Alberta is home to many public oil and gas companies, but also to a wide variety of private oil and gas companies that don’t make the news as much as their public counter-parts. With the intention of shedding light on a notable private upstream company, today we at the BOE Report wish to put a spotlight on Petrus Resources. Stay tuned for more company profiles as we seek to spread the word on notable private oil and gas companies in Western Canada.
Petrus Resources
Petrus Resources Ltd. is a Calgary based intermediate private oil and gas company active in property exploitation, and strategic acquisitions throughout Western Canada. Currently, the company produces 9,700 BOE/D (44% of which is oil and natural gas liquids). In 2011 the company was formed to capitalize on an opportunity to aggregate natural gas assets at attractive prices. Now, Petrus has an extensive inventory of low risk oil and gas development assets throughout Alberta.
Kevin Adair, company co-founder, President, and CEO noted that “although the initial transaction was focused on aggregating gas assets, subsequent oil-targeted drilling and oil-weighted acquisitions have transitioned the asset base to a relative balance between light oil and gas. The company has no heavy oil assets.” Prior to Petrus, Adair co-founded Spry Energy which along with Ken Bowie (founder of Progress Energy) in 2003. As you may recall, Spry was sold for $223 million to Whitecap Resources in April 2011.
In March of 2011, Petrus raised a first round of seed capital and assembled a technical team of individuals who formerly played key roles at Peyto Exploration & Development Corp. Peyto for those unaware was one of the most successful energy companies in Canada over the past decade. Don Gray, who co-founded Peyto, currently sits as Petrus’ Chairman.
The four core operating areas of the company are Ferrier, Central Alberta, Peace River and the Rocky Mountain foothills.
Ferrier
Petrus has established a large land position, with an extensive inventory of repeatable and liquids rich Cardium gas drilling locations. The area also features emerging Glauconitic, Belly River and Mannville plays.
Central Alberta
Petrus’ Central Alberta play consists of numerous oil and gas producing properties southwest of the City of Edmonton. The properties are characterized by stable low decline production evenly split between oil and natural gas.
Peace River
Petrus operates the oil and gas producing areas of Rycroft and Tangent, which are near the Grande Prairie. At Tangent, Petrus has exposure to a significant Montney oil resource play with a large inventory of low-risk drilling locations and waterflood potential.
Foothills
Petrus owns oil and gas producing properties along the foothills trend in the vicinity of Hinton, stretching from Cordel / Stolberg in the south to Cabin Creek in the north. The company’s successful drilling program over the past two years has primarily targeted oil in the Cardium formation. Numerous additional oil and gas locations have been identified in the Cardium, Notikewin, Belly River and other horizons.
Over the past several years, Petrus has demonstrated impressive value creation. For example, year-over-year performance between 2013 and 2014 saw the company grow overall production by 24%, and cash flow by 24%. Annualized quarterly cash-flow for the company is now approximately $64 million dollars. The company’s operating expenses also decreased by an impressive 35% to a mere $6.43/BOE.
Going forward, Petrus’ current outlook features a combination of a conservative base budget and exciting strategic opportunities. By holding production flat, investing in strategic plant assets, applying free cash flow to debt repayment, and maintaining the flexibility to expand the capital program with improved commodity prices, Petrus is poised to take advantage of strategic opportunities. Eventually, when market conditions allow, management will strongly consider a public listing of shares.