Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) is
pleased to report financial and operating results as at and for the
three months ended March 31, 2023.
Q1 2023 HIGHLIGHTS:
- Higher production – Production was up 54% from
7,379 boe/d(1) in the first quarter of 2022 to 11,385 boe/d in the
first quarter of 2023. The increase was primarily due to a full
quarter of production realized from the wells drilled in the fourth
quarter of 2022 as well as one month of production from the 3 (3.0
net) new wells brought on stream this quarter. Production was up
25% quarter over quarter from 9,113 boe/d during the fourth quarter
of 2022.
- Funds flow increased 58% – Generated funds
flow(2) of $26.2 million ($0.21 per share(3)) for the first quarter
of 2023, 58% higher than funds flow of $16.6 million ($0.17 per
share) in the first quarter of 2022, despite the realized price per
boe being 23% lower.
- Net income increased 58% – Petrus reported net
income of $17.3 million ($0.14 per share) during the first quarter,
up 58% from the first quarter of 2022 ($10.9 million; $0.11 per
share).
- Increased capital activity – Petrus invested
$29.8 million of capital during the first quarter of 2023, a
484% increase from the first quarter of 2022. The majority of
capital was allocated towards the drilling of 7 (7.0 net) new
wells, of which 3 (3.0 net) were completed and brought on stream
during the quarter.
- Net debt to funds flow improvement – The net
debt(2) to annualized funds flow ratio(3) was 0.51 at March 31,
2023 in comparison to 0.75 at March 31, 2022, despite higher
capital spending in the current quarter. The Company will continue
to strengthen its balance sheet by further reducing net debt and
maintaining a net debt to funds flow ratio of under 1x.
2023 CAPITAL BUDGET AND
GUIDANCE(4)
The current price environment and outlook for
the remainder of the year is materially lower than the assumptions
used to develop the 2023 capital budget. As a result, the Company
is re-evaluating the budget and has already deferred some of the
planned capital spending. Completion activities for the four wells
drilled near the end of the first quarter will be delayed until
there is a more constructive price environment, possibly until the
winter gas season. Petrus has elected not to provide updated
guidance during this reporting cycle, but would like to reiterate
that it remains committed to keeping capital spending within cash
flow and only investing capital where it will generate exceptional
returns. We look forward to providing further updates with second
quarter results, if not sooner.
(1)Disclosure of production on a per boe basis
consists of the constituent product types and their respective
quantities. Refer to "BOE Presentation" for further
details.(2)Non-GAAP measure. Refer to "Non-GAAP and Other Financial
Measures".(3)Non-GAAP ratio. Refer to "Non-GAAP and Other Financial
Measures".(4)Refer to "Advisories - Forward-Looking
Statements".
SELECTED FINANCIAL INFORMATION
OPERATIONS |
Three months endedMar. 31,
2023 |
Three months endedMar. 31,
2022 |
Three months endedDec. 31,
2022 |
Three months endedSept. 30,
2022 |
Three months endedJun. 30,
2022 |
Average Production |
|
|
|
|
|
Natural gas (mcf/d) |
45,237 |
|
29,530 |
|
33,201 |
|
28,107 |
|
30,913 |
|
Oil (bbl/d) |
2,192 |
|
1,250 |
|
2,458 |
|
957 |
|
1,073 |
|
NGLs (bbl/d) |
1,654 |
|
1,207 |
|
1,121 |
|
997 |
|
1,055 |
|
Total (boe/d) |
11,385 |
|
7,379 |
|
9,113 |
|
6,639 |
|
7,280 |
|
Total (boe)(1) |
1,024,645 |
|
664,010 |
|
838,375 |
|
610,722 |
|
662,456 |
|
Light oil weighting |
19 |
% |
17 |
% |
27 |
% |
14 |
% |
15 |
% |
Realized Prices |
|
|
|
|
|
Natural gas ($/mcf) |
3.78 |
|
5.20 |
|
6.04 |
|
5.02 |
|
7.74 |
|
Oil ($/bbl) |
94.63 |
|
110.12 |
|
106.85 |
|
111.04 |
|
133.36 |
|
NGLs ($/bbl) |
47.55 |
|
60.12 |
|
56.90 |
|
62.25 |
|
74.63 |
|
Total realized price ($/boe) |
40.16 |
|
49.31 |
|
57.81 |
|
46.62 |
|
63.33 |
|
Royalty income |
0.16 |
|
0.29 |
|
0.15 |
|
0.37 |
|
0.25 |
|
Royalty expense |
(6.38 |
) |
(6.89 |
) |
(7.92 |
) |
(11.84 |
) |
(8.64 |
) |
Gain (loss) on risk management activities |
1.45 |
|
— |
|
(1.26 |
) |
(0.81 |
) |
(6.76 |
) |
Net oil and natural gas revenue ($/boe) |
35.39 |
|
42.71 |
|
48.78 |
|
34.34 |
|
48.18 |
|
Operating expense |
(7.26 |
) |
(6.76 |
) |
(6.86 |
) |
(8.47 |
) |
(7.92 |
) |
Transportation expense |
(2.05 |
) |
(2.17 |
) |
(2.08 |
) |
(1.89 |
) |
(2.16 |
) |
Operating netback(2)($/boe) |
26.08 |
|
33.78 |
|
39.84 |
|
23.98 |
|
38.10 |
|
Realized gain (loss) on financial derivatives($/boe) |
1.77 |
|
(6.98 |
) |
2.89 |
|
1.00 |
|
— |
|
Other income (cash) |
0.16 |
|
0.07 |
|
0.22 |
|
0.05 |
|
0.04 |
|
General & administrative expense |
(1.20 |
) |
(0.82 |
) |
(1.10 |
) |
(1.30 |
) |
(1.70 |
) |
Cash finance expense |
(1.11 |
) |
(1.04 |
) |
(1.18 |
) |
(0.87 |
) |
(1.46 |
) |
Decommissioning expenditures |
(0.13 |
) |
(0.02 |
) |
0.03 |
|
(0.29 |
) |
0.06 |
|
Funds flow & corporate
netback($/boe)(2) |
25.57 |
|
24.99 |
|
40.70 |
|
22.57 |
|
35.04 |
|
|
|
|
|
|
|
FINANCIAL (000s except $ per share) |
Three months endedMar. 31,
2023 |
Three months endedMar. 31,
2022 |
Three months endedDec. 31,
2022 |
Three months endedSept. 30,
2022 |
Three months endedJun. 30,
2022 |
Oil and natural gas revenue |
41,319 |
|
32,940 |
|
48,590 |
|
28,701 |
|
42,119 |
|
Net income |
17,273 |
|
10,903 |
|
22,097 |
|
9,822 |
|
18,046 |
|
Net income per share |
|
|
|
|
|
Basic |
0.14 |
|
0.11 |
|
0.18 |
|
0.08 |
|
0.16 |
|
Fully diluted |
0.14 |
|
0.11 |
|
0.17 |
|
0.08 |
|
0.15 |
|
Funds flow(2) |
26,216 |
|
16,601 |
|
34,117 |
|
13,789 |
|
23,208 |
|
Funds flow per share(2) |
|
|
|
|
|
Basic |
0.21 |
|
0.17 |
|
0.28 |
|
0.11 |
|
0.21 |
|
Fully diluted |
0.21 |
|
0.16 |
|
0.27 |
|
0.11 |
|
0.20 |
|
Capital expenditures |
29,820 |
|
5,064 |
|
37,792 |
|
49,513 |
|
4,932 |
|
Acquisitions |
— |
|
15,200 |
|
— |
|
16 |
|
364 |
|
Weighted average shares outstanding |
|
|
|
|
|
Basic |
123,416 |
|
99,189 |
|
122,545 |
|
122,058 |
|
111,795 |
|
Fully diluted |
127,358 |
|
103,250 |
|
127,600 |
|
126,822 |
|
117,203 |
|
As at period
end |
|
|
|
|
|
Common shares outstanding |
|
|
|
|
|
Basic |
123,239 |
|
106,907 |
|
123,239 |
|
122,197 |
|
122,017 |
|
Fully diluted |
133,377 |
|
113,883 |
|
133,377 |
|
131,482 |
|
131,302 |
|
Total assets |
403,276 |
|
308,744 |
|
381,057 |
|
356,050 |
|
302,472 |
|
Non-current liabilities |
68,056 |
|
46,702 |
|
63,021 |
|
61,778 |
|
50,924 |
|
Net debt(2) |
53,111 |
|
50,044 |
|
50,808 |
|
48,465 |
|
13,895 |
|
(1)Disclosure of production on a per boe basis consists of the
constituent product types and their respective quantities. Refer to
"BOE Presentation" for further details.
(2)Non-GAAP ratio or non-GAAP measure. Refer to
"Non-GAAP and Other Financial Measures".
OPERATIONS UPDATE
First quarter average production by area was as
follows:
For the three months ended March 31, 2023 |
Ferrier |
North Ferrier |
Foothills |
Central Alberta |
Kakwa |
Total |
Natural gas (mcf/d) |
33,145 |
4,107 |
2,844 |
5,065 |
76 |
45,237 |
Oil (bbl/d) |
1,683 |
156 |
83 |
257 |
12 |
2,191 |
NGLs (bbl/d) |
1,378 |
117 |
11 |
142 |
6 |
1,654 |
Total (boe/d) |
8,586 |
957 |
568 |
1,243 |
31 |
11,385 |
First quarter average production was 11,385
boe/d in 2023 compared to 7,379 boe/d in 2022. The increase in
production was mainly a result of Petrus' capital program during
2022 and 3 (3.0 net) new 2023 drilled wells brought on stream in
late February and early March.
ANNUAL GENERAL MEETINGThe
Company's Annual General Meeting will be held at 240FOURTH
(previously BP Centre) 240, 4th Ave SW Calgary, Alberta, on Monday,
June 26, 2023 at 1:30 p.m. (Calgary time). The Company does not
plan to have a formal presentation at the conclusion of the
meeting. Shareholders and guests can listen to the meeting via
teleconference at 1‐888‐433‐2192 (participant code 9350829);
however, shareholders and proxyholders will not be able to vote
their shares via teleconference. We encourage all shareholders to
submit their proxies in advance of the meeting.
An updated corporate presentation can be found
on the Company's website at www.petrusresources.com.
For further information, please
contact:
Ken Gray, P.Eng.President and Chief Executive
OfficerT: (403) 930-0889E: kgray@petrusresources.com
NON-GAAP AND OTHER FINANCIAL
MEASURES
This press release makes reference to the terms "operating
netback" (on an absolute and $/boe basis), "corporate netback" (on
an absolute and $/boe basis), "funds flow" (on an absolute, per
share (basic and fully diluted) and $/boe basis), "net debt" and
"net debt to annualized funds flow ratio". These non-GAAP and other
financial measures are not recognized measures under GAAP (IFRS)
and do not have a standardized meaning prescribed by GAAP (IFRS).
Accordingly, the Company's use of these terms may not be comparable
to similarly defined measures presented by other companies. These
non-GAAP and other financial measures should not be considered to
be more meaningful than GAAP measures which are determined in
accordance with IFRS as indicators of our performance. Management
uses these non-GAAP and other financial measures for the reasons
set forth below.
Operating NetbackOperating
netback is a common non-GAAP financial measure used in the oil and
natural gas industry which is a useful supplemental measure to
evaluate the specific operating performance by product type at the
oil and natural gas lease level. The most directly comparable GAAP
measure to operating netback is oil and natural gas revenue.
Operating netback is calculated as oil and natural gas revenue less
royalty expenses, operating expenses, transportation expenses and
gain (loss) on risk management activities. See below for a
reconciliation of operating netback to oil and natural gas
revenue.
Operating netback ($/boe) is a non-GAAP ratio
used in the oil and natural gas industry which is a useful
supplemental measure to evaluate the specific operating performance
by product type at the oil and natural gas lease level . It is
calculated as operating netbacks divided by weighted average daily
production on a per boe basis. See below.
Corporate Netback and Funds
FlowCorporate netback or funds flow is a common non-GAAP
financial measure used in the oil and natural gas industry which
evaluates the Company’s profitability at the corporate level.
Corporate netback and funds flow are used interchangeably. Petrus
analyzes these measures on an absolute value and on a per unit
(boe) and per share (basic and fully diluted) basis as non-GAAP
ratios. Management believes that funds flow and corporate netback
provide information to assist a reader in understanding the
Company's profitability relative to current commodity prices. They
are calculated as the operating netback less general and
administrative expense, cash finance expense, decommissioning
expenditures, plus other income (cash) and the realized gain (loss)
on financial derivatives. See below for a reconciliation of funds
flow and corporate netback to oil and natural gas revenue.
Corporate netback ($/boe) or funds flow ($/boe)
is a non-GAAP ratio used in the oil and natural gas industry which
evaluates the Company’s profitability at the corporate level.
Management believes that funds flow ($/boe) or corporate netback
($/boe) provide information to assist a reader in understanding the
Company's profitability relative to current commodity prices. It is
calculated as corporate netbacks or funds flow divided by weighted
average daily production on a per boe basis. See below.
Funds flow per share (basic and fully diluted) is comprised of
funds flow divided by basic or fully diluted weighted average
common shares outstanding.
|
Three months endedMarch 31,
2023 |
Three months endedMarch 31,
2022 |
|
$000s |
$/boe |
$000s |
$/boe |
Oil and natural gas revenue |
41,319 |
|
40.33 |
|
32,940 |
|
49.61 |
|
Royalty expense |
(6,534 |
) |
(6.38 |
) |
(4,576 |
) |
(6.89 |
) |
Gain on
risk management activities |
1,490 |
|
1.45 |
|
— |
|
— |
|
Net oil and natural gas revenue |
36,275 |
|
35.40 |
|
28,364 |
|
42.72 |
|
Transportation expense |
(2,102 |
) |
(2.05 |
) |
(1,440 |
) |
(2.17 |
) |
Operating expense |
(7,434 |
) |
(7.26 |
) |
(4,492 |
) |
(6.76 |
) |
Operating netback |
26,739 |
|
26.09 |
|
22,432 |
|
33.79 |
|
Realized gain (loss) on financial derivatives |
1,814 |
|
1.77 |
|
(4,632 |
) |
(6.98 |
) |
Other income(1) |
169 |
|
0.16 |
|
47 |
|
0.07 |
|
General & administrative
expense |
(1,230 |
) |
(1.20 |
) |
(543 |
) |
(0.82 |
) |
Cash finance expense |
(1,140 |
) |
(1.11 |
) |
(689 |
) |
(0.26 |
) |
Decommissioning expenditures |
(136 |
) |
(0.13 |
) |
(14 |
) |
(0.02 |
) |
Funds flow and corporate netback |
26,216 |
|
25.58 |
|
16,601 |
|
25.78 |
|
(1)Excludes non-cash government grant related to decommissioning
expenditures.
Net DebtNet debt is a non-GAAP
financial measure and is calculated as the sum of long term debt
and working capital (current assets and current liabilities),
excluding the current financial derivative contracts and current
portion of the lease obligation. Petrus uses net debt as a key
indicator of its leverage and strength of its balance sheet. Net
debt is reconciled, in the table below, to long-term debt which is
the most directly comparable GAAP measure.
($000s) |
As at March 31, 2023 |
As at December 31, 2022 |
As at September 30, 2022 |
As at June 30, 2022 |
Long-term debt |
25,000 |
|
25,000 |
|
22,000 |
|
12,000 |
|
Current assets |
(31,309 |
) |
(29,849 |
) |
(29,905 |
) |
(18,783 |
) |
Current liabilities |
50,336 |
|
51,395 |
|
51,102 |
|
18,785 |
|
Current financial
derivatives |
9,328 |
|
4,502 |
|
5,503 |
|
2,124 |
|
Current
portion of lease obligation |
(244 |
) |
(240 |
) |
(235 |
) |
(231 |
) |
Net debt |
53,111 |
|
50,808 |
|
48,465 |
|
13,895 |
|
Net debt to annualized funds flow ratio is a non-GAAP ratio used
as a key indicator of our leverage and strength of our balance
sheet. It is calculated as net debt divided by funds flow for the
relevant period.
ADVISORIES
Basis of PresentationFinancial
data presented above has largely been derived from the Company’s
financial statements, prepared in accordance with GAAP which
require publicly accountable enterprises to prepare their financial
statements using IFRS. Accounting policies adopted by the Company
are set out in the notes to the audited consolidated financial
statements as at and for the twelve months ended December 31, 2022.
The reporting and the measurement currency is the Canadian dollar.
All financial information is expressed in Canadian dollars, unless
otherwise stated.
Forward-Looking
StatementsCertain information regarding Petrus set forth
in this press release contains forward-looking statements within
the meaning of applicable securities law, that involve substantial
known and unknown risks and uncertainties. The use of any of the
words “anticipate”, “continue”, “estimate”, “expect”, “may”,
“will”, “project”, “should”, “believe” and similar expressions are
intended to identify forward-looking statements. Such statements
represent Petrus’ internal projections, estimates, beliefs, plans,
objectives, assumptions, intentions or statements about future
events or performance. These statements are only predictions and
actual events or results may differ materially. Although Petrus
believes that the expectations reflected in the forward-looking
statements are reasonable, it cannot guarantee future results,
levels of activity, performance or achievement since such
expectations are inherently subject to significant business,
economic, competitive, political and social uncertainties and
contingencies. Many factors could cause Petrus’ actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, Petrus.
In particular, forward-looking statements
included in this press release include, but are not limited to,
statements with respect to: that the Company will continue to
strengthen its balance sheet by further reducing net debt and
maintaining a net debt to funds flow ratio of under 1x; that the
outlook for the price environment for the remainder of the year is
materially lower than the assumptions used to develop the 2023
budget; that the Company is reevaluating the budget for the
remainder of the year; that completion activities of the four wells
drilled near the end of the first quarter are deferred until there
is a more constructive price environment; that Petrus is committed
to keeping capital spending within cash flow and only investing
capital where the Company can generate exceptional returns.
These forward-looking statements are subject to
numerous risks and uncertainties, most of which are beyond the
Company’s control, including: the impact of general economic
conditions; volatility in market prices for crude oil, NGL and
natural gas; industry conditions; currency fluctuation; changes in
interest rates and inflation rates; imprecision of reserve
estimates; liabilities inherent in crude oil and natural gas
operations; environmental risks; incorrect assessments of the value
of acquisitions and exploration and development programs;
competition; the lack of availability of qualified personnel or
management; changes in income tax laws or changes in tax laws and
incentive programs relating to the oil and gas industry; hazards
such as fire, explosion, blowouts, cratering, and spills, each of
which could result in substantial damage to wells, production
facilities, other property and the environment or in personal
injury; stock market volatility; ability to access sufficient
capital from internal and external sources; and the other risks and
uncertainties described in the AIF. With respect to forward-looking
statements contained in this press release, Petrus has made
assumptions regarding: future commodity prices and royalty regimes;
availability of skilled labour; timing and amount of capital
expenditures; future exchange rates; the impact of increasing
competition; conditions in general economic and financial markets;
availability of drilling and related equipment and services;
effects of regulation by governmental agencies; the effects of
inflation on our profitability; future interest rates; and future
operating costs. Management has included the above summary of
assumptions and risks related to forward-looking information
provided in this press release in order to provide investors with a
more complete perspective on Petrus’ future operations and such
information may not be appropriate for other purposes. Petrus’
actual results, performance or achievement could differ materially
from those expressed in, or implied by, these forward-looking
statements and, accordingly, no assurance can be given that any of
the events anticipated by the forward-looking statements will
transpire or occur, or if any of them do so, what benefits that the
Company will derive therefrom. Readers are cautioned that the
foregoing lists of factors are not exhaustive.
These forward-looking statements are made as of
the date of this press release and the Company disclaims any intent
or obligation to update any forward-looking statements, whether as
a result of new information, future events or results or otherwise,
other than as required by applicable securities laws.
BOE PresentationThe oil and
natural gas industry commonly expresses production volumes and
reserves on a barrel of oil equivalent (“boe”) basis whereby
natural gas volumes are converted at the ratio of six thousand
cubic feet to one barrel of oil. The intention is to sum oil and
natural gas measurement units into one basis for improved
measurement of results and comparisons with other industry
participants. Petrus uses the 6:1 boe measure which is the
approximate energy equivalence of the two commodities at the burner
tip. Boe’s do not represent an economic value equivalence at the
wellhead and therefore may be a misleading measure if used in
isolation.
Abbreviations
$000’s |
thousand
dollars |
$/bbl |
dollars per barrel |
$/boe |
dollars per barrel of oil equivalent |
$/GJ |
dollars per gigajoule |
$/mcf |
dollars per thousand cubic feet |
bbl |
barrel |
mbbl |
thousand barrel |
bbl/d |
barrels per day |
boe |
barrel of oil equivalent |
mboe |
thousand barrel of oil equivalent |
mmboe |
million barrel of oil equivalent |
boe/d |
barrel of oil equivalent per day |
GJ |
gigajoule |
GJ/d |
gigajoules per day |
mcf |
thousand cubic feet |
mcf/d |
thousand cubic feet per day |
mmcf/d |
million cubic feet per day |
bcf |
billion cubic feet |
NGLs |
natural gas liquids |
WTI |
West Texas Intermediate |
Petrus Resources (TSX:PRQ)
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