.