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, 2022.
Q2 2022 HIGHLIGHTS:
- Production up 15% – Production was up 15% from 6,309 boe/d in the second quarter of 2021 to 7,280 boe/d in the second quarter of 2022 due to the new wells drilled in late 2021 and the strategic acquisition of Cardium assets located in Petrus’ Ferrier area that closed in March 2022.
- Funds flow(1) increased 188% – Generated funds flow of $23.2 million ($0.21 per share(2)) for the second quarter of 2022, 188% higher than funds flow of $8.1 million ($0.16 per share) for the second quarter of 2021.
- Operating netback(2) up 118% – Operating netback increased by 118% from $20.55/boe in the second quarter of 2021 to $44.86/boe in the second quarter of 2022.
- Commodity price improvement – Realized price per boe increased by 87% in the second quarter of 2022 compared to the second quarter of 2021; from $33.87/boe to $63.33/boe. The realized oil, natural gas and NGL prices increased by 75%, 136% and 88%, respectively.
- Backstopped rights offering – Petrus closed a $20 million rights offering that was backstopped by the Company’s major shareholders. The rights offering was oversubscribed by 84%.
- Net debt(1) reduction – Net debt was $13.9 million at June 30, 2022, an 87% decrease from the second quarter of 2021 and a 78% decrease from December 31, 2021. The Company continues to manage its balance sheet with the goal of maintaining a net debt to funds flow ratio(2) of under 1x.
- Debt restructuring complete – The Company entered into agreements with new lenders providing two new credit facilities (“New Facilities”) totaling $55 million; at June 30, 2022, $18 million was drawn on the New Facilities. The refinancing completes the Company’s debt restructuring, moving forward with supportive lenders that provide stability and liquidity.
2022 CAPITAL PROGRAM
The Company’s 2022 capital program resumed in the second quarter with 2 (1.6 net) operated wells spud and an additional 3 (0.15 net) non-operated wells spud in late June. Given the inherent volatility of commodity prices, the Company recognizes it is prudent to remain disciplined and flexible from an operational and financial perspective. Petrus will continue to monitor the price of Canadian light oil and natural gas and will evaluate capital investments on an ongoing basis.
(1)Non-GAAP measure. Refer to “Non-GAAP and Other Financial Measures”.
(2)Non-GAAP ratio. Refer to “Non-GAAP and Other Financial Measures”.
SELECTED FINANCIAL INFORMATION
OPERATIONS | Three months ended
Jun. 30, 2022 |
Three months ended
Jun. 30, 2021 |
Three months ended
Mar. 31, 2022 |
Three months ended
Dec. 31, 2021 |
Three months ended
Sept. 30, 2021 |
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Average Production | ||||||||||
Natural gas (mcf/d) | 30,913 | 24,291 | 29,530 | 23,494 | 23,942 | |||||
Oil (bbl/d) | 1,073 | 1,214 | 1,250 | 1,002 | 937 | |||||
NGLs (bbl/d) | 1,055 | 1,046 | 1,207 | 962 | 1,010 | |||||
Total (boe/d) | 7,280 | 6,309 | 7,379 | 5,880 | 5,937 | |||||
Total (boe) | 662,456 | 574,084 | 664,010 | 540,924 | 546,227 | |||||
Light oil weighting | 15 | % | 19 | % | 17 | % | 20 | % | 21 | % |
Realized Prices | ||||||||||
Natural gas ($/mcf) | 7.74 | 3.28 | 5.20 | 5.45 | 4.04 | |||||
Oil ($/bbl) | 133.36 | 75.99 | 110.12 | 89.71 | 82.56 | |||||
NGLs ($/bbl) | 74.63 | 39.76 | 60.12 | 56.35 | 45.10 | |||||
Total realized price ($/boe) | 63.33 | 33.87 | 49.31 | 46.29 | 37.00 | |||||
Royalty income | 0.25 | 0.19 | 0.29 | 0.06 | 0.18 | |||||
Royalty expense | (8.64 | ) | (4.87 | ) | (6.89 | ) | (6.34 | ) | (3.94 | ) |
Net oil and natural gas revenue ($/boe) | 54.94 | 29.19 | 42.71 | 40.01 | 33.24 | |||||
Operating expense | (7.92 | ) | (6.80 | ) | (6.76 | ) | (5.02 | ) | (5.57 | ) |
Transportation expense | (2.16 | ) | (1.84 | ) | (2.17 | ) | (1.87 | ) | (1.81 | ) |
Operating netback(1) ($/boe) | 44.86 | 20.55 | 33.78 | 33.12 | 25.86 | |||||
Realized loss on financial derivatives ($/boe) | — | (3.21 | ) | (6.98 | ) | (9.52 | ) | (6.41 | ) | |
Loss on risk management activities ($/boe) | (6.76 | ) | — | — | — | — | ||||
Other income | 0.04 | 1.77 | 0.07 | 0.04 | 0.02 | |||||
General & administrative expense | (1.70 | ) | (2.41 | ) | (0.82 | ) | (2.24 | ) | (1.47 | ) |
Cash finance expense | (1.46 | ) | (2.52 | ) | (1.04 | ) | (1.58 | ) | (3.30 | ) |
Decommissioning expenditures | 0.06 | (0.14 | ) | (0.02 | ) | (0.56 | ) | (0.27 | ) | |
Funds flow & corporate netback(1)($/boe) | 35.04 | 14.04 | 24.99 | 19.26 | 14.43 | |||||
FINANCIAL (000s except $ per share) | Three months ended
Jun. 30, 2022 |
Three months ended
Jun. 30, 2021 |
Three months ended
Mar. 31, 2022 |
Three months ended
Dec. 31, 2021 |
Three months ended Sept. 30, 2021 |
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Oil and natural gas revenue | 42,119 | 19,553 | 32,940 | 25,070 | 20,306 | |||||
Net income (loss) | 18,046 | (4,265 | ) | 10,903 | 114,633 | 7,343 | ||||
Net income (loss) per share | ||||||||||
Basic | 0.16 | (0.09 | ) | 0.11 | 1.19 | 0.04 | ||||
Fully diluted | 0.15 | (0.09 | ) | 0.11 | 1.11 | 0.03 | ||||
Funds flow(2) | 23,208 | 8,070 | 16,601 | 10,418 | 7,874 | |||||
Funds flow per share(1) | ||||||||||
Basic | 0.21 | 0.16 | 0.17 | 0.11 | 0.15 | |||||
Fully diluted | 0.20 | 0.16 | 0.16 | 0.10 | 0.14 | |||||
Capital expenditures | 4,932 | 763 | 5,064 | 12,235 | 6,101 | |||||
Acquisitions (dispositions) | 364 | (100 | ) | 15,200 | — | — | ||||
Weighted average shares outstanding | ||||||||||
Basic | 111,795 | 49,513 | 99,189 | 96,660 | 54,167 | |||||
Fully diluted | 117,203 | 49,513 | 103,250 | 102,868 | 57,638 | |||||
As at period end | ||||||||||
Common shares outstanding | ||||||||||
Basic | 122,017 | 49,559 | 106,907 | 96,708 | 96,603 | |||||
Fully diluted | 131,302 | 49,559 | 113,883 | 103,889 | 100,074 | |||||
Total assets | 302,472 | 176,629 | 308,744 | 290,492 | 173,101 | |||||
Non-current liabilities | 50,924 | 40,838 | 46,702 | 42,172 | 40,200 | |||||
Net debt(2) | 13,895 | 110,346 | 50,044 | 61,779 | 60,071 |
(1)Non-GAAP ratio. Refer to “Non-GAAP and Other Financial Measures”.
(2)Non-GAAP measure. Refer to “Non-GAAP and Other Financial Measures”.
OPERATIONS UPDATE
Second quarter average production by area was as follows:
For the three months ended June 30, 2022 | Ferrier | North Ferrier | Foothills | Central Alberta | Kakwa | Total |
Natural gas (mcf/d) | 19,020 | 4,093 | 2,696 | 4,915 | 192 | 30,916 |
Oil (bbl/d) | 570 | 145 | 91 | 248 | 31 | 1,085 |
NGLs (bbl/d) | 778 | 114 | 6 | 130 | 16 | 1,044 |
Total (boe/d) | 4,518 | 940 | 546 | 1,198 | 78 | 7,280 |
Second quarter average production was 7,280 boe/d in 2022 compared to 6,309 boe/d in 2021. The increase in production is due to the capital activity in the second half of 2021, the strategic acquisition of Cardium assets located in Petrus’ Ferrier area that closed in March 2022, and certain wells in the Foothills area being brought back on-stream due to improved pricing.
An updated corporate presentation can be found on the Company’s website at www.petrusresources.com.
For further information, please contact:
Ken Gray, P.Eng.
President and Chief Executive Officer
T: (403) 930-0889
E: kgray@petrusresources.com
NON-GAAP AND OTHER FINANCIAL MEASURES
This press release makes reference to the terms “operating netback” (on an absolute and $/boe basis), “corporate netback” (on an absolute and $/boe basis), “funds flow” (on an absolute, per share and $/boe basis), “net debt” and “net debt to funds flow ratio”. These non-GAAP and other financial measures are not recognized measures under GAAP (IFRS) and do not have a standardized meaning prescribed by GAAP (IFRS). Accordingly, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. These non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS as indicators of our performance. Management uses these non-GAAP and other financial measures for the reasons set forth below.
Operating Netback
Operating netback is a common non-GAAP financial measure used in the oil and natural gas industry which is a useful supplemental measure to evaluate the specific operating performance by product type at the oil and natural gas lease level. The most directly comparable GAAP measure to operating netback is oil and natural gas revenue. Operating netback is calculated as oil and natural gas revenue less royalty expenses, operating expenses and transportation expenses. See below for a reconciliation of operating netback to oil and natural gas revenue.
Operating netback ($/boe) is a non-GAAP ratio used in the oil and natural gas industry which is a useful supplemental measure to evaluate the specific operating performance by product type at the oil and natural gas lease level. It is calculated as operating netbacks divided by weighted average daily production on a per boe basis. See below.
Corporate Netback and Funds Flow
Corporate netback or funds flow is a common non-GAAP financial measure used in the oil and natural gas industry which evaluates the Company’s profitability at the corporate level. Corporate netback and funds flow are used interchangeably. Petrus analyzes these measures on an absolute value and on a per unit (boe) basis as a non-GAAP ratio. Management believes that funds flow and corporate netback provide information to assist a reader in understanding the Company’s profitability relative to current commodity prices. They are calculated as the operating netback less general and administrative expense, finance expense, decommissioning expenditures, plus other income and the net realized gain (loss) on financial derivatives and risk management activities. See below for a reconciliation of funds flow and corporate netback to oil and natural gas revenue.
Corporate netback ($/boe) or funds flow ($/boe) is a non-GAAP ratio used in the oil and natural gas industry which evaluates the Company’s profitability at the corporate level. Management believes that funds flow ($/boe) or corporate netback ($/boe) provide information to assist a reader in understanding the Company’s profitability relative to current commodity prices. It is calculated as corporate netbacks or funds flow divided by weighted average daily production on a per boe basis. See below.
Funds flow per share (basic and fully diluted) is comprised of funds flow divided by basic or fully diluted weighted average common shares outstanding.
Three months ended
Jun. 30, 2022 |
Three months ended
Jun. 30, 2021 |
Six months ended
June 30, 2022 |
Six months ended
June 30, 2021 |
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$000s | $/boe | $000s | $/boe | $000s | $/boe | $000s | $/boe | |||||||||
Oil and natural gas revenue | 42,119 | 63.58 | 19,553 | 34.06 | 75,059 | 56.58 | 35,892 | 32.44 | ||||||||
Royalty expense | (5,721 | ) | (8.64 | ) | (2,794 | ) | (4.87 | ) | (10,297 | ) | (7.76 | ) | (4,783 | ) | (4.32 | ) |
Net oil and natural gas revenue | 36,398 | 54.94 | 16,759 | 29.19 | 64,762 | 48.82 | 31,109 | 28.12 | ||||||||
Transportation expense | (1,434 | ) | (2.16 | ) | (1,057 | ) | (1.84 | ) | (2,874 | ) | (2.17 | ) | (1,920 | ) | (1.74 | ) |
Operating expense | (5,249 | ) | (7.92 | ) | (3,903 | ) | (6.80 | ) | (9,741 | ) | (7.34 | ) | (7,157 | ) | (6.47 | ) |
Operating netback | 29,715 | 44.86 | 11,799 | 20.55 | 52,147 | 39.31 | 22,032 | 19.91 | ||||||||
Realized loss on financial derivatives | — | — | (1,843 | ) | (3.21 | ) | (4,632 | ) | (3.49 | ) | (3,058 | ) | (2.77 | ) | ||
Loss on risk management activities | (4,476 | ) | (6.76 | ) | — | — | (4,476 | ) | (3.37 | ) | — | — | ||||
Other income | 28 | 0.04 | 1,018 | 1.77 | 75 | 0.06 | 1,041 | 0.94 | ||||||||
General & administrative expense | (1,127 | ) | (1.70 | ) | (1,381 | ) | (2.41 | ) | (1,670 | ) | (1.26 | ) | (2,257 | ) | (2.04 | ) |
Cash finance expense(1) | (969 | ) | (1.46 | ) | (1,444 | ) | (2.52 | ) | (1,655 | ) | (0.34 | ) | (2,474 | ) | (2.24 | ) |
Decommissioning expenditures | 37 | 0.06 | (79 | ) | (0.14 | ) | 21 | 0.02 | (222 | ) | (0.20 | ) | ||||
Funds flow and corporate netback | 23,208 | 35.04 | 8,070 | 14.04 | 39,810 | 30.93 | 15,062 | 13.60 |
(1)Excludes non-cash Term Loan interest payment-in-kind
Net Debt
Net debt is a non-GAAP financial measure and is calculated as the sum of long term debt and working capital (current assets and current liabilities), excluding the current financial derivative contracts and current portion of the lease obligation. Petrus uses net debt as a key indicator of its leverage and strength of its balance sheet. Net debt is reconciled, in the table below, to long-term debt which is the most directly comparable GAAP measure.
($000s) | As at June 30, 2022 | As at March 31, 2022 | As at December 31, 2021 | |||
Long-term debt | 12,000 | — | — | |||
Current assets | (18,783 | ) | (17,356 | ) | (15,611 | ) |
Current liabilities | 18,785 | 67,625 | 80,095 | |||
Current financial derivatives | 2,124 | — | (2,488 | ) | ||
Current portion of lease obligation | (231 | ) | (225 | ) | (217 | ) |
Net debt | 13,895 | 50,044 | 61,779 |
Net debt to funds flow ratio is a non-GAAP ratio used as a key indicator of our leverage and strength of our balance sheet. It is calculated as net debt divided by funds flow for the relevant period.