CALGARY, ALBERTA–(Marketwired – Nov. 9, 2016) – Pine Cliff Energy Ltd. (“Pine Cliff” or the “Company“) (TSX:PNE) is pleased to announce its third quarter financial and operating results. Included in the filings were Pine Cliff’s condensed consolidated interim financial statements and related management’s discussion and analysis for the period ended September 30, 2016 (the “Q3-Report“). Selected highlights are shown below and should be read in conjunction with the Q3-Report.
Third Quarter 2016 Highlights
Pine Cliff is pleased to report that it:
- Achieved record quarterly revenue of $32.4 million;
- Generated $7.0 million of funds flow from operations ($0.02 per share) compared to $7.5 million in the third quarter of 2015 ($0.03 per share), despite realized natural gas prices being $2.33 per Mcf compared to $2.94 per Mcf a year ago;
- Continued to be one of the lowest cost operators in the industry by maintaining low operating costs of $9.43 per Boe ($1.57 per Mcf) and reducing G&A expenses to $0.74 per Boe ($0.12 per Mcf), a 31% decrease from the same quarter in the previous year;
- Increased production by 80% to 22,521 Boe/d (93% natural gas) from 12,504 Boe/d (94% natural gas) in the third quarter of 2015, representing a 40% increase on a per share basis;
- Restructured the bank debt by issuing $41 million in subordinated debt and entering into an agreement with the banking syndicate for an $85 million credit facility;
- Continued to strengthen the balance sheet, paying down $8.7 million of bank debt with funds flow from operations and the sale of a non-core oil asset; and
- Reduced net debt by $11.7 million from the second quarter of 2016.
This quarter had considerable significance to Pine Cliff as it was the first full quarter since closing the December acquisition that realized natural gas prices were above $2.00 per Mcf. Pine Cliff has been busy integrating that acquisition in 2016 and is now seeing the benefits of those efforts in reduced operating costs to complement the record revenue.
With a predictable asset base and one of the highest sensitivities to natural gas prices in the industry, Pine Cliff is well positioned to provide shareholders with exposure to potentially rising natural gas prices. As an illustration of the material impact that natural gas pricing has on our corporate netback, in the first nine months of this year Pine Cliff’s netback was $0.13 per Mcf at an average realized natural gas price of $1.87 per Mcf, but in 2015 the corporate netback was $0.97 per Mcf at an average realized natural gas price of $2.74 per Mcf. Every $0.10 per Mcf move in AECO prices equates to almost $4.4 million of annual cash flow or $0.014 per outstanding share.
Notwithstanding all the market turbulence of the past four and 3/4 years, Pine Cliff’s strategy has never changed. Pine Cliff has built up both a quality portfolio of assets and a specialized team of employees that is capable of generating true free cash flow at gas prices above $2.50 per Mcf while keeping production flat. Pine Cliff currently estimates that it has over 800 drilling and recompletion locations that can deliver at least a 10% rate of return at $3.00 per Mcf or less. The Company will continue to look at adding quality assets, but acquisitions will only be made if the incremental value on a per share basis justifies the addition.
|Financial and Operating Results1|
|Three months ended September 30||Nine months ended September 30|
|($000s, unless otherwise indicated)||2016||2015||2016||2015|
|Oil and gas sales (before royalties)||32,401||20,933||80,326||57,045|
|Cash flow from operating activities||4,606||6,617||9,857||19,795|
|Funds flow from operations 2||6,972||7,507||4,715||19,268|
|Per share – Basic and Diluted ($/share)||0.02||0.03||0.02||0.08|
|Per share – Basic and Diluted ($/share)||(0.04||)||(0.05||)||(0.18||)||(0.09||)|
|Capital expenditures, excluding acquisitions||1,437||2,051||5,803||5,384|
|Acquisitions, after adjustments||(603||)||(166||)||222||13,525|
|Net debt 3||110,312||35,208||110,312||35,208|
|Percent natural gas (%)||93||94||92||95|
|Combined sales price ($/Boe)||15.64||18.19||12.85||17.25|
|Operating netback ($/Boe) 4||5.08||7.92||2.59||7.46|
|Operating netback ($ per Mcfe)||0.85||1.32||0.43||1.24|
|Corporate netback ($/Boe) 5||3.36||6.52||0.77||5.83|
|Corporate netback ($ per Mcfe)||0.56||1.09||0.13||0.97|
|1||Includes results for acquisitions and excludes results for dispositions from the closing dates.|
|2||Funds flow from operations is a non-IFRS measure that represents the total of funds provided by operating activities, before adjusting for changes in non-cash working capital, and decommissioning obligations settled.|
|3||Net debt is a non-IFRS measure calculated as the sum of bank debt, subordinated promissory notes at the principal amount, due to related party, and trade and other payables less trade and other receivables, cash, prepaid expenses and deposits and investments.|
|4||Operating netback is a non-IFRS measure calculated as the Company’s oil and gas sales, less royalties and operating expenses, averaged over the Boe production of the Company.|
|5||Corporate netback is a non-IFRS measure calculated as the Company’s operating netback, less general and administrative expenses, interest and bank charges plus finance and dividend income, averaged over the Boe production of the Company.|
About Pine Cliff
Pine Cliff is a natural gas company with a long-term view of creating shareholder value. Pine Cliff’s current focus is on acquiring long life assets that are cash flow positive in a low commodity price environment. Further information relating to Pine Cliff, including the Q3 Report, may be found on www.sedar.com as well as on Pine Cliff’s website at www.pinecliffenergy.com. To request a hard copy, free of charge, please send an email to [email protected].