All dollar amounts in this news release are stated in Canadian dollars unless otherwise noted.
Highlights |
Three months ended |
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(in thousands, except per share data) |
March 31 2023 |
December 31 2022 |
March 31 2022 |
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Financial |
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Funds flow (1) |
$39,909 |
$37,015 |
$33,601 |
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Per share basic |
$0.06 |
$0.06 |
$0.06 |
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Per share diluted |
$0.06 |
$0.06 |
$0.05 |
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Funds flow, excluding transaction costs (1) |
$39,909 |
$37,015 |
$35,701 |
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Per share basic |
$0.06 |
$0.06 |
$0.06 |
|||||||||
Per share diluted |
$0.06 |
$0.06 |
$0.06 |
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Adjusted EBITDA (1) |
$41,481 |
$38,708 |
$35,664 |
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Per share basic |
$0.06 |
$0.06 |
$0.06 |
|||||||||
Per share diluted |
$0.06 |
$0.06 |
$0.06 |
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Cash provided by operating activities |
$34,918 |
$41,903 |
$38,242 |
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Net income |
$18,469 |
$18,995 |
$5,888 |
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Per share basic |
$0.03 |
$0.03 |
$0.01 |
|||||||||
Per share diluted |
$0.03 |
$0.03 |
$0.01 |
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Exploration and development expenditures (1) |
$31,315 |
$16,560 |
$11,062 |
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Net debt (1) |
$69,608 |
$77,426 |
$121,092 |
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Common shares |
||||||||||||
Shares outstanding, end of period |
662,411 |
662,411 |
659,638 |
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Weighted average shares (basic) |
662,411 |
662,411 |
609,679 |
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Weighted average shares (diluted) |
671,484 |
672,207 |
623,170 |
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Operations |
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Production |
||||||||||||
Tight oil (Bbls per day) |
6,904 |
6,326 |
7,065 |
|||||||||
Shale gas (Mcf per day) |
12,719 |
13,218 |
11,138 |
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NGL (Bbls per day) |
2,235 |
2,480 |
1,760 |
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Barrels of oil equivalent (Boepd, 6:1) |
11,259 |
11,009 |
10,681 |
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Average realized price |
||||||||||||
Tight oil ($ per Bbl) |
$104.80 |
$114.49 |
$119.28 |
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Shale gas ($ per Mcf) |
$5.64 |
$5.34 |
$4.87 |
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NGL ($ per Bbl) |
$10.70 |
$13.25 |
$27.30 |
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Barrels of oil equivalent ($ per Boe, 6:1) |
$72.76 |
$75.18 |
$88.26 |
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Operating netback per Boe (6:1) |
||||||||||||
Operating netback (1) |
$42.81 |
$40.07 |
$41.11 |
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Operating netback (prior to hedging) (1) |
$42.81 |
$44.07 |
$56.01 |
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Funds flow netback per Boe (6:1) |
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Including transaction related costs (1) |
$39.39 |
$36.55 |
$34.95 |
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Excluding transaction related costs (1) |
$39.39 |
$36.55 |
$37.14 |
(1) |
Management uses these non-GAAP financial measures to analyze operating performance, leverage and investing activity. These measures do not have a standardized meaning under GAAP and therefore may not be comparable with the calculation of similar measures for other companies. See Non-GAAP Measures within this document for additional information. |
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MESSAGE TO SHAREHOLDERS
Lucero’s first quarter of 2023 continued to build on the positive momentum realized through 2022, driving higher production and funds flow during the period, while also strengthening the balance sheet. With a consistent focus on long-term objectives, including the delivery of disciplined growth and enhanced financial flexibility, Lucero commenced a disciplined 2023 drilling and capital development program. During the first three months of 2023, Lucero invested $31.3 million of exploration and development expenditures safely and responsibly, while also successfully reducing net debt by 10% over year end 2022, supporting the Company’s long-term sustainability.
Highlights in the first quarter of 2023 include the following:
- Increased quarterly production to 11,259 Boepd, compared to 11,009 Boepd in the fourth quarter of 2022 and 10,681 Boepd in the first quarter of 2022;
- Generated robust funds flow of $39.9 million, an 8% increase over $37.0 million in the fourth quarter of 2022 and 19% higher than $33.6 million for the same period in 2022;
- Reported funds flow per share of $0.06, consistent with $0.06 generated in the fourth quarter of 2022 and $0.06 in the first quarter of 2022, while net income per share of $0.03 in the current period was consistent with $0.03 per share in the fourth quarter of 2022, and higher than $0.01 per share during the same period the prior year;
- Successfully invested $31.3 million in exploration and development expenditures, which was directed to the completion of 2.97 net operated wells, numerous well optimization projects and the commencement of the Company’s 2023 drilling program;
- Reduced net debt to $69.6 million at March 31, 2023, a decline of 10% from $77.4 million at December 31, 2022 and a reduction of 43% from $121.1 million at March 31, 2022;
- Closed an accretive working interest top-up acquisition subsequent to the end of the quarter, for cash consideration of $6.3 million (US$4.7 million), which included approximately 200 Boepd of high quality operated production; and
- Released the Company’s inaugural Sustainability Report subsequent to the end of the quarter, demonstrating Lucero’s continued prioritization of, and commitment to, strong Environmental, Social, and Governance principles across the organization.
OPERATIONAL UPDATE
Strong new well results and continued solid performance from the Company’s existing production base contributed to the growth of Lucero’s quarterly volumes. In addition to realizing steady production growth, the Company has also been successful in moderating Lucero’s overall corporate decline rate to less than 30%, ultimately supporting a more sustainable business model.
Lucero’s exploration and development expenditures totaled $31.3 million in the first quarter, representing approximately one-third of the full year budget, with the program focused on completing three (2.97 net) operated wells along with undertaking various well optimization projects, contributing to the Company’s higher quarterly volumes. Subsequent to the end of the first quarter, Lucero commenced the drilling of five (4.3 net) operated wells and began the process of building a multi-well facility at the Company’s Tahu property. As a result of these initiatives, Lucero anticipates bringing corresponding production on-stream prior to year end 2023, which is expected to help set the stage for further measured growth in 2024.
During the quarter, Lucero generated free funds flow of $8.6 million that was allocated to strengthening the balance sheet, as net debt declined 10% to $69.6 million at March 31, 2023, from $77.4 million as at December 31, 2022.
OUTLOOK AND SUSTAINABILITY
Lucero has established a unique position among Canadian-listed, growth-oriented exploration and production companies. With 100% exposure to U.S. light oil-weighted assets, the Company offers a growth platform comprised of lower-risk, high-impact development opportunities in the heart of the prolific North Dakota Bakken/Three Forks play. The Company is well positioned to continue generating stable production and robust operating netbacks while targeting high estimated recoveries, all of which contributes to the Company’s ability to drive compelling rates of return and create shareholder value. With a corporate production decline profile forecasted to be under 30% for 2023, Lucero’s assets are expected to benefit from a supportive pricing environment and yield significant free funds flow that can be directed to further debt reduction, growth projects or other value-add initiatives.
The Company is proud to highlight the following key operational and financial attributes:
Production Guidance |
2023E Average: >11,500 Boepd (~80% light oil and natural gas liquids) 2023E Exit: >12,000 Boepd (~80% light oil and natural gas liquids) |
Total Proved plus Probable Reserves(1) |
~74 MMboe (83% light oil and liquids) |
Development Inventory(2) |
>40 net undrilled locations |
Corporate Production Decline |
~28% (2023E) |
2023 Capital Program(3) |
US$70 million (~C$95 million) |
Net Debt as at March 31, 2023 |
C$69.6 million |
Common Shares Outstanding (basic) |
662 million |
(1) |
All reserves information in this press release are gross Company reserves, meaning Lucero’s working interest reserves before deductions of royalties and before consideration of Lucero’s royalty interests. The reserve information for Lucero in the foregoing table is derived from the independent engineering report effective December 31, 2022 prepared by Netherland, Sewell & Associates, Inc. (“NSAI”) evaluating the oil, NGL and natural gas reserves attributable to all of the Company’s properties. |
(2) |
As at December 31, 2022. |
(3) |
Assumes a foreign exchange rate of US$1.00 = C$1.35. |