CALGARY, Alberta – Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) announces its fourth quarter 2020 capital budget and provides a market update. Petrus’ Board of Directors approved a fourth quarter 2020 capital budget of $4.7 million, which includes the drilling of 1.0 (1.0 net) well. As a result of favourable fall weather conditions, drilling of the well was commenced in late Q3.
Since March 2020, there has been unprecedented stress on both oil and natural gas prices as the world adjusts to the global COVID-19 pandemic. Accordingly, many energy companies in North America, and around the world, have dramatically reduced their capital budgets. As debt repayment remains Petrus’ top priority, the Company reduced its second and third quarter capital budgets to only include non-discretionary maintenance capital.
Over the past few months, commodity prices have been steadily strengthening. Since June 30, 2020, the future commodity prices of Alberta natural gas and Canadian dollar West Texas Intermediate oil have increased by approximately 22% and 3% respectively for 2021 as noted in the table below (Source: CIBC Daily Energy Update September 16, 2020). If the improved forecast prices are realized, Petrus’ 2021 operating netback and funds flow would be expected to increase, which would potentially allow the Company to moderately increase future capital spending, while still prioritizing and expanding debt repayment.
To view the Commodity Price Change table visit https://www.globenewswire.com/NewsRoom/AttachmentNg/ffae665a-7e78-4c26-8c93-24a2d9334d30
Over the past five years, Petrus has made significant efforts to reduce debt levels, decrease both operating and general and administrative costs and balance the production base between natural gas and light oil and liquids. Since the end of 2015, the Company has reduced net debt by $106 million or 47% to the end of June 2020, and continues to prioritize debt repayment and further balance sheet improvement. The Company is actively exploring opportunities to access government support programs put in place during the COVID-19 pandemic including increased debt facilities from the Export Development Canada, wage subsidies, and well abandonment and reclamation subsidies.
Petrus is committed to maintaining its financial flexibility and the Company intends to determine 2021 capital spending as the year progresses. Petrus has designed its 2020 capital plan to invest capital systematically each quarter within funds flow, permitting excess funds each quarter to reduce debt.
Petrus is a public Canadian oil and gas company focused on property exploitation, strategic acquisitions and risk-managed exploration in Alberta.