CALGARY, Alberta, May 11, 2021 (GLOBE NEWSWIRE) — Prairie Provident Resources Inc. (“Prairie Provident”, “PPR” or the “Company”) today announces our financial and operating results for the three months ended March 31, 2021. PPR’s unaudited condensed interim consolidated financial statements for the three months ended March 31, 2021 (“Interim Financial Statements”) and related Management’s Discussion and Analysis (“MD&A”) for the three months ended March 31, 2021 are available on our website at www.ppr.ca and filed on SEDAR.
Q1 2021 HIGHLIGHTS
- Successful Drilling Program: During the quarter, we successfully drilled and completed our first Ellerslie well to prove the emerging play in Princess. The well commenced production on April 29, 2021 and initial production averaged 2232 boe/d (weighted 60% to liquids) during the first 10 days. In addition, we drilled a Glauconite well in Princess that was completed in the second quarter of 2021 with test production rates of 7763 boe/d (weighted 47% to liquids). This well is expected to come on production in mid-May 2021. For Q1 2021, we incurred $4.4 million of Net Capital Expenditures1.
- Production: Production averaged 4,071 boe/d (66% liquids) in the quarter, which was 23% or 1,210 boe/d lower than Q1 2020, due primarily to natural declines and production shut-ins from last year. In the summer of 2020, PPR resumed workover activities that had been deferred due to weak commodity prices on select projects meeting economic thresholds of less than a one-year payout, however, several projects remain uneconomic though Q1 2021, which continues to contribute to reduced production volumes. Q1 2021 average production was lower than 2021 annualized guidance as production from our capital program is scheduled to come on after Q1 2021, in addition to production outages from inclement weather. Production is expected to increase throughout the remainder of 2021 as we look forward to adding new production from our 2021 capital program.
- Operating netback1: Operating netback for Q1 2021 was $5.9 million ($16.17/boe) before the impact of derivatives, and $4.8 million ($13.23/boe) after the realized losses on derivatives, an 85% increase and 7% decrease, respectively, relative to Q1 2020. On a per boe basis, operating netback before and after the realized losses on derivatives increased by 143% and 22%, respectively, primarily due to higher realized prices, partially offset by higher operating expenses and realized losses on derivatives. Q1 2021 operating expenses included higher seasonal electricity and fuel costs and higher maintenance costs on a per boe basis, a direct result of cold weather.
- Adjusted funds flow (“AFF”)1: AFF for Q1 2021 totaled $2.1 million ($0.01 per basic and diluted share), excluding $0.1 million of decommissioning settlements, reflecting a 125% improvement from the same quarter of 2020 primarily due to lower cash interest and G&A expenses.
- Net loss: Net loss totaled $11.5 million in Q1 2021, a $56.6 million improvement compared to Q1 2020. The decrease was primarily driven by the absence of a $77.3 million non-cash impairment charge recognized in Q1 2020 and an increase in foreign exchange gain of $8.0 million in Q1 2021, partially offset by a decrease in unrealized gains on derivative instruments of $31.9 million. Unrealized gains on derivatives recognized in Q1 2020 were caused by sharply declining forward commodity prices at the end of Q1 2020. Conversely, at the end of Q1 2021, forward commodity prices increased resulting in unrealized losses on derivatives for the quarter. The increase in foreign exchange gain was due to strengthening of the Canadian dollar relative to the US dollar at the end of Q1 2021.
- Net debt1: Net debt at March 31, 2021, net debt totaled $118.2 million, an increase of $2.6 million from December 31, 2020. The increase was primarily due to deferred interest recognized on the Company’s long-term debt of $0.4 million and capital expenditures in the quarter that exceeded AFF1, partially offset by a $0.9 million unrealized foreign exchange gain on our US dollar denominated debt. Using current commodity forward prices, capital expenditures are expected to be fully funded by AFF for 2021.
- Long-term debt: At March 31, 2021, PPR had US$44.4 million of borrowings drawn against its US$57.7 million revolving facility (“Revolving Facility”), leaving the Company with US$13.3 million (CAN$16.74 million equivalent (December 31, 2020 — US$11.2 million)) borrowing capacity under the Revolving Facility. In addition, US$47.3 million (CAN$59.54 million) of senior subordinated notes were outstanding at March 31, 2021, for total borrowings of US$91.7 million (CAN$118.24 million equivalent).
1 Non-IFRS measure – see below under “Non-IFRS Measures”
2 Average initial production over a 10-day period commencing April 29, 2021, during which the well produced an average of 133 bbl/d of light & medium crude oil and 543 boe/d Mcf/d of conventional natural gas from the Ellerslie formation. Readers are cautioned that short-term initial production rates are preliminary in nature and may not be indicative of stabilized on-stream production rates, future product types, long-term well or reservoir performance, or ultimate recovery. Actual future results will differ from those realized during an initial short-term production period, and the difference may be material.
3 Average rates realized over a 3-day production test, during which the well produced an average of 367 bbl/d of heavy crude oil and 2,452 Mcf/d of conventional natural gas from the Glauconite formation. Readers are cautioned that short-term test rates are preliminary in nature and may not be indicative of stabilized on-stream production rates, future product types, long-term well or reservoir performance, or ultimate recovery. Actual future results will differ from those realized during an initial short-term test period, and the difference may be material.
4 Converted using the month end exchange rate of $1.00 USD to $1.2575 CAD as at March 31, 2021 and $1.00 USD to $1.2732 CAD as at December 31, 2020.
FINANCIAL AND OPERATING SUMMARY
|Three Months Ended
|($000s except per unit amounts)||2021||2020|
|Light & medium crude oil (bbl/d)||2,453||3,164|
|Heavy crude oil (bbl/d)||117||292|
|Conventional natural gas (Mcf/d)||8,233||10,186|
|Natural gas liquids (bbls/d)||129||127|
|Average Realized Prices|
|Light & medium crude oil ($/bbl)||60.34||41.30|
|Heavy crude oil ($/bbl)||51.76||41.92|
|Conventional natural gas ($/Mcf)||3.48||2.10|
|Natural gas liquids ($/bbl)||44.79||27.52|
|Operating Netback ($/boe)1|
|Realized gains (losses) on derivative instruments||(2.94||)||4.15|
|Operating netback, after realized gains (losses) on derivative instruments||13.23||10.81|
1 Operating netback is a non-IFRS measure (see “Non-IFRS Measures” below).
March 31, 2021
December 31, 2020
|Working capital (deficit)1||(0.4||)||5.3|
|Borrowings outstanding (principal plus deferred interest)||(118.2||)||(121.3||)|
|Total net debt2||(118.6||)||(115.9||)|
|Common shares outstanding (in millions)||128.0||172.3|
1 Working capital (deficit) is a non-IFRS measure (see “Non-IFRS Measures” below), calculated as current assets less current portion of derivative instruments, minus accounts payable and accrued liabilities.
2 Net debt is a non-IFRS measure (see “Non-IFRS Measures” below), calculated by adding working capital (deficit) and long-term debt.
3 Debt capacity reflects the undrawn capacity of the Company’s revolving facility of USD$57.7 million at March 31, 2021 and USD$57.7 million at December 31, 2020, converted at an exchange rate of $1.0000 USD to $1.2575 CAD on March 31, 2021 and $1.0000 USD to $1.2732 CAD on December 31, 2020.
|Three Months Ended
|Net (working interest) wells||2.0||1.0|
|Success rate, net wells (%)||100||%||100||%|
Prairie Provident is encouraged by early production and test data from the first two wells of our 2021 capital program. For the second half of 2021, we expect to drill two development wells in the Princess area, while monitoring our pilot waterflood program at Michichi. Prairie Provident’s full-year 2021 guidance estimates remain unchanged from those presented in the Company’s news release dated March 26, 2021. Additional details on Prairie Provident’s 2021 capital program and guidance can be found on the Company’s website at www.ppr.ca.
ABOUT PRAIRIE PROVIDENT
Prairie Provident is a Calgary-based company engaged in the exploration and development of oil and natural gas properties in Alberta. The Company’s strategy is to grow organically in combination with accretive acquisitions of conventional oil prospects, which can be efficiently developed. Prairie Provident’s operations are primarily focused at the Michichi and Princess areas in Southern Alberta targeting the Banff, the Ellerslie and the Lithic Glauconite formations, along with an established and proven waterflood project at our Evi area in the Peace River Arch. Prairie Provident protects its balance sheet through an active hedging program and manages risk by allocating capital to opportunities offering maximum shareholder returns.