CALGARY, Alberta – Prairie Provident Resources Inc. (“Prairie Provident”, “PPR” or the “Company”) is pleased to announce an update to its 2022 capital budget and non-core disposition process.
MESSAGE TO SHAREHOLDERS
Tony Berthelet, President & Chief Executive Officer, commented: “Given significantly higher oil and natural gas prices, PPR has chosen to pivot our second half 2022 capital program toward non-core reactivations, recompletions and optimization projects to maximize shareholder value. In addition, we expect to drill a Glauconite formation well at Princess as previously announced. The anticipated benefits of this change in scope include improved reserve additions, incremental unhedged revenue, low risk capital execution, and an improved corporate liability rating. This capital program pivot highlights the great work the team has done to identify the low risk, quick payout, value added opportunities in PPR’s non-core asset base. We look forward to sharing the results of this program in the coming quarters.”
NON-CORE PROPERTY DISPOSITION PROCESS
On February 22 2022, PPR announced the plan to market its Central Alberta assets in the producing properties of Wheatland, Craigmyle East, Drumheller, Willdunn, Provost, Hayter and Coutts. After an extensive internal evaluation of properties and a robust sales process, management has elected to redirect capital from the previously announced drilling program to reactivations, recompletions and optimization identified in non-core areas that is expected to provide incremental cashflow and reduce associated liability ratings.
2022 UPDATE HIGHLIGHTS
- Fully funded capital budget remains unchanged at $23.0 to $23.5 million (including capitalized general and administrative expenses and asset retirement obligations (“ARO”)) incorporating increased ARO activity and inflation across services.
- Based on the updated capital budget we maintain our previous production guidance of between 4,350 – 4,600 boe per day and anticipate a reduction in net debt1 of $5.0 – $10.0 million at year end.
- Operating costs are now expected to be approximately $25.00 – $26.00/boe versus the previously announced $20.50 – $22.50/boe, driven by inflationary field cost pressures.
- Finding and development costs from the reactivations, recompletions and optimizations are expected to be $3.15/boe on spending of $2.0 million.
- As previously announced, we have reactivated one of the wells in our Coutts field bringing on 60 bbl/d of oil initial production and stabilized rates of approximately 18 bbl/d compared to a 5 boe/d budgeted production add. In addition, the Loyalist field is currently producing approximately 13 bbl/d of oil with two of the six reactivations producing above expectations. The Loyalist field is budgeted to stabilize at 40 bbl/d as we complete this program. These two optimization examples demonstrate the opportunities within the non-core portfolio.
- The (2.0 net) Banff formation wells drilled at Michichi in Q1 continue to provide strong results with average IP90 rates of 1472,5boe/d and 1153,5boe/d, respectively. We remain encouraged by the strong reservoir pressure after 90 days of production and will continue to expand our waterflood development as part of our second half capital program and will look to continue development drilling activities in 2023.
- The Company plans to drill a Glauconite well at Princess in the third quarter, building off our recent success at the 103/03-29-018-10W4 well drilled in late 2021. Current production of 103/03-29-018-10W4 well is approximately 4404,5 boe/d.
- Net debt is a non-GAAP financial measure (see “Non-GAAP and Other Financial Measures” below), calculated by adding working capital (deficit) and borrowings outstanding under long-term debt.
- Average initial production over a 90-day period commencing March 3, 2022, during which the well produced an average of 130 bbl/d of light & medium crude oil and 258 Mcf/d of conventional natural gas and 6 bbl/d of natural gas liquids from the Banff formation.
- Average initial production over a 90-day period commencing March 3, 2022, during which the well produced an average of 115 bbl/d of light & medium crude oil and 272 Mcf/d of conventional natural gas and 5 bbl/d of natural gas liquids from the Banff formation.
- Comprised of average production of approximately 103 bbl/d of light & medium crude oil and 290 Mcf/d of conventional natural gas
- 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.