CALGARY, Alberta – Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) is pleased to report financial and operating results as at and for the three and six months ended June 30, 2021. Petrus is focused on generating free cash flow for debt repayment and further development of its Ferrier Cardium asset.
Throughout the second quarter of 2021, global economies continued to show promise of a post-pandemic recovery. Increased demand for oil and natural gas persisted, which further strengthened commodity prices. Petrus generated funds flow of $8.1 million in the second quarter of 2021, which was 15% higher than in the first quarter of 2021. The Company’s production was 6,309 boe/d in the second quarter of 2021, an increase of 7% from 5,912 boe/d in the first quarter of 2021. The incremental production is attributable to 5 (3.2 net) recently drilled wells that were brought on production in late March and early April.
As uncertainty surrounding the COVID-19 pandemic endured and Petrus remained committed to debt repayment, the Company continued to execute a disciplined capital strategy throughout Q2 2021. Petrus will closely monitor the Canadian commodity price environment and evaluate subsequent quarter capital spending on an ongoing basis. Capital investments will remain focused in Ferrier where ownership of critical infrastructure supports low operating costs and high rates of return.
With balance sheet strength remaining a top priority for the Company, Petrus reduced net debt by $6.3 million in the second quarter of 2021, 5% reduction.
HIGHLIGHTS
- Commodity price improvements – Realized price per boe increased by 11% in the second quarter of 2021 compared to the first quarter. This is attributable to strengthening oil and NGL prices, which increased by 14% and 8%, respectively, quarter over quarter.
- Production – Increased production of 6,309 boe/d was associated with two new operated and three non-operated (1.2 net) wells being brought on production early in the quarter. These wells were drilled in the fourth quarter of 2020 and the first quarter of 2021 and the associated capital costs were largely incurred in those quarters.
- Operating netback – Operating netback increased to $11.8 million ($20.55 per boe) in the second quarter of 2021 from $10.2 million ($19.22 per boe) in the first quarter 2021, a 15% increase, and was up 144% from the COVID depressed second quarter of 2020.
- Funds flow – Petrus generated funds flow(1) of $8.1 million ($0.16 per share) in Q2 2021, which is 15% higher than the previous quarter and up 38% year over year.
CREDIT FACILITY EXTENSION
Subsequent to June 30, 2021, the lenders have extended the maturity date of the RCF from July 14 to August 13, 2021. The Company is actively engaged with the RCF lenders to further extend the maturity date of RCF. The Company is currently $73.5 million drawn against the RCF.
SECOND LIEN TERM LOAN EXTENSION
Effective June 15, 2021 Macquarie Bank Limited assigned the Company’s second lien term loan (“Term Loan”) to Blue Oak Partners (Canada) Inc. Subsequent to June 30, 2021, the Company extended the maturity of the Term Loan to October 14, 2021. The Company is actively engaged with the Term Loan lender to further extend the maturity date of Term Loan. The Company has approximately $39 million outstanding on the Term Loan.
2021 OUTLOOK
Consistent with the Company’s strategy of financial flexibility and balance sheet strength, Petrus will determine and provide guidance around quarterly capital spending as the year progresses. Throughout the balance of 2021 Petrus will continue to take a controlled approach to capital investments while also making quarterly payments of $2.75 million per quarter to the revolving credit facility. The Company has the financial and operational flexibility to respond quickly to changing market conditions and adjust capital investment plans accordingly. For the third quarter of 2021, the Board of Directors has approved a capital budget of $7.5 million for the drilling of 4 gross (1.5 net) Ferrier wells and investment in facility expansion in North Ferrier.
(1)Refer to “Non-GAAP Financial Measures” in the Management’s Discussion & Analysis attached hereto.
(2)Refer to “Advisories – Forward-Looking Statements” in the Management’s Discussion & Analysis attached hereto.
SELECTED FINANCIAL INFORMATION
OPERATIONS | Three months ended
Jun. 30, 2021 |
Three months ended
Jun. 30, 2020 |
Three months ended
Mar. 31, 2021 |
Three months ended
Dec. 31, 2020 |
Three months ended
Sept. 30, 2020 |
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Average Production | ||||||||||
Natural gas (mcf/d) | 24,291 | 27,630 | 22,985 | 26,177 | 26,181 | |||||
Oil (bbl/d) | 1,214 | 867 | 923 | 980 | 1,103 | |||||
NGLs (bbl/d) | 1,046 | 819 | 1,158 | 1,014 | 997 | |||||
Total (boe/d) | 6,309 | 6,291 | 5,912 | 6,357 | 6,463 | |||||
Total (boe) | 574,084 | 572,440 | 532,099 | 584,860 | 594,599 | |||||
Light oil weighting | 19 | % | 14 | % | 15 | % | 15 | % | 17 | % |
Realized Prices | ||||||||||
Natural gas ($/mcf) | 3.28 | 2.35 | 3.33 | 3.07 | 2.51 | |||||
Oil ($/bbl) | 75.99 | 27.18 | 66.61 | 49.64 | 46.46 | |||||
NGLs ($/bbl) | 39.76 | 12.87 | 36.79 | 23.52 | 22.05 | |||||
Total realized price ($/boe) | 33.87 | 15.73 | 30.55 | 24.05 | 21.48 | |||||
Royalty income | 0.19 | 0.06 | 0.15 | 0.13 | 0.12 | |||||
Royalty expense | (4.87 | ) | (1.51 | ) | (3.74 | ) | (2.02 | ) | (2.09 | ) |
Net oil and natural gas revenue ($/boe) | 29.19 | 14.28 | 26.96 | 22.16 | 19.51 | |||||
Operating expense | (6.80 | ) | (4.44 | ) | (6.12 | ) | (5.53 | ) | (4.05 | ) |
Transportation expense | (1.84 | ) | (1.40 | ) | (1.62 | ) | (1.68 | ) | (1.63 | ) |
Operating netback(1) ($/boe) | 20.55 | 8.44 | 19.22 | 14.95 | 13.83 | |||||
Realized gain (loss) on derivatives ($/boe) | (3.21 | ) | 6.39 | (2.28 | ) | 0.65 | 2.20 | |||
Other income | 1.77 | 0.17 | 0.04 | 0.31 | 0.04 | |||||
General & administrative expense | (2.41 | ) | (1.43 | ) | (1.65 | ) | (1.81 | ) | (1.07 | ) |
Cash finance expense | (2.52 | ) | (3.20 | ) | (1.93 | ) | (2.49 | ) | (2.16 | ) |
Decommissioning expenditures | (0.14 | ) | (0.15 | ) | (0.27 | ) | (0.63 | ) | (0.13 | ) |
Funds flow & corporate netback(1)(2) ($/boe) | 14.04 | 10.22 | 13.13 | 10.98 | 12.71 | |||||
FINANCIAL (000s except $ per share) | Three months ended
Jun. 30, 2021 |
Three months ended
Jun. 30, 2020 |
Three months ended
Mar. 31, 2021 |
Three months ended
Dec. 31, 2020 |
Three months ended
Sept. 30, 2020 |
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Oil and natural gas revenue | 19,553 | 9,041 | 16,339 | 14,143 | 12,840 | |||||
Net loss | (4,265 | ) | (6,281 | ) | (3,155 | ) | (151 | ) | (3,678 | ) |
Net loss per share | ||||||||||
Basic | (0.09 | ) | (0.13 | ) | (0.06 | ) | — | (0.07 | ) | |
Fully diluted | (0.09 | ) | (0.13 | ) | (0.06 | ) | — | (0.07 | ) | |
Funds flow | 8,070 | 5,855 | 6,993 | 6,423 | 7,551 | |||||
Funds flow per share | ||||||||||
Basic | 0.16 | 0.12 | 0.14 | 0.13 | 0.15 | |||||
Fully diluted | 0.16 | 0.12 | 0.14 | 0.13 | 0.15 | |||||
Capital expenditures | 663 | 305 | 7,917 | 2,797 | 2,543 | |||||
Net dispositions | — | — | — | — | — | |||||
Weighted average shares outstanding | ||||||||||
Basic | 49,513 | 49,469 | 49,469 | 49,469 | 49,469 | |||||
Fully diluted | 49,513 | 49,469 | 49,469 | 49,469 | 49,469 | |||||
As at period end | ||||||||||
Common shares outstanding | ||||||||||
Basic | 49,559 | 49,469 | 49,469 | 49,469 | 49,469 | |||||
Fully diluted | 49,559 | 49,469 | 49,469 | 49,469 | 49,469 | |||||
Total assets | 176,629 | 184,532 | 177,587 | 177,914 | 179,895 | |||||
Non-current liabilities | 40,838 | 43,017 | 42,028 | 45,321 | 44,471 | |||||
Net debt(1) | 110,346 | 120,570 | 116,634 | 114,361 | 116,717 |
(1)Refer to “Non-GAAP Financial Measures”.
(2)Corporate netback is equal to funds flow which is a directly comparable GAAP measure. Petrus analyzes these measures on an absolute value and per unit basis.
OPERATIONS UPDATE
Second quarter average production by area was as follows:
For the three months ended June 30, 2021 | Ferrier | Foothills | Central Alberta | Other | Total | |||||
Natural gas (mcf/d) | 17,628 | 1,468 | 4,808 | 387 | 24,291 | |||||
Oil (bbl/d) | 667 | 111 | 272 | 164 | 1,214 | |||||
NGLs (bbl/d) | 902 | — | 125 | 19 | 1,046 | |||||
Total (boe/d) | 4,507 | 356 | 1,199 | 247 | 6,309 |
Second quarter production averaged 6,309 boe/d in 2021 compared to 6,291 boe/d in 2020. During the second quarter of 2021, production increased marginally compared to the same period in 2021 due to 5 gross (3.2 net) new wells being brought on production at the start of Q2 2021 offsetting production declines.
In the second quarter of 2021, the Company invested $0.7 million of capital spending consisting almost entirely of non-discretionary maintenance capital.