CALGARY, Alberta, Aug. 08, 2019 (GLOBE NEWSWIRE) — Prairie Provident Resources Inc. (“Prairie Provident”, “PPR” or the “Company”) today announced operating and financial results for the three and six months ended June 30, 2019. PPR’s consolidated financial statements (“Financial Statements”) and related Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2019 are available on our website at www.ppr.ca and filed on SEDAR.
- Achieved record production averaging 6,386 boe/d (69% liquids) in the second quarter and 6,175 boe/d (69% liquids) for the first six months of 2019, an increase of 24% and 27%, respectively, compared to the corresponding periods in 2018 and in line with guidance. The production increase was driven by a successful development program which contributed 458 boe/d and 315 boe/d of production in the second quarter and the first half of 2019, respectively, as well as incremental production volumes from the Marquee acquisition which closed in Q4 2018.
- A new well in southern Princess came online in June 2019, with production averaging 715 boe/d (36% liquids) for the last 13 days of the month and contributing 102 boe/d of incremental production in the second quarter of 2019.
- Net capital expenditures1 during the second quarter and first half of 2019 were in line with guidance and totaled $3.2 and $6.9 million, respectively, primarily directed to the Princess drilling program and strategic land acquisitions. With the volatility in both West Texas Intermediate and Canadian oil price differentials late in 2018, PPR elected to take a conservative approach in the first half of 2019 by reducing capital spending relative to the prior year with a focus on improving the balance sheet.
- PPR generated $12.4 million ($21.25/boe) of operating netback1 before the impact of derivatives in the second quarter, which represents an increase of 11% over the operating netback amount generated during the same period in 2018. Higher production volumes year-over-year largely drove the increase, which was partially offset by lower commodity prices, particularly for liquids. PPR generated $10.9 million ($18.79/boe) of operating netback after the realized loss on derivatives, which was 33% higher than the operating netback amount generated in the second quarter of 2018.
- Adjusted funds flow1, excluding $0.3 million of decommissioning settlements, totaled $6.6 million ($0.04 per basic share and $0.02 per diluted share) in the second quarter, an increase of 38% from the same period last year and a 56% increase from the first quarter of 2019 due to higher revenue from increased production, lower royalties, lower realized loss on derivatives, and lower absolute operating expenses. Decommissioning settlements decreased by $2.7 million from the first quarter of 2019 when PPR focused efforts on one of our winter-access-only areas. Including the impact from decommissioning settlements, adjusted funds flow increased by 406% and 37% from the first quarter of 2019 and the second quarter of 2018, respectively. Strong adjusted funds flow realized during the second quarter contributed to a strengthened balance sheet, positioning PPR to internally fund our planned 2019 capital program.
- Net earnings totaled $3.2 million in the second quarter of 2019 compared to a net loss of $15.1 million in the same period the prior year, primarily driven by non-cash items, while for the first half of 2019, net loss totaled $18.0 million compared to a net loss of $26.8 million for the same period in 2018.
- PPR’s lenders confirmed the US$60 million borrowing base under the Company’s senior secured revolving facility in April 2019, demonstrating their continued support as PPR successfully executes our strategic plan.
- Overall net debt1 was reduced during the second quarter primarily due to adjusted funds flow significantly exceeding net capital expenditures. As at June 30, 2019, net debt totaled $113.4 million, a decrease of $2.0 million and $3.9 million from March 31, 2019 and December 31, 2018, respectively. PPR’s 2019 budget forecast for capital expenditures is expected to underspend projected adjusted funds flow at current strip pricing, enhancing the Company’s financial flexibility to pursue future growth opportunities organically or through acquisition.
1 Non-IFRS measure – see below under “Non-IFRS Measures”.
FINANCIAL AND OPERATING SUMMARY
|Three Months Ended
|Six Months Ended
|($000s except per unit amounts)||2019||2018||2019||2018|
|Crude oil (bbls/d)||4,230||3,513||4,062||3,302|
|Natural gas (Mcf/d)||11,709||9,175||11,639||8,776|
|Natural gas liquids (bbls/d)||204||104||173||114|
|Average Realized Prices|
|Crude oil ($/bbl)||66.44||70.96||61.80||66.60|
|Natural gas ($/Mcf)||1.15||1.20||1.79||1.62|
|Natural gas liquids ($/bbl)||28.60||53.04||32.73||52.87|
|Operating Netback ($/boe)1|
|Realized losses on derivative instruments||(2.46)||(6.28)||(1.39)||(4.71)|
|Operating netback, after realized losses on derivative instruments||18.79||17.58||17.27||17.46|
- Operating netback is a Non-IFRS measure (see “Non-IFRS Measures” below).
June 30, 2019
December 31, 2018
|Working capital (deficit)1||(0.5)||(16.1)|
|Total net debt2||(113.4)||(117.2)|
|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 portion of derivative instruments, minus accounts payable and accrued liabilities.
- 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 June 30, 2019 and USD$65 million at December 31, 2018, converted at an exchange rate of $1.0000 USD to $1.3087 CAD on June 30, 2019 and $1.0000 USD to $1.3642 CAD on December 31, 2018.
|Three months ended
|Six months ended
|Net (working interest) wells||1.0||2.0||1.0||8.0|
|Success rate, net wells (%)||100%||100%||100%||100%|
PPR’s most recent well in the southern portion of our Princess acreage was completed and brought on production in June 2019, averaging production of 715 boe/d (36% liquids) for the last 13 days of the month and contributing 102 boe/d of incremental production in the second quarter3. With a total capital cost of approximately $1.6 million to drill, complete, equip and tie-in, the well is expected to pay out after ten months under current commodity price assumptions. PPR has an inventory of nine additional high-quality Lithic Glauconite drilling opportunities for future development, as well as a further eight liquids-rich Ellerslie and three Detrital potential drilling opportunities in the area4. Current production from the Princess area is approximately 1,500 boe/d (70% liquids).
During the first half of 2019, PPR acquired leases on 4.25 sections of undeveloped lands in the Michichi/Wayne area as part of the elimination of PPR’s capital commitment in the area and purchased natural gas rights in areas where PPR currently holds petroleum leases. The Michichi area continues to contribute approximately 2,650 boe/d (50% liquids) to overall production.
Total current production from the Evi area is approximately 1,950 boe/d (98% liquids) and includes incremental production from the two gross (2.0 net) Slave Point wells completed and brought on production in February 2019.
2019 OUTLOOK AND GUIDANCE
Supported by a successful 2019 development program and strong adjusted funds flow generated year-to-date, Prairie Provident’s disciplined 2019 capital budget of $14.2 million is expected to be funded with internally-generated adjusted funds flow. Management and the board will continuously review the capital budget considering commodity prices, economics and market opportunities, and adjust as needed during the year. The Company remains focused on responsibly managing its inventory of high-quality drilling locations, capital spending and asset retirement obligations, while seeking to enhance per share production, reserves, and adjusted funds flow for shareholders.
The Company also reaffirms its full-year 2019 guidance, with estimates unchanged from those included 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.