CALGARY, Alberta, May 08, 2019 (GLOBE NEWSWIRE) — Prairie Provident Resources Inc. (“Prairie Provident”, “PPR” or the “Company”) is pleased to announce our operating and financial results for the three months ended March 31, 2019. PPR’s consolidated financial statements (“Financial Statements”) and related Management’s Discussion and Analysis (“MD&A”) for the three months ended March 31, 2019 are available on our website at www.ppr.ca and filed on SEDAR.
FIRST QUARTER 2019 HIGHLIGHTS
- Production averaged 5,962 boe/d (68% liquids), a 29% increase from the same period in 2018 driven by a successful development program and incremental production volumes from the Marquee acquisition in Q4 2018. Volumes were impacted by severely cold temperatures, the shut-in of natural gas weighted wells in the Wheatland and other non-operated areas and natural declines. Subsequent to the quarter, PPR has resumed approximately 400 boe/d of production impacted by cold weather and is currently producing within our 2019 production guidance range of 6,100 to 6,500 boe/d.
- Net loss totaled $21.3 million in the first quarter of 2019 compared to a net loss of $11.7 million the same period the prior year, primarily driven by non-cash items.
- Capital expenditures totaled $3.8 million and included $2.8 million to complete two gross (2.0 net) Slave Point wells at Evi, which were brought on production at the end of February.
- Operating netbacks1 before realized hedging loss averaged $15.84/boe for the quarter, a significant improvement over the $2.30/boe in Q4 2018 due to higher realized prices but $4.43/boe lower compared to Q1 2018 due to lower realized prices and higher per unit operating expenses incurred to restore production impacted by severe cold weather, partially offset by a decrease in royalty expenses per boe.
- In this press release, adjusted funds flow1 include decommissioning liability settlements, which were previously excluded from the calculation in accordance with common industry practice, to conform to recent direction expressed by Alberta Securities Commission staff regarding funds flow disclosure by oil and gas issuers. By including the cost of decommissioning liability settlements in adjusted funds flow for the first quarter, the current calculation results in a correspondingly lower adjusted funds flow amount than under the previous methodology. With many oil and gas issuers continuing to exclude decommissioning settlements from their own funds flow calculations, the Company emphasizes that its adjusted funds flow measurement may not be comparable with the calculation of similar measurements used by other companies. Applying the previous methodology, adjusted funds flow (excluding $3.0 million of decommissioning liability settlements) would have been $4.2 million (2018 – $3.9 million) for the first quarter of 2019; while under the current methodology, adjusted funds flow (including $3.0 million of decommissioning liability settlements) was $1.2 million (2018 – $3.2 million).
- Adjusted funds flow1 in Q1 decreased by $2.0 million ($0.01/share) compared to Q1 2018, due to the impact of decommissioning settlements. During the quarter PPR invested $3.0 million of the $4.7 million allocated in its full-year budget for the clean-up and reclamation of inactive wells as part of our ongoing abandonment and reclamation obligations (“ARO”). The high concentration of spending in Q1 was attributable to the Company’s focused effort on one of its winter-access-only areas where the Company successfully achieved economies of scale, combined with “catch-up” compliance activities on certain newly acquired Marquee properties. Excluding the $2.3 million quarter-over-quarter increase in ARO spending, adjusted funds flow increased by $0.3 million.
- PPR’s lenders confirmed our US$60 million borrowing base under our senior secured revolving facility during the quarter, demonstrating their continued support as we continue to execute our corporate strategy. Further, our lenders also agreed to relax certain financial covenant ratios for the remainder of the year solely due to the impact of widened Canadian crude oil price differentials during Q4 2018 on the computation of PPR’s financial covenants for 2019.
- On March 29, 2019, the Company’s remaining capital commitment of $17.3 million in the Wheatland area was eliminated by mutual agreement with the lessor for an immaterial cash consideration. The Company also acquired leases on 4.25 sections of proven undeveloped lands in the Wayne area.
- As at March 31, 2019, total net debt remained consistent with year-end 2018, reflecting US$56.5 million drawn on our US$60 million revolving facility, US$29.9 million of subordinated notes, plus a working capital deficit of $7.7 million. PPR’s 2019 budget forecast for capital expenditures is expected to be less than our projected adjusted funds flow at current strip pricing, positioning the Company to capture upside in a strengthening commodity price environment.
- At March 31, 2019, using the prevalent forward commodity prices the Company recorded $7.9 million of marked-to-market liabilities (December 31, 2018 – $6.6 million of assets) relating to derivative contracts settling the next three years.
- Capital was returned to our shareholders during the quarter pursuant to our normal course issuer bid program. During the three months ended March 31, 2019, PPR repurchased 643,130 shares at a weighted average cost of $0.21/share.
FINANCIAL AND OPERATING HIGHLIGHTS
|Three Months Ended March 31,|
|($000s except per unit amounts)||2019||2018|
|Oil and natural gas revenue||22,895||19,283|
|Per share – basic & diluted||(0.12||)||(0.10||)|
|Adjusted funds flow1||1,248||3,222|
|Per share – basic & diluted||0.01||0.04|
|Net capital expenditures2||3,685||14,952|
|Crude oil (bbls/d)||3,892||3,089|
|Natural gas (Mcf/d)||11,568||8,373|
|Natural gas liquids (bbls/d)||142||124|
(1)(2) Adjusted funds flow and net capital expenditures are non-IFRS measures and are defined below under “Non-IFRS Measures”.
|Average Realized Prices|
|Crude oil ($/bbl)||56.70||61.57|
|Natural gas ($/Mcf)||2.44||2.09|
|Natural gas liquids ($/bbl)||38.65||52.78|
|Operating Netback ($/boe)3|
|Realized losses on derivative instruments||(0.24||)||(2.92||)|
|Operating netback, after realized losses on
(3) Operating netback are non-IFRS measures and are defined below under “Non-IFRS Measures”.
March 31, 2019
December 31, 2018
|Working capital (deficit)(1)||(7.7||)||(16.1||)|
|Long-term debt, less cash collateralized letters of credit||(109.9||)||(100.1||)|
|Total net debt(2)||(117.6||)||(116.2||)|
|Common shares outstanding (in millions)||171.3||171.9|
- Working capital (deficit) is a non-IFRS measure (see “Non-IFRS Measures” below) calculated as current assets less current liabilities excluding the current portion of derivative instruments, the current portion of decommissioning liabilities, the warrant liability and flow-through share premium.
- Net debt is a non-IFRS measure (see “Non-IFRS Measures” below), calculated by adding working capital (deficit) and long-term debt.
- Debt capacity reflects the undrawn capacity of the Company’s revolving facility of USD$60 million at March 31, 2019 and USD$65 million at December 31, 2018, converted at an exchange rate of $1.0000 USD to $1.3363 CAD on March 31, 2019 and $1.0000 USD to $1.3642 CAD on December 31, 2018.
|Three months ended March 31|
|Working interest wells||n/a||5.95|
|Success rate, gross wells (%)||n/a||100|
The Michichi area continues to contribute approximately 2,600 boe/d (46% liquids) to overall production with a significant inventory of high-quality future drilling locations to support longer-term growth.
Current production is approximately 1,200 boe/d (77% liquids) in this area. Future development in 2019 includes the drilling of three horizontal Glauconite wells.
During the quarter, PPR completed two gross (2.0 net) new Slave Point wells at Evi for $2.8 million which were brought on production at the end of February. Combined current production from the two wells averaged approximately 320 boe/d (93% liquids). Total current production from the Evi area is approximately 2,000 boe/d (98% liquids).
2019 OUTLOOK AND GUIDANCE
PPR’s efficient and disciplined 2019 capital budget of $14.2 million is expected to be fully funded internally and underspend forecast 2019 adjusted funds flow. Management and the board will continuously review, and as needed adjust, the capital budget through the year considering commodity prices, economics and market opportunities. We will continue to focus on responsibly managing our inventory of high-quality drilling locations, manage our capital spending and ARO obligations while striving to enhance our per share production, reserves, and funds flow.
We are pleased to reiterate our full-year 2019 guidance, with estimates unchanged from those set out in PPR’s year end 2018 news release dated March 27, 2019.
ABOUT PRAIRIE PROVIDENT
Prairie Provident is a Calgary-based company engaged in the exploration and development of oil and natural gas properties in Alberta. The Company’s strategy is to grow organically in combination with accretive acquisitions of conventional oil prospects, which can be efficiently developed. Prairie Provident’s operations are primarily focused at the Michichi and Princess areas in Southern Alberta targeting the Banff, the Ellerslie and the Lithic Glauconite formations, along with an established and proven waterflood project at our Evi area in the Peace River Arch. Prairie Provident protects its balance sheet through an active hedging program and manages risk by allocating capital to opportunities offering maximum shareholder returns.