- Net operating income (“NOI”)1 growth to $100-$130 million
- Adjusted Funds Flow From Operations (“AFFO”)1 increase to $80-$110 million
- Adjusted operating expenses1 of $9.50-10.50/boe
- Production of 40,000-45,000 boe/d
- $45-55 million upstream capital budget
- $10-$15 million pre-FID Goldboro LNG development expense budget, and post-FID Goldboro LNG capital expenditure budget of $250-$350 million2
- Commodities hedging of 55-65% on an 18-month rolling boe/d basis
- Corporate and upstream general and administrative (“G&A”) costs of $0.90 to $1.00 per boe/d
CALGARY, Alberta – Pieridae Energy Limited (“Pieridae” or the “Company”) (PEA.TO) today released its corporate guidance for 2021 which focuses on continued improvement of key metrics including: NOI, AFFO and production, an increased upstream capital budget and pre- and post-final investment decision (“FID”) budget allocations for our Goldboro LNG Project as we continue our commitment of the initiative.
“We are guiding to an increase in NOI primarily due to higher anticipated gas prices in 2021, as well as continued optimization of our assets, higher third-party processing fees, increased overall volumes and other cost saving initiatives,” said Pieridae CEO Alfred Sorensen. “An upstream capital budget of $45-55 million has been approved that includes money to continue investing in our assets to ensure their safety and reliability, as well as funding to maintain our current level of production. Specifically, for Goldboro LNG, we have allocated $10-$15 million for development expenses. And assuming FID is declared by the end of June 2021, a further $250-$300 million capital expenditure budget for Goldboro would be triggered.
“We continue to believe that our share price does not reflect the significant upside offered by our Goldboro LNG Project, an initiative that sets us apart from other Alberta natural gas producing companies,” added Sorensen. “Besides the financial benefits the Project would mean to investors, the multi-billion-dollar initiative would create thousands of much-needed jobs across Canada, support reconciliation through our partnership with the Nova Scotia Mi’kmaq First Nation to build a $720 million workforce lodge, and lower global GHGs by delivering LNG to replace high emissions coal overseas.”
2021 Guidance Details
Pieridae anticipates 2021 NOI in the range of $100-130 million, primarily due to higher forecast natural gas prices, continued optimization of our assets, higher third-party processing fees, increased overall volumes and other cost saving initiatives.
Our adjusted operating expense guidance of $9.50-10.50/boe normalizes our operating expense and is a reflection of third-party revenue and sulphur production revenue being netted off operating costs, as both of these line items add to the operating expenses in order to generate those revenue line items. This brings us closer to a more normalized Opex performance metric when comparing Pieridae to its peers.
Finally, Pieridae continues to take steps to ensure G&A costs are in line with our peers. When we strip out G&A costs related to the Goldboro LNG development project, our forecast G&A is in the range of $0.90 to $1.00 per boe/d, which, again, compares favourably to our peers.
Nearly half of the Company’s $45-$55 million upstream capital budget is comprised of investments for the safe and reliable operations of our assets. As part of our commitment to safety and our regulatory obligations to maintain gas gathering and processing infrastructure, we have two gas plant turnarounds planned next year, one at Caroline and the other at Jumping Pound.
An announcement regarding FID for Goldboro LNG is expected in mid 2021, at which point Pieridae would begin our approximate five-year drilling plan to eventually fill Train 1 at the Goldboro LNG Facility. Prior to FID, the Company plans to spend approximately $12 million on development capital to further flatten our low decline production base. Our ultimate goal through a multi-year conventional Foothills drilling program is to fill our three Alberta sour gas plants as we prepare to send feed gas to the LNG Facility in Nova Scotia.
We expect 2021 production to be in the range of 40-45,000 boe/d. Pieridae anticipates positive volume growth in the midst of two turnarounds and normal decline thanks to decisions that increased volumes in Q4 and investment in development capital in 2021 to further increase volumes.
The Company continues to have a strong hedging program in place to insulate itself from volatile commodity prices. The program is designed to enable us to maintain cashflow targets as we seek to hedge 55-65% of our production on an 18-month rolling boe/d basis.
As the Company continues to advance the Goldboro LNG Project, $10-$15 million has been allocated for pre-FID development expenses in 2021. About half is for Bechtel to deliver a comprehensive engineering, procurement, construction and commissioning (“EPCC”) execution plan by March 31, 2021, and deliver a final lump sum, turnkey EPCC contract price proposal by May 31, 2021.
The remaining funds will be used for necessary third-party due diligence work and fees for midstream companies for the delivery of pipeline engineering analyses that all must be completed in order for the Company to be in a position to make a FID for the Project.
Assuming a successful FID, Goldboro LNG capital expenditures of $250-$350 million will be incurred in 2021. These expenditures would be made on early works at the LNG site: highway re-alignment around the site; a down payment for construction of a large-scale workforce lodge; building key marine facilities for LNG offloading; and site preparation such as areas to store equipment and large-scale Facility building materials.
Environmental, Social, Governance (“ESG”) Report Development
As companies continue to champion ethical responsibility, a focus on ESG can help firms understand the positive impacts and manage the risks its operations have on customers, investors, employees, communities and the environment.
At Pieridae, we are aligned with this, including the value it brings to what we strive to accomplish each and every day. We have formally started our ESG journey, partnering with a global leader in ESG strategy development within the energy sector to facilitate and guide the Company towards formulating and implementing our ESG strategy. Their strong knowledge of key stakeholders including Indigenous Peoples, investors, government and others is important in developing our ESG program as we pursue FID and financing of our Goldboro LNG Project.
The target is to issue an inaugural Pieridae ESG Report early in Q2 2021.
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 157,641,871 common shares issued and outstanding which trade on the TSX (“PEA.TO”).