The COVID-19 pandemic and the associated precipitous decline in demand for crude oil combined with the OPEC inspired price war have had a dramatic effect on Clearview’s operations and financial results. As a result, Clearview has made significant reductions in its head office costs, field capital and operations to preserve cash flow in these challenging times while at the same time not compromising on the core principles of environmental protection, health and safety and regulatory compliance.
In April of 2020, the Company made the decision to shut-in approximately 50% of its production, largely oil volumes and the associated natural gas. As prices continued to erode through May, Clearview produced its oil to storage tanks before safely shutting-in its operated oil production.
In June, prices and differentials meaningfully recovered resulting in profitable operating netbacks, a sharp reversal of the situation in late March and April. At this time, Clearview began turning its oil production back on-stream and selling its oil in storage. Currently most of the Company’s production is back on-stream with recent production once again over 2,100 barrels of oil equivalent per day.
CREDIT FACILITY REVIEW
The Company’s credit facility was set for its normal course review to be completed by no later than June 30, 2020. The Company’s lender, ATB Financial (“ATB”), has informed Clearview that the completion of the review will likely be extended to no later than August 31, 2020. In the meantime, the Company remains in compliance in all aspects of the current credit facility. Despite the very challenging commodity price market for its production, the Company has been able to maintain its net debt at approximately $15.3 million as of May 31, 2020 compared to $15.4 million at the end of the prior year against the Company’s credit facility of $18.5 million. Management continues to be in regular communication with ATB.
FEDERAL AND PROVINCIAL PROGRAMS
The Company has been assessing the impact of the current market dynamics and has been investigating the programs initiated by the federal government through Export Development Canada (“EDC”) and Business Development Bank of Canada and the Canada Emergency Wage Subsidy (“CEWS”). Clearview has received confirmation of its eligibility for the guarantee program from the EDC and is now working with its Lender for final approval to implement the guarantee program and to obtain added support for its credit facility. The Company also meets the requirements of the CEWS program and has been receiving its eligible subsidy under this program. Clearview has also filed numerous applications for wellsite rehabilitation under the Government of Alberta’s Site Rehabilitation Program (“SRP”). The Company is still awaiting approval of its SRP applications.