Projected 10 Times Increase in Net Operating Income
- Net operating income (“NOI”)1 growth to $80-$110 million with recent acquisition synergies
- Production in 2020 of 40,000-50,000 boe/d, a 230% to 290% increase over Q3 exit production
- $10.50-11.50/boe operating costs2
- $32 million pre-final investment decision (“FID”) capital budget, $16 million Goldboro LNG development expense budget
- Commodities hedging of 55-65% on a boe/d basis
CALGARY, Alberta, Dec. 12, 2019 (GLOBE NEWSWIRE) — Pieridae Energy Limited (“Pieridae” or the “Company”) (PEA – TSXV) released updated corporate guidance for 2020 today which focuses on increasing NOI due to, among other things, operating efficiencies; increasing production with the recent, previously disclosed acquisition of key Alberta Foothills assets; lower per barrel operating costs; a higher capital budget; and a development expense budget for Goldboro LNG as we move toward FID for the project.
“We are guiding to an increase of up to 10 times our NOI from pre-acquisition levels which further accentuates the transformational nature and accretiveness of the Foothills assets acquisition,” said Pieridae CEO Alfred Sorensen. “A doubling or close to tripling of daily production speaks to the value of the acquisition and provides us with the majority of the gas resource necessary to supply train 1 at Goldboro. We have approved a pre-FID capital budget of $32 million and a development expense budget for Goldboro LNG of $16 million in 2020.”
“It’s Pieridae’s advantage of being an integrated LNG company and not just a gas producer and processor that sets us apart from our peers,” added Sorensen. “Delivering on our stated goals of completing a fixed price contract with KBR and finalizing project financing puts us in a position to make a final investment decision for Goldboro LNG next year. We continue to make progress toward that goal.”
2020 Guidance Details
Pieridae anticipates a 2020 NOI in the range of $80-110 million through, among other things, finding efficiencies in the field and by expanding third party revenue. The top end of the range would be a 10 times increase in NOI compared to a pre-Foothills assets acquisition NOI at a maximum of $10 million.
With our Jumping Pound, Caroline and Waterton deep cut gas plants operating well below capacity, increasing processing with our own gas and other producers’ gas will improve output volumes and enhance operating efficiencies. These plants feed into the TC Energy Pipeline System and are located south of the often-congested James River transport corridor. This is anticipated to result in lower transportation tolls to AECO and fewer outages.
Pieridae has an extensive drilling inventory encompassing multiple dry gas and liquids-rich gas reservoirs within the Foothills area. The legacy assets acquired in the Foothills acquisition consist of long life, low decline production in the range of 10%, with high liquids and sulphur yields.
We expect 2020 production to be in the range of 40-50,000 boe/d (230% to 290% higher than our Q3 2019 exit production), with a product mix of approximately 80% natural gas and 20% liquids. As well, we expect our average per barrel operating costs to be $10.50-$11.50/boe.
Together with existing Foothills drilling and development experience within the Company, Pieridae is well positioned to leverage the US$1.5 billion of the government-backed loan guarantees for conventional gas supply development which the German government approved in principle.
Our drilling program continues to take shape as we plan to increase production up to 800 mmcf/d to supply the first train at Goldboro. We have enough existing processing capacity to operate at this level.
In Q2 2019, we implemented a physical hedging program. That resulted in a higher realized average natural gas price of $1.22 per gigajoule (“GJ”) in Q3, compared to an average price of $1.19 per GJ in Q2. The realized price of $1.22 per GJ in Q3 was 41% higher than the average AECO price, which speaks to the value of the program. For 2020, we anticipate hedging 55-65% of our production on a boe/d basis.
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. After completion of all the transactions disclosed in this news release, Pieridae has 157,459,584 common shares issued and outstanding which trade on the TSX Venture Exchange (PEA).