CALGARY, Alberta, May 07, 2018 (GLOBE NEWSWIRE) — Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX:PRQ) is pleased to report financial and operating results for the first quarter of 2018. Petrus is focused on organic growth and infrastructure control in its core area, Ferrier, Alberta. The Company is targeting light oil and liquids rich natural gas in the Cardium formation as well as investing in infrastructure in Ferrier to control operations in order to maximize the Company’s return on investment. The Company’s Management’s Discussion and Analysis (“MD&A”) and interim consolidated financial statements dated as at and for the period ended March 31, 2018 are available on SEDAR (the System for Electronic Document Analysis and Retrieval) at www.sedar.com.
- Petrus generated funds flow of $12.1 million in the first quarter of 2018, a 3% increase relative to the $11.7 million generated in the first quarter of 2017. The 3% increase in funds flow is attributed to 14% higher production and 3% lower operating expenses (on a per boe basis) from the prior year, despite a 37% decrease in the market price of natural gas (AECO 7A monthly index) over the same period.
- First quarter average production was 10,596 boe/d in 2018 compared to 9,331 boe/d for the same period in 2017. The 14% increase is attributable to the Company’s drilling program in Ferrier, where production has grown 126% since the third quarter of 2016 when the Company strategically accelerated its development in the area.
- Total operating expenses for the first quarter were 3% lower at $4.36 per boe in 2018 compared to $4.50 per boe in 2017. The Company has strategically focused on lowering its operating cost structure particularly in the Ferrier area through facility ownership and control.
- Petrus utilizes financial derivative contracts to mitigate commodity price risk. The Company’s realized gain on financial derivatives in the first quarter of 2018 increased the Company’s corporate netback(1) by $0.31 per boe. The realized hedging gain decreased relative to the $0.57 per boe realized in the first quarter of 2017 primarily due to the increase in the market price for light oil. As a percentage of first quarter 2018 production, Petrus has derivative contracts in place for 54% and 67% of its natural gas and oil and natural gas liquids production, respectively, for the remainder of 2018.
- During the first quarter of 2018, Petrus drilled one (0.5 net) Cardium liquids rich natural gas well in the Ferrier area. Capital was also directed toward the completion and tie-in activities related to two (0.4 net) Cardium oil wells drilled late in the fourth quarter of 2017. The three (0.9 net) wells were all brought on production during the first quarter of 2018. Subsequent to the end of the first quarter Petrus participated in an additional light oil well (0.2 net) in the Ferrier area. This well is expected to be brought on production later in the second quarter.(2)
- Petrus’ 2018 drilling program will continue after breakup. As a result of the current commodity price environment, Petrus intends to direct 84% of its 2018 capital budget toward Cardium light oil development in Ferrier.(2)
(1) Refer to “Non-GAAP Financial Measures”.
(2) Refer to “Advisories – Forward-Looking Statements”.
SELECTED FINANCIAL INFORMATION
OPERATIONS | Three months ended Mar. 31, 2018 |
Three months ended Mar. 31, 2017 |
Three months ended Dec. 31, 2017 |
Three months ended Sept. 30, 2017 |
Three months ended Jun. 30, 2017 |
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Average Production | ||||||||||
Natural gas (mcf/d) | 45,543 | 40,332 | 46,625 | 45,550 | 42,392 | |||||
Oil (bbl/d) | 1,530 | 1,542 | 1,854 | 1,877 | 2,015 | |||||
NGLs (bbl/d) | 1,475 | 1,067 | 1,086 | 1,098 | 1,160 | |||||
Total (boe/d) | 10,596 | 9,331 | 10,711 | 10,567 | 10,240 | |||||
Total (boe) | 953,598 | 839,746 | 985,388 | 972,140 | 931,821 | |||||
Natural gas sales weighting | 72 | % | 72 | % | 73 | % | 72 | % | 69 | % |
Realized Prices | ||||||||||
Natural gas ($/mcf) | 2.18 | 2.85 | 1.90 | 1.66 | 3.29 | |||||
Oil ($/bbl) | 73.91 | 62.62 | 66.10 | 51.23 | 59.02 | |||||
NGLs ($/bbl) | 46.50 | 33.18 | 38.00 | 24.79 | 30.32 | |||||
Total realized price ($/boe) | 26.50 | 26.48 | 23.56 | 18.82 | 28.69 | |||||
Royalty income | 0.03 | 0.05 | 0.03 | 0.01 | 0.03 | |||||
Royalty expense | (4.90 | ) | (3.94 | ) | (3.04 | ) | (2.73 | ) | (4.62 | ) |
Net oil and natural gas revenue ($/boe) | 21.63 | 22.59 | 20.55 | 16.10 | 24.10 | |||||
Operating expense | (4.36 | ) | (4.50 | ) | (4.81 | ) | (5.42 | ) | (5.53 | ) |
Transportation expense | (1.26 | ) | (1.38 | ) | (1.25 | ) | (1.29 | ) | (1.32 | ) |
Operating netback (1) ($/boe) | 16.01 | 16.71 | 14.49 | 9.39 | 17.25 | |||||
Realized gain on derivatives ($/boe) | 0.31 | 0.57 | 1.23 | 1.88 | 0.23 | |||||
General & administrative expense | (1.50 | ) | (1.05 | ) | (0.27 | ) | (1.09 | ) | (1.12 | ) |
Cash finance expense | (1.96 | ) | (2.07 | ) | (1.54 | ) | (1.99 | ) | (1.94 | ) |
Decommissioning expenditures | (0.23 | ) | (0.19 | ) | (0.62 | ) | (0.23 | ) | (1.03 | ) |
Corporate netback (1) ($/boe) | 12.63 | 13.97 | 13.29 | 7.96 | 13.39 |
FINANCIAL (000s except per share) | Three months ended Mar. 31, 2018 |
Three months ended Mar. 31, 2017 |
Three months ended Dec. 31, 2017 |
Three months ended Sept. 30, 2017 |
Three months ended Jun. 30, 2017 |
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Oil and natural gas revenue | 25,301 | 22,274 | 23,243 | 18,299 | 26,753 | ||||
Net income (loss) | (5,684 | ) | 7,311 | (67,095 | ) | (50,696 | ) | (781 | ) |
Net income (loss) per share | |||||||||
Basic | (0.11 | ) | 0.16 | (1.36 | ) | (1.03 | ) | (0.02 | ) |
Fully diluted | (0.11 | ) | 0.16 | (1.36 | ) | (1.03 | ) | (0.02 | ) |
Funds flow | 12,105 | 11,732 | 13,084 | 7,727 | 12,458 | ||||
Funds flow per share | |||||||||
Basic | 0.24 | 0.25 | 0.26 | 0.16 | 0.25 | ||||
Fully diluted | 0.24 | 0.25 | 0.26 | 0.16 | 0.25 | ||||
Capital expenditures | 6,056 | 18,907 | 21,885 | 13,055 | 18,903 | ||||
Net acquisitions (dispositions) | (123 | ) | 8,818 | 789 | (4,866 | ) | — | ||
Weighted average shares outstanding | |||||||||
Basic | 49,492 | 46,754 | 49,456 | 49,428 | 49,428 | ||||
Fully diluted | 49,492 | 46,989 | 49,456 | 49,428 | 49,428 | ||||
As at period end | |||||||||
Common shares outstanding | |||||||||
Basic | 49,492 | 49,428 | 49,492 | 49,428 | 49,428 | ||||
Fully diluted | 49,492 | 52,664 | 49,492 | 49,428 | 49,428 | ||||
Total assets | 343,161 | 460,095 | 353,445 | 409,078 | 465,794 | ||||
Non-current liabilities | 174,634 | 165,104 | 173,272 | 191,145 | 170,580 | ||||
Net debt (1) | 142,238 | 130,624 | 148,066 | 137,531 | 137,069 |
(1) Refer to “Non-GAAP Financial Measures”.
OPERATIONS UPDATE | ||||||||
Production | ||||||||
Average first quarter production by area was as follows: | ||||||||
For the three months ended March 31, 2018 | Ferrier | Foothills | Central Alberta | Total | ||||
Natural gas (mcf/d) | 31,835 | 6,793 | 6,915 | 45,543 | ||||
Oil (bbl/d) | 942 | 173 | 415 | 1,530 | ||||
NGLs (bbl/d) | 1,282 | 21 | 172 | 1,475 | ||||
Total (boe/d) | 7,530 | 1,326 | 1,740 | 10,596 | ||||
Natural gas sales weighting | 70 | % | 85 | % | 66 | % | 72 | % |
First quarter average production was 10,596 boe/d (72% natural gas) in 2018 compared to 9,331 boe/d (72% natural gas) in the first quarter of 2017. The 14% increase is attributable to the Company’s drilling program in its core operating area, Ferrier, where production has grown 126% since the third quarter of 2016.
Capital Development (1)
As a result of Petrus’ strategic focus on its Ferrier production growth, the Company set a 2017 capital budget of $50 to $60 million, which was subsequently increased by $10 million to participate in additional capital opportunities identified. Petrus achieved year over year annual average production growth of 24% from 2016 to 2017. In response to the current commodity price outlook for natural gas, the Company has shifted its focus for 2018 to prioritize its light oil drilling opportunities and to moderate the Company’s growth by setting a reduced capital budget for 2018 of $25 to $30 million in order to direct excess funds flow towards debt repayment. Petrus estimates debt repayment between $10 and $15 million in 2018, based on a current forecast for commodity futures pricing, anticipated service costs and current activity levels.(1)
Assuming capital investment of $25 million and a current forecast for commodity futures pricing, Petrus estimates the 2018 capital program will increase production year over year by approximately 2% to an average annual 2018 production of approximately 10,350 boe/d. The 2018 capital is expected to be directed primarily to the development of the Company’s Ferrier Cardium asset which is comprised of light oil and liquids rich natural gas opportunities. The program is expected to include the drilling of nine gross (4.4 net) Cardium wells with a focus on light oil drilling locations. The 2018 capital program is expected to be funded through funds flow and available capacity from the Company’s existing credit facilities.(1)
During the first quarter of 2018 Petrus drilled one (0.5 net) Cardium liquids rich natural gas well in the Ferrier area. Capital was also directed toward the completion and tie-in activities related to two (0.4 net) Cardium oil wells drilled late in the fourth quarter of 2017. The three (0.9 net) wells were all brought on production during the first quarter of 2018.
Subsequent to the end of the first quarter, Petrus participated in an additional light oil well (0.2 net) in the Ferrier area. The well is expected to be brought on production later in the second quarter.(1) Petrus’ 2018 drilling program will continue after breakup and Petrus plans to target Cardium light oil for the remainder of the year.
(1) Refer to “Advisories – Forward-Looking Statements”.
ANNUAL MEETING
The Company’s Annual Meeting will be held at the Jamieson Place Conference Centre (3rd floor) 308, 4th Ave SW Calgary, Alberta, on Tuesday May 8, 2018 at 2:00 p.m. (Calgary time). The Information Circular, Annual Information Form, 2017 Annual Report and the First Quarter 2018 Report are available on the SEDAR filing system (www.sedar.com) as well as on the Company’s website (www.petrusresources.com).
An updated corporate presentation can be found on the Company’s website at www.petrusresources.com.