Pieridae Energy Limited (“Pieridae” or the “Company”)
(PEA.TO) released its 2021 financial and operating
results today, highlighted by year-over-year growth in Adjusted
Funds Flow From Operations (up 115% to $57.7 million) and a 66%
increase in Net Operating income to $84.1 million.
“We have transformed as a company in the past
year following the completion of our strategic review and the
suspension of the Goldboro LNG Project,” said Pieridae’s Chief
Executive Officer, Alfred Sorensen. “Pieridae has adjusted its
strategy to one of focusing on building the upstream side of our
business, while maintaining optionality for an LNG Project. We
believe there is great value in developing our Foothills assets,
holding one of the largest land bases in the area, and we will work
to demonstrate that it is an economic place to drill. The potential
start of our 2022 drilling program, projected for the second half
of the year, would bring on new production, help fill up our gas
plants, lower per-unit operating costs and increase revenue. We
also know we must lower debt financing costs and develop and
execute a carbon management plan which is aligned to our
environmental, social and governance (“ESG”) vision.
“While we continue to believe that an LNG
project at our Goldboro site could be an economically compelling
and nation building opportunity, what Pieridae needs in order to
continue development of the project is a commitment of support from
the Government of Canada that this initiative is a national
priority. If it is deemed to be, then pipeline capacity to
transport the gas to the East Coast would need to be worked out. We
must find an investment partner and also hope the Mi’kmaq remain
involved as partners so that they might share in the benefits of a
future project,” concluded Sorensen.
Financial and operational information is set out
below and should be read in conjunction with Pieridae’s 2021 Annual
Report which includes the Corporation’s audited annual consolidated
financial statements and the related management's discussion and
analysis ("MD&A"). In addition, the Corporation today announces
the filing of its Annual Information Form ("AIF") for the year
ended December 31, 2021 that contains the Corporation's reserves
and other oil and natural gas information, as required under
National Instrument 51-101 Standards of Disclosure of Oil and Gas
Activities. The AIF, Annual Report, audited consolidated financial
statements and MD&A are available for review at www.sedar.com
and on the Company's website.
New President & COO and CFO
NamedWe are pleased to announce a pair of important
promotions within the Company at the Senior Leadership Team level.
Darcy Reding becomes President & Chief Operating Officer
(“COO”), after serving as the Company’s COO since Joining Pieridae
in April 2021. As well, interim Chief Financial Officer (“CFO”)
Adam Gray is no longer fulfilling the role on an interim basis and
is promoted to CFO.
“Both Darcy and Adam have played significant
roles during a challenging year at Pieridae to influence the
operations side of our business, moving us toward our goal of being
a successful Foothills producer and increasing returns to our
shareholders,” said Pieridae’s Chief Executive Officer, Alfred
Sorensen. “We congratulate them both on their promotions and look
forward to what they will accomplish in the months and years
ahead.”
Financial PerformanceDuring
2021, the Company generated cashflow from operations of $51.1
million, and AFFO of $57.7 million, an increase of 115% compared to
the same period in 2020. Higher realized prices for natural gas,
NGLs and condensate contributed significantly to higher cashflows,
offset by lower production, increased operating costs and royalties
largely driven by the increase in commodity prices, and first-half
costs associated with the Goldboro LNG Project.
Trends in petroleum and natural gas revenue are
primarily associated with fluctuations in the total volume produced
and prices the Company receives for its production. We were able to
mitigate our production decline to 3% during 2021; increases in
realized prices during the year was the primary driver of the 41%
increase in petroleum and natural gas revenue from $238.1 million
in 2020 to $334.7 million in 2021. That said, fixed price physical
forward sales contracts in place during the year did not allow us
to take full advantage of the increase in commodity prices.
2021 was a year of change for Pieridae, with
challenges faced on a number of fronts as we have discussed. Events
highlighted earlier in this release impacted our business,
operations, cash flows and net income (loss) during the past four
quarters. Throughout these events Pieridae remained committed to
and impressed by the operational resilience of our assets and our
team.
Annual Highlights
($ 000s unless otherwise noted) |
2021 |
|
2020 |
|
2019 |
|
Production |
|
|
|
Natural gas (mcf/day) |
199,793 |
|
201,040 |
|
121,263 |
|
Condensate (bbl/day) |
2,877 |
|
3,020 |
|
807 |
|
NGLs (bbl/day) |
4,386 |
|
5,473 |
|
1,379 |
|
Sulphur (ton/day) |
1,530 |
|
1,985 |
|
410 |
|
Total production (boe/d) (1) |
40,562 |
|
42,000 |
|
22,397 |
|
Reserves |
|
|
|
Net proved plus probable (“2P”) reserves (2) |
1,002,134 |
|
976,147 |
|
1,062,453 |
|
Financial |
|
|
|
Net loss |
(39,790 |
) |
(100,693 |
) |
(71,573 |
) |
Net loss per share basic and diluted |
(0.25 |
) |
(0.64 |
) |
(0.73 |
) |
Net operating income (3) |
84,085 |
|
50,723 |
|
25,001 |
|
Cashflow provided by (used in) operating activities |
51,117 |
|
2,234 |
|
(51,772 |
) |
Adjusted funds flow from operations (3) |
57,692 |
|
26,866 |
|
608 |
|
Total assets |
622,540 |
|
612,651 |
|
602,474 |
|
Working capital deficit |
(87,666 |
) |
(19,615 |
) |
19,105 |
|
Capital expenditures |
34,972 |
|
17,243 |
|
169,167 |
|
Development expenses |
4,750 |
|
18,742 |
|
9,150 |
|
Long-term debt(4) |
231,581 |
|
219,555 |
|
202,913 |
|
(1) |
Total
production excludes sulphur. |
(2) |
Estimated pre-tax net present value of discounted cash flows
from reserves using a 10% discount rate. |
(3) |
Refer to the “non-GAAP measures” on page 20 of the Company’s
most recent MD&A. |
(4) |
Long-term debt includes current and long-term portion and
reflects accretion of the $50 million deferred fee over the
four-year term of the loan; refer to note 12 of the consolidated
financial statements. |
Quarterly Highlights
|
2021 |
2020 |
($ 000s unless otherwise noted) |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Production |
|
|
|
|
|
|
|
|
Natural gas (mcf/day) |
198,596 |
|
191,439 |
|
194,232 |
|
215,179 |
|
212,220 |
|
184,080 |
|
208,689 |
|
199,234 |
|
Condensate (bbl/day) |
2,851 |
|
2,555 |
|
2,950 |
|
3,158 |
|
3,259 |
|
2,807 |
|
3,166 |
|
2,850 |
|
NGLs (bbl/day) |
5,354 |
|
4,133 |
|
3,083 |
|
4,975 |
|
6,171 |
|
4,722 |
|
5,843 |
|
5,156 |
|
Sulphur (ton/day) |
1,185 |
|
1,518 |
|
1,710 |
|
1,713 |
|
1,829 |
|
2,232 |
|
1,970 |
|
1,906 |
|
Total production (boe/d) |
41,304 |
|
38,595 |
|
38,404 |
|
43,997 |
|
44,800 |
|
38,209 |
|
43,791 |
|
41,211 |
|
Financial |
|
|
|
|
|
|
|
|
Realized natural gas price ($/mcf) |
3.67 |
|
2.70 |
|
2.59 |
|
2.63 |
|
2.16 |
|
1.70 |
|
1.87 |
|
2.25 |
|
Benchmark natural gas price ($/mcf) |
4.69 |
|
3.59 |
|
3.11 |
|
3.16 |
|
2.67 |
|
2.14 |
|
1.98 |
|
1.94 |
|
Realized condensate price ($/bbl) |
69.71 |
|
65.33 |
|
68.08 |
|
58.40 |
|
53.48 |
|
44.67 |
|
39.94 |
|
67.74 |
|
Benchmark condensate price ($/bbl) |
100.10 |
|
70.25 |
|
64.82 |
|
59.05 |
|
56.01 |
|
38.40 |
|
35.83 |
|
46.83 |
|
Net income (loss) |
4,661 |
|
(14,846 |
) |
(10,058))) |
(19,547 |
) |
(45,968 |
) |
(29,845 |
) |
(13,396 |
) |
(11,484 |
) |
Net income (loss) per share, basic |
0.03 |
|
(0.09 |
) |
(0.06 |
) |
(0.12 |
) |
(0.29 |
) |
(0.19 |
) |
(0.09 |
) |
(0.07 |
) |
Net income (loss) per share, diluted |
0.03 |
|
(0.09 |
) |
(0.06 |
) |
(0.12 |
) |
(0.29 |
) |
(0.19 |
) |
(0.09 |
) |
(0.07 |
) |
Net operating income (loss) (1) |
30,845 |
|
17,920 |
|
14,444 |
|
20,876 |
|
12,829 |
|
(646 |
) |
19,301 |
|
19,239 |
|
Cashflow provided by (used in) operating
activities |
21,139 |
|
6,885 |
|
12,093 |
|
11,000 |
|
2,362 |
|
(4,541 |
) |
(2,013 |
) |
6,426 |
|
Adjusted funds flow from operations(1) |
23,317 |
|
10,981 |
|
8,516 |
|
14,878 |
|
8,535 |
|
(6,779 |
) |
12,466 |
|
12,644 |
|
Total assets |
622,540 |
|
560,782 |
|
575,690 |
|
557,696 |
|
612,651 |
|
583,942 |
|
588,415 |
|
609,437 |
|
Working capital (deficit) surplus |
(87,665 |
) |
(52,534 |
) |
(47,862 |
) |
(28,314 |
) |
(19,615 |
) |
(9,164 |
) |
15,109 |
|
15,596 |
|
Capital expenditures |
1,493 |
|
9,852 |
|
17,959 |
|
5,668 |
|
8,926 |
|
6,033 |
|
264 |
|
2,020 |
|
Development expenses |
225 |
|
783 |
|
(4,862 |
) |
8,604 |
|
8,682 |
|
2,472 |
|
4,129 |
|
3,459 |
|
(1) |
Refer to the
“non-GAAP measures” on page 20 of the Company’s most recent
MD&A. |
Operations
PerformanceProduction in the fourth quarter of 2021
decreased by 8% compared to the same quarter in 2020 due to the
temporary shut-in of production in Central Alberta due to partner
disputes, unplanned downtime at Waterton for maintenance repairs,
unseasonably cold weather in December 2021 and normal production
declines.
During 2021, production decreased 3% compared to
2020. The calculated 2021 decline rate in the independent reserve
evaluator’s year-end 2020 reserve report was 8% on a total proved
plus probable basis. During 2021, the Company successfully
endeavoured to mitigate this decline through numerous optimization
and maintenance activities. These relatively low-cost investments
generated significant internal rates of return. Production was
negatively impacted during 2021 by the major planned facility
turnarounds at Jumping Pound and Caroline in April and September
respectively, mitigated to the extent possible by volume
re-direction to third-party facilities during the turnarounds.
During 2021, Pieridae also increased production from minor working
interest acquisitions in the Waterton and Jumping Pound areas.
The Company continues to execute a commodity
risk management program governed by its Hedge Policy. Over the past
12 months, our debt lender temporarily waived and/or amended their
requirement to have 60% of forecast base production hedged on an
18-month rolling average basis, in order to allow the Company to
take advantage of strengthening natural gas and NGL prices, and to
recognize the credit implications of hedging into a rising
commodity price market. During 2021, the Company’s primary hedging
tools were physical fixed price forward sales contracts. As of
December 31, 2021, 56,900 GJ/d of fixed price natural gas contracts
were in place at a weighted-average price of $2.50/GJ over a term
of 15 months, as further described in note 19 of the consolidated
financial statements. As of March 23, 2022, physical fixed-price
forward sales contracts representing 92,007 GJ/d of natural gas
hedged at an average price of $2.92/GJ for 2022 and 17,500 GJ/d for
Q1 2023 at $2.88/GJ are in place. In addition, condensate hedges
(C$WTI basis) averaging 659 bbl/d for 2022 at an average price of
C$107.98/bbl are in place.
Strategic ReviewOn July 26,
2021, Pieridae announced it had initiated a formal process to
identify, examine and consider a range of strategic alternatives
with a view to enhancing shareholder value. Such strategic
alternatives may have included a corporate sale, merger, a sale of
a material portion of Pieridae’s assets or other transactions.
“Shareholders and the Company have invested
heavily in the Goldboro LNG Project for a number of years and we
have acquired and consolidated a large base of Foothills upstream
assets, so it is prudent for us to look for ways to ensure an
appropriate return is found for the investments made to date,” said
Pieridae Chief Executive Officer Alfred Sorensen.
Pieridae’s Board of Directors had authorized the
creation of a special committee to review and evaluate potential
strategic alternatives and transactions. Pieridae as well hired
Peters & Co. to advise the strategic review committee and the
Company during the strategic review process.
On January 24, 2022, the company announced the
strategic review process had wrapped up. Ultimately, the special
committee concluded that the various alternatives presented were
not compelling relative to the Company’s stand-alone prospects. The
restructuring of Pieridae’s credit agreement announced January 4,
2022 played a role in the special committee’s conclusion. The full
Pieridae Board supported and approved the committee’s
recommendation.
Goldboro LNGOn July 2, 2021,
the company announced a future path for its Goldboro LNG Project.
While Pieridae had made progress in advancing the Project, as of
June 30, 2021, we were not able to meet all of the key conditions
necessary to make a positive final investment decision. It became
apparent that cost pressures and time constraints due to COVID-19
made building the LNG Project difficult. We began to assess options
and analyzed strategic alternatives that could make an LNG Project
more compatible in the future with a changing environment. The main
option analyzed was a floating LNG vessel in the same Nova Scotia
location.
Early in 2022, we became witness to rising
tensions between Russia and Ukraine which placed global energy
security of supply front and centre. Pieridae’s project could
provide potential solutions to help alleviate supply issues,
including of a net zero emissions floating LNG facility.
The first step is ensuring Pieridae has an
investment partner.
AER Shell Licence Transfer On
January 31, 2022, Shell and Pieridae filed a request with the
Alberta Energy Regulator (“AER”) to withdraw the licence transfer
application for the Foothills assets from Shell to Pieridae. The
AER approved the request.
After changes to AER regulations late in 2021,
both Shell and Pieridae decided to revise the application and plan
to resubmit at a future date under the new regulatory framework.
Pieridae continues to own the Foothills Assets and has
responsibility for their continued safe operation. Shell remains
the licensee of record.
COVID-19 ResponseMany companies
have or are incorporating plans to have their employees return to
work for what may be the other side of the pandemic. At Pieridae,
we have followed provincial guidelines since COVID became an issue
in the spring of 2020. With the Government of Alberta lifting the
vast majority of restrictions, early March saw the beginning of a
return to the work environment at Pieridae.
The company feels it is important to restart
both culture building and in-person collaboration. Being able to
see each other face to face is the best way to accomplish both
goals.
Employees and contractors deserve recognition
for adjusting to a sometimes extremely difficult work environment
over the last two years. Pieridae navigated its way through the
COVID quagmire without suffering any significant loss of
productivity, and in many instances thriving. A tangible example of
this was a pair of large turnarounds, which are planned maintenance
shutdowns, at two of our gas complexes: Jumping Pound and Caroline.
Both were safely completed very close to budget and on time and
that took a significant amount of planning and effort.
Throughout this significant work, Pieridae
successfully maintained its focus on safety, as evidenced by total
reportable injury frequency (“TRIF”) of 0.26 as compared to an
annual target of 0.34 and 2020 annual TRIF of 0.34.
2021 Developments
New Chief Operating Officer
HiredOn April 1 2021, the Company hired an industry
veteran with senior level experience operating complex sour gas
assets as its new COO, someone well positioned to take full
advantage of the opportunities Pieridae’s assets offer.
Professional engineer Darcy Reding brought 30+ years of experience
to the role along with a proven track record.
“We needed someone with a proven record of
building a resource base and economically bringing on new reserves
that will be critical to filling our gas plants and delivering
long-term success,” said Pieridae CEO Alfred Sorensen. “Darcy has
previously managed a billion-dollar multi-year program to
successfully grow production volumes.”
Exploring the Feasibility of a
Large-Scale Carbon Capture and Storage Project On May 27,
2021, we announced our intent to explore the feasibility of
developing a Caroline Carbon Capture Power Complex. This
large-scale carbon capture and sequestration and blue power
production complex would be located at Pieridae’s Caroline Gas
Complex in Alberta. The Caroline opportunity has the potential to
capture and store underground up to three million tonnes of CO2
annually from the gas processing facility, power production and
third parties. The underground depleted gas reservoir that would
store the carbon has enough capacity to sequester up to 100 million
tonnes of CO2 over three-plus decades.
Our goal in 2022 is to conduct an updated
feasibility study for the project. If the concept makes sense, it
would be a key part of our carbon management plan which we also aim
to develop and deliver this year. That plan would be aligned with
our ongoing ESG work.
Pieridae Releases its Inaugural ESG
Report On June 22, 2021, we were excited to announce the
publishing of Pieridae Energy’s inaugural ESG Report. This report
is the continuation of our sustainability journey to demonstrate
Pieridae’s commitment to achieving an authentic ESG outcome through
caring deeply about what we stand for as a Company, and by
responding to our stakeholders’ needs and concerns.
“A commitment to ESG has been a big part of
Pieridae Energy throughout our history,” said Pieridae’s Chief
Executive Officer Alfred Sorensen. “It wasn’t always called ESG, of
course, but we have consistently built respectful relationships
with Indigenous Peoples, communities and other stakeholders as well
as focusing on meeting and exceeding environmental regulatory and
governance standards. It’s been that way from the beginning of this
Company, shaped by a strong framework of responsible
governance.”
Updated Credit Agreement Reached With
TEC On January 4, 2022, Pieridae announced it had reached
an agreement with its senior secured lender, Third Eye Capital
Corporation, to extend payment of the $50 million term loan
deferred fee and to amend certain other terms and covenants of the
Credit Agreement first signed with TEC in October of 2019, related
to the purchase of Shell’s Foothills assets.
Under the updated terms of the Credit Agreement,
the $50 million deferred fee is now incorporated as part of the
overall loan due on October 16, 2023. However, the deferred fee
will not accrue interest while outstanding. Additionally, certain
other modifications to the Credit Agreement were negotiated,
including the continued waiver of the requirement to hedge 60%
production on an 18-month rolling basis, through the end of
February 2022. This allowed Pieridae to take better advantage of
stronger commodity prices.
Reserves
Highlights Pieridae’s net PDP
reserve volumes at December 31, 2021 are 131.3 MMboe, an increase
of 3% year over year. Economic factors, led by price forecast
increases partially offset by higher operating and capital
maintenance assumptions, contributed 12.4 MMboe of the
year-over-year increase, resource acquisitions contributed 1.3
MMboe and technical revisions a further 4.7 MMboe, offset by
production during 2021 of 14.8 MMboe.
Total net 1P reserve volumes were 202.6 MMboe,
an increase of 15% compared to the prior year. The increase is
primarily due to the addition of proved undeveloped drilling
locations, offset by 2021 production and economic truncations from
higher operating and capital maintenance assumptions. Pieridae’s
total net 2P reserve volumes were 269.2 MMboe, an increase of 13%
compared to the prior year with increases primarily due to the
addition of proved plus probable undeveloped drilling locations,
offset by 2021 production and economic truncations from higher
operating and capital maintenance assumptions.
Pieridae added eight new gross proved
undeveloped reserve locations (“PUD”s) and eight new gross proved
plus probable reserve locations (“P+PUD”s) in 2021, for a total of
26 and 28 respective gross undeveloped drilling locations. Total
undiscounted future development capital included in our reserve
estimate is $300.8 million 1P and $ $439.1 million 2P.
The Company's 2P reserves as at December 31,
2021 were estimated to have a pre-tax net present value of $1,002.1
million using a 10% discount rate, compared to $976.1 million in
the prior year. The increase in value was primarily due to higher
commodity price forecasts and additional, undeveloped drilling
locations, partially offset by modifications to certain operating
cost, capital maintenance and royalty assumptions.
2021 Independent Reserves
EvaluationThe following tables are based on the Reserves
Report prepared by Deloitte, an independent qualified reserves
evaluator, effective as of December 31, 2021 and dated and prepared
as of March 14, 2022 (the “Deloitte Reserves Report”). The tables
show the estimated share of Pieridae’s oil, natural gas and NGL
reserves in its properties and the present value of estimated
future net revenue for these reserves, after provision for Alberta
gas cost allowance, using forecast price and cost assumptions. The
Deloitte Reserves Report was prepared in accordance with the
standards included in the COGE Handbook and NI 51-101.
Stated reserves are company gross basis (working
interest before deduction of royalties without the inclusion of any
royalty interest) unless otherwise noted. In addition to the
information disclosed in this news release, more detailed
information will be included in the corporation’s AIF for the year
ended December 31, 2021.
Canadian Domestic Forecast
(1)
Year |
Light Oil |
Natural Gas |
Natural Gas Liquids |
|
CanadianLight SweetCrude (2)
40⁰API($Cdn/Bbl) |
Alberta AECO($Cdn/Mcf) |
EdmontonPropane($Cdn/Bbl) |
EdmontonButane($Cdn/Bbl) |
EdmontonPentanes Plus($Cdn/Bbl) |
OperatingCostInflationRate(%/Year) |
ExchangeRate($US/$Cdn) |
Historical |
2013 |
93.36 |
3.17 |
38.54 |
77.44 |
103.52 |
0.90 |
% |
0.97 |
2014 |
94.00 |
4.50 |
42.93 |
59.43 |
101.47 |
1.90 |
% |
0.91 |
2015 |
57.00 |
2.69 |
5.35 |
33.70 |
55.15 |
1.10 |
% |
0.78 |
2016 |
52.22 |
2.16 |
8.71 |
31.45 |
52.43 |
1.40 |
% |
0.75 |
2017 |
62.11 |
2.16 |
27.56 |
40.96 |
62.85 |
1.60 |
% |
0.77 |
2018 |
75.39 |
1.61 |
29.54 |
45.93 |
81.62 |
2.30 |
% |
0.77 |
2019 |
66.93 |
1.80 |
27.00 |
39.40 |
62.65 |
1.50 |
% |
0.75 |
2020 |
45.90 |
2.25 |
15.81 |
20.82 |
46.58 |
0.75 |
% |
0.75 |
2021 |
79.80 |
3.61 |
45.92 |
40.30 |
81.87 |
3.30 |
% |
0.80 |
Forecast |
2022 |
85.43 |
3.58 |
43.71 |
37.34 |
90.21 |
0.00 |
% |
0.80 |
2023 |
79.36 |
3.22 |
35.40 |
48.92 |
83.90 |
2.25 |
% |
0.80 |
2024 |
76.07 |
3.07 |
33.88 |
46.93 |
80.67 |
2.00 |
% |
0.80 |
2025 |
77.59 |
3.14 |
34.55 |
47.88 |
82.29 |
2.00 |
% |
0.80 |
2026 |
79.13 |
3.20 |
35.24 |
48.83 |
93.94 |
2.00 |
% |
0.80 |
2027 |
80.73 |
3.26 |
35.94 |
49.80 |
85.62 |
2.00 |
% |
0.80 |
2028 |
82.33 |
3.33 |
36.67 |
50.80 |
87.33 |
2.00 |
% |
0.80 |
2029 |
83.98 |
3.40 |
37.39 |
51.81 |
89.073 |
2.00 |
% |
0.80 |
2030 |
85.66 |
3.46 |
38.14 |
52.85 |
90.84 |
2.00 |
% |
0.80 |
Escalation rate of 2% thereafter |
(1) |
Forecast
prices were estimated using the average of the escalated price
forecasts of four independent reserve evaluators, namely Deloitte
LLP, GLJ Petroleum Consultants Ltd., McDaniels & Associates
Consultants Ltd. and Sproule Associates Limited. There is no
assurance that the forecast prices and forecast factors used by
Deloitte in the Deloitte Report will prove accurate and variances
could be material. |
(2) |
Edmonton Par prior to 2013. |
Reserve Life Index ("RLI")Based
on these latest reserves updates for the 2021-year-end process,
Pieridae’s 2P RLI is 17.7 years.
Net Present Value
SummaryPieridae’s crude oil, natural gas and NGLs reserves
were evaluated using the four-consultant average (“IC4”) forecast
pricing and foreign exchange rates on January 1, 2022, as described
above. The NPV value is prior to the provision for interest, debt
service charges and general and administrative (“G&A”) expense.
It should not be assumed that the NPV of future net revenue
estimated by Deloitte represents the fair market value of
Pieridae’s reserves.
The following tables summarize the undiscounted
value and the present value, discounted at 5%, 10%, 15% and 20%, of
Pieridae’s estimated future net present value of revenue based on
forecast price and cost assumptions as of December 31, 2021.
Summary of Before-Tax Present Value of
Future Net Revenue on December 31, 2021
(1)
|
|
Before Income Tax, Discounted at (%/year) |
Unit Value Before Income Tax,Discounted at 10%/year |
Reserves Category (2) |
|
0%(M$) |
5%(M$) |
10%(M$) |
15%(M$) |
20%(M$) |
$/BOE |
Proved |
|
|
|
|
|
|
|
|
|
|
|
|
Developed Producing |
|
336,361 |
|
492,368 |
|
427,675 |
|
369,719 |
|
326,391 |
|
3.82 |
Developed Non-Producing |
|
102,420 |
|
71,011 |
|
51,326 |
|
38,248 |
|
29,127 |
|
3.43 |
Undeveloped |
|
642,486 |
|
407,772 |
|
273,200 |
|
189,808 |
|
135,026 |
|
5.96 |
Total Proved |
|
1,081,267 |
|
971,151 |
|
752,202 |
|
597,775 |
|
490,544 |
|
4.36 |
Total Probable |
|
767,173 |
|
410,511 |
|
249,932 |
|
166,191 |
|
117,660 |
|
4.41 |
Total Proved + Probable |
|
1,848,440 |
|
1,381,662 |
|
1,002,134 |
|
763,966 |
|
608,203 |
|
4.37 |
(1) |
Future net
revenue is estimated using forecast prices and costs – see “Pricing
Assumptions – Forecast Prices and Costs – December 31, 2021” in the
Company’s AIF. |
(2) |
Values reflect abandonment and reclamation costs for all wells,
facilities, and pipelines and for all future locations assigned
reserves in the Deloitte Reserves Report in the aggregate amount of
$429.6 million (undiscounted) for total proved reserves and 440.1
million (undiscounted) for total proved plus probable
reserves. |
Reserve VolumeThe corporation
was able to protect base production throughout the year due to
optimization and maintenance programs, the results of which provide
one of the lowest corporate declines amongst our peers. These
relatively low-cost investments generated attractive rates of
return and significantly improved our already low production
decline. Key optimization projects included plunger lift
optimization and liquid loading mitigation in the wellbore, and gas
compression optimization at surface.
Summary of Oil and Gas Reserves as of
December 31, 2021
|
|
Light/MediumCrude Oil |
Conventional NaturalGas (1) |
Natural Gas Liquids |
Sulphur |
Reserves Category |
|
Gross(Mbbl) |
Net (Mbbl) |
Gross(Mmcf) |
Net (Mmcf) |
Gross(Mbbl) |
Net(Mbbl) |
Gross(Mlt) |
Net(Mlt) |
Proved |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developed Producing (2) |
|
- |
|
4.1 |
|
626,993 |
|
542,385 |
|
26,811 |
|
21,509 |
|
5,610 |
|
4,575 |
|
Developed Non-Producing (3) |
|
- |
|
- |
|
108,511 |
|
87,930 |
|
401 |
|
292 |
|
154 |
|
128 |
|
Undeveloped (4) |
|
- |
|
- |
|
207,091 |
|
181,630 |
|
18,316 |
|
15,577 |
|
2,588 |
|
2,104 |
|
Total Proved |
|
- |
|
4.1 |
|
942,596 |
|
811,944 |
|
45,528 |
|
37,377 |
|
8,352 |
|
6,806 |
|
Total Probable |
|
- |
|
0.2 |
|
306,055 |
|
262,771 |
|
15,583 |
|
12,876 |
|
2,795 |
|
2,290 |
|
Total Proved + Probable |
|
- |
|
4.3 |
|
1,248,651 |
|
1,074,715 |
|
61,111 |
|
50,253 |
|
11,147 |
|
9,096 |
|
(1) |
Natural gas
volumes include associated, and non-associated gas. |
(2) |
“Developed Producing” reserves are those reserves that are
expected to be recovered from completion intervals open at the time
of the estimate. These reserves may be currently producing or, if
shut-in, they must have previously been on production, and the date
of resumption of production must be known with reasonable
certainty. |
(3) |
“Developed Non-Producing” reserves are those reserves that
either have not been on production, or have previously been on
production, but are shut in, and the date of resumption of
production is unknown. |
(4) |
“Undeveloped” reserves are those reserves expected to be
recovered from known accumulations where a significant expenditure
(e.g., when compared to the cost of drilling a well) is required to
render them capable of production. They must fully meet the
requirements of the reserves classification (proved, probable,
possible) to which they are assigned. |
(5) |
Gross refers to the working interest volumes before royalty
deductions. |
2022 Outlook:
($ 000s unless otherwise noted) |
2021 Actual Results |
|
2022 Guidance |
|
Total production (boe/d) |
40,562 |
|
39.000 – 42,000 |
|
Net operating income (1)(2) |
84,085 |
|
100,000 – 130,000 |
|
Implied Operating Netback ($/boe) (2) |
5.68 |
|
7.02 – 8.48 |
|
Sustaining capital expenditures (3) |
26,488 |
|
17,000 – 22,000 |
|
Development capital expenditures (4) |
7,212 |
|
17,000 – 25,000 |
|
(1) |
Refer to the
“non-GAAP measures” section on pages 20 of the Company’s latest
MD&A |
(2) |
Assumes average 2022 AECO price of $3.83/mcf and average 2022
WTI price of USD$80.28/bbl, inclusive of fixed price forward sales
contracts in place as at March 23, 2022 |
(3) |
Comprised of facility maintenance and turnaround capital
expenditures |
(4) |
Comprised of seismic, development and land capital
expenditures |
Pieridae’s near-term priority is to strengthen
its balance sheet through sustaining production, maintain rigorous
cost control across its operations and administration, and to
deliver accretive non-core asset dispositions and related
commercial optimization activities. As mentioned earlier in the
release, we plan to begin a drilling program in the second half of
2022.
About Pieridae:Pieridae is a
majority Canadian-owned corporation based in Calgary that was
founded in 2011. The Company is focused on the exploration,
extraction and processing of natural gas as well as analyzing
options for a reconfigured LNG Project that fits with the current
environment and would supply Europe and other markets. Pieridae
provides the energy to fuel people’s daily lives while supporting
the environment and the transition to a lower-carbon economy. After
completion of all the transactions disclosed in this news release,
Pieridae has 157,645,871 common shares issued and outstanding which
trade on the TSX (PEA.TO).
For further information please
contact: |
Alfred
Sorensen, Chief Executive Officer |
James
Millar, Director, External Relations |
Telephone: (403) 261-5900 |
Telephone: (403) 261-5900 |
Forward-Looking
StatementsCertain statements contained herein may
constitute "forward-looking statements" or "forward-looking
information" within the meaning of applicable securities laws
(collectively "forward-looking statements"). Words such as "may",
"will", "should", "could", "anticipate", "believe", "expect",
"intend", "plan", "potential", "continue", "shall", "estimate",
"expect", "propose", "might", "project", "predict", "forecast" and
similar expressions may be used to identify these forward-looking
statements.
Forward-looking statements involve significant
risk and uncertainties. A number of factors could cause actual
results to differ materially from the results discussed in the
forward-looking statements including, but not limited to, risks
associated with oil and gas exploration, development, exploitation,
production, marketing and transportation, loss of markets,
volatility of commodity prices, currency fluctuations, imprecision
of resources estimates, environmental risks, competition from other
producers, incorrect assessment of the value of acquisitions,
failure to realize the anticipated benefits or synergies from
acquisitions, delays resulting from or inability to obtain required
regulatory approvals and ability to access sufficient capital from
internal and external sources and the risk factors outlined under
"Risk Factors" and elsewhere herein. The recovery and resources
estimate of Pieridae's reserves provided herein are estimates only
and there is no guarantee that the estimated resources will be
recovered. As a consequence, actual results may differ materially
from those anticipated in the forward-looking statements.
Forward-looking statements are based on a number
of factors and assumptions which have been used to develop such
forward-looking statements, but which may prove to be incorrect.
Although Pieridae believes that the expectations reflected in such
forward-looking statements are reasonable, undue reliance should
not be placed on forward-looking statements because Pieridae can
give no assurance that such expectations will prove to be correct.
In addition to other factors and assumptions which may be
identified in this document, assumptions have been made regarding,
among other things: the impact of increasing competition; the
general stability of the economic and political environment in
which Pieridae operates; the timely receipt of any required
regulatory approvals; the ability of Pieridae to obtain qualified
staff, equipment and services in a timely and cost efficient
manner; the ability of the operator of the projects which Pieridae
has an interest in, to operate the field in a safe, efficient and
effective manner; the ability of Pieridae to obtain financing on
acceptable terms; the ability to replace and expand oil and natural
gas resources through acquisition, development and exploration; the
timing and costs of pipeline, storage and facility construction and
expansion and the ability of Pieridae to secure adequate product
transportation; future commodity prices; currency, exchange and
interest rates; the regulatory framework regarding royalties, taxes
and environmental matters in the jurisdictions in which Pieridae
operates; timing and amount of capital expenditures, future sources
of funding, production levels, weather conditions, success of
exploration and development activities, access to gathering,
processing and pipeline systems, advancing technologies, and the
ability of Pieridae to successfully market its oil and natural gas
products.
Readers are cautioned that the foregoing list of
factors is not exhaustive. Additional information on these and
other factors that could affect Pieridae's operations and financial
results are included in reports on file with Canadian securities
regulatory authorities and may be accessed through the SEDAR
website (www.sedar.com), and at Pieridae's website
(www.pieridaeenergy.com). Although the forward-looking statements
contained herein are based upon what management believes to be
reasonable assumptions, management cannot assure that actual
results will be consistent with these forward-looking statements.
Investors should not place undue reliance on forward-looking
statements. These forward-looking statements are made as of the
date hereof and Pieridae assumes no obligation to update or review
them to reflect new events or circumstances except as required by
Applicable Securities Laws.
Forward-looking statements contained herein
concerning the oil and gas industry and Pieridae's general
expectations concerning this industry are based on estimates
prepared by management using data from publicly available industry
sources as well as from reserve reports, market research and
industry analysis and on assumptions based on data and knowledge of
this industry which Pieridae believes to be reasonable. However,
this data is inherently imprecise, although generally indicative of
relative market positions, market shares and performance
characteristics. While Pieridae is not aware of any misstatements
regarding any industry data presented herein, the industry involves
risks and uncertainties and is subject to change based on various
factors.
Barrels of oil equivalent (“boes”) may be
misleading, particularly if used in isolation. A boe conversion
ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
Neither TSX nor its Regulation Services
Provider (as that term is defined in policies of the TSX) accepts
responsibility for the adequacy or accuracy of this
release.
1 NOI and AFFO are non-GAAP measures. They do not have any
standardized meaning under IFRS and therefore may not be comparable
to similar measures presented by other issuers. Refer to the
“non-GAAP measures” section on page 20 of the Company’s most recent
MD&A.
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