CALGARY, AB, May 27, 2021 /CNW/ - Altura Energy Inc. ("Altura"
or the "Corporation") (TSXV: ATU) is pleased to announce its
financial and operating results for the three months ended
March 31, 2021. The unaudited interim
condensed consolidated financial statements and related
management's discussion and analysis ("MD&A") for the three
months ended March 31, 2021 are
available on SEDAR at www.sedar.com and on Altura's website at
www.alturaenergy.ca. Selected financial and operating information
for the three months ended March 31,
2021 appear below and should be read in conjunction with the
related financial statements and MD&A.
Operational and Financial Summary
|
Three months
ended
|
|
March
31, 2021
|
December 31,
2020
|
March 31,
2020
|
Operating
|
|
|
|
Average daily
production
|
|
|
|
Heavy crude oil
(bbls/d)
|
496
|
468
|
667
|
Light crude &
medium crude oil (bbls/d)
|
-
|
-
|
8
|
Natural gas
(Mcf/d)
|
2,356
|
2,402
|
2,926
|
NGLs
(bbls/d)
|
53
|
48
|
87
|
Total
(boe/d)
|
942
|
916
|
1,250
|
Total boe/d per
million shares – diluted
|
8.6
|
8.4
|
11.5
|
Average realized
prices
|
|
|
|
Heavy crude oil
($/bbl)
|
56.92
|
44.45
|
33.06
|
Natural gas
($/Mcf)
|
3.30
|
2.87
|
2.20
|
NGLs
($/bbl)
|
41.50
|
25.72
|
22.02
|
Average realized price
($/boe)
|
40.59
|
31.56
|
24.46
|
($/boe)
|
|
|
|
Petroleum and natural
gas sales
|
40.59
|
31.56
|
24.46
|
Royalties
|
(4.45)
|
(2.61)
|
(1.96)
|
Operating
expenses
|
(13.16)
|
(12.75)
|
(12.19)
|
Transportation
expenses
|
(1.96)
|
(1.93)
|
(2.49)
|
Operating
netback(1)
|
21.02
|
14.27
|
7.82
|
Realized gain (loss)
on financial instruments
|
(4.75)
|
1.48
|
5.53
|
Operating netback
after realized gain (loss) on financial
instruments(1)
|
16.27
|
15.75
|
13.35
|
General and
administrative
|
(5.49)
|
(4.66)
|
(3.50)
|
Interest and financing
expense
|
(1.23)
|
(1.39)
|
(0.17)
|
Adjusted funds flow
per boe(1)
|
9.55
|
9.70
|
9.68
|
|
|
|
|
Financial
($000, except per share amounts)
|
|
|
|
Petroleum and natural
gas sales
|
3,440
|
2,659
|
2,783
|
Cash flow from
operating activities
|
827
|
206
|
1,183
|
Adjusted funds
flow(1)
|
809
|
818
|
1,102
|
Per share –
basic(1)
|
0.01
|
0.01
|
0.01
|
Per share –
diluted(1)
|
0.01
|
0.01
|
0.01
|
Net income
(loss)
|
(908)
|
10,823
|
(31,529)
|
Per share –
basic
|
(0.01)
|
0.10
|
(0.29)
|
Per share –
diluted(2)
|
(0.01)
|
0.10
|
(0.29)
|
Capital
expenditures
|
1,510
|
105
|
7,082
|
Property
disposition
|
(438)
|
-
|
-
|
Total capital
expenditures, net
|
1,072
|
105
|
7,082
|
Net
debt(1)
|
4,129
|
3,857
|
6,183
|
Common shares
outstanding – basic (000)
|
108,921
|
108,921
|
108,921
|
|
|
(1)
|
Adjusted funds flow,
net debt, operating netback, and operating netback after realized
gain (loss) on financial instruments are non-GAAP measures
that do not have any standardized meaning under IFRS and therefore
may not be comparable to similar measures presented by other
companies. Refer to the heading entitled "Non-GAAP Measures"
included in the "Advisories" section at the end of the
MD&A.
|
(2)
|
Basic weighted
average shares are used to calculate diluted per share amounts when
the Corporation is in a loss position.
|
FIRST QUARTER 2021 REVIEW
In the quarter, Altura completed its 102/16-14-049-26W4 Rex
horizontal well ("16-14") (89% working interest) that was drilled
in February 2020 and not completed
due to low commodity prices. The 16-14 well was designed with
increased frac density of 74 fracs at 27 meter spacing. This
completion is consistent with two Rex horizontal wells that were
completed in 2018 with increased frac density that continue to
outperform expectations. By comparison, this is a 57% increase in
intervals compared to earlier wells with 47 fracs at 40 meter
spacing. The 16-14 well commenced production at the end of
February 2021 and initial production
rates are consistent with and meeting Altura's higher expectations
of increased frac density wells.
Altura invested $1.5 million in
capital expenditures in the quarter which included the completion
and equipping of the 16-14 well for $1.0
million and capitalized workovers of $0.3 million related to rod upgrades to improve
run-time efficiency on existing wells.
The Corporation closed a previously announced asset disposition
on January 29, 2021, divesting of a
0.6875% working interest in Altura's production, wells, lands and
facilities for $437,500.
Production volumes averaged 942 boe per day in the first
quarter, up three percent from the fourth quarter of 2020 due to
new production from the 16-14 well that was placed on production in
late February.
Altura's realized heavy oil price increased 28% to $56.92 per barrel in the first quarter compared
to $44.45 per barrel in the fourth
quarter of 2020 and increased 72% compared to $33.06 per barrel in the first quarter of
2020.
Operating expenses in the first quarter were $13.16 per boe, compared to $12.75 per boe in the fourth quarter of 2020. The
increase was mainly due to higher electricity costs. Transportation
expenses were $1.96 per boe,
consistent with $1.93 per boe in the
fourth quarter of 2020.
The Corporation's operating netback1 averaged
$21.02 per boe, up 47% from the
fourth quarter of 2020 due to higher crude oil and natural gas
prices, partially offset by higher royalties and operating
expenses.
Adjusted funds flow1 was $809,000 in the quarter, consistent with
$818,000 in the fourth quarter of
2020. The increase in petroleum and natural gas sales of
$781,000 in the quarter was offset by
increased royalty expense and a realized loss on financial
instruments of $403,000, compared to
a gain of $125,000 in the fourth
quarter of 2020.
Altura recorded a net loss of $908,000 in the quarter which was impacted by an
unrealized loss on financial instruments of $866,000 in the quarter.
Altura's net debt1 was $4.1 million at March 31,
2021, compared to $3.9 million
at December 31, 2020.
PRODUCTION UPDATE
The Corporation's one (0.9 net) well that was shut-in in
February 2021, due to third-party gas
processing restrictions, was brought back on production on
May 2, 2021. Altura's current
production is estimated at 977 boe per day2 based
on field estimates from May 9, 2021
to May 24, 2021 with approximately
100 boe per day3 to come back online once weather
permits.
OUTLOOK
Management is excited to get back to drilling in the Rex pool
and plans to drill two (1.8 net) new wells at Leduc-Woodbend in the
summer of 2021 with production additions in July and October,
respectively. With added production from the two new wells,
improving commodity prices and a more favorable hedge book, Altura
is forecasting substantial adjusted funds flow1 growth
in the second half of 2021 and a decrease in net
debt1.
At current commodity prices, management believes that over the
next five years the Corporation could double production at
Leduc-Woodbend and completely eliminate debt while drilling only
half of its booked locations4. Additionally, if
conservative levels of debt continue to be utilized, management
believes it has the economic inventory at Leduc-Woodbend to further
accelerate production growth. See
Altura's corporate presentation at
www.alturaenergy.ca for further details on Altura's long-term
plan.
Altura has increased its capital expenditure budget for 2021
from $6.0 million to $7.5 million to advance several parallel
initiatives:
- Altura will continue to improve its extended reach horizontal
("ERH") well design by increasing the lateral length in one of the
proposed wells from 2,000 to 2,300 meters (a 15% increase). This
extension will accommodate a commensurate increase in total frac
stages from 74 to 85. Previous success with longer horizontal
laterals and increased frac stages in the Rex pool illustrates
improved production and reserve capture. This further optimization
is expected to result in even greater well performance which will
reduce the number of required wells and decrease the capital
required to develop the remainder of the Rex pool.
- The Corporation is excited to implement a waterflood pilot
project at Leduc-Woodbend. Success of the pilot would result in
gas/oil ratio ("GOR") suppression, reservoir pressure maintenance
and attenuated production declines which could add material upside
to Altura's Rex oil pool reserve recoveries.
- In the first quarter of 2021, Altura modified the artificial
lift system in three (2.7 net) Rex wells to a more robust rod
string resulting in improved runtime efficiency which is expected
to reduce future workover costs. The expanded budget will enable
the conversion of an additional nine (7.9 net) wells in 2021.
Altura expects to close the final disposition of a 1.375%
working interest for $875,000 on
June 30, 2021 as disclosed in the
April 28, 2021 news release.
While 2020 was primarily a defensive year of survival for many
junior oil weighted producers, 2021 is looking to be a year of
opportunity. Altura's Leduc-Woodbend asset has a large economic
well inventory of 47 (36.6 net) booked locations4 and
104 (67 net) additional drilling opportunities4 and at
current commodity prices can self-fund growth within cash flow
while improving its strong balance sheet. The Altura team is very
excited and poised to refocus efforts towards creating value for
shareholders in 2021 and beyond.
_________________________
|
1 Adjusted funds flow, net debt and
operating netback are non-GAAP measures that do not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other companies. Refer to the
heading entitled "Non-GAAP Measures" contained within the
"Advisories" section of Altura's MD&A
|
2 Consists of 512 bbls/d of heavy
crude oil, 65 bbls/d of NGLs and 2,400 Mcf/d of natural
gas
|
3 Consists of 40 bbls/d of heavy
crude oil, 5 bbls/d of NGLs and 330 Mcf/d of natural gas
|
4 See
advisories on drilling locations in this news release
|
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
We believe that we can develop and produce oil and natural gas
safely, responsibly and profitably, while making a positive
contribution to society. We believe this sustainable approach is
key to the long-term success of the Corporation. Altura has created
a culture rooted in strong economic, environmental, social and
governance performance which is the foundation for corporate
sustainability. From senior leadership to our front-line
consultants we focus on continuous improvement and leadership in
all aspects of our business.
Altura has demonstrated operational strength and capital
discipline while delivering on the safety performance commitment
outlined in our Corporate Social Responsibility Policy. Our focus
and commitment to hazard identification, emergency readiness and
communication regarding safety standards and expectations has
created a safety leadership culture that enables everyone to return
home safely at the end of the day.
We have a vision of conservation and innovation to minimize
environmental impacts and maximize value from the resources we
produce. We have invested time and resources to reduce emissions
and, although we are a small company, we believe the results have
demonstrated leadership on this important objective. We also
recognize the value of stakeholder feedback during this important
transition phase in the energy industry and believe that disclosure
of ESG topics provides a more in-depth picture of the
sustainability of the Corporation.
Altura recognizes that to deliver consistent and long-term
shareholder value we must operate in a safe, healthy, ethical,
legal, and environmentally responsible manner. We look forward to
stakeholder feedback as we find new and exciting ways to maximize
value for all stakeholders.
Following its approval by the ESG Committee of Altura's Board of
Directors, the Corporation has posted its 2021 Sustainability
Report on its website at www.alturaenergy.ca.
ANNUAL GENERAL MEETING
The Annual General Meeting ("AGM") of shareholders will be held
at the Corporation's offices at 2500, 605 - 5th Avenue S.W.,
Calgary, Alberta, on Thursday, June 3, 2021 at 10:30 am (Mountain Time). In view of the COVID-19
pandemic and the restrictions on mass gatherings implemented by the
Government of Alberta, the
Corporation strongly encourages shareholders to consider voting
their shares via proxy rather than attending the AGM in person.
Subject to the Corporation's by-laws, access to the AGM will be
limited to essential personnel and registered shareholders and
proxyholders entitled to attend and vote at the AGM. No external
guests will be allowed to attend the AGM.
A link to a live audio webcast of the AGM will be available on
the Corporation's website at www.alturaenergy.ca. Following the
formal business of the AGM, the Corporation is planning a brief
presentation by management which will also be available on Altura's
website following the AGM.
ABOUT ALTURA ENERGY INC.
Altura is a junior oil and gas exploration, development and
production company with operations in central Alberta. Altura predominantly produces from
the Rex reservoir in the Upper Mannville group and is focused on
delivering per share growth and attractive shareholder returns
through a combination of organic growth and strategic acquisitions.
An updated corporate presentation is available on Altura's website
at www.alturaenergy.ca.
READER ADVISORIES
Forward-looking Information and Statements
This press release contains certain forward-looking information
and statements within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "budget",
"forecast", "continue", "estimate", "objective", "ongoing", "may",
"will", "project", "should", "believe", "plans", "intends",
"strategy" and similar expressions are intended to identify
forward-looking information or statements. In particular, but
without limiting the foregoing, this press release contains
forward-looking information and statements pertaining to:
- the 2021 capital expenditure budget including plans to bring
two (1.8 net) new wells on production in July and October 2021;
- Altura's forecast of substantial adjusted funds flow growth in
the second half of 2021, while reducing net debt;
- management's belief over the next five years the Corporation
could double production at Leduc-Woodbend and eliminate its debt
while drilling only half of its booked locations and could further
accelerate production growth at Leduc-Woodbend by utilizing
conservative debt levels;
- management's expectation that further ERH well optimization
could result in even greater well performance which will reduce the
number of required wells and decrease the capital required to
develop the remainder of the Rex pool;
- the success of a waterflood pilot project including GOR
suppression, reservoir pressure maintenance and attenuated
production declines which could add material upside to Altura's Rex
oil pool reserve recoveries; and
- plans to close the final stage of the previously announced
asset disposition on June 30,
2021.
- The forward-looking information and statements contained in
this press release reflect several material factors and
expectations and assumptions of Altura including, without
limitation:
- the continued performance of Altura's oil and gas properties in
a manner consistent with its past experiences
- that Altura will continue to conduct its operations in a manner
consistent with past operations;
- the general continuance of current industry conditions;
- the continuance of existing (and in certain circumstances, the
implementation of proposed) tax, royalty and regulatory
regimes;
- the accuracy of the estimates of Altura's reserves and resource
volumes;
- certain commodity price and other cost assumptions;
- the continued availability of oilfield services; and
- the continued availability of adequate debt and equity
financing and cash flow from operations to fund its planned
expenditures.
Altura believes the material factors, expectations and
assumptions reflected in the forward-looking information and
statements are reasonable but no assurance can be given that these
factors, expectations and assumptions will prove to be correct. To
the extent that any forward-looking information contained herein
may be considered future oriented financial information or a
financial outlook, such information has been included to provide
readers with an understanding of management's assumptions used for
budgeted and developing future plans and readers are cautioned that
the information may not be appropriate for other purposes.
The forward-looking information and statements included in this
press release report are not guarantees of future performance and
should not be unduly relied upon. Such information and statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking information or statements
including, without limitation:
- changes in commodity prices;
- changes in the demand for or supply of Altura's products;
- unanticipated operating results or production declines;
- changes in tax or environmental laws, royalty rates or other
regulatory matters;
- changes in development plans of Altura or by third party
operators of Altura's properties,
- increased debt levels or debt service requirements;
- inaccurate estimation of Altura's oil and gas reserve and
resource volumes;
- limited, unfavorable or a lack of access to capital
markets;
- increased costs;
- a lack of adequate insurance coverage;
- the impact of competitors; and
- certain other risks detailed from time to time in Altura's
public documents.
The forward-looking information and statements contained in this
press release speak only as of the date of this press release, and
Altura does not assume any obligation to publicly update or revise
them to reflect new events or circumstances, except as may be
required pursuant to applicable laws.
Oil and Gas Advisories
Barrels of Oil Equivalent
The term barrels of oil equivalent ("Boe") may be misleading,
particularly if used in isolation. Per
Boe amounts have been calculated by using the conversion
ratio of six thousand cubic feet (6 mcf) of natural gas to one
barrel (1 bbl) of crude oil. The Boe conversion ratio of 6 mcf to 1
bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalent of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Drilling Locations
This news release discloses drilling locations in three
categories: (i) proved locations; (ii) probable locations; and
(iii) potential drilling opportunities. Proved locations and
probable locations, which are sometimes collectively referred to as
"booked locations", are derived from the Corporation's most recent
independent reserves evaluation as of December 31, 2020 and account for drilling
locations that have associated proved reserves. Potential drilling
opportunities are internal estimates based on the Corporation's
prospective acreage and an assumption as to the number of wells
that can be drilled per section based on industry practice and
Altura's internal review. Potential drilling opportunities do not
have attributed reserves or resources. Potential drilling
opportunities have specifically been identified by management as an
estimation of our multi-year drilling activities based on
evaluation of applicable geologic, seismic, engineering, production
and reserves data on prospective acreage and geologic formations.
The drilling locations on which we actually drill wells will
ultimately depend upon the availability of capital, regulatory
approvals, seasonal restrictions, crude oil and natural gas prices,
costs, actual drilling results and other factors. While certain of
the potential drilling opportunities have been derisked by drilling
existing wells in relative close proximity to such potential
drilling opportunities, the majority of other potential drilling
opportunities are farther away from existing wells where management
has less information about the characteristics of the reservoir and
therefore there is more uncertainty whether wells will be drilled
in such locations, and if drilled there is more uncertainty that
such wells will result in additional reserves, resources or
production.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Altura Energy Inc.