CALGARY, Alberta, Nov. 08, 2017 (GLOBE NEWSWIRE) — Pine Cliff Energy Ltd. (“Pine Cliff” or the “Company”) (TSX:PNE) is pleased to announce the filing of its third quarter financial and operating results. Included in the filings were Pine Cliff’s unaudited condensed consolidated interim financial statements and related management’s discussion and analysis for the three and nine months ended September 30, 2017 (the “Q3-Report”). Selected highlights are shown below and should be read in conjunction with the Q3-Report.
Third Quarter and Year to Date 2017 Highlights
Significant highlights from the third quarter of 2017 were as follows:
- generated $2.9 million of funds flow from operations ($0.01 per basic share) for the three months ended September 30, 2017, emphasizing the importance of maintaining one of the lowest cash flow break even gas prices in the industry at $1.71 per Mcf;
- generated $24.9 million ($0.08 per basic share) of funds flow from operations in the nine months ended September 30, 2017, compared to $4.7 million of funds flow from operations ($0.02 per basic share) in the nine months ended September 30, 2016;
- generated total revenue of $89.6 million for the nine months ended September 30, 2017, an increase of 18% compared to $75.9 million in the nine months ended September 30, 2016;
- achieved average production of 21,863 Boe/d (95% natural gas) in the third quarter, only 3% lower than the 22,521 Boe/d in the third quarter of 2016, despite selling over 600 Boe/d of production in late 2016 and experiencing short-term production curtailments of approximately 400 Boe/d in the third quarter of 2017;
- replaced our production decline during the nine months ended September 30, 2017, from a production level of 21,582 Boe/d at December 31, 2016, with drilling and recompletion capital spending of $6.0 million, representing only 24% of funds flow from operations, highlighting the importance of having one of the lowest decline rates in the industry at 10%;
- repaid $20.2 million of bank debt during the nine months ended September 30, 2017, ending the quarter with bank debt of $10.6 million, which is $60.8 million less than the third quarter of 2016 amount of $71.4 million. The decrease in bank debt resulted in lower interest and bank charges, net of dividend income, of $0.37 per Boe this past quarter, 62% lower than the $0.98 per Boe in the third quarter of 2016; and
- ended the quarter with $52.2 million in net debt, $58.1 million less than the third quarter of 2016 net debt level of $110.3 million.
Q3 AECO Volatility
AECO natural gas prices experienced unprecedented volatility in the third quarter. The primary cause of this volatility appears to have been the inability of gas producers to access storage during pipeline maintenance due to a change in operational philosophy by the primary gathering system operator. The impact of this change, combined with a depressed summer gas market after a warm winter, resulted in the AECO daily pricing averaging $1.45 per Mcf for the quarter.
In the middle of the AECO pricing chaos this past quarter, Pine Cliff recompleted 16 net wells in Central Alberta which contributed an initial 60 day producing average of 1,100 Boe/d while spending only $700,000 on the program for a capital efficiency of $636/Boe/d ($106/Mcf/d). It is important to note that 11 of these wells were previously standing wells which were successfully returned to production as part of the program.
AECO gas prices have now rebounded to the $2.70 Mcf level. The rest of fourth quarter pricing will primarily be driven by North American weather. If winter temperatures (especially in the Eastern US) revert to a more normalized historical pattern, this should be bullish for gas prices and Pine Cliff cash flow. If it is another record warm winter like the past two winters, then pricing will most likely languish as the system deals with increased natural gas production.
Pine Cliff continues to use its cash flow to pay down debt to further strengthen the Company. The short-term reduction in natural gas prices has created acquisition opportunities that Pine Cliff continues to explore. Pine Cliff has been built on taking a counter-cyclical view of the natural gas markets and plans to continue to look for accretive acquisitions that fit into its growth plan.
|Financial and Operating Results1|
|Three months ended September 30,||Nine months ended September 30,|
|($000s, unless otherwise indicated)|
|Oil and gas sales (before royalty expense)||23,078||32,401||93,604||80,326|
|Cash flow from operating activities||5,517||4,606||29,359||9,857|
|Funds flow from operations2||2,879||6,972||24,946||4,715|
|Per share – Basic and Diluted ($/share)2||0.01||0.02||0.08||0.02|
|Per share – Basic and Diluted ($/share)||(0.10||)||(0.04||)||(0.11||)||(0.18||)|
|Weighted-average common shares outstanding (000s)|
|Basic and diluted||307,076||306,878||307,076||306,109|
|Combined sales price ($/Boe)||11.47||15.64||16.03||12.85|
|Operating netback ($/Boe)2||2.30||5.08||5.56||2.59|
|Corporate netback ($/Boe)2||1.44||3.36||4.27||0.77|
|Operating netback ($ per Mcfe)2||0.38||0.85||0.93||0.43|
|Corporate netback ($ per Mcfe)2||0.24||0.56||0.71||0.13|
|1 Includes results for acquisitions and excludes results for dispositions from the closing dates.
2 This is a non-IFRS measure, see “NON-IFRS Measures” for additional information.
Pine Cliff is pleased to announce the promotion of Christopher S. Lee to the position of Vice President, Geology. Mr. Lee has 17 years of experience working in the oil and gas industry and has been an employee of Pine Cliff since March 2012. Mr. Lee has a Bachelor of Science degree in Geology as well as a Bachelor of Arts degree in Economics from the University of Saskatchewan.
About Pine Cliff
Pine Cliff is an Alberta based natural gas company that is focused on acquiring and developing long life assets that are cash flow positive even 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 printed copy, free of charge, please send an email to email@example.com.