Calgary, Alberta – TransGlobe Energy Corporation (AIM: TGL) (TSX: TGL) (NASDAQ: TGA) (“TransGlobe” or the “Company”) is pleased to announce its financial and operating results for the three and six months ended June 30, 2022. All dollar values are expressed in United States dollars unless otherwise stated. TransGlobe’s Condensed Consolidated Financial Statements together with the notes related thereto, as well as TransGlobe’s Management’s Discussion and Analysis for the three and six months ended June 30, 2022 and 2021, are available on TransGlobe’s website at www.trans-globe.com.
FINANCIAL HIGHLIGHTS:
- Second quarter sales averaged 12,609 boe/d including 104.0 Mbbls sold to EGPC for proceeds of $11.8 million and one cargo lifting of 451.0 Mbbls of entitlement crude oil sold for proceeds of $46.3 million;
- Average realized price for Q2-2022 sales of $95.37/boe; Q2-2022 average realized price on Egypt sales was $101.29/bbl and on Canadian sales was $59.65/boe;
- Funds flow from operations of $42.5 million ($0.58 per share) in the quarter;
- Second quarter net earnings of $32.1 million ($0.44 per share), inclusive of a $0.6 million unrealized derivative gain on commodity contracts;
- Ended the second quarter with positive working capital of $78.6 million, including cash of $61.2 million;
- Achieved consolidated netbacks of $42.25 per boe during the second quarter, an increase of 49% from the previous quarter primarily due to improved commodity prices and the Company’s improved economic interest under the Merged Concession agreement;
OPERATIONAL HIGHLIGHTS:
- Second quarter production averaged 12,132 boe/d (Egypt 10,338 bbls/d, Canada 1,794 boe/d), a decrease of 314 boe/d (3%) from the previous quarter, primarily due to planned maintenance at a third-party processing facility in Canada. This was partially offset by an increase in production in the Eastern desert from Q1-2022 resulting from new development wells drilled in 2022, partially offset by natural declines;
- Production in the month of July averaged ~11,458 boe/d (Egypt ~9,257 bbls/d, Canada ~2,201 boe/d), a decrease of 6% from Q2-2022 primarily due to Egypt production being affected by higher than expected natural declines and low initial well performance from the secondary Q2 drilling campaign targets, partially offset by an increase in production in Canada after completion of the planned third-party facility turnaround in the second quarter;
- Ended the quarter with nil entitlement crude oil inventory, a decrease of 43.4 Mbbls from Q1-2022. This decrease is due to sales outpacing production in the period primarily driven by increased sales volumes from the Q2-2022 cargo lifting and direct sales to EGPC in June;
- Drilled and cased five development wells in the Eastern Desert of Egypt;
- Drilled three 100% working interest horizontal Cardium reservoir development wells (two 2-mile, and one 1-mile) in the South Harmattan area in Canada. Another 1-mile 100% working interest horizontal Cardium reservoir development well was spud in June with rig release in early July. Stimulation and equipping of these wells commenced in July 2022, with first production anticipated in September 2022;
- Increased capital budget by $4.4 million to $74.9 million (before capitalized G&A) for the year, due to increased tie-in costs in Canada and the drilling of one additional well and performance of two additional recompletions in the Eastern Desert in Egypt;
CORPORATE HIGHLIGHTS:
- As announced on January 20, 2022, the Company executed its agreement (the “Merged Concession agreement” or “Merged Concession”) with the Egyptian General Petroleum Corporation (“EGPC”) to merge its three existing Eastern Desert concessions with a 15-year primary term and improved Company economics;
- On March 16, 2022 the Company declared a dividend of $0.10 per share, which was paid on May 12, 2022 to shareholders of record on April 29, 2022. The ex-dividend date was April 28, 2022; and
- On July 14 2022 TransGlobe and VAALCO Energy, Inc. announced that they have entered into a definitive arrangement agreement pursuant to which VAALCO will acquire all of the outstanding common shares of TransGlobe in a stock-for-stock strategic business combination transaction.
FINANCIAL AND OPERATING RESULTS
Additional financial information is provided in the Company’s Condensed Consolidated Financial Statements together with the notes related thereto, as well as TransGlobe’s Management’s Discussion and Analysis for the three months ended June 30, 2022 and 2021. These documents, along with other documents affecting the rights of securityholders and other information relating to the Company, may be found on SEDAR at www.sedar.com and in the Company’s Annual Report on Form 40-F for the fiscal year ended December 31, 2021, filed on EDGAR at www.sec.gov.
(US$000s, except per share, price, volume amounts and % change)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||
Financial | 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||||
Petroleum and natural gas sales | 109,427 | 85,018 | 29 | 190,937 | 127,295 | 50 | ||||||||||||
Petroleum and natural gas sales, net of royalties | 74,690 | 50,595 | 48 | 127,644 | 68,647 | 86 | ||||||||||||
Realized derivative loss on commodity contracts | 717 | 3,646 | (80 | ) | 767 | 5,191 | (85 | ) | ||||||||||
Unrealized derivative (gain) loss on commodity contracts | (569 | ) | 1,248 | (146 | ) | 787 | 4,218 | (81 | ) | |||||||||
Production and operating expense | 14,830 | 19,722 | (25 | ) | 28,109 | 29,171 | (4 | ) | ||||||||||
Selling costs | 2,010 | 1,671 | 20 | 2,493 | 1,705 | 46 | ||||||||||||
General and administrative expense | 8,077 | 3,670 | 120 | 14,942 | 8,707 | 72 | ||||||||||||
Depletion, depreciation and amortization expense | 7,299 | 6,959 | 5 | 14,169 | 11,774 | 20 | ||||||||||||
Income tax expense | 9,381 | 5,605 | 67 | 17,939 | 10,265 | 75 | ||||||||||||
Cash flow generated by operating activities | 42,170 | 23,832 | 77 | 18,388 | 19,892 | (8 | ) | |||||||||||
Funds flow from operations1 | 42,465 | 17,100 | 148 | 69,596 | 17,181 | 305 | ||||||||||||
Basic per share2 | 0.58 | 0.24 | 0.95 | 0.24 | ||||||||||||||
Diluted per share2 | 0.57 | 0.24 | 0.94 | 0.24 | ||||||||||||||
Net earnings (loss) | 32,133 | 7,722 | 316 | 80,943 | (3,302 | ) | (2,551 | ) | ||||||||||
Basic per share | 0.44 | 0.11 | 1.11 | (0.05 | ) | |||||||||||||
Diluted per share | 0.44 | 0.11 | 1.09 | (0.05 | ) | |||||||||||||
Capital expenditures3 | 15,736 | 3,597 | 337 | 24,585 | 6,504 | 278 | ||||||||||||
Working capital6 | 78,642 | 17,136 | 359 | 78,642 | 17,136 | 359 | ||||||||||||
Long-term debt, including current portion | 3,102 | 16,951 | (82 | ) | 3,102 | 16,951 | (82 | ) | ||||||||||
Common shares outstanding | ||||||||||||||||||
Basic (weighted average) | 73,241 | 72,542 | 1 | 73,009 | 72,542 | 1 | ||||||||||||
Diluted (weighted average) | 73,517 | 72,922 | 1 | 74,337 | 72,954 | 2 | ||||||||||||
Total assets | 354,836 | 208,479 | 70 | 354,836 | 208,479 | 70 | ||||||||||||
Operating | ||||||||||||||||||
Average production volumes (boe/d) | 12,132 | 13,077 | (7 | ) | 12,288 | 12,652 | (3 | ) | ||||||||||
Average sales volumes (boe/d) | 12,609 | 16,542 | (24 | ) | 12,288 | 13,135 | (6 | ) | ||||||||||
Inventory (Mbbls) | – | 140.3 | (100 | ) | – | 140.3 | (100 | ) | ||||||||||
Average realized sales price ($/boe)4 | 95.37 | 56.48 | 69 | 85.85 | 53.54 | 60 | ||||||||||||
Production and operating expenses ($/boe)5 | 12.92 | 13.10 | (1 | ) | 12.64 | 12.27 | 3 |
1 Non-GAAP financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. The most directly comparable GAAP measure for funds flow from operations is cash flow generated by operating activities. Refer to “Non-GAAP and Other Financial Measures” contained within the Q2-2022 MD&A.
2 Non-GAAP ratio that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Includes a non-GAAP financial measure component of funds flow from operations. Refer to “Non-GAAP and Other Financial Measures” contained within the Q2-2022 MD&A.
3 Non-GAAP financial measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. The most directly comparable GAAP measure for capital expenditures is cash flow used in investing activities. Refer to “Non-GAAP and Other Financial Measures” contained within the Q2-2022 MD&A.
4 Supplementary financial measure that is comprised of petroleum and natural gas sales, as determined in accordance with IFRS, divided by the Company’s average daily production volumes.
5 Supplementary financial measure that is comprised of production and operating expenses, as determined in accordance with IFRS, divided by the Company’s average daily production volumes.
6 Supplementary financial measure that is comprised of current assets less current liabilities, as determined in accordance with IFRS.
2022 | 2021 | ||||||||||||||
Average reference prices and exchange rates | Q-2 | Q-1 | Q-4 | Q-3 | Q-2 | ||||||||||
Crude oil | |||||||||||||||
Dated Brent average oil price ($/bbl) | 113.54 | 100.30 | 79.59 | 73.47 | 68.83 | ||||||||||
Edmonton Sweet index ($/bbl) | 106.68 | 92.64 | 73.19 | 66.61 | 63.07 | ||||||||||
Natural gas | |||||||||||||||
AECO ($/MMBtu) | 5.42 | 3.68 | 3.89 | 2.97 | 2.48 | ||||||||||
US/Canadian Dollar average exchange rate | 1.28 | 1.27 | 1.26 | 1.26 | 1.23 |
CORPORATE SUMMARY
TransGlobe Energy Corporation (“TransGlobe” or the “Company”) produced an average of 12,132 barrels of oil equivalent per day (“boe/d”) during the second quarter of 2022. Egypt production was 10,338 barrels of oil per day (“bbls/d”) and Canada production was 1,794 boe/d. Production for the quarter was below full year 2022 guidance of 12,400 to 13,400 boe/d and 3% lower than the previous quarter. The decrease was primarily due to planned maintenance at a third-party processing facility in Canada, partially offset by an increase in production in the Eastern desert from the ongoing drilling program. It is expected that annual production will be within full-year 2022 production guidance.
TransGlobe’s Egyptian crude oil is sold at a quality discount to Dated Brent. The Company received an average price of $101.29 per barrel in Egypt during the quarter. In Canada, the Company received an average of $106.67 per barrel of oil, $44.38 per barrel of NGLs and $5.14 per thousand cubic feet (“Mcf”) of natural gas during the quarter.
During Q2-2022, the Company had funds flow from operations of $42.5 million and ended the quarter with positive working capital of $78.6 million, including cash of $61.2 million. The Company had net earnings in the quarter of $32.1 million, inclusive of a $0.6 million unrealized derivative gain on commodity contracts which represents a fair value adjustment on the Company’s hedging contracts at June 30, 2022.
In Egypt, the Company sold one cargo lifting of 451.0 Mbbls of entitlement crude oil during the quarter for proceeds of $46.3 million, which were collected in May and June 2022. TransGlobe also sold 104.0 Mbbls of inventoried entitlement crude oil to the Egyptian General Petroleum Company (“EGPC”) for proceeds of $11.8 million during Q2-2022. All Canadian production was sold during the quarter.
As announced on January 20, 2022, the agreement with the Egyptian General Petroleum Corporation to merge the Company’s three existing Eastern Desert concessions was executed. In advance of the Minister of Petroleum and Mineral Resources of the Arab Republic of Egypt (the “Minister”) executing the Merged Concession agreement with TransGlobe, the Company paid the first modernization payment ($15.0 million) and signature bonus ($1.0 million) as part of the conditions precedent to the official signing ceremony on January 19, 2022. Upon finalization of the agreement, TransGlobe recognized the amounts due from the effective date to closing of $67.5 million based on historical pricing at the time of production. This amount is still under discussions with the EGPC and is expected to be received through normal EGPC receivables collections. On February 1, 2022, the Company paid the second modernization payment ($10.0 million). In accordance with the Merged Concession agreement, TransGlobe will make a further four annual equalization payments of $10.0 million each beginning February 1, 2023 until February 1, 2026. The Company also has minimum financial work commitments of $50.0 million per each five-year period of the primary development term, commencing on the February 1, 2020 effective date.
The results achieved in the six months ended June 30, 2022 are inclusive of the impact of the Merged Concession.
In Egypt, during the quarter, the Company drilled and cased five development oil wells in the Eastern Desert. The K-78 development well was drilled to a total depth of 1,422 meters. The well was fully logged and evaluated with an internally estimated 21.8 meters of net oil pay in the Asl-A reservoir and 10.2 meters of net oil pay in the Asl-B. The second well, K-75, was drilled to a total depth of 1,396 meters and was fully logged and evaluated. The well encountered 4.9 meters of net oil pay in the Asl-A reservoir. The third well, K-74, was drilled to a total depth of 1,404 meters and was fully logged and evaluated. The well encountered 9.6 meters of net oil pay in the Asl-A Reservoir. TransGlobe drilled a fourth development oil well, K-73, to a total depth of 1,406 meters, encountering an internally estimated 20.6 meters of net oil pay in Asl-A reservoir and 1.9 meters in the Asl-B reservoir. An additional well, K-77 in K-field, was drilled to 1,410 meters. The well was fully logged and evaluated. The well encountered an internally estimated 19.4 meters of net oil pay in the Asl-A reservoir and 3.4 meters of net oil pay in the Asl-B reservoir.
In Canada, during the quarter, TransGlobe successfully drilled three 100% working interest horizontal Cardium reservoir development wells (two 2-mile, and one 1-mile) in the South Harmattan area. Another 1-mile 100% working interest horizontal Cardium reservoir development well was spud in June with rig release in early July. Stimulation and equipping of these wells commenced in July 2022, with first production anticipated in September 2022.
The Company is projecting an additional capital increase of $4.4 million for 2022 to $74.9 million (before capitalized G&A). In Canada, the increase is primarily the result of increased tie-in costs ($3.2 million). In Egypt, the increase is due to the drilling of one additional well and performing two additional recompletions in the Eastern Desert.
On July 14 2022 TransGlobe and VAALCO Energy, Inc. announced that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) pursuant to which VAALCO will acquire all of the outstanding common shares of TransGlobe in a stock-for-stock strategic business combination transaction (the “Transaction”). Under the terms of the Arrangement Agreement, VAALCO will acquire each TransGlobe share for 0.6727 of a VAALCO share of common stock, which represented a 24.9 per cent premium per TransGlobe common share based on the companies’ respective 30-day volume weighted average share prices as of market close on July 13, 2022. The Transaction will result in VAALCO stockholders owning approximately 54.5 percent and TransGlobe shareholders owning approximately 45.5 percent of the combined company.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
(100% working interest, operated)
Operations and Exploration
The Company continued to use the EDC-64 rig in its Eastern Desert drilling campaign, managing to drill and case five additional development wells in the K-Field during the quarter.
The K-71 well was put on production from the Asl-B reservoir only and is currently producing at 480 bbls/d (heavy crude, field estimate) and 20% water cut. The Asl-A reservoir was not perforated and was internally estimated to have 19 m of net oil pay. The Asl-A is a potential future recompletion.
The K-78 well was drilled to a total depth of 1,422 meters. The well was fully logged and evaluated with an internally estimated 21.8 meters of net oil pay in the primary Asl-A reservoir and 10.2 meters of net oil pay in the secondary Asl-B reservoir. The Asl-B was perforated to appraise its oil productivity and put on production however, the production from this zone was with a high water cut. The Asl-B zones are currently being isolated and tested individually to assess further potential for oil production. If insufficient production results, the primary Asl-A reservoir target will be recompleted in the near future.
The K-75 well was drilled to a total depth of 1,396 meters. The well was fully logged and evaluated. The well encountered 4.9 meters of net oil pay in the Asl-A. Subsequent to the quarter, the Asl-A was perforated and the well was recently put on production at 41 bbl/d (heavy crude, field estimate) and 90% water cut.
The K-74 well was drilled to a total depth of 1,404 meters. The well was fully logged and evaluated. The well encountered 9.6 meters of net oil pay in the Asl-A reservoir. Subsequent to the quarter, the Asl-A was perforated and the well put on production. It is currently producing 88 bbls/d (heavy crude, field estimate) at 60% water cut.
The K-73 well was drilled to a total depth of 1,406 meters. The well was fully logged and evaluated with an internally estimated 20.6 meters of net oil pay in the Asl-A reservoir and 1.9 meters in the Asl-B reservoir. The well was perforated in the Asl-A reservoir subsequent to the quarter and put on production with a current rate of 126 bbls/d (heavy crude, field estimate) and 79% water cut.
The K-77 well in K-Field was drilled to 1,410 meters. The well was fully logged and evaluated. The well encountered an internally estimated 19.4 meters of net oil pay in the Asl-A reservoir and 3.4 meters of net oil pay in the Asl-B reservoir. The well was perforated in the Asl-B reservoir and is currently producing 31 bbls/d at 96% water cut. The well is scheduled for a recompletion in the Asl-A.
The Arta-76 and NWG-1E vertical wells have been stimulated. These wells confirmed the presence of oil in the Nukhul, were cored to provide data to update the reservoir models, and have successfully delineated the reservoir for optimal targeting of the forthcoming horizontal wells. Both wells are expected to be used for micro-seismic monitoring of the multi-stage stimulation of the horizontal wells, and this data will be used to calibrate our stimulation model for optimization of the future horizontal well development program. Meanwhile, the two wells have been put on production. Arta-76 is producing intermittently in the 20-30 bbl/d range and water cut ranging from ~20-30% (heavy crude, field estimate). NWG-1E is currently producing at 14 bbls/d with a 62% water cut (heavy crude, field estimate).
The Company continues working to proactively mitigate potential supply chain issues by engaging alternative materials suppliers. In the short term, materials shortages causing tie-in delays to some recently drilled wells are being addressed.
Production
Production averaged 10,256 bbls/d during the quarter, an increase of 2% (218 bbls/d) from the previous quarter. The increase was primarily due to the new development wells drilled in 2022, partially offset by natural declines.
Production for the month of July 2022 averaged ~9,257 bbls/d. Production was lower due to higher than expected natural declines and low initial well performance from the secondary Q2 drilling campaign targets. A well testing campaign is in progress to identify impacted wells and plan potential remedial interventions.
Sales
The Company sold 101.1 Mbbls of entitlement crude oil to EGPC and sold one cargo lifting of 451.0 Mbbls of entitlement crude oil during the quarter.
Quarterly Eastern Desert Production (bbls/d) | 2022 | 2021 | ||||||||||
Q-2 | Q-1 | Q-4 | Q-3 | |||||||||
Gross production rate1 | 10,256 | 10,038 | 9,771 | 10,653 | ||||||||
TransGlobe production sold (inventoried) | 477 | (482 | ) | – | 1,525 | |||||||
Total sales | 10,733 | 9,556 | 9,771 | 12,178 | ||||||||
Government share (royalties and tax) | 4,648 | 4,440 | 5,549 | 6,050 | ||||||||
TransGlobe sales (after royalties and tax)2 | 6,085 | 5,116 | 4,222 | 6,128 | ||||||||
Total sales | 10,733 | 9,556 | 9,771 | 12,178 |
1 Quarterly production by concession (bbls/d):
Eastern Desert – 10,733 (Q2-2022) and 10,038 (Q1-2022)
West Gharib – 2,648 (Q4- 2021), and 2,932 (Q3- 2021)
West Bakr – 6,804 (Q4- 2021), and 7,257 (Q3-2021))
North West Gharib – 319 (Q4- 2021), and 464 (Q3-2021)
2 Under the terms of the Production Sharing Concession Agreements, royalties and taxes are paid out of the government’s share of production sharing oil.
WESTERN DESERT
South Ghazalat (100% working interest, operated)
Operations and Exploration
A problem with the rigless artificial lift system deployed on SGZ-6X well at South Ghazalat is under investigation. On artificial lift, the lower Bahariya reservoir at SGZ-6X was producing 93 bbls/d of light crude oil with an 83% watercut (field estimate) prior to well shut-in.
Production
Production averaged 82 bbls/d during the quarter, an increase of 58% (30 bbls/d) from the previous quarter. The increase was primarily due to the optimization of the artificial lift system, partially offset by higher water cuts than anticipated and natural declines.
There was no production in July 2022 at South Ghazalat due to the SGZ-6X shut-in.
Sales
The Company sold 2,823 bbls of entitlement crude oil to EGPC during the quarter.
Quarterly Western Desert Production (bbls/d) | 2022 | 2021 | ||||||||||
Q-2 | Q-1 | Q-4 | Q-3 | |||||||||
Gross production rate | 82 | 52 | 294 | 623 | ||||||||
Total sales | 82 | 52 | 294 | 623 | ||||||||
Government share (royalties and tax) | 51 | 32 | 183 | 388 | ||||||||
TransGlobe sales (after royalties and tax)1 | 31 | 20 | 111 | 235 | ||||||||
Total sales | 82 | 52 | 294 | 623 |
1 Under the terms of the Production Sharing Concession Agreements, royalties and taxes are paid out of the government’s share of production sharing oil.
CANADA
Operations and Exploration
During the quarter, three 100% working interest Harmattan horizontal Cardium reservoir wells (two 2-mile, and one 1-mile) were drilled in the South Harmattan area. Another 1-mile 100% working interest horizontal Cardium reservoir development well was spud in June with rig release in early July. Stimulation and equipping of these wells commenced in July 2022, with first production anticipated in September 2022.
The Company has spudded a 100% working interest 1-mile Harmattan horizontal Cardium reservoir well, the start of a three horizontal well Harmattan Cardium reservoir summer drill program.
Production
In Canada, production averaged 1,794 boe/d during the quarter, a decrease of 562 boe/d (24%) from the previous quarter and below full year 2022 guidance of 2,400 to 2,600 boe/d. The decrease in production from the previous quarter is primarily due to planned maintenance at a third-party processing facility.
Production in July 2022 averaged ~2,201 boe/d with ~682 bbls/d of oil. The increase from Q2-2022 is due to wells being back on stream following completion of the planned third-party facility turnaround in the second quarter.
Quarterly Canada Production | 2022 | 2021 | ||||||||||
Q-2 | Q-1 | Q-4 | Q-3 | |||||||||
Canada crude oil (bbls/d) | 570 | 821 | 1,176 | 601 | ||||||||
Canada NGLs (bbls/d) | 624 | 768 | 716 | 677 | ||||||||
Canada natural gas (Mcf/d) | 3,600 | 4,598 | 4,832 | 4,734 | ||||||||
Total production (boe/d) | 1,794 | 2,356 | 2,698 | 2,066 |
Condensed Consolidated Interim Statements of Earnings (Loss) and Comprehensive Income (Loss)
(Unaudited – Expressed in thousands of U.S. Dollars, except per share amounts)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
REVENUE | ||||||||||||
Petroleum and natural gas sales, net of royalties | 74,690 | 50,595 | 127,644 | 68,647 | ||||||||
Finance revenue | 3 | 3 | 3 | 6 | ||||||||
Other revenue | 1 | 33 | 1 | 33 | ||||||||
74,694 | 50,631 | 127,648 | 68,686 | |||||||||
EXPENSES | ||||||||||||
Production and operating | 14,830 | 19,722 | 28,109 | 29,171 | ||||||||
Selling costs | 2,010 | 1,671 | 2,493 | 1,705 | ||||||||
General and administrative | 8,077 | 3,670 | 14,942 | 8,707 | ||||||||
Foreign exchange loss | 13 | 10 | 5 | 43 | ||||||||
Finance costs | 717 | 333 | 1,271 | 803 | ||||||||
Depletion, depreciation and amortization | 7,299 | 6,959 | 14,169 | 11,774 | ||||||||
Asset retirement obligation accretion | 86 | 45 | 159 | 111 | ||||||||
Gain on concession merger | – | – | (7,953 | ) | – | |||||||
Loss on financial instruments | 148 | 4,894 | 1,554 | 9,409 | ||||||||
Impairment reversal | – | – | (25,983 | ) | – | |||||||
33,180 | 37,304 | 28,766 | 61,723 | |||||||||
Earnings before income taxes | 41,514 | 13,327 | 98,882 | 6,963 | ||||||||
Income tax expense – current | 9,381 | 5,605 | 17,939 | 10,265 | ||||||||
NET EARNINGS (LOSS) | 32,133 | 7,722 | 80,943 | (3,302 | ) | |||||||
OTHER COMPREHENSIVE (LOSS) INCOME | ||||||||||||
Currency translation adjustments | (1,815 | ) | 772 | (1,083 | ) | 1,166 | ||||||
COMPREHENSIVE INCOME (LOSS) | 30,318 | 8,494 | 79,860 | (2,136 | ) | |||||||
Net earnings (loss) per share | ||||||||||||
Basic | 0.44 | 0.11 | 1.11 | (0.05 | ) | |||||||
Diluted | 0.44 | 0.11 | 1.09 | (0.05 | ) |
Condensed Consolidated Interim Balance Sheets
(Unaudited – Expressed in thousands of U.S. Dollars)
As at | As at | |||||
June 30, 2022 | December 31, 2021 | |||||
ASSETS | ||||||
Current | ||||||
Cash | 61,175 | 37,929 | ||||
Accounts receivable | 74,790 | 12,217 | ||||
Prepaids and other | 5,328 | 4,024 | ||||
141,293 | 54,170 | |||||
Non-Current | ||||||
Intangible exploration and evaluation assets | 2,737 | 2,673 | ||||
Property and equipment | ||||||
Petroleum and natural gas assets | 208,510 | 173,804 | ||||
Other | 2,296 | 2,202 | ||||
Deferred taxes | – | 6,246 | ||||
354,836 | 239,095 | |||||
LIABILITIES | ||||||
Current | ||||||
Accounts payable and accrued liabilities | 42,707 | 26,112 | ||||
Share-based compensation liabilities | 8,286 | 6,174 | ||||
Modernization payment liabilities | 9,555 | – | ||||
Derivative commodity contracts | 858 | 88 | ||||
Lease obligations | 1,245 | 764 | ||||
62,651 | 33,138 | |||||
Non-Current | ||||||
Long-term debt | 3,102 | 3,040 | ||||
Asset retirement obligations | 11,335 | 14,102 | ||||
Share-based compensation liabilities | 1,892 | 3,959 | ||||
Modernization payment liabilities | 24,620 | – | ||||
Lease obligations | 1,005 | 36 | ||||
Deferred taxes | – | 6,246 | ||||
104,605 | 60,521 | |||||
SHAREHOLDERS’ EQUITY | ||||||
Share capital | 153,118 | 153,021 | ||||
Accumulated other comprehensive income | 755 | 1,838 | ||||
Contributed surplus | 23,905 | 24,896 | ||||
Retained earnings (deficit) | 72,453 | (1,181 | ) | |||
250,231 | 178,574 | |||||
354,836 | 239,095 |
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(Unaudited – Expressed in thousands of U.S. Dollars)
Six Months Ended June 30 | ||||||
2022 | 2021 | |||||
Share Capital | ||||||
Balance, beginning of period | 153,021 | 152,805 | ||||
Stock options exercised | (990 | ) | – | |||
Transfer from contributed surplus on exercise of options | 1,087 | – | ||||
Balance, end of period | 153,118 | 152,805 | ||||
Accumulated Other Comprehensive Income | ||||||
Balance, beginning of period | 1,838 | 1,900 | ||||
Currency translation adjustment | (1,083 | ) | 1,166 | |||
Balance, end of period | 755 | 3,066 | ||||
Contributed Surplus | ||||||
Balance, beginning of period | 24,896 | 25,109 | ||||
Share-based compensation expense | 96 | 194 | ||||
Transfer to share capital on exercise of options | (1,087 | ) | – | |||
Balance, end of period | 23,905 | 25,303 | ||||
Retained Earnings (Deficit) | ||||||
Balance, beginning of period | (1,181 | ) | (41,519 | ) | ||
Net earnings (loss) | 80,943 | (3,302 | ) | |||
Dividends | (7,309 | ) | – | |||
Balance, end of period | 72,453 | (44,821 | ) |
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited – Expressed in thousands of US Dollars)
Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||
OPERATING | ||||||||||||
Net earnings (loss) | 32,133 | 7,722 | 80,943 | (3,302 | ) | |||||||
Adjustments for: | ||||||||||||
Depletion, depreciation and amortization | 7,299 | 6,959 | 14,169 | 11,774 | ||||||||
Asset retirement obligation accretion | 86 | 45 | 159 | 111 | ||||||||
Impairment reversal | – | – | (25,983 | ) | – | |||||||
Share-based compensation | 2,801 | 816 | 6,231 | 3,587 | ||||||||
Finance costs | 717 | 333 | 1,271 | 803 | ||||||||
Unrealized (gain) loss on financial instruments | (569 | ) | 1,248 | 787 | 4,218 | |||||||
Unrealized loss on foreign currency translation | 19 | 8 | 92 | 12 | ||||||||
Gain on concession merger | – | – | (7,953 | ) | – | |||||||
Asset retirement obligations settled | (21 | ) | (31 | ) | (120 | ) | (22 | ) | ||||
Changes in working capital | (295 | ) | 6,732 | (51,208 | ) | 2,711 | ||||||
Net cash generated by operating activities | 42,170 | 23,832 | 18,388 | 19,892 | ||||||||
INVESTING | ||||||||||||
Additions to intangible exploration and evaluation assets | (40 | ) | (15 | ) | (64 | ) | (578 | ) | ||||
Additions to petroleum and natural gas assets | (15,662 | ) | (3,557 | ) | (24,293 | ) | (5,887 | ) | ||||
Additions to other assets | (34 | ) | (25 | ) | (228 | ) | (39 | ) | ||||
Changes in working capital | 5,874 | 522 | 5,904 | 2,347 | ||||||||
Net cash used in investing activities | (9,862 | ) | (3,075 | ) | (18,681 | ) | (4,157 | ) | ||||
FINANCING | ||||||||||||
Issue of common shares | (325 | ) | – | (989 | ) | – | ||||||
Interest paid | (42 | ) | (291 | ) | (78 | ) | (584 | ) | ||||
Increase in long-term debt | 55 | 146 | 110 | 225 | ||||||||
Payments on lease obligations | (508 | ) | (479 | ) | (997 | ) | (1,071 | ) | ||||
Repayments of long-term debt | – | (5,000 | ) | – | (5,000 | ) | ||||||
Dividends paid | (7,309 | ) | – | (7,309 | ) | – | ||||||
Increase in modernization payment liabilities | – | – | 59,027 | – | ||||||||
Payments on modernization payment liabilities | – | – | (26,000 | ) | – | |||||||
Changes in working capital | (49 | ) | (8 | ) | (17 | ) | (9 | ) | ||||
Net cash (used in) generated by financing activities | (8,178 | ) | (5,632 | ) | 23,747 | (6,439 | ) | |||||
Currency translation differences relating to cash | (200 | ) | (155 | ) | (208 | ) | (167 | ) | ||||
NET INCREASE IN CASH | 23,930 | 14,970 | 23,246 | 9,129 | ||||||||
CASH, BEGINNING OF PERIOD | 37,245 | 28,669 | 37,929 | 34,510 | ||||||||
CASH, END OF PERIOD | 61,175 | 43,639 | 61,175 | 43,639 |