CALGARY, Alberta, Aug. 08, 2019 (GLOBE NEWSWIRE) — Pieridae Energy Limited (“Pieridae” or the “Company”) (PEA – TSXV) has filed its second quarter (“Q2”) unaudited condensed interim financial statements and related management’s discussion and analysis (“MD&A”) for the three and six month periods ending June 30, 2019. Pieridae’s unaudited condensed interim financial statements and MD&A are available on our website at www.pieridaeenergy.com and are filed on SEDAR at www.sedar.com.
Operational Highlights of the Quarter:
On April 1, 2019, the Company announced it had engaged Kellogg Brown & Root Limited (“KBR”) to perform a review of an amended version of the previously prepared front-end engineering and design study for its proposed Goldboro LNG Facility. KBR will also conduct an open book estimate necessary for entering into a lump sum engineering, procurement and construction contract. The total cost for this contract is expected to be approximately $13.0 million. KBR’s work is expected to take several more months to complete.
On June 26, 2019, Pieridae took a major step forward in acquiring the natural gas needed to supply the first train (or facility) at the proposed Goldboro LNG export facility with the signing of a purchase and sale agreement (the “Agreement”) with Shell Canada Energy (“Shell”) to purchase all of Shell’s midstream and upstream assets in the southern Alberta Foothills (the “Assets”). The Agreement with Shell Canada includes approximately 28,623 barrels of oil equivalent per day (“BOE/d”), three deep cut sour gas processing plants: Jumping Pound, Caroline and Waterton, and 1,700 kilometres of pipelines in the southern Alberta Foothills region. Net annual operating income (“NOI”)1 of the assets is approximately $60 million (based on Q1, 2019 rolling 12-months adjusted NOI). The acquisition is expected to close in the third quarter of this year.
The Shell asset acquisition will give Pieridae a better product mix, layering in more liquids and sulphur – creating a stronger business platform which will help protect the Company from overall price volatility. The acquisition is immediately accretive to the Company, makes Pieridae a major player in the Alberta midstream and conventional upstream natural gas industries, and sees Shell take an equity interest in Pieridae. The Assets align well with the Company’s existing Alberta properties, providing further consolidation of the productive conventional foothills natural gas pools. Potential synergy opportunities exist where consolidation of working interests in production and midstream assets compliment Pieridae’s existing core areas. The Assets consist of long life, low decline production, in the range of 10%, with very high liquids and sulphur yields – a match for the Company’s current and future needs. The Assets are well suited to the technical skill set that currently exists within the workforce of Pieridae. Existing production and new drilling inventory will provide significant new gas supply along with an extensive, well maintained, underutilized and sophisticated gas midstream system.
“We continue to make solid progress in working to close our deal with Shell Canada,” said Pieridae Energy CEO Alfred Sorensen. “This asset acquisition will mean we would have the majority of the natural gas needed to supply the first facility or train at Goldboro. And when the deal closes, Pieridae will be the largest gas producer in the southern Alberta foothills.”
Consolidated Performance Highlights
|For the three months ended
|| For the six months ended
|($000s, except where otherwise stated)||June 30, 2019||June 30, 2018||June 30, 2019||June 30, 2018|
|Net revenues (1)||$||13,387||$||66||$||36,369||$||82|
|Net loss per common share – basic and diluted ($/share)||$||(0.23||)||$||(0.05||)||$||(0.40||)||$||(0.11||)|
|Cash flow from operating activities||$||(16,702||)||$||(1,753||)||$||(33,786||)||$||(3,901||)|
|Project expenditures (2)||$||8,758||$||2,208||$||9,330||$||3,033|
|Natural gas (Mcf/d)||90,942||–||96,551||–|
|Barrels of oil equivalent (boe/d)(3)||15,368||–||16,297||–|
|June 30, 2019||December 31, 2018|
|Net working capital (deficit) (2)||$||(77,892||)||$||(84,061||)|
|(1)||Revenues net of royalties and losses on risk management contracts as shown in the Consolidated Statement of Loss and Comprehensive Loss|
|(2)||Non-IFRS measure. See page 19 in the Company’s MD&A.|
|(3)||Excludes sulphur production. This was supplemented by an additional 18,573 tonnes of sulphur in Q2 and 38,745 tonnes of sulphur YTD.|
Volatile natural gas prices in Alberta impacted Pieridae’s bottom line for the quarter as prices were lower than they were in Q1 2019. The Company has taken steps to mitigate this impact, shutting in certain higher cost wells and implementing a hedging program to help blunt the current gas price environment. See the Company’s MD&A for further discussion of the Q2 results.
With low natural gas prices resulting in production shut-ins, management is reducing the guidance issued in the Company’s Annual Report to average daily production expectations of 13,000 – 17,000 BOE/d, from the previous expectation range of 16,000 – 18,000 BOE/d. Production guidance excludes the expected Shell acquisition. The Shell acquisition is expected to increase production to a daily average of 45,000 – 50,000 boe/d in the late part of the year.
Pieridae’s 2019 upstream capital program has been curtailed and is now expected to be approximately $2 – 5 million as opposed to previous guidance of $8 – 10 million. With the focus now being on the completion of the Shell acquisition, management has reduced expected spending on Goldboro development activities to $20 million from previous guidance of up to $45 million.
In other Pieridae news, Chief Financial Officer Melanie Litoski will be leaving the Company August 9, 2019 to pursue another employment opportunity. Pieridae thanks Ms. Litoski for her contributions and wishes her well in her new role. The Company has initiated a search to fill the CFO position and, in the interim, these responsibilities will be handled by our Senior VP Finance & Risk, Rob Dargewitcz.
Founded in 2011, Pieridae, a majority Canadian owned corporation based in Calgary, is focused on the development of integrated energy-related activities, from the exploration and extraction of natural gas to the development, construction and operation of the Goldboro LNG facility and the production of LNG for sale to Europe and other markets. Pieridae is on the leading edge of the re-integration of the LNG value chain in North America. Pieridae has 86,713,714 common shares issued and outstanding which trade on the TSX Venture Exchange (PEA).