Calgary, Alberta – Pine Cliff Energy Ltd. (TSX: PNE) (“Pine Cliff” or the “Company“) is pleased to announce the filing of its third quarter financial and operating results. Included in the filings were Pine Cliff’s unaudited interim condensed consolidated financial statements and related management’s discussion and analysis for the three and nine months ended September 30, 2020 (the “Q3-Report“). Selected highlights are shown below and should be read in conjunction with the Q3-Report.
Third Quarter 2020 Highlights
The third quarter of 2020 saw the steady recovery of crude oil prices along with stable natural gas prices. Pine Cliff benefited from AECO 5A benchmark pricing averaging $2.23 per mcf for the quarter, resulting in Pine Cliff generating positive adjusted funds flow of $809,000.
Highlights from Pine Cliff’s third quarter ended September 30, 2020 include:
- realized $2.18 per Mcf natural gas price for the three months ended September 30, 2020, 41% higher than the $1.55 per Mcf realized for the comparable quarter in 2019;
- produced an average of 18,755 Boe/d and 18,963 Boe/d in the three and nine months ended September 30, 2020, a 1% decrease and unchanged respectively compared to the same periods in 2019;
- brought on production at the end of the quarter from one gross (0.08 net) Edson liquids rich natural gas well drilled during the quarter; and
- issued 7,500,000 common shares at a price of $0.20565 per share on the exercise of share purchase warrants by Alberta Investment Management Corporation.
In Q3 2019, the AECO 5A natural gas benchmark price was $0.90 per Mcf. In Q3 2020, this benchmark price was $2.23 per Mcf, a level not seen for a comparable third quarter since 2016. The strengthening of forward AECO natural gas prices has continued into Q4, where this morning spot daily AECO 5A was priced at $3.15 Mcf and the forward AECO 5A price for calendar 2021 was $3.05 per Mcf.
Operating within the confines of a global pandemic has brought challenges to all businesses, but relatively speaking, the natural gas sector has not been impacted as much as most other industries. The reduction in oil demand combined with oil oversupply has resulted in a reduced global oil price and North American rig counts remaining at historical lows. Pine Cliff’s production is 92% natural gas and over 75% of our production is currently priced off AECO, making Pine Cliff one of the most levered public companies to increases in AECO pricing. With a production decline rate of approximately 8%, Pine Cliff is required to spend a relatively minimal amount of its adjusted funds flow to support, maintain or grow its production levels.
Pine Cliff continues to be disciplined and focused on its strategy, including prioritizing the health and safety of its employees. Pine Cliff successfully transitioned its office staff to work remotely in March and as restrictions eased through the summer, Pine Cliff’s entire workforce had returned to the office by mid-September. Pine Cliff continues to monitor the situation related to COVID-19 and will follow the advice of public health officials in supporting our employees, their families and our business partners.
2020 Updated Guidance
Pine Cliff expects its capital expenditure program for 2020 will total $7.6 million, lower than guidance of $10.2 million, with the drilling of one (1.0 net) Pekisko oil well in Central Alberta being deferred at this time. Based on this revised capital expenditure amount, Pine Cliff expects its 2020 annual production volumes to average at the high end of the guidance range of 18,500 to 19,000 Boe per day, weighted 92% to natural gas.
Financial and Operating Results1
|Three months ended September 30,||Nine months ended September 30,|
|($000s, unless otherwise indicated)|
|Commodity sales (before royalty expense)||24,744||20,107||71,878||73,667|
|Cash flow from operating activities||3,945||(2,931||)||6,121||11,497|
|Adjusted funds flow2||809||(3,922||)||733||854|
|Per share – Basic and Diluted ($/share)2||–||(0.01||)||–||–|
|Per share – Basic and Diluted ($/share)||(0.04||)||(0.05||)||(0.14||)||(0.15||)|
|Percentage natural gas (%)||92%||91%||91%||92%|
|Weighted-average common shares outstanding (000s)|
|Basic and diluted||330,230||327,784||328,605||316,406|
|Combined sales price ($/Boe)||14.34||11.48||13.83||14.23|
|Operating netback ($/Boe)2||1.90||(0.97||)||1.58||1.59|
|Corporate netback ($/Boe)2||0.47||(2.24||)||0.14||0.17|
|Operating netback ($ per Mcfe)2||0.32||(0.16||)||0.26||0.27|
|Corporate netback ($ per Mcfe)2||0.08||(0.37||)||0.02||0.03|
1 Includes results for acquisitions and excludes results for disposition from the closing date.
2 This is a non-GAAP measure, see “NON-GAAP Measures” for additional information.