CALGARY, Alberta, May 08, 2018 (GLOBE NEWSWIRE) — Pine Cliff Energy Ltd. (“Pine Cliff” or the “Company”) (TSX:PNE) is pleased to announce the filing of its first 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 months ended March 31, 2018 (the “Q1-Report“). Selected highlights are shown below and should be read in conjunction with the Q1-Report.
FIRST QUARTER 2018 HIGHLIGHTS
Highlights from the first quarter of 2018 are as follows:
- generated $29.7 million of oil and gas sales, 8% higher than the $27.4 million generated for the three months ended December 31, 2017;
- generated $5.1 million of adjusted funds flow ($0.02 per basic share) for the three months ended March 31, 2018, compared to $3.8 million of adjusted funds flow ($0.01 per basic share) for the three months ended December 31, 2017;
- production averaged 20,008 Boe/d (94% natural gas) in the first quarter of 2018. The Company experienced short-term production outages of approximately 1,000 Boe/d for the first quarter of 2018, primarily due to cold weather related downtime;
- diversified the Company’s natural gas delivery points beyond AECO whereby approximately 42% of forecasted 2018 natural gas production is anticipated to be sold to non-AECO markets;
- reduced bank debt by $4.8 million or 27% during the three months ended March 31, 2018, from $18.0 million to $13.2 million, the lowest Company bank debt level since 2014. The reduction in bank debt resulted in interest expense and bank charges, net of dividend income, of $0.42 per Boe this past quarter, 19% lower than the $0.52 per Boe in the first quarter of 2017;
- ended the quarter with $52.4 million in net debt, Pine Cliff’s lowest net debt level since 2014 and $1.2 million lower than the fourth quarter of 2017 net debt level of $53.6 million. On a trailing 12 month basis, this resulted in the Company’s debt to cash flow ratio being 2.3 to 1;
- successfully completed a compression project on March 27, 2018, giving Pine Cliff the flexibility to deliver an additional 14 million Mcf per day of Alberta natural gas to the TransGas market in Saskatchewan, or revert production back to the AECO market in Alberta, depending on the pricing differential between the two markets. This increases Pine Cliff’s capacity to the TransGas market to 26 million Mcf per day; and
- completed arrangements to give Pine Cliff the capability to physically divert up to 12 million Mcf per day of Southern Alberta gas from the AECO market to the Empress market.
Impact of Pine Cliff’s Diversification Strategy
Despite the AECO daily natural gas price only averaging $2.07/Mcf this past quarter, Pine Cliff was able to realize $2.35/Mcf, an increase of 14%, primarily due to several commodity price management initiatives. Pine Cliff continues to focus on reducing costs and on sourcing premium prices for its products to improve margins. An important component of Pine Cliff’s diversification strategy is utilizing most of its own infrastructure to expand the sales points. This flexibility will allow Pine Cliff to react quickly when future market pricing dynamics change.
The movement and pricing of natural gas in Canada has become increasingly complex. The pipeline maintenance periods that started last summer and continue this summer has resulted in some production not being able to exit Alberta or being able to flow into storage. Compounding this issue was the significant increase in Western Canada natural gas supply in the past 12 months. The positive outcome of this situation is that many industry producers have already announced reductions in 2018 capital expenditure programs across Western Canada, natural gas rig counts have dropped and now some degree of uneconomic production is being shut-in. Pine Cliff believes that these producer reactions, combined with the fact that gas storage levels are below five year averages in both Canada and the United States, should be positive for future natural gas pricing.
Financial and Operating Results
|Three months ended March 31,|
|($000s, unless otherwise indicated)|
|Oil and gas sales (before royalty expense)||29,711||35,148|
|Cash flow from operating activities||6,979||13,835|
|Adjusted funds flow1||5,137||11,233|
|Per share – Basic and Diluted ($/share)1||0.02||0.04|
|Per share – Basic and Diluted ($/share)||(0.05||)||(0.01||)|
|Weighted-average common shares outstanding (000s)|
|Basic and diluted||307,076||307,076|
|Combined sales price ($/Boe)||16.50||18.41|
|Operating netback ($/Boe)1||4.04||7.14|
|Corporate netback ($/Boe)1||2.86||5.88|
|Operating netback ($ per Mcfe)1||0.67||1.19|
|Corporate netback ($ per Mcfe)1||0.48||0.98|
1 This is a non-GAAP measure, see NON-GAAP Measures for additional information.