Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) is
pleased to report financial and operating results as at and for the
three and twelve months ended December 31, 2021 and to provide 2021
year end reserves information as evaluated by Insite Petroleum
Consultants Ltd. ("Insite"). The Company's Management's Discussion
and Analysis ("MD&A") and audited consolidated financial
statements are available on SEDAR (the System for Electronic
Document Analysis and Retrieval) at www.sedar.com.
An updated corporate presentation as well as the
monthly activity update can be found on the Company's website at
www.petrusresources.com.
Q4 2021 HIGHLIGHTS
- Commodity price
improvement – Realized price per boe increased by 92% in
the fourth quarter of 2021 compared to the fourth quarter of 2020
due to strengthened oil, natural gas and NGL pricing, which
increased by 81%, 78% and 140%, respectively.
- Operating netback up
112% – Operating netback(1) increased by 122% to
$33.12/boe in the fourth quarter of 2021 up from $14.95/boe in the
fourth quarter of 2020.
- Total funds flow up
62% – Petrus generated funds flow and corporate netback(2)
of $10.4 million and $19.26/boe in the fourth quarter of 2021, 62%
and 75% higher, respectively, than the fourth quarter of the prior
year.
- Increased capital
activity – Petrus incurred capital expenditures of $12.2
million in the fourth quarter of 2021 compared to $2.8 million in
the fourth quarter of 2020. Petrus began execution of its fourth
quarter 2021 drilling program in November, which included the
Company’s first operated well in North Ferrier. In December, the
Company drilled two net wells in its core Ferrier area.
ANNUAL 2021 HIGHLIGHTS
- Transformative debt
reduction – During 2021, Petrus executed transactions that
transformed its debt position, as follows:
- Reduced net debt(1) by 46% from
$114.4 million to $61.8 million;
- Debt to fourth quarter 2021
annualized funds flow (excluding realized hedge settlements) is now
1.5x;
- Second lien term loan settled in
full; and
- First lien debt is now fully
conforming at $57.7 million drawn.
- Funds flow per boe up
41% – Petrus generated funds flow and corporate netback of
$33.4 million and $15.19/boe in 2021, 26% and 40% higher,
respectively, than funds flow of $26.4 million and $10.93/boe in
2020.
- Capital expenditures
doubled – Petrus incurred $26.9 million of capital
expenditures in 2021, compared to $14.3 million in 2020; drilling
ten gross (6.4 net) wells in Ferrier and North Ferrier.
- Maintained
production – Petrus held production relatively flat at
6,009 boe/d through 2021 as it focused on debt repayment, which
limited capital reinvestment during the first nine months of the
year.
2022
OUTLOOK(3)
The completion of the debt restructuring
transactions during the third quarter of 2021 transformed Petrus
from a company with limited capital resources to one with the
ability to create meaningful shareholder value. The substantial
debt reduction associated with the second lien debt settlement and
equity financing has bolstered the Company’s financial position and
provides the flexibility required to invest in the development of
its land base and unlock proven value.
On March 1, 2022, the Company entered into a
definitive agreement to acquire producing oil and gas properties
that are held by a privately owned limited partnership and its
general partner (the "Acquired Entities") for total consideration
of approximately $14.4 million, consisting of 10 million common
shares of the Company issued at a deemed price of $1.44 per share
based on the volume weighted average trading price of the common
shares of the Company on the TSX for the five trading days prior to
the date of the Agreement (the "Acquisition"). The Acquisition is
expected to close in March 2022 and is subject to customary closing
conditions. For more information, please refer to the related press
release dated March 1, 2022.
Petrus' Board of Directors has approved a 2022
capital budget of $50 to $55 million. Capital will be largely
focused on the drilling, completion and tie-in of 14 net wells in
Ferrier. The 2022 budget was constructed using a price forecast of
WTI at US$69.00/bbl, AECO at $3.20/GJ and a foreign exchange rate
of US$0.79. Through the successful execution of this capital plan
and with the Acquired Entities now included, Petrus is expecting
to:
- Achieve a 2022 exit production rate
of 9,000 to 9,500 boe per day (62% conventional natural gas, 25%
light crude oil and 13% natural gas liquids), a projected increase
of 40 to 50% compared to 2021 average annual production.
- Generate in excess of $60 million
in annual funds flow, an anticipated 65 to 80% improvement compared
to 2021 results.
- Continue to reduce debt and further
strengthen the Company’s balance sheet.
(1)Non-GAAP measure or non-GAAP ratio. Refer to
"Non-GAAP and Other Financial Measures" below.(2)Corporate netback
is equal to funds flow, which is a comparable additional GAAP
measure. Petrus analyzes these measures on an absolute value and
per unit basis. Refer to "Non-GAAP and Other Financial
Measures".(3)Refer to "Advisories - Forward-Looking Statements"
below.
SELECTED FINANCIAL INFORMATION
OPERATIONS |
Twelve
monthsended Dec. 31,
2021 |
Twelve monthsendedDec. 31,
2020 |
Three monthsendedDec. 31,
2021 |
Three monthsendedSept. 30,
2021 |
Three
monthsended Jun. 30,
2021 |
Three
monthsended Mar. 31,
2021 |
Average production |
|
|
|
|
|
|
Natural gas (mcf/d) |
23,680 |
|
27,640 |
|
23,494 |
|
23,942 |
|
24,291 |
|
22,985 |
|
Oil (bbl/d) |
1,019 |
|
1,021 |
|
1,002 |
|
937 |
|
1,214 |
|
923 |
|
NGLs (bbl/d) |
1,043 |
|
980 |
|
962 |
|
1,010 |
|
1,046 |
|
1,158 |
|
Total (boe/d) |
6,009 |
|
6,608 |
|
5,880 |
|
5,937 |
|
6,309 |
|
5,912 |
|
Total (boe) |
2,193,432 |
|
2,418,259 |
|
540,924 |
|
546,227 |
|
574,084 |
|
532,099 |
|
Light oil weighting |
17 |
% |
15 |
% |
20 |
% |
21 |
% |
19 |
% |
15 |
% |
Realized Prices |
|
|
|
|
|
|
Natural gas ($/mcf) |
4.03 |
|
2.57 |
|
5.45 |
|
4.04 |
|
3.28 |
|
3.33 |
|
Oil ($/bbl) |
78.82 |
|
44.14 |
|
89.71 |
|
82.56 |
|
75.99 |
|
66.61 |
|
NGLs ($/bbl) |
44.09 |
|
20.84 |
|
56.35 |
|
45.10 |
|
39.76 |
|
36.79 |
|
Total realized price ($/boe) |
36.90 |
|
20.67 |
|
46.29 |
|
37.00 |
|
33.87 |
|
30.55 |
|
Royalty income |
0.14 |
|
0.16 |
|
0.06 |
|
0.18 |
|
0.19 |
|
0.15 |
|
Royalty expense |
(4.72 |
) |
(2.15 |
) |
(6.34 |
) |
(3.94 |
) |
(4.87 |
) |
(3.74 |
) |
Net oil and natural gas revenue ($/boe) |
32.32 |
|
18.68 |
|
40.01 |
|
33.24 |
|
29.19 |
|
26.96 |
|
Operating expense |
(5.89 |
) |
(4.64 |
) |
(5.02 |
) |
(5.57 |
) |
(6.80 |
) |
(6.12 |
) |
Transportation expense |
(1.79 |
) |
(1.43 |
) |
(1.87 |
) |
(1.81 |
) |
(1.84 |
) |
(1.62 |
) |
Operating netback(1) ($/boe) |
24.64 |
|
12.61 |
|
33.12 |
|
25.86 |
|
20.55 |
|
19.22 |
|
Realized gain (loss) on derivatives ($/boe) |
(5.34 |
) |
2.70 |
|
(9.52 |
) |
(6.41 |
) |
(3.21 |
) |
(2.28 |
) |
Other income (cash) |
0.49 |
|
0.15 |
|
0.04 |
|
0.02 |
|
1.77 |
|
0.04 |
|
General & administrative expense |
(1.95 |
) |
(1.41 |
) |
(2.24 |
) |
(1.47 |
) |
(2.41 |
) |
(1.65 |
) |
Cash finance expense |
(2.34 |
) |
(2.75 |
) |
(1.58 |
) |
(3.30 |
) |
(2.52 |
) |
(1.93 |
) |
Decommissioning expenditures |
(0.31 |
) |
(0.37 |
) |
(0.56 |
) |
(0.27 |
) |
(0.14 |
) |
(0.27 |
) |
Funds flow & corporate netback(2)
($/boe) |
15.19 |
|
10.93 |
|
19.26 |
|
14.43 |
|
14.04 |
|
13.13 |
|
|
|
|
|
|
|
|
FINANCIAL (000s except $ per share) |
Twelve months
ended Dec. 31,
2021 |
Twelve months
ended Dec. 31,
2020 |
Three months
ended Dec. 31,
2021 |
Three months
ended Sept. 30,
2021 |
Three months
ended Jun. 30,
2021 |
Three months
ended Mar. 31,
2021 |
Oil and natural gas revenue |
81,268 |
|
50,368 |
|
25,070 |
|
20,306 |
|
19,553 |
|
16,339 |
|
Net income (loss) |
114,556 |
|
(97,554 |
) |
114,633 |
|
7,343 |
|
(4,265 |
) |
(3,155 |
) |
Net income (loss) per share |
|
|
|
|
|
|
Basic |
1.83 |
|
(1.97 |
) |
1.19 |
|
0.04 |
|
(0.09 |
) |
(0.06 |
) |
Fully diluted |
1.76 |
|
(1.97 |
) |
1.11 |
|
0.03 |
|
(0.09 |
) |
(0.06 |
) |
Funds flow |
33,354 |
|
26,397 |
|
10,418 |
|
7,874 |
|
8,070 |
|
6,993 |
|
Funds flow per share |
|
|
|
|
|
|
Basic |
0.53 |
|
0.53 |
|
0.11 |
|
0.15 |
|
0.16 |
|
0.14 |
|
Fully diluted |
0.51 |
|
0.53 |
|
0.10 |
|
0.14 |
|
0.16 |
|
0.14 |
|
Capital expenditures |
26,916 |
|
14,298 |
|
12,235 |
|
6,101 |
|
663 |
|
7,917 |
|
Weighted average shares outstanding |
|
|
|
|
|
|
Basic |
62,557 |
|
49,469 |
|
96,660 |
|
54,167 |
|
49,513 |
|
49,469 |
|
Fully diluted |
65,207 |
|
49,469 |
|
102,868 |
|
57,638 |
|
49,513 |
|
49,469 |
|
As at period
end |
|
|
|
|
|
|
Common shares outstanding |
|
|
|
|
|
|
Basic |
96,708 |
|
49,469 |
|
96,708 |
|
96,603 |
|
49,559 |
|
49,469 |
|
Fully diluted |
103,889 |
|
49,469 |
|
103,889 |
|
100,074 |
|
49,559 |
|
49,469 |
|
Total assets |
290,492 |
|
177,914 |
|
290,492 |
|
173,101 |
|
176,629 |
|
177,587 |
|
Non-current liabilities |
42,172 |
|
45,321 |
|
42,172 |
|
40,200 |
|
40,838 |
|
42,028 |
|
Net
debt(1) |
61,779 |
|
114,361 |
|
61,779 |
|
60,071 |
|
110,346 |
|
116,634 |
|
(1)Non-GAAP measure or non-GAAP ratio. Refer to "Non-GAAP and
Other Financial Measures" below.(2)Corporate netback is equal to
funds flow, which is a directly comparable GAAP measure. Petrus
analyzes these measures on an absolute value and per unit basis.
Refer to "Non-GAAP and Other Financial Measures".
OPERATIONS UPDATE
Fourth quarter average production by area was as
follows:
For the three months endedDecember 31, 2021 |
Ferrier |
North Ferrier |
Foothills |
Central Alberta |
Kakwa |
Total |
Natural gas (mcf/d) |
16,288 |
1,194 |
1,405 |
4,415 |
163 |
23,465 |
Oil (bbl/d) |
560 |
40 |
109 |
257 |
37 |
1,003 |
NGLs
(bbl/d) |
799 |
26 |
5 |
132 |
4 |
966 |
Total (boe/d) |
4,073 |
265 |
347 |
1,126 |
69 |
5,880 |
Fourth quarter 2021 production averaged 5,880
boe/d compared to 5,937 boe/d in the previous quarter. Three gross
(3.0 net) wells were drilled with one well brought on production
late in the quarter adding 114 boe/d to the fourth quarter average,
which offset natural declines. Production was relatively consistent
quarter over quarter.
RESERVES
Petrus’ 2021 year end reserves were evaluated by
independent reserves evaluator, InSite Petroleum Consultants Ltd.
("Insite"), in accordance with the definitions, standards and
procedures contained in the Canadian Oil and Gas Evaluation
Handbook (“COGE Handbook”) and National instrument 51-101 -
Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) as
of December 31, 2021 ("2021 Insite Report"). Additional
reserve information as required under NI 51-101 will be included in
our Annual Information Form for the year ended December 31,
2021, which will be available under the Company's profile on SEDAR
(the System for Electronic Document Analysis and Retrieval) at
www.sedar.com.
Petrus has a reserves committee, comprised of a
majority of independent board members, that reviews the
qualifications and appointment of the independent reserves
evaluator. The committee also reviews the procedures for providing
information to the evaluators. All booked reserves are based upon
annual evaluations by the independent qualified reserve evaluator
conducted in accordance with the COGE Handbook and NI 51-101. The
evaluations are conducted using all available geological and
engineering data. The reserves committee has reviewed the reserves
information and approved the 2021 Insite Report.
The following table provides a summary of the
Company’s before tax reserves as evaluated by Insite:
As at December 31, 2021 |
Total Company Interest
(1)(3) |
Reserve Category |
ConventionalNatural
Gas(mmcf) |
Light andMediumCrude
Oil(mbbl) |
NGL(mbbl) |
Total(mboe) |
NPV
0%(2)($000s) |
NPV
5%(2)($000s) |
NPV
10%(2)($000s) |
Proved Producing |
49,580 |
885 |
2,550 |
11,698 |
119,994 |
136,554 |
128,517 |
Proved Non-Producing |
1,066 |
2 |
24 |
204 |
1,756 |
1,509 |
1,329 |
Proved
Undeveloped |
82,065 |
1,725 |
5,797 |
21,200 |
302,220 |
193,014 |
130,575 |
Total Proved |
132,711 |
2,612 |
8,371 |
33,101 |
423,970 |
331,078 |
260,421 |
Proved
+ Probable Producing |
59,462 |
1,057 |
3,049 |
14,017 |
163,359 |
162,738 |
146,541 |
Total Probable |
67,070 |
2,300 |
3,812 |
17,291 |
321,029 |
193,091 |
130,210 |
Total Proved Plus Probable |
199,781 |
4,912 |
12,183 |
50,392 |
744,999 |
524,168 |
390,631 |
(1)Tables may not add due to rounding.(2)NPV 0%,
NPV 5% and NPV 10% refer to the risked net present value of the
future net revenue of the Company's reserves, discounted by 0%, 5%
and 10%, respectively and is presented before tax and based on
Insite's pricing assumptions. (3)Total company interest reserve
volumes presented above and in the remainder of this press release
are presented as the Company's total working interest before the
deduction of royalties (but after including any royalty interests
of Petrus).
In 2021, Petrus’ development program generated
proved developed producing ("PDP") reserve volume additions of 3.0
mmboe. The Company produced 2.2 mmboe and had dispositions of 1.3
mmboe of PDP reserves. The Company ended the year with 11.7 mmboe
of PDP reserves (29% crude oil and liquids).
Petrus ended 2021 with $129.9 million, $260.4
million and $390.6 million of Proved Developed ("PD"), Total Proved
("TP"), and Proved plus Probable (“P+P”), respectively, reserve
value before-tax, discounted at 10%, based on the 2021 Insite
Report. In 2021, the Company realized Finding, Development and
Acquisition (“FD&A”) costs of $15.64/boe for PDP reserves.
Based on the 2021 Insite Report, the Company’s
PDP reserve value before-tax, discounted at 10% is $1.33 per share
(96,707,912 basic common shares outstanding at December 31, 2021).
On the same basis, the P+P reserve value before tax, discounted at
10%, is $4.04 per share.
FUTURE DEVELOPMENT COSTFuture
Development Cost ("FDC") reflects Insite's best estimate of what it
will cost to bring the P+P undeveloped reserves on production. The
following table provides a summary of the Company's FDC as set
forth in the 2021 Insite Report:
Future Development Cost ($000s) |
Total Proved |
Total Proved + Probable |
2022 |
49,560 |
49,560 |
2023 |
68,890 |
76,030 |
2024 |
68,752 |
68,752 |
2025 |
40,854 |
82,203 |
2026 |
5,629 |
66,942 |
Total FDC, Undiscounted |
233,684 |
343,489 |
Total FDC, Discounted at 10% |
194,687 |
270,860 |
PERFORMANCE RATIOS
The following table highlights annual
performance ratios for the Company from 2017 to 2021(3):
|
December 31, 2021 |
December 31, 2020 |
December 31, 2019 |
December 31, 2018 |
December 31, 2017 |
Proved Producing |
|
|
|
|
|
FD&A ($/boe) (1)(2) |
15.64 |
4.83 |
|
13.31 |
|
37.76 |
13.05 |
F&D ($/boe) (1)(2) |
8.90 |
4.83 |
|
12.81 |
|
42.27 |
11.57 |
Reserve Life Index (yr) (1) |
5.4 |
5.2 |
|
3.8 |
|
4.6 |
4.1 |
Reserve Replacement Ratio (1) |
1.4 |
1.2 |
|
0.4 |
|
0.2 |
1.6 |
FD&A Recycle Ratio (1) |
1.6 |
2.6 |
|
1.2 |
|
0.4 |
1.1 |
Proved Developed |
|
|
|
|
|
FD&A ($/boe) (1)(2) |
14.54 |
4.71 |
|
12.49 |
|
11.34 |
16.74 |
F&D ($/boe) (1)(2) |
8.53 |
4.71 |
|
12.03 |
|
11.55 |
14.62 |
Reserve Life Index (yr) (1) |
5.5 |
5.2 |
|
4.8 |
|
5.6 |
4.5 |
Reserve Replacement Ratio (1) |
1.4 |
1.2 |
|
0.5 |
|
0.6 |
1.2 |
FD&A Recycle Ratio (1) |
1.7 |
2.7 |
|
1.3 |
|
1.4 |
0.9 |
Total Proved |
|
|
|
|
|
FD&A ($/boe) (1)(2) |
10.51 |
1.29 |
|
1.09 |
|
8.73 |
14.33 |
F&D ($/boe) (1)(2) |
9.24 |
1.29 |
|
(6.83 |
) |
8.16 |
12.03 |
Reserve Life Index (yr) (1) |
15.3 |
10.9 |
|
9.9 |
|
11.1 |
8 |
Reserve Replacement Ratio (1) |
5.1 |
(1 |
) |
0.3 |
|
1.3 |
1.1 |
FD&A Recycle Ratio (1) |
2.3 |
9.8 |
|
14.4 |
|
1.8 |
1 |
Future Development Cost ($000s) |
233,684 |
156,815 |
|
174,027 |
|
194,757 |
182,086 |
Total Proved + Probable |
|
|
|
|
|
FD&A ($/boe) (1)(2) |
10.57 |
0.37 |
|
(7.32 |
) |
6.49 |
14.87 |
F&D ($/boe) (1)(2) |
8.36 |
0.37 |
|
190.21 |
|
5.15 |
17.28 |
Reserve Life Index (yr) (1) |
23.3 |
17.7 |
|
15.4 |
|
17.1 |
12.3 |
Reserve Replacement Ratio (1) |
6.4 |
(1.3 |
) |
— |
|
1.5 |
1.7 |
FD&A Recycle Ratio (1) |
2.3 |
33.7 |
|
(2.1 |
) |
2.4 |
1.0 |
Future Development Cost ($000s) |
343,489 |
252,335 |
|
267,652 |
|
290,876 |
283,030 |
(1)Refer to "Oil and Gas Disclosures"
below.(2)Certain changes in FD&A costs and F&D costs
produce non-meaningful figures as discussed in "Oil and Gas
Disclosures" below.(3)While FD&A costs and F&D costs,
reserve life index, reserve replacement ratio and FD&A recycle
ratio are commonly used in the oil and nature gas industry and have
been prepared by management, these terms do not have a standardized
meaning and may not be comparable to similar measures presented by
other companies and, therefore, should not be used to make such
comparisons.
NET ASSET VALUEThe following table shows the
Company's Net Asset Value ("NAV"), calculated using the 2021 Insite
Report and Insite's December 31, 2021 price forecast:
As at December 31, 2021 ($000s except per
share) |
Proved Developed Producing |
Total Proved |
Proved + Probable |
Present Value Reserves, before tax (discounted at 10%) (1) |
|
128,517 |
|
|
260,421 |
|
|
390,631 |
|
Undeveloped Land Value
(2) |
|
35,634 |
|
|
35,634 |
|
|
35,634 |
|
Net
Debt (3) |
|
(61,779 |
) |
|
(61,779 |
) |
|
(61,779 |
) |
Net Asset Value |
|
102,372 |
|
|
234,276 |
|
|
364,486 |
|
Fully
Diluted Shares Outstanding |
|
103,889 |
|
|
103,889 |
|
|
103,889 |
|
Estimated Net Asset Value per Share |
$0.99 |
|
$2.26 |
|
$3.51 |
|
(1)Based on the 2021 Insite Report, using the
forecast future prices and costs.(2)Based on the exploration and
evaluation assets as per the Company's December 31, 2021 audited
consolidated financial statements.(3)See "Non-GAAP and Other
Financial Measures" below.
ANNUAL GENERAL MEETING The
Company's Annual General Meeting will be held at 240FOURTH
(previously BP Centre) 240, 4th Ave SW Calgary, Alberta,
on Thursday May 12, 2022 at 1:30 p.m. (Calgary time).
For further information, please
contact:
Ken Gray, P.Eng.President and Chief Executive OfficerT: (403)
930-0889E: kgray@petrusresources.com
NON-GAAP AND OTHER FINANCIAL
MEASURESThis press release makes reference to the terms
"operating netback", "corporate netback" and "net
debt". These non-GAAP and other financial measures are
not recognized measures under GAAP (IFRS) and do not have a
standardized meaning prescribed by GAAP (IFRS). Accordingly, the
Company's use of these terms may not be comparable to similarly
defined measures presented by other companies. These non-GAAP and
other financial measures should not be considered to be more
meaningful than GAAP measures which are determined in accordance
with IFRS as indicators of our performance. Management uses these
non-GAAP and other financial measures for the reasons set forth
below.
Operating NetbackOperating
netback is a common non-GAAP financial measure used in the oil and
natural gas industry which is a useful supplemental measure to
evaluate the specific operating performance by product type at the
oil and natural gas lease level. The most directly comparable GAAP
measure to operating netback is funds flow / oil and natural gas
revenue. Operating netback is calculated as oil and natural gas
revenue less royalties and operating and transportation expenses.
It is presented on an absolute value and on a per unit (boe) basis
as a non-GAAP ratio. See below for a reconciliation of operating
netback to oil and natural gas revenue.
Corporate NetbackCorporate
netback is a common non-GAAP financial measure used in the oil and
natural gas industry which evaluates the Company’s profitability at
the corporate level. Corporate netback is equal to funds flow,
which is a directly comparable GAAP measure. Petrus analyzes these
measures on an absolute value and on a per unit (boe) basis as a
non-GAAP ratio. Management believes that funds flow and corporate
netback provide information to assist a reader in understanding the
Company's profitability relative to current commodity prices. They
are calculated as the operating netback less general and
administrative expense, finance expense, decommissioning
expenditures, plus other income and the net realized gain (loss) on
financial derivatives. See below for a reconciliation of funds flow
and corporate netback to oil and natural gas revenue.
|
Three monthsended December
31,2021 |
Three monthsended December
31,2020 |
Twelve months
ended December 31,
2021 |
Twelve months
ended December 31,
2020 |
|
$000s |
$/boe |
$000s |
$/boe |
$000s |
$/boe |
$000s |
$/boe |
Oil and natural gas revenue |
25,070 |
|
46.35 |
|
14,143 |
|
24.18 |
|
81,268 |
|
37.04 |
|
50,368 |
|
20.83 |
|
Royalty
expense |
(3,429 |
) |
(6.34 |
) |
(1,183 |
) |
(2.02 |
) |
(10,361 |
) |
(4.72 |
) |
(5,194 |
) |
(2.15 |
) |
Net oil and natural gas revenue |
21,641 |
|
40.01 |
|
12,960 |
|
22.16 |
|
70,907 |
|
32.32 |
|
45,174 |
|
18.68 |
|
Transportation expense |
(1,010 |
) |
(1.87 |
) |
(983 |
) |
(1.68 |
) |
(3,920 |
) |
(1.79 |
) |
(3,452 |
) |
(1.43 |
) |
Operating expense |
(2,715 |
) |
(5.02 |
) |
(3,237 |
) |
(5.53 |
) |
(12,914 |
) |
(5.89 |
) |
(11,223 |
) |
(4.64 |
) |
Operating netback |
17,916 |
|
33.12 |
|
8,740 |
|
14.95 |
|
54,073 |
|
24.64 |
|
30,499 |
|
12.61 |
|
Realized gain (loss) on financial derivatives |
(5,148 |
) |
(9.52 |
) |
381 |
|
0.65 |
|
(11,713 |
) |
(5.34 |
) |
6,518 |
|
2.70 |
|
Other income |
21 |
|
0.04 |
|
184 |
|
0.31 |
|
1,075 |
|
0.49 |
|
354 |
|
0.15 |
|
General & administrative
expense |
(1,213 |
) |
(2.24 |
) |
(1,059 |
) |
(1.81 |
) |
(4,274 |
) |
(1.95 |
) |
(3,409 |
) |
(1.41 |
) |
Cash finance expense(1) |
(856 |
) |
(1.58 |
) |
(1,456 |
) |
(2.49 |
) |
(5,133 |
) |
(2.34 |
) |
(6,661 |
) |
(2.75 |
) |
Decommissioning expenditures |
(302 |
) |
(0.56 |
) |
(366 |
) |
(0.63 |
) |
(674 |
) |
(0.31 |
) |
(904 |
) |
(0.37 |
) |
Funds flow and corporate netback |
10,418 |
|
19.26 |
|
6,424 |
|
10.98 |
|
33,354 |
|
15.19 |
|
26,397 |
|
10.93 |
|
(1)Excludes non-cash Term Loan interest payment-in-kind.
Net Debt Net debt is a non-GAAP
financial measure and is calculated as current assets (excluding
unrealized financial derivative assets) less current liabilities
(excluding unrealized financial derivative liabilities,
right-of-use lease obligations, and deferred share unit
liabilities) and long term debt. Petrus uses net debt as a key
indicator of its leverage and strength of its balance sheet. See
below for a reconciliation of net debt to long-term debt, being our
nearest measure prescribed by GAAP (IFRS).
($000s) |
As at December 31, 2021 |
As at December 31, 2020 |
Adjusted current assets(1) |
15,611 |
|
7,428 |
|
Less: adjusted current
liabilities(1) |
(77,390 |
) |
(121,789 |
) |
Net debt |
(61,779 |
) |
(114,361 |
) |
(1)Adjusted for unrealized risk management
assets, liabilities, lease obligations and unrealized deferred
share unit liabilities.
OIL AND GAS DISCLOSURESOur oil
and gas reserves statement for the year ended December 31, 2021,
which includes disclosure of our oil and natural gas reserves and
other oil and natural gas information in accordance with NI 51-101,
is contained in the AIF. The recovery and reserve estimates
contained herein are estimates only and there is no guarantee that
the estimated reserves will be recovered.
Management uses oil and gas metrics for its own
performance measurements and to provide shareholders with measures
to compare Petrus' operations over time. Readers are cautioned that
the information provided by these metrics, or that can be derived
from the metrics presented in this press release, should not be
relied upon for investment or other purposes.
F&D Costs and FD&A
CostsFD&A cost is defined as capital costs for the
time period including change in FDC divided by change in reserves
including revisions and production for that same time period.
F&D cost is defined as capital costs for the time period
including change in FDC divided by change in reserves including
revisions and production for that same time period, excluding
acquisitions and dispositions. Both F&D costs and FD&A
costs take into account reserves revisions during the year on a per
boe basis. The methodology used to calculate F&D costs includes
disclosure required to bring the proved undeveloped and probable
reserves to production. Annually, changes in forecast FDC occur as
a result of Petrus' development, acquisition and disposition
activities, undeveloped reserve revision and capital cost
estimates. These values reflect the independent evaluator's best
estimate of the cost to bring the proved and probable undeveloped
reserves to production.
Reserve Life IndexReserve life
index is defined as total reserves by category divided by the
annualized fourth quarter production.
Reserve Replacement RatioThe
reserve replacement ratio is calculated by dividing the yearly
change in reserves net of production by the actual annual
production for the year.
FD&A Recycle RatioThe
FD&A recycle ratio is calculated by dividing operating netback
by FD&A.
ADVISORIESBasis of
PresentationFinancial data presented above has largely
been derived from the Company’s financial statements, prepared in
accordance with GAAP which require publicly accountable enterprises
to prepare their financial statements using IFRS. Accounting
policies adopted by the Company are set out in the notes to the
audited consolidated financial statements as at and for the twelve
months ended December 31, 2021. The reporting and the measurement
currency is the Canadian dollar. All financial information is
expressed in Canadian dollars, unless otherwise stated.
Forward-Looking
StatementsCertain information regarding Petrus set forth
in this new release contains forward-looking statements within the
meaning of applicable securities law, that involve substantial
known and unknown risks and uncertainties. The use of any of the
words “anticipate”, “continue”, “estimate”, “expect”, “may”,
“will”, “project”, “should”, “believe” and similar expressions are
intended to identify forward-looking statements. Such statements
represent Petrus’ internal projections, estimates, beliefs, plans,
objectives, assumptions, intentions or statements about future
events or performance. These statements are only predictions and
actual events or results may differ materially. Although Petrus
believes that the expectations reflected in the forward-looking
statements are reasonable, it cannot guarantee future results,
levels of activity, performance or achievement since such
expectations are inherently subject to significant business,
economic, competitive, political and social uncertainties and
contingencies. Many factors could cause Petrus’ actual results to
differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, Petrus.
In particular, forward-looking statements
included in this press release include, but are not limited to,
statements with respect to: the ability of Petrus to create
meaningful shareholder value; that Petrus has the flexibility
required to invest in the development of its land base and unlock
proven value; our 2022 capital budget and the components thereof,
including the wells that we intend to drill; our forecast for 2022
exit production rate including by product type; our forecast for
2022 funds flow; our ability to continue to reduce debt and further
strengthen the Company's balance sheet. In addition, statements
relating to “reserves” are deemed to be forward-looking statements,
as they involve the implied assessment, based on certain estimates
and assumptions, that the reserves described can be profitably
produced in the future.
These forward-looking statements are subject to
numerous risks and uncertainties, most of which are beyond the
Company’s control, including: the impact of general economic
conditions; volatility in market prices for crude oil, NGL and
natural gas; the ability of the Company to renegotiate or refinance
its credit facility ("RCF") at or before maturity; industry
conditions; currency fluctuation; imprecision of reserve estimates;
liabilities inherent in crude oil and natural gas operations;
environmental risks; incorrect assessments of the value of
acquisitions and exploration and development programs; competition;
the lack of availability of qualified personnel or management;
changes in income tax laws or changes in tax laws and incentive
programs relating to the oil and gas industry; hazards such as
fire, explosion, blowouts, cratering, and spills, each of which
could result in substantial damage to wells, production facilities,
other property and the environment or in personal injury; stock
market volatility; ability to access sufficient capital from
internal and external sources; and the other risks and
uncertainties described in our annual information form. With
respect to forward-looking statements contained in this press
release, Petrus has made assumptions regarding: future commodity
prices (including as disclosed herein) and royalty regimes;
availability of skilled labour; timing and amount of capital
expenditures; ability to renegotiate and/or refinance Petrus' RCF;
future exchange rates; the impact of increasing competition;
conditions in general economic and financial markets; availability
of drilling and related equipment and services; effects of
regulation by governmental agencies; and future operating costs.
Management has included the above summary of assumptions and risks
related to forward-looking information provided in this press
release in order to provide investors with a more complete
perspective on Petrus’ future operations and such information may
not be appropriate for other purposes. Petrus’ actual results,
performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits that the Company will
derive therefrom. Readers are cautioned that the foregoing lists of
factors are not exhaustive.
This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about Petrus' prospective results of
operations including, without limitation, its 2022 capital budget,
its forecast for 2022 funds flow and its ability to repay debt,
which are subject to the same assumptions, risk factors,
limitations, and qualifications as set forth above. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on FOFI. Petrus' actual results, performance
or achievement could differ materially from those expressed in, or
implied by, these FOFI, or if any of them do so, what benefits
Petrus will derive therefrom. Petrus has included the FOFI in order
to provide readers with a more complete perspective on Petrus'
future operations and such information may not be appropriate for
other purposes.
These forward-looking statements and FOFI are
made as of the date of this press release and the Company disclaims
any intent or obligation to update any forward-looking statements
and FOFI, whether as a result of new information, future events or
results or otherwise, other than as required by applicable
securities laws.
BOE PresentationThe oil and
natural gas industry commonly expresses production volumes and
reserves on a barrel of oil equivalent (“boe”) basis whereby
natural gas volumes are converted at the ratio of six thousand
cubic feet to one barrel of oil. The intention is to sum oil and
natural gas measurement units into one basis for improved
measurement of results and comparisons with other industry
participants. Petrus uses the 6:1 boe measure which is the
approximate energy equivalence of the two commodities at the burner
tip. Boe’s do not represent an economic value equivalence at the
wellhead and therefore may be a misleading measure if used in
isolation.
Abbreviations |
|
$000’s |
thousand dollars |
$/bbl |
dollars per barrel |
$/boe |
dollars per barrel of oil
equivalent |
$/GJ |
dollars per gigajoule |
$/mcf |
dollars per thousand cubic
feet |
bbl |
barrel |
bbl/d |
barrels per day |
boe |
barrel of oil equivalent |
mboe |
thousand barrel of oil
equivalent |
mmboe |
million barrel of oil
equivalent |
boe/d |
barrel of oil equivalent per
day |
GJ |
gigajoule |
GJ/d |
gigajoules per day |
mcf |
thousand cubic feet |
mcf/d |
thousand cubic feet per day |
mmcf/d |
million cubic feet per day |
NGLs |
natural gas liquids |
WTI |
West Texas Intermediate |
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