CALGARY, Alberta, March 21, 2019 (GLOBE NEWSWIRE) — Altura Energy Inc. (“Altura” or the “Corporation”) (TSXV: ATU) is pleased to announce its financial and operating results for the fourth quarter and year ended December 31, 2018. The audited consolidated financial statements and related management’s discussion and analysis (“MD&A”) are available at www.sedar.com and www.alturaenergy.ca. Selected financial and operating information for the fourth quarter and year ended December 31, 2018 appear below and should be read in conjunction with the related financial statements and MD&A.
Operational and Financial Summary
|Three months ended||Year ended|
|Average daily production|
|Heavy oil (Bbls/d)||1,044||805||544||720||369|
|Medium oil (Bbls/d)||46||51||414||193||557|
|Natural gas (Mcf/d)||1,699||1,128||1,286||1,369||1,085|
|Total Boe/d per million shares – diluted||12.8||9.5||11.0||10.6||10.3|
|Average realized prices|
|Heavy oil ($/Bbl)||25.28||56.59||55.73||43.46||51.41|
|Medium oil ($/Bbl)||51.44||66.74||48.54||57.94||46.75|
|Natural gas ($/Mcf)||1.74||1.23||1.81||1.63||2.33|
|Petroleum and natural gas sales||23.57||48.29||44.22||39.40||43.72|
|General and administrative||(5.99||)||(4.25||)||(6.20||)||(4.92||)||(4.31||)|
|Interest and financing expense||(0.18||)||(0.03||)||(0.38||)||(0.37||)||(0.20||)|
|Adjusted funds flow per Boe(1)||6.35||30.31||22.82||19.31||23.02|
|Financial ($000, except per share amounts)|
|Petroleum and natural gas sales||3,062||4,741||4,893||16,847||18,001|
|Adjusted funds flow(1)||826||2,977||2,526||8,256||9,478|
|Per share – diluted(1)||0.01||0.03||0.02||0.07||0.09|
|Net income (loss)||(984||)||750||(1,032||)||2,693||(103||)|
|Per share – diluted(2)||(0.01||)||0.01||(0.01||)||0.02||–|
|Property acquisitions/(dispositions), net||986||2,637||(355||)||(24,089||)||(1,105||)|
|Total capital expenditures, acquisitions and dispositions||4,036||19,354||2,728||9,367||21,197|
|Common shares outstanding (000)|
|End of period – basic||108,921||108,921||108,921||108,921||108,921|
|Weighted average for the period – basic(2)||108,921||108,921||108,921||108,921||108,921|
|Weighted average for the period – diluted(2)||110,260||112,281||109,570||110,412||109,138|
- Adjusted funds flow, net debt and operating netback are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled “Non-GAAP Measures” contained within the “Advisories” section of Altura’s MD&A.
- Basic weighted average shares are used to calculate diluted per share amounts when the Corporation is in a loss position.
- Drilled 10 (9.95 net) wells, including nine (8.95 net) extended reach horizontal (“ERH”) wells in the Leduc-Woodbend area and one (1.0 net) horizontal well in the Macklin area. Additionally, the Corporation invested in key infrastructure at Leduc-Woodbend including the construction of a multi-well battery and a natural gas gathering pipeline that connects Altura’s northern area production to a third-party gas plant.
- Reduced operating and transportation costs to $10.93 per Boe, down 11 percent from 2017. This decrease is largely a result of lower-cost production growth into the new multi-well battery at Leduc-Woodbend and a disposition which had higher average operating costs.
- Closed the sale of its eastern Alberta and Saskatchewan assets (the “Disposition”) producing 668 Boe per day in May 2018 for $27.3 million (net of transaction costs and adjustments) leaving Altura with production of 502 Boe per day in June.
- Generated adjusted funds flow1 of $8.3 million ($19.31 per Boe), or $0.07 per share and net income of $2.7 million, up from a net loss of $0.1 million in 2017.
- Total capital expenditures, acquisitions and dispositions (including transactions costs on the Disposition) was $9.8 million which was only $1.5 million higher than adjusted funds flow1 and resulted in fourth quarter production increasing 17 percent over last year on an absolute and per share basis.
- Finding and development costs2 (“FD&A”) were $17.30 per Boe for proved developed producing (“PDP”), $16.48 per Boe for total proved (“1P”) and $12.53 per Boe for total proved plus probable (“2P”) reserves, including the changes in future development costs.
- Produced an average of 1,172 Boe per day (81 percent oil and liquids), an increase of four percent from 2017 on an absolute and per share basis. This production growth was achieved despite the May 2018 disposition of 668 Boe per day.
- Closed two acquisitions in the Leduc-Woodbend area for an aggregate cash consideration of $3.6 million. The Corporation acquired 3.0 net sections of highly prospective lands in the Upper Mannville oil pool which added eight net ERH equivalent potential drilling opportunities3 to the well inventory and a 60 percent working interest, including operatorship, of an oil unit producing approximately 120 net Boe per day (90 percent oil & liquids) of low decline Glauconitic 33° API oil.
- Maintained a conservative balance sheet with net debt1 of $4.8 million at December 31, 2018, or 0.6 times annual 2018 adjusted funds flow1.
FOURTH QUARTER 2018 HIGHLIGHTS
- Produced an average of 1,412 Boe per day, an increase of 32 percent from the third quarter of 2018 and 17 percent from the fourth quarter of 2017, respectively, on an absolute and per share basis. Production increased to 2,053 Boe per day in October but was voluntarily curtailed in November to 1,512 Boe per day and in December to 675 Boe per day due to weak oil prices caused by wide Canadian oil differentials.
- Reduced operating and transportation costs to $8.61 per Boe, down seven percent from the third quarter of 2018 and down 26 percent from the fourth quarter of 2017. This decrease is largely a result of lower cost production growth into the new multi-well battery at Leduc-Woodbend and the Disposition which had higher average operating costs.
- Capital expenditures including acquisitions totaled $4.0 million which included one well completion, facility work at the previously commissioned multi-well battery to optimize fluid processing, initial costs related to an electrification project at the multi-well battery and associated pad sites and an acquisition for $1.0 million.
- Generated adjusted funds flow1 of $0.8 million, or $0.01 per share. Compared to last year, adjusted funds flow1 declined by $16.47 per Boe with the decrease of $3.56 per Boe in operating costs being more than offset by a decrease of $20.65 per Boe in petroleum and natural gas sales as a result of weaker oil prices caused by wider Canadian oil differentials.
FOURTH QUARTER REVIEW
The Canadian energy sector faced numerous challenges in the fourth quarter of 2018. The lack of pipeline access to international oil markets, the temporary seasonal maintenance of oil refineries in the United States, slow growth in the crude-by-rail option to transport crude to the United States, full Canadian oil storage and the growth of Canadian oil production all contributed to the fourth quarter widening of crude differentials and significantly reduced realized prices for Canadian light, medium and heavy crude oil.
After achieving record production of 2,053 Boe per day in October, production volumes were voluntarily curtailed in November and December in response to weak oil prices caused by extremely wide Canadian oil differentials. Even with the curtailments, production volumes averaged 1,412 Boe per day, which equated to per share increases of 32 percent from the third quarter of 2018 and 17 percent from the fourth quarter of 2017, respectively.
Altura achieved significant per unit cost reductions in 2018 with operating and transportation costs decreasing 26 percent to $8.61 per Boe in the fourth quarter from $11.58 per Boe in the fourth quarter of 2017. The decrease in per unit costs was mainly due to Altura’s growth of lower-cost production and the completion of the multi-well battery at Leduc-Woodbend that enabled the Corporation to treat emulsion and dispose water on site. In addition, Altura realized operating costs savings from the Disposition, which had higher average operating costs.
The Corporation’s operating netback1 averaged $12.56 per Boe, down 63 percent from the third quarter of 2018 and 57 percent from the fourth quarter of 2017. The decrease was due to the 59 percent decline in the WCS oil price in the quarter, partially mitigated by the operating and transportation costs reductions and lower royalties.
Adjusted funds flow1 was $0.8 million in the fourth quarter of 2018, down 72 percent from the third quarter of 2018 and down 67 percent from the fourth quarter of 2017 due primarily to the decline in realized oil prices.
Altura invested $3.1 million at Leduc-Woodbend in the fourth quarter that included one well completion, facility work at the previously commissioned multi-well battery to optimize fluid processing, and initial costs related to an electrification project at the multi-well battery and associated pad sites.
The independent evaluation of the Corporation’s oil and natural gas reserves (the “McDaniel Report”) was prepared in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook and National Instrument 51-101 (“NI 51-101”). Year-over-year, proved developed producing (“PDP”) reserves increased by eight percent from 1,595 MBoe to 1,725 MBoe. Total proved (“1P”) reserves increased by 102 percent from 3,107 MBoe to 6,270 MBoe. Total proved plus probable (“2P”) reserves increased by 89 percent from 5,370 MBoe to 10,126 MBoe. Percentage increases were the same on a per share basis.
These reserve additions were achieved notwithstanding the reserve reductions from the Disposition which represented 73 percent, 49 percent and 60 percent of the Corporation’s year-end 2017 PDP, 1P and 2P reserve volumes respectively. See Altura’s March 5, 2019 news release entitled, “Altura Energy Inc. Announces 2018 Reserves, an Operational Update and 2019 Guidance” available on Altura’s website at www.alturaenergy.ca and as filed on SEDAR at www.sedar.com. In addition to the information contained in the March 5, 2019 news release, more detailed reserves information will be included in Altura’s Annual Information Form for the year ended December 31, 2018, which will be filed on SEDAR by April 30, 2019.
FIRST QUARTER 2019 UPDATE
The last well of Altura’s 2018 summer drilling program, which was drilled and completed in 2018, was equipped for production in January 2019. The well commenced production on February 4, 2019 and initial production rates are consistent with the Corporation’s other wells in the Leduc-Woodbend area. Corporate production in January 2019 was re-established at 2,000 Boe per day based on field estimates.
Corporate guidance for 2019 remains as previously announced with a capital budget of $15 million. The capital program is weighted to the second half of 2019 and includes drilling four ERH wells at Leduc-Woodbend. Additionally, Altura plans to implement a waterflood pilot project at Leduc-Woodbend which includes drilling on reduced inter-well spacing.
Altura’s base production coupled with production from its capital program is forecasted to grow annual average production to between 1,700 to 1,800 Boe per day in 2019, compared to 1,172 Boe per day in 2018, representing more than a 45 percent increase on an absolute and per share basis.
Canadian oil prices have increased materially in the first quarter of 2019. In response to the extremely wide Canadian oil differentials in the fourth quarter, the Alberta government introduced mandatory production curtailment to balance the market and reduce crude oil differentials. The curtailment commenced in January 2019 and Canadian oil differentials have tightened significantly. WCS prices for January and February 2019 improved to US$34 and US$45 per barrel, respectively, from US$6 per barrel in December 2018.
Management intends to continuously monitor well performance and commodity prices throughout the year and may at any time adjust the 2019 capital program if well performance is exceeding expectations or if oil prices deteriorate or strengthen. The budget leaves Altura with a conservative balance sheet and the flexibility to accelerate development in the second half of 2019 if results and commodity prices are supportive.
On behalf of the Board of Directors and the Altura management team, we would like to thank our shareholders for their ongoing support.
ABOUT ALTURA ENERGY INC.
Altura is a junior oil and gas exploration, development and production company with operations in central Alberta. Altura predominantly produces from the Rex member in the Upper Mannville group and is focused on delivering per share growth and attractive shareholder returns through a combination of organic growth and strategic acquisitions.
An updated corporate presentation is available on Altura’s website at www.alturaenergy.ca.