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 nine months ended September 30, 2021. All dollar values are expressed in United States dollars unless otherwise stated. TransGlobe’s Condensed Consolidated Interim Financial Statements together with the notes related thereto, as well as TransGlobe’s Management’s Discussion and Analysis for the three and nine months ended September 30, 2021 and 2020, are available on TransGlobe’s website at www.trans-globe.com.
FINANCIAL HIGHLIGHTS:
- Third quarter sales averaged 14,868 boe/d including 307.5 Mbbls sold to EGPC for net proceeds of $20.9 million and one cargo lifting of 499.6 Mbbls of entitlement crude oil for net proceeds of $33.3 million (collected in August 2021). The overlift portion of the cargo (~221.7 Mbbls) will be settled through future entitlement crude oil production at West Gharib;
- Average realized price for Q3-2021 sales of $60.85/boe; Q3-2021 average realized price on Egyptian sales of $64.73/bbl and Canadian sales of $36.82/boe;
- Funds flow from operations of $12.4 million ($0.17 per share) in the quarter;
- Third quarter net earnings of $37.1 million ($0.51 per share), inclusive of a $31.5 million non-cash impairment reversal and a $1.3 million unrealized gain on derivative commodity contracts;
- Ended the third quarter with positive working capital of $17.7 million, including cash of $54.0 million;
OPERATIONAL HIGHLIGHTS:
- Third quarter production averaged 13,342 boe/d (Egypt 11,276 bbls/d, Canada 2,066 boe/d), an increase of 265 boe/d (2%) from the previous quarter, primarily due to well optimization activities and new drilling in Egypt, partially offset by natural declines while awaiting the production start from new drilling in Canada;
- Production in October averaged ~13,882 boe/d (Egypt ~10,964 bbls/d, Canada ~2,918 boe/d), an increase of 4% from Q3-2021;
- Ended the quarter with nil entitlement crude oil inventory, a decrease of 140.3 Mbbls from Q2-2021. This decrease is due to an increase in sales volumes as a result of the Q3-2021 cargo lifting, partially offset by a slight increase in production;
- Drilled two development oil wells at West Bakr in the Eastern Desert, Egypt, both successfully encountering oil-bearing sands and placed on production. A third development oil well was spud at West Bakr subsequent to the quarter;
- Drilled one well at North West Gharib in the Eastern Desert, Egypt;
- Drilled an oil exploration well on the SGZ-7B prospect at South Ghazalat in the Western Desert, Egypt subsequent to the quarter;
- Drilled, completed, and equipped the one 2-mile and two 1-mile horizontal wells in the northern area of the Company’s Cardium reservoir extension in South Harmattan;
- Brought the 2-mile well in South Harmattan on production;
CORPORATE HIGHLIGHTS:
- Amounts outstanding under the Mercuria prepayment agreement were repaid in full during the quarter. On September 27, 2021 the prepayment agreement was amended to $10 million (undrawn) and extended to December 31, 2021 to coincide with the expiry of the Company’s remaining Brent crude oil hedges of 150 Mbbls; and
- The Company announced a merged concession agreement with a 15-year primary term and improved Company economics on December 3, 2020. The agreement is currently awaiting ratification by the Egyptian Parliament but will have a February 2020 effective date upon ratification. As such, the results achieved in Q3-2021 and year to-date are exclusive of any effective date adjustments that will be made upon ratification.
FINANCIAL AND OPERATING RESULTS
(US$000s, except per share, price, volume amounts and % change)
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||
Financial | 2021 | 2020 | % Change | 2021 | 2020 | % Change | ||||||||||||
Petroleum and natural gas sales2 | 83,234 | 33,046 | 152 | 210,528 | 137,782 | 53 | ||||||||||||
Petroleum and natural gas sales, net of royalties2 | 42,316 | 16,740 | 153 | 110,963 | 81,366 | 36 | ||||||||||||
Realized derivative (loss) gain on commodity contracts | (2,188 | ) | 662 | (431 | ) | (7,379 | ) | 6,807 | (208 | ) | ||||||||
Unrealized derivative gain (loss) on commodity contracts | 1,327 | (267 | ) | (597 | ) | (2,891 | ) | 761 | (480 | ) | ||||||||
Production and operating expense | 16,741 | 11,473 | 46 | 45,912 | 45,136 | 2 | ||||||||||||
Overlift | 15,551 | – | 100 | 15,551 | – | 100 | ||||||||||||
Selling costs | 2,161 | 54 | 3,902 | 3,866 | 1,103 | 250 | ||||||||||||
General and administrative expense | 4,230 | 2,542 | 66 | 12,937 | 8,397 | 54 | ||||||||||||
Depletion, depreciation and amortization expense | 6,592 | 5,493 | 20 | 18,366 | 23,402 | (22 | ) | |||||||||||
Income tax expense | 6,096 | 3,092 | 97 | 16,361 | 10,122 | 62 | ||||||||||||
Cash flow generated by (used in) operating activities | 27,026 | (3,349 | ) | (907 | ) | 46,918 | 17,529 | 168 | ||||||||||
Funds flow from operations1 | 12,381 | 323 | 3,733 | 29,562 | 23,241 | 27 | ||||||||||||
Basic per share | 0.17 | 0.00 | 0.41 | 0.32 | ||||||||||||||
Diluted per share | 0.17 | 0.00 | 0.41 | 0.32 | ||||||||||||||
Net earnings (loss) | 37,080 | (5,957 | ) | (722 | ) | 33,778 | (74,542 | ) | (145 | ) | ||||||||
Basic per share | 0.51 | (0.08 | ) | 0.47 | (1.03 | ) | ||||||||||||
Diluted per share | 0.51 | (0.08 | ) | 0.46 | (1.03 | ) | ||||||||||||
Capital expenditures | 11,624 | 437 | 2,560 | 18,128 | 7,243 | 150 | ||||||||||||
Working capital | 17,667 | 12,708 | 39 | 17,667 | 12,708 | 39 | ||||||||||||
Long-term debt, including current portion | 6,882 | 25,946 | (73 | ) | 6,882 | 25,946 | (73 | ) | ||||||||||
Common shares outstanding | ||||||||||||||||||
Basic (weighted average) | 72,542 | 72,542 | – | 72,542 | 72,542 | – | ||||||||||||
Diluted (weighted average) | 72,980 | 72,542 | 1 | 72,983 | 72,542 | 1 | ||||||||||||
Total assets | 267,263 | 205,583 | 30 | 267,263 | 205,583 | 30 | ||||||||||||
Operating | ||||||||||||||||||
Average production volumes (boe/d) | 13,342 | 12,044 | 11 | 12,884 | 13,774 | (6 | ) | |||||||||||
Average sales volumes (boe/d)2 | 14,868 | 10,680 | 39 | 13,719 | 15,344 | (11 | ) | |||||||||||
Inventory (Mbbls) | – | 534.2 | (100 | ) | – | 534.2 | (100 | ) | ||||||||||
Average realized sales price ($/boe)2 | 60.85 | 33.63 | 81 | 56.21 | 32.77 | 72 | ||||||||||||
Production and operating expenses ($/boe)2 | 12.24 | 11.68 | 5 | 12.26 | 10.74 | 14 |
1 Funds flow from operations (before finance costs) is a measure that represents cash generated from operating activities before changes in non-cash working capital and may not be comparable to measures used by other companies. See “Non-GAAP Financial Measures”.
2 Excludes the impact of the Q3-2021 overlift of $15.6 million (221.7 Mbbls).
2021 | 2020 | ||||||||||||||
Average reference prices and exchange rates | Q-3 | Q-2 | Q-1 | Q-4 | Q-3 | ||||||||||
Crude oil | |||||||||||||||
Dated Brent average oil price ($/bbl) | 73.47 | 68.83 | 60.82 | 44.29 | 42.96 | ||||||||||
Edmonton Sweet index ($/bbl) | 66.61 | 63.01 | 52.54 | 38.50 | 37.35 | ||||||||||
Natural gas | |||||||||||||||
AECO ($/MMBtu) | 2.97 | 2.48 | 2.30 | 2.18 | 1.69 | ||||||||||
US/Canadian Dollar average exchange rate | 1.26 | 1.23 | 1.27 | 1.30 | 1.33 |
CORPORATE SUMMARY
TransGlobe Energy Corporation (“TransGlobe” or the “Company”) produced an average of 13,342 barrels of oil equivalent per day (“boe/d”) during the third quarter of 2021. Egypt production was 11,276 barrels of oil per day (“bbls/d”) and Canada production was 2,066 boe/d. Production for the quarter was slightly above full year 2021 guidance of 12,000 to 13,000 boe/d and 2% higher than the previous quarter. The increase was primarily due to well optimization activities and new drilling in Egypt, partially offset by natural declines while awaiting the production start from new drilling in Canada.
TransGlobe’s Egyptian crude oil is sold at a quality discount to Dated Brent. The Company received an average price of $64.73 per barrel in Egypt during the quarter. In Canada, the Company received an average of $65.43 per barrel of oil, $35.40 per barrel of NGLs and $2.71 per thousand cubic feet (“Mcf”) of natural gas during the quarter.
During Q3-2021, the Company had funds flow from operations of $12.4 million and ended the quarter with positive working capital of $17.7 million, including cash of $54.0 million. The Company had net earnings in the quarter of $37.1 million, inclusive of a $1.3 million unrealized derivative gain on commodity contracts which represents a fair value adjustment on the Company’s hedging contracts at September 30, 2021. Net income was also inclusive of a non-cash impairment reversal of $31.5 million on the Company’s petroleum and natural gas (“PNG”) assets that was recognized due to the sustained increase and stabilization in forecasted commodity prices in 2021.
The Mercuria prepayment agreement was fully repaid during the quarter with the final $10.0 million being paid in August 2021. On September 27, 2021 the prepayment agreement was amended to $10.0 million (undrawn) and extended to December 31, 2021 to coincide with the expiry of the Company’s remaining Brent crude oil hedges of 150 thousand barrels (“Mbbls”).
In Egypt, the Company sold 307.5 Mbbls of entitlement crude oil to the Egyptian General Petroleum Company (“EGPC”) and sold one cargo lifting of 499.6 Mbbls of entitlement crude oil to third-party buyers during the quarter. The cargo resulted in an overlift of 221.7 Mbbls by TransGlobe. The overlift will be settled as the Company delivers the equivalent future entitlement production from West Gharib to EGPC. All Canadian production was sold during the quarter.
As announced on December 3, 2020, the Company has reached an agreement with EGPC to merge its three existing Eastern Desert concessions with a 15-year primary term and improved Company economics. As previously announced, the Company is now expecting ratification to occur in Q4-2021. The February 1, 2020 effective date for the improved concession terms is supportive of increased investment in advance of ratification.
In Egypt, the Company drilled two development oil wells in the Eastern Desert at West Bakr. The K-62 development well was drilled to a total depth of 1,473 meters, and encountered oil-bearing sands in the Asl-A formation. The second well in West Bakr, K-65, was drilled to a total depth of 1,730 meters, and encountered oil-bearing sands in the Asl-A, Asl-B, Asl-C, Asl-D and Asl-E formations. The Company drilled one additional well in the Eastern Desert at North West Gharib, NWG-3B-2, to a total depth of 1,627 meters to assess Red Bed potential in the northern area of TransGlobe’s development leases. The well encountered Red Bed sands which were wet. The results are under evaluation to identify any up-dip sidetrack potential.
In Canada, the Company successfully drilled, completed, and equipped one 2-mile and two 1-mile horizontal wells in the northern area of the Cardium reservoir extension at South Harmattan, first identified by the 2-20 well in 2019. The 2-mile well was brought on production at the end of Q3-2021, while the other two wells were brought on production in October. All three wells initially flowed without the assistance of pumps. As of month end, two of the wells ceased flowing naturally, as anticipated, and are now equipped with pumps. The third well continues to flow naturally and will be equipped with a pump when the unassisted flow ceases. Initial production rates (IP30 and IP60) will be made available once sufficient data has been acquired.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity describes a company’s ability to access cash. Companies operating in the upstream oil and gas industry require sufficient cash in order to fund capital programs that maintain and increase production and reserves, to acquire strategic oil and gas assets, to repay current liabilities and debt and ultimately to provide a return to shareholders. TransGlobe’s capital programs are funded by existing working capital and cash provided from operating activities. The Company’s cash flow from operations varies significantly from quarter to quarter, depending on the timing of oil sales from cargoes lifted in Egypt, and these fluctuations in cash flow impact the Company’s liquidity. TransGlobe’s management will continue to steward capital and focus on cost reductions in order to maintain balance sheet strength.
Funding for the Company’s capital expenditures is provided by cash flows from operations and cash on hand. The Company expects to fund its 2021 exploration and development program through the use of working capital and cash flow from operations. Fluctuations in commodity prices, product demand, foreign exchange rates, interest rates and various other risks may impact capital resources and capital expenditures.
Working capital is the amount by which current assets exceed current liabilities. As at September 30, 2021, the Company had a working capital surplus of $17.7 million (December 31, 2020 – $15.3 million). The increase in working capital is primarily due to an increase in cash resulting from collections on accounts receivable in the period and an increase in accounts receivable due to increased sales in Q3-2021. These increases were partially offset by a decrease in crude oil inventory and increase in overlift liability as a result of the Q3-2021 cargo lifting, an increase in the derivative commodity contracts liability from increased commodity pricing and an increase in accounts payable driven by the 2021 capital program.
All of the Company’s cash and cash equivalents are on deposit with high credit-quality financial institutions.
Over the past 10 years, the Company has experienced delays in the collection of accounts receivable from EGPC. The length of delay peaked in 2013, returned to historical delays of up to nine months in 2017, and has since fluctuated within an acceptable range. As at September 30, 2021, amounts owing from EGPC were $24.5 million. The Company considers there to be minimal credit risk associated with amounts receivable from EGPC.
In Egypt, the Company sold 307.5 Mbbls of entitlement crude oil to EGPC in Q3-2021 for net proceeds of $20.9 million and sold one cargo lifting of 499.6 Mbbls of entitlement crude oil for net proceeds of $33.3 million (collected in August 2021). The overlift portion of the cargo (221.7 Mbbls) will be settled through future entitlement crude oil production at West Gharib. During the third quarter of 2021, the Company collected a total of $4.5 million of accounts receivable from EGPC, an additional $3.7 million has been collected subsequent to the quarter. The Company incurs a 30-day collection cycle on sales to third-party international buyers. Depending on the Company’s assessment of the credit of crude oil purchasers, they may be required to post irrevocable letters of credit to support the sales prior to the cargo lifting. As at September 30, 2021, the Company held no crude oil inventory.
As at September 30, 2021, the Company had $27.7 million of revolving credit facilities with $6.9 million drawn and $20.8 million available. The Company has a prepayment agreement with Mercuria that was amended to $10.0 million (undrawn) and extended to December 31, 2021 to coincide with the expiry of TransGlobe’s remaining Brent crude oil hedges. During the quarter, the prepayment agreement was fully repaid in the amount of $10.0 million. The Company also has a revolving Canadian reserves-based lending facility with ATB totaling C$22.5 million ($17.7 million), of which C$8.7 million ($6.9 million) was drawn and outstanding. During the nine months ended September 30, 2021, the Company had drawings of C$0.4 million ($0.3 million) on this facility.
The Company actively monitors its liquidity to ensure that cash flows, credit facilities and working capital are adequate to support these financial liabilities, as well as the Company’s capital programs.
OPERATIONS UPDATE
ARAB REPUBLIC OF EGYPT
EASTERN DESERT
West Gharib, West Bakr, and North West Gharib (100% working interest, operated)
Operations and Exploration
The Company continues to utilize the EDC-64 rig drilling development oil wells.
In West Bakr, the Company successfully drilled two development oil wells during Q3-2021 and moved on to a third well (K-66) at quarter end.
The K-62 development well was drilled to a total depth of 1,473 meters, and encountered oil-bearing sands in the Asl-A formation. The reservoir section has been fully logged and evaluated, with an internally estimated 24.2 meters of net oil pay in the Asl-A reservoirs. The Asl-A2 was completed for oil production and came on production at a field estimated 120 bbls/d of oil.
The second well in West Bakr (K-65) was drilled to a total depth of 1,730 meters, and encountered oil-bearing sands in the Asl-A, Asl-B, Asl-C, Asl-D and Asl-E formations. The reservoir section has been fully logged and evaluated, with an internally estimated 10.6 meters of net oil pay in the Asl-A sand, 12.5 meters of net oil pay across the Asl-B sand, 6.1 meters of net oil pay across the Asl-C sand, 5.5 meters of net oil pay across the Asl-D sand and 11.4 meters of net oil pay in the Asl-E sand (total net oil pay 46.1 meters). The Asl-E was completed for production in this well and came on production at a field estimated 520 bbls/d oil. The Asl-A, Asl-B, Asl-C, and Asl-D are expected to be recovered through future recompletions of this well.
The Company drilled one well in North West Gharib (NWG-3B-2) to a total depth of 1,627 meters to assess Red Bed potential in the northern area of TransGlobe’s development leases. The well encountered Red Bed sands which were wet. The results are under evaluation to identify any up-dip sidetrack potential.
Production
Production averaged 10,653 bbls/d during the quarter, an increase of 7% (736 bbls/d) from the previous quarter. The increase was primarily due to well optimization activities and new drilling, partially offset by natural declines.
Production in October 2021 averaged ~10,445 bbls/d.
Sales
The Company sold 285.9 Mbbls of entitlement crude oil to EGPC and sold one cargo lifting of 499.6 Mbbls of entitlement crude oil to third-party buyers during the quarter. The remaining overlift position (221.7 Mbbls) will be settled as the Company delivers equivalent future entitlement production from West Gharib.
Quarterly Eastern Desert Production (bbls/d) | 2021 | 2020 | ||||||||||
Q-3 | Q-2 | Q-1 | Q-4 | |||||||||
Gross production rate1 | 10,653 | 9,917 | 10,050 | 10,129 | ||||||||
TransGlobe production sold (inventoried) | 1,525 | 3,465 | (2,531 | ) | 3,328 | |||||||
Total sales3 | 12,178 | 13,382 | 7,519 | 13,457 | ||||||||
Government share (royalties and tax) | 6,050 | 5,229 | 5,680 | 5,715 | ||||||||
TransGlobe sales (after royalties and tax)2 | 6,128 | 8,153 | 1,839 | 7,742 | ||||||||
Total sales3 | 12,178 | 13,382 | 7,519 | 13,457 |
1 Quarterly production by concession (bbls/d):
West Gharib – 2,932 (Q3- 2021), 3,024 (Q2-2021), 3,076 (Q1-2021), and 3,113 (Q4-2020)
West Bakr – 7,257 (Q3-2021), 6,327 (Q2-2021), 6,415 (Q1-2021), and 6,656 (Q4-2020)
North West Gharib – 464 (Q3-2021), 566 (Q2-2021), 559 (Q1-2021), and 360 (Q4-2020)
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.
3 Excludes the impact of the Q3-2021 overlift of 221.7 Mbbls.
WESTERN DESERT
South Ghazalat (100% working interest, operated)
Operations and Exploration
The Lower Bahariya reservoir at SGZ-6X continues to produce on Gas Oil Ratio (“GOR”) control at a field estimated ~490 bbls/d of light oil with a 54% watercut.
With improved oil prices and spare capacity available in the South Ghazalat early production facility, the Company has accelerated drilling of an oil exploration well on the SGZ-7B prospect to the east of SGZ-6X. The SGZ-7B well was drilled to a total depth of 5,240 feet MD and encountered gas-bearing sands in the Upper Bahariya formation and oil-bearing sands in the Lower Bahariya formation. It has been cased for further testing and evaluation. This well fulfills the Company’s commitment to EGPC as part of the South Ghazalat development lease approval in 2019.
Production
Production averaged 623 bbls/d during the quarter, a decrease of 23% (187 bbls/d) from the previous quarter. The decrease was primarily due to natural declines.
Production in October 2021 averaged ~519 bbls/d.
Sales
The Company sold 21.6 Mbbls of inventoried entitlement crude oil to EGPC during the quarter.
Quarterly Western Desert Production (bbls/d) | 2021 | 2020 | ||||||||||
Q-3 | Q-2 | Q-1 | Q-4 | |||||||||
Gross production rate | 623 | 810 | 188 | 139 | ||||||||
Total sales | 623 | 810 | 188 | 139 | ||||||||
Government share (royalties and tax) | 388 | 504 | 117 | 86 | ||||||||
TransGlobe sales (after royalties and tax)1 | 235 | 306 | 71 | 53 | ||||||||
Total sales | 623 | 810 | 188 | 139 |
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
The Company successfully drilled, completed, and equipped one 2-mile and two 1-mile horizontal wells in the northern area of TransGlobe’s Cardium reservoir extension at South Harmattan, first identified by the 2-20 well in 2019. The 2-mile well was brought on production at the end of September 2021, while the other two wells commenced production in October. All three wells initially flowed without artificial lift. Two of the wells ceased natural flow, as anticipated, and are now equipped with pumps, while the third well continues to flow unassisted.
Additional information on individual well performance will be provided when sufficient stabilized production history has been obtained late 2021 / early 2022.
In Canada, ethane extraction from gas stream at the 3rd party processing facility resumed in October, resulting in increased production on a boe basis.
Production
In Canada, production averaged 2,066 boe/d during the quarter, a decrease of 284 boe/d (12%) from the previous quarter and below full year 2021 guidance of 2,300 to 2,500 boe/d. The decrease in production from the previous quarter is primarily due to natural declines while awaiting the production start from new drilling.
Production in October 2021 averaged ~2,918 boe/d with ~1,310 bbls/d of oil. The increase from Q3-2021 is due to the new wells being brought on stream and the resumption of ethane extraction at the 3rd party processing facility.
Quarterly Canada Production | 2021 | 2020 | ||||||||||
Q-3 | Q-2 | Q-1 | Q-4 | |||||||||
Canada crude oil (bbls/d) | 601 | 687 | 564 | 618 | ||||||||
Canada NGLs (bbls/d) | 677 | 857 | 710 | 755 | ||||||||
Canada natural gas (Mcf/d) | 4,734 | 4,834 | 4,259 | 4,454 | ||||||||
Total production (boe/d) | 2,066 | 2,350 | 1,983 | 2,116 |
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 September 30 |
Nine Months Ended September 30 |
|||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
REVENUE | ||||||||||||
Petroleum and natural gas sales, net of royalties | 57,868 | 16,740 | 126,515 | 81,366 | ||||||||
Finance revenue | 2 | 9 | 8 | 101 | ||||||||
Other revenue | – | 106 | 33 | 328 | ||||||||
57,870 | 16,855 | 126,556 | 81,795 | |||||||||
EXPENSES | ||||||||||||
Production and operating | 16,741 | 11,473 | 45,912 | 45,136 | ||||||||
Overlift | 15,551 | – | 15,551 | – | ||||||||
Selling costs | 2,161 | 54 | 3,866 | 1,103 | ||||||||
General and administrative | 4,230 | 2,542 | 12,937 | 8,397 | ||||||||
Foreign exchange (gain) loss | (75 | ) | (65 | ) | (32 | ) | 100 | |||||
Finance costs | 227 | 552 | 1,030 | 1,956 | ||||||||
Depletion, depreciation and amortization | 6,592 | 5,493 | 18,366 | 23,402 | ||||||||
Asset retirement obligation accretion | 47 | 66 | 158 | 194 | ||||||||
Loss (gain) on financial instruments | 861 | (395 | ) | 10,270 | (7,568 | ) | ||||||
Gain on overlift liability | (120 | ) | – | (120 | ) | – | ||||||
Impairment (reversal) loss | (31,521 | ) | – | (31,521 | ) | 73,495 | ||||||
14,694 | 19,720 | 76,417 | 146,215 | |||||||||
Earnings (loss) before income taxes | 43,176 | (2,865 | ) | 50,139 | (64,420 | ) | ||||||
Income tax expense – current | 6,096 | 3,092 | 16,361 | 10,122 | ||||||||
NET EARNINGS (LOSS) | 37,080 | (5,957 | ) | 33,778 | (74,542 | ) | ||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
Currency translation adjustments | (1,296 | ) | 1,188 | (130 | ) | (1,371 | ) | |||||
COMPREHENSIVE INCOME (LOSS) | 35,784 | (4,769 | ) | 33,648 | (75,913 | ) | ||||||
Net earnings (loss) per share | ||||||||||||
Basic | 0.51 | (0.08 | ) | 0.47 | (1.03 | ) | ||||||
Diluted | 0.51 | (0.08 | ) | 0.46 | (1.03 | ) |
Condensed Consolidated Interim Balance Sheets
(Unaudited – Expressed in thousands of U.S. Dollars)
As at | As at | |||||
September 30, 2021 | December 31, 2020 | |||||
ASSETS | ||||||
Current | ||||||
Cash and cash equivalents | 53,952 | 34,510 | ||||
Accounts receivable | 29,030 | 9,996 | ||||
Prepaids and other | 3,642 | 3,530 | ||||
Product inventory | – | 5,828 | ||||
86,624 | 53,864 | |||||
Non-Current | ||||||
Intangible exploration and evaluation assets | 1,245 | 584 | ||||
Property and equipment | ||||||
Petroleum and natural gas assets | 172,652 | 140,059 | ||||
Other | 2,334 | 2,917 | ||||
Deferred taxes | 4,408 | 3,723 | ||||
267,263 | 201,147 | |||||
LIABILITIES | ||||||
Current | ||||||
Accounts payable and accrued liabilities | 49,319 | 21,667 | ||||
Derivative commodity contracts | 3,285 | 398 | ||||
Current portion of lease obligations | 922 | 1,553 | ||||
Current portion of long-term debt | – | 14,897 | ||||
Overlift liability | 15,431 | – | ||||
68,957 | 38,515 | |||||
Non-Current | ||||||
Long-term debt | 6,882 | 6,567 | ||||
Asset retirement obligations | 13,519 | 13,042 | ||||
Other long-term liabilities | 1,235 | 544 | ||||
Lease obligations | 51 | 461 | ||||
Deferred taxes | 4,408 | 3,723 | ||||
95,052 | 62,852 | |||||
SHAREHOLDERS’ EQUITY | ||||||
Share capital | 152,805 | 152,805 | ||||
Accumulated other comprehensive income | 1,770 | 1,900 | ||||
Contributed surplus | 25,377 | 25,109 | ||||
Deficit | (7,741 | ) | (41,519 | ) | ||
172,211 | 138,295 | |||||
267,263 | 201,147 |
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity
(Unaudited – Expressed in thousands of U.S. Dollars)
Nine Months Ended September 30 | ||||||
2021 | 2020 | |||||
Share Capital | ||||||
Balance, beginning and end of period | 152,805 | 152,805 | ||||
Accumulated Other Comprehensive Income (Loss) | ||||||
Balance, beginning of period | 1,900 | 1,134 | ||||
Currency translation adjustment | (130 | ) | (1,371 | ) | ||
Balance, end of period | 1,770 | (237 | ) | |||
Contributed Surplus | ||||||
Balance, beginning of period | 25,109 | 24,673 | ||||
Share-based compensation expense | 268 | 340 | ||||
Balance, end of period | 25,377 | 25,013 | ||||
(Deficit) Retained Earnings | ||||||
Balance, beginning of period | (41,519 | ) | 35,878 | |||
Net earnings (loss) | 33,778 | (74,542 | ) | |||
Balance, end of period | (7,741 | ) | (38,664 | ) |
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited – Expressed in thousands of US Dollars)
Three Months Ended September 30 |
Nine Months Ended September 30 |
|||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
OPERATING | ||||||||||||
Net earnings (loss) | 37,080 | (5,957 | ) | 33,778 | (74,542 | ) | ||||||
Adjustments for: | ||||||||||||
Depletion, depreciation and amortization | 6,592 | 5,493 | 18,366 | 23,402 | ||||||||
Asset retirement obligation accretion | 47 | 66 | 158 | 194 | ||||||||
Impairment (recovery) loss | (31,521 | ) | – | (31,521 | ) | 73,495 | ||||||
Share-based compensation | 1,403 | (72 | ) | 4,990 | (489 | ) | ||||||
Finance costs | 227 | 552 | 1,030 | 1,956 | ||||||||
Unrealized (gain) loss on financial instruments | (1,327 | ) | 267 | 2,891 | (761 | ) | ||||||
Unrealized loss (gain) on foreign currency translation | 2 | (26 | ) | 14 | 6 | |||||||
Gain on overlift | (120 | ) | – | (120 | ) | – | ||||||
Asset retirement obligations settled | (2 | ) | – | (24 | ) | (20 | ) | |||||
Changes in non-cash working capital | 14,645 | (3,672 | ) | 17,356 | (5,712 | ) | ||||||
Net cash generated by (used in) operating activities | 27,026 | (3,349 | ) | 46,918 | 17,529 | |||||||
INVESTING | ||||||||||||
Additions to intangible exploration and evaluation assets | (83 | ) | – | (661 | ) | (337 | ) | |||||
Additions to petroleum and natural gas assets | (11,494 | ) | (399 | ) | (17,381 | ) | (6,721 | ) | ||||
Additions to other assets | (47 | ) | (38 | ) | (86 | ) | (185 | ) | ||||
Changes in non-cash working capital | 5,642 | (1,883 | ) | 7,989 | (2,545 | ) | ||||||
Net cash used in investing activities | (5,982 | ) | (2,320 | ) | (10,139 | ) | (9,788 | ) | ||||
FINANCING | ||||||||||||
Interest paid | (190 | ) | (396 | ) | (774 | ) | (1,526 | ) | ||||
Increase in long-term debt | 95 | 114 | 320 | 282 | ||||||||
Payments on lease obligations | (499 | ) | (366 | ) | (1,570 | ) | (1,141 | ) | ||||
Repayments of long-term debt | (10,000 | ) | (1,504 | ) | (15,000 | ) | (11,504 | ) | ||||
Changes in non-cash working capital | 3 | – | (6 | ) | – | |||||||
Net cash used in financing activities | (10,591 | ) | (2,152 | ) | (17,030 | ) | (13,889 | ) | ||||
Currency translation differences relating to cash and cash equivalents | (140 | ) | 49 | (307 | ) | (38 | ) | |||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 10,313 | (7,772 | ) | 19,442 | (6,186 | ) | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 43,639 | 34,837 | 34,510 | 33,251 | ||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | 53,952 | 27,065 | 53,952 | 27,065 |