OPERATIONS UPDATE
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.
[expand title=”Advisories & Contact”]FOR FURTHER INFORMATION PLEASE CONTACT:
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CLEARVIEW RESOURCES LTD.
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2400 – 635 – 8th Avenue S.W. Calgary, Alberta T2P 3M3
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Telephone: (403) 265-3503
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Facsimile: (403) 265-3506
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Email: info@clearviewres.com
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Website: www.clearviewres.com
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TONY ANGELIDIS
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BRIAN KOHLHAMMER
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President & CEO
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V.P. Finance & CFO
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Note Regarding Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information (collectively “forward-looking information”) within the meaning of applicable securities laws relating to the Company’s plans and other aspects of our anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities. Specifically, this press release has forward looking information with respect to: future drilling plans; waterflood recovery and overall growth strategy. Forward-looking information typically uses words such as “anticipate”, “believe”, “project”, “expect”, “goal”, “plan”, “intend” or similar words suggesting future outcomes, statements that actions, events or conditions “may”, “would”, “could” or “will” be taken or occur in the future. Statements relating to “reserves” are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.
The forward-looking information is based on certain key expectations and assumptions made by our management, including expectations and assumptions concerning prevailing commodity prices and differentials, exchange rates, interest rates as set out in the appendices to this press release, also applicable royalty rates and tax laws; the impact of government assistance programs with have on the Company in connection with, among other things, the COVID-19 pandemic; the impact on energy demands going forward and the inability of certain entitles, including OPEC to agree on crude oil production output constraints; the impact on commodity prices, production and cash flow due to production shut-ins; the impact of regional and/or global health related events on energy demand; global energy policies going forward; our ability to execute our plans as described herein; global energy policies going forward; that the current commodity price and foreign exchange environment will improve; future exchange rates; future debt levels; the availability and cost of financing, labour and services; the impact of increasing competition and the ability to market oil and natural gas successfully and our ability to access capital. Although Clearview believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Clearview can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties which could include the possibility that Clearview will not be able to execute some or all of its ongoing programs; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; further fluctuations in the price of crude oil, natural gas liquids and natural gas; fluctuations in foreign exchange or interest rates; adverse changes to differentials for crude oil and natural gas produced in Canada as compared to other markets and worsened transportation restrictions. Our actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on our future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
Non-GAAP Measures and Oil and Gas Metrics
The Company’s management uses and reports certain measures not prescribed by International Financial Reporting Standards (“IFRS”) (referred to as “non-GAAP measures”) in the evaluation of operating and financial performance.
- Operating netback is a non-GAAP measure used by the Company to assess its operating results. The Canadian Oil and Gas Evaluation Handbook (“COGEH”) describes netback as “an operations indicator to assess operating priorities and evaluate smaller capital expenditures normally associated with field maintenance and improvement”. The COGEH provides guidance that “the netback calculation takes the price received for a unit of production at a point in time and deducts from it all production costs, royalties and production taxes to find the cash netback to the producer from each barrel of oil or mcf of sales gas”. The Company computes the operating netback for the Company directly from the applicable amounts on the Statements of Operations in the financial statements being oil and natural gas sales and processing income less royalties, production and transportation costs. This amount divided by the associated production volume (usually in boe’s) provides a per unit amount.
- Corporate netback is the adjusted funds flow amount divided by the total production for the period and represents the cash margin received on each barrel of oil equivalent sold.
- Adjusted funds flow is a non-GAAP measure derived from cash flow from operating activities excluding decommissioning expenditures and changes in non-cash working capital. The adjusted funds flow amount represents funds available for capital expenditures, repayment of net debt or distribution to shareholders. Readers are directed to review the reconciliation of adjusted funds flow to cash flow provided by operating activities set out in the Company’s MD&A for the year ended December 31, 2019.
- Net debt consists of current assets (excluding financial derivatives) less current liabilities (excluding financial derivatives). Net debt is used to assess financial strength, capacity to finance future development and manage liquidity risk.
- Operating netback, adjusted funds flow, corporate netback and net debt do not have any standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of a similar measure for other companies. The Company uses these terms as an indicator of financial performance because such terms are used internally in managing and governing the Company and are often utilized by investors and other financial statement users to evaluate producers in the oil and natural gas industry.
- Boe means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boe’s may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6: 1, using a conversion on a 6: 1 basis may be misleading as an indication of value.
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