CALGARY,
AB, Aug. 13, 2024 /PRNewswire/ - Strathcona
Resources Ltd. ("Strathcona" or the "Company") (TSX: SCR) today
reported its second quarter 2024 financial and operational results.
The Board of Directors also declared its inaugural base quarterly
dividend of $0.25 per share to be
paid on September 27, 2024 to
shareholders of record on September 16,
2024.
Highlights
- Production of 181,766 boe/d (72% oil and condensate, 78%
liquids)(1)
- Operating Earnings of $306.1
million ($1.43 /
share)(2)
- Free Cash Flow of $247.3 million
($1.15 / share)(2)
|
Three Months
Ended
|
Six Months
Ended
|
($ millions, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
WTI (US$ /
bbl)
|
80.57
|
73.78
|
76.96
|
78.76
|
74.96
|
WCS Hardisty (C$ /
bbl)
|
91.63
|
78.76
|
77.77
|
84.70
|
74.03
|
AECO 5A (C$ /
mcf)
|
1.18
|
2.45
|
2.50
|
1.84
|
2.83
|
|
|
|
|
|
|
Bitumen
(bbls/d)
|
59,581
|
53,825
|
60,150
|
59,865
|
52,469
|
Heavy oil
(bbls/d)
|
51,111
|
53,470
|
51,835
|
51,473
|
55,446
|
Condensate and light
oil (bbls/d)
|
20,120
|
10,600
|
19,279
|
19,700
|
9,341
|
Total oil production
(bbls/d)
|
130,812
|
117,895
|
131,264
|
131,038
|
117,256
|
Other NGLs
(bbls/d)
|
11,426
|
7,780
|
11,738
|
11,582
|
8,139
|
Natural gas
(mcf/d)
|
237,170
|
108,612
|
252,720
|
244,945
|
111,442
|
Production
(boe/d)
|
181,766
|
143,778
|
185,122
|
183,444
|
143,968
|
Sales
(boe/d)
|
185,841
|
143,239
|
182,862
|
184,351
|
145,048
|
% Oil and
condensate
|
72 %
|
82 %
|
71 %
|
71 %
|
81 %
|
%
Liquids(1)
|
78 %
|
87 %
|
77 %
|
78 %
|
87 %
|
|
|
|
|
|
|
Oil and natural gas
sales, net of blending costs and other
income(2)
|
1,184.8
|
862.6
|
1,004.3
|
2,189.1
|
1,624.1
|
Royalties
|
194.0
|
106.2
|
126.2
|
320.2
|
219.3
|
Production and
operating – Energy(2)
|
64.9
|
79.7
|
78.8
|
143.7
|
168.4
|
Production and
operating - Non-energy(2)
|
149.5
|
110.9
|
135.4
|
284.9
|
226.8
|
Transportation and
processing
|
149.2
|
104.8
|
143.4
|
292.6
|
232.7
|
General and
administrative
|
25.2
|
20.8
|
22.0
|
47.2
|
46.7
|
Depletion, depreciation
and amortization
|
229.1
|
170.7
|
221.8
|
450.9
|
333.8
|
Interest and finance
costs
|
66.8
|
68.1
|
67.7
|
134.5
|
140.0
|
Current income tax
recovery
|
—
|
—
|
—
|
—
|
(46.9)
|
Operating
Earnings(2)
|
306.1
|
201.4
|
209.0
|
515.1
|
303.3
|
Other
items(3)
|
78.9
|
(72.7)
|
108.4
|
187.3
|
(61.3)
|
Income and
comprehensive income
|
227.2
|
274.1
|
100.6
|
327.8
|
364.6
|
|
|
|
|
|
|
Operating
Earnings(2)
|
306.1
|
201.4
|
209.0
|
515.1
|
303.3
|
Non-cash
items(4)
|
252.4
|
188.5
|
244.1
|
496.5
|
369.1
|
(Loss) gain on risk
management contracts and foreign exchange - realized
|
(10.9)
|
(0.7)
|
2.5
|
(8.4)
|
(6.3)
|
Funds from
Operations(2)
|
547.6
|
389.2
|
455.6
|
1,003.2
|
666.1
|
Capital
expenditures
|
(297.4)
|
(231.7)
|
(286.1)
|
(583.5)
|
(460.4)
|
Decommissioning
costs
|
(2.9)
|
(4.9)
|
(11.6)
|
(14.5)
|
(16.7)
|
Free Cash
Flow(2)
|
247.3
|
152.6
|
157.9
|
405.2
|
189.0
|
|
|
|
|
|
|
Debt
|
2,435.6
|
2,898.2
|
2,642.5
|
2,435.6
|
2,898.2
|
Common shares
(millions)(5)
|
214.2
|
2,186.7
|
214.2
|
214.2
|
2,186.7
|
(1)
|
See "Presentation of
Oil and Gas Information" section of this press release.
|
(2)
|
A non-GAAP financial
measure which does not have a standardized meaning under IFRS;
see "Non-GAAP Measures and Ratios" section of this press
release.
|
(3)
|
Other items is an
aggregation of (gain) loss on risk management contracts, foreign
exchange loss (gain), transaction related costs, unrealized loss
(gain) on Sable remediation fund and deferred tax
expense.
|
(4)
|
Non-cash items is an
aggregation of depletion, depreciation and amortization, finance
costs, and decommissioning government grant.
|
(5)
|
On October 3, 2023,
pursuant to a plan of arrangement under the Business
Corporations Act (Alberta), the former holders of shares of
Strathcona Resources Ltd., a predecessor of Strathcona, received
0.089278 common shares of Strathcona for each Class A or Class B
common share of the predecessor corporation held. Common shares as
at June 30, 2024 reflect this exchange ratio. Common shares as at
June 30, 2023 are not adjusted for this exchange ratio.
|
|
Three Months
Ended
|
Six
Months Ended
|
($/boe, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
Oil and natural gas
sales, net of blending costs and other
income(1)
|
70.05
|
66.17
|
60.36
|
65.24
|
61.80
|
Royalties
|
11.47
|
8.15
|
7.58
|
9.54
|
8.35
|
Production and
operating – Energy(1)
|
3.84
|
6.11
|
4.74
|
4.28
|
6.41
|
Production and
operating - Non-energy(1)
|
8.84
|
8.51
|
8.14
|
8.49
|
8.64
|
Transportation and
processing
|
8.82
|
8.04
|
8.62
|
8.72
|
8.86
|
General and
administrative
|
1.49
|
1.59
|
1.32
|
1.40
|
1.78
|
Depletion, depreciation
and amortization
|
13.55
|
13.10
|
13.33
|
13.44
|
12.71
|
Interest and finance
costs
|
3.95
|
5.22
|
4.07
|
4.01
|
5.33
|
Current income tax
recovery
|
—
|
—
|
—
|
—
|
(1.79)
|
Operating
Earnings(1)
|
18.09
|
15.45
|
12.56
|
15.36
|
11.51
|
Effective royalty rate
(%)(1)
|
16.4 %
|
12.3 %
|
12.6 %
|
14.6 %
|
13.5 %
|
(1)
|
A non-GAAP financial
measure which does not have a standardized meaning under IFRS;
see "Non-GAAP Measures and Ratios" section of this press
release.
|
Quarter Review and Near-Term Priorities
Strathcona delivered stable
performance in the second quarter, highlighted by flat
quarter-over-quarter oil production of approximately 131 Mbbls /
day driven by steady execution in Cold
Lake and Lloydminster.
Natural gas production was 16 MMcf / day lower compared to the
first quarter, due to a combination of planned and unplanned
outages at third-party gas facilities in Grand Prairie and
Kakwa.
In Cold Lake, second quarter
performance benefitted from an 8% reduction in steam-oil-ratio
year-over-year, including a 19% reduction in Lindbergh as a result
of ongoing plant debottlenecking to improve steam conformance, and
a 12% reduction in Tucker through the reactivation of previously
suspended wells. The current focus of the Cold Lake capital program is the execution of
the 4-well pair G4 pad in Orion, Strathcona's second pad in the Upper Grand
Rapids formation, and 8 new lower drainage wells on the D-east pad
at Tucker which will serve to further lower Tucker's
steam-oil-ratio.
In Lloydminster, Strathcona commenced deliveries to a new
third-party crude-by-rail offloading terminal on the US Gulf Coast,
which was purpose-built to handle Strathcona's Lloydminster thermal crude. As a result, the
second quarter saw a drawdown of oil from storage, equal to
approximately 4,000 barrels / day. Current capital activity remains
concentrated in Edam where 4 well
pairs are being executed on the 104 pad, and on the annual drilling
program at Druid which will include Strathcona's first multi-lateral well
targeting the Mannville stack.
Strathcona is also progressing a
brownfield expansion at one of our Meota West facilities which will
add a 6th steam generator and is scheduled to come on
stream by late 2025.
In the Montney, volumes in
Grande Prairie were impacted by
prolonged outages at two third-party gas processing facilities, as
well as the failure of a major third-party gas compressor which has
since been restored to service. In Kakwa, Strathcona recently sanctioned the 5-well 5-21
pad, Strathcona's first with
2.5-mile laterals, which are expected to lead to an approximately
10% reduction in capital costs per well versus Strathcona's typical 2-mile design. At
Groundbirch, Strathcona finished
drilling and completing its 3-well 13-25 pad, and completed a
short-term productivity test before shutting them in. Early results
from the 13-25 pad are encouraging, with sustained strong flowing
pressures between 18,000 and 21,000 kPa and achieved peak rates of
approximately 10 MMcf / d across a 150-hour test period. As
previously disclosed, given ongoing weakness to natural gas prices,
Strathcona has deferred bringing
these wells on production until natural gas prices improve.
On July 10, 2024, Strathcona announced a first-of-its-kind
partnership with Canada Growth Fund to develop up to $2 billion in carbon capture infrastructure on
Strathcona's thermal assets.
Strathcona has since begun its
detailed FEED work towards the first carbon capture project, with a
targeted FID date in mid-2025. For further information regarding
the Canada Growth Fund partnership, please see Strathcona's press release dated July 10, 2024.
Return of Capital
Over the past seven years, the capital on Strathcona's balance sheet has grown from zero
to $10.7 billion, funded in part by
the issuance of (1) 214.2 million shares, (2) $2.4 billion of debt and (3) $2.0 billion of retained earnings. Strathcona's retained earnings balance
reflects both Strathcona's history
of full-cycle profitability and a belief that Strathcona could earn attractive returns
reinvesting 100% of its excess cash flow. As evidence of the
latter, Strathcona's operating
earnings over the first six months of 2024 equate to a 25%
Operating Return on Equity(1), based on Waterous Energy Fund's
contributed equity cost basis of $10.00 / share plus retained earnings.
Going forward, maximizing return on equity will remain the
primary goal of Strathcona.
However, unlike much of the first seven years of Strathcona's history, the business is now
generating more excess cash flow than Strathcona's board and management believe can
be profitably employed in the business while maintaining our
current return on equity. At the same time, Strathcona's leverage and liquidity are now at
levels the board views as prudent, with the company ending the
second quarter below its $2.5 billion
debt target.
As a result, Strathcona is
pleased to announce that its board of directors has declared its
inaugural base quarterly dividend of $0.25 per share to be paid on September 27, 2024 to shareholders of record on
September 16, 2024. Payments to
shareholders who are not residents of Canada will be net of any Canadian withholding
taxes that may be applicable. Dividends paid by Strathcona are considered "eligible dividends"
for Canadian tax purposes.
The base dividend has been sized to increase Strathcona's full-cycle WTI breakeven by less
than US$5 / bbl, ensuring it remains
durable at trough periods of the oil price cycle. In turn,
Strathcona's board of directors
will consider potential future increases in the base dividend based
on growth in Strathcona's oil
production and / or reductions in Strathcona's full-cycle breakeven.
Strathcona's debt target
remains at $2.5 billion, leaving 100%
of excess free cash flow beyond the base dividend available for
further shareholder returns or bolt-on M&A opportunities. In
the short term while Strathcona's
public float remains small, these shareholder returns will likely
take the form of special dividends. Longer term, buybacks of
Strathcona's stock will also be an
option, depending on Strathcona's
share price at the time. Rather than a restrictive quarterly
formula, Strathcona's board of
directors will act opportunistically to allocate this excess free
cash flow on an ad hoc basis as market conditions warrant, with a
view to maximizing return on equity and value per share for our
shareholders.
Outlook
Strathcona's 2024 capital
budget remains unchanged at $1.3
billion as does its 2024 oil and total liquids production
guidance.
In light of continued weakness in natural gas prices,
Strathcona is electing to further
defer production from the Groundbirch 13-25 pad. This deferral,
combined with a previously unscheduled third-party gas facility
outage late in the third quarter and third-party outages
experienced in the second quarter, are expected to reduce full year
natural gas production by approximately 15 MMcf / d. Strathcona's updated full year production
guidance is therefore 185 to 190 Mboe / d, with an increased
liquids weighting of 79% (from 78%) and an increased oil weighting
of 72% (from 71%).
Strathcona is also pleased to
announce that it will be hosting its first Investor Day on
November 14, 2024. Further details
regarding the investor day will be provided in coming months.
____________________________
|
(1) A
non-GAAP financial measure which does not have a standardized
meaning under IFRS; see "Non-GAAP Measures and Ratios" section of
this press release.
|
Conference Call Details
Strathcona will host a
conference call on August 14, 2024,
starting at 9:00AM MT (11:00AM ET), to review the Company's second
quarter and 2024 financial and operating results.
Date: Wednesday, August 14, 2024
Time: 11:00AM ET (9:00AM
MT)
URL Entry: To join without operator assistance, register at
https://emportal.ink/4b3399J up to 15 minutes before the
start time. Enter your name and phone number to receive an
automated call-back.
Telephone Entry: Alternatively, you can join with operator
assistance by dialing 1 (888) 390-0605 (North American Toll Free)
and quote conference ID 146205
Webcast Link:
https://app.webinar.net/y1JGnDLnaYD
For those unable to participate in the conference call at the
scheduled time, a recording of the conference call will be
available for seven days following the call and can be accessed by
dialing 1 (888) 390-0541 and entering the conference number
146205.
About Strathcona
Strathcona is one of
North America's fastest growing
oil and gas producers with operations focused on thermal oil,
enhanced oil recovery and liquids-rich natural gas. Strathcona is built on an innovative approach
to growth achieved through the consolidation and development of
long-life oil and gas assets. Strathcona's common shares (symbol SCR) are
listed on the Toronto Stock Exchange (TSX).
For more information about Strathcona, visit
www.strathconaresources.com.
Non-GAAP Measures and Ratios
"Oil and natural gas sales, net of blending and other
income" is calculated by deducting purchased product and
blending costs from oil and natural gas sales, sales of purchased
product and other income. Management uses this metric to isolate
the revenue associated with the Company's production after
accounting for the unavoidable cost of blending. The following
table contains a quantitative reconciliation of Oil and natural gas
sales, net of blending and other income to the most directly
comparable GAAP financial measure, oil and natural gas sales.
|
Three Months
Ended
|
Six
Months Ended
|
($ millions, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
Oil and natural gas
sales
|
1,472.3
|
1,112.8
|
1,298.8
|
2,771.1
|
2,160.5
|
Sales of purchased
products
|
13.0
|
14.0
|
2.0
|
15.0
|
27.8
|
Other (loss)
income
|
(0.1)
|
0.2
|
0.1
|
—
|
0.2
|
Purchased
product
|
(13.0)
|
(14.6)
|
(2.0)
|
(15.0)
|
(29.4)
|
Blending
costs
|
(287.4)
|
(249.8)
|
(294.6)
|
(582.0)
|
(535.0)
|
Oil and natural gas
sales, net of blending and other income
|
1,184.8
|
862.6
|
1,004.3
|
2,189.1
|
1,624.1
|
"Operating Earnings" is considered a key financial metric
for evaluating the profitability of Strathcona's principal business and is derived
from income (loss) and comprehensive income (loss) adjusted for
amounts which are considered non-recurring or not directly
attributable to the Company's operations.
"Production and operating – Energy" is the portion of
production and operating expenses reflecting the cost of gas and
propane fuel, utilities and carbon tax incurred to operate
facilities. This metric allows management to analyze the portion of
production and operating expenses subject to non-controllable
market prices. "Production and operating – Non-energy" is
the portion of production and operating expenses reflecting the
cost of operating activities relating to the production of
resources. This metric allows management to analyze the portion of
production and operating expenses that is within the Company's
control. A quantitative reconciliation of Production and operating
– Energy and Production and operating – Non energy to the most
directly comparable GAAP financial measure, Production and
operating expenses, is set forth below.
|
Three Months
Ended
|
Six
Months Ended
|
($ millions, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
Production and
operating – Energy
|
64.9
|
79.7
|
78.8
|
143.7
|
168.4
|
Production and
operating – Non-energy
|
149.5
|
110.9
|
135.4
|
284.9
|
226.8
|
Production and
operating expenses
|
214.4
|
190.6
|
214.2
|
428.6
|
395.2
|
"Funds from Operations" is used by management to analyze
operating performance and provides an indication of the funds
generated by Strathcona's
principal business to either fund operating activities, re-invest
to either maintain or grow the business or make debt repayments.
Funds from Operations is derived from income (loss) and
comprehensive income (loss) adjusted for non-cash items and
transaction costs.
"Free Cash Flow" indicates funds available for
deleveraging, funding future growth, or shareholder returns. Free
Cash Flow is derived from income (loss) and comprehensive income
(loss) adjusted for non-cash items, transaction costs, capital
expenditures and decommissioning costs.
A quantitative reconciliation of Operating Earnings, Funds from
Operations and Free Cash Flow to the most directly comparable GAAP
financial measure, income (loss) and comprehensive income (loss),
is set forth below.
|
Three Months
Ended
|
Six
Months Ended
|
($ millions, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
Income and
comprehensive income
|
227.2
|
274.1
|
100.6
|
327.8
|
364.6
|
(Gain) loss on risk
management contracts
|
(2.1)
|
(142.1)
|
39.7
|
37.6
|
(206.3)
|
Foreign exchange loss
(gain)
|
6.9
|
(12.2)
|
20.4
|
27.3
|
(18.1)
|
Transaction related
costs
|
0.3
|
0.4
|
0.1
|
0.4
|
1.6
|
Unrealized loss (gain)
on Sable remediation fund
|
—
|
0.1
|
0.1
|
0.1
|
(0.1)
|
Deferred tax
expense
|
73.8
|
81.1
|
48.1
|
121.9
|
161.6
|
Operating
Earnings
|
306.1
|
201.4
|
209.0
|
515.1
|
303.3
|
Depletion, depreciation
and amortization
|
229.1
|
170.7
|
221.8
|
450.9
|
333.8
|
Finance
costs
|
23.1
|
17.8
|
22.3
|
45.4
|
35.6
|
Decommissioning
government grant
|
0.2
|
—
|
—
|
0.2
|
(0.3)
|
(Loss) gain on risk
management contracts - realized
|
(11.4)
|
(0.4)
|
4.5
|
(6.9)
|
(5.8)
|
Foreign exchange gain
(loss) - realized
|
0.5
|
(0.3)
|
(2.0)
|
(1.5)
|
(0.5)
|
Funds from
Operations
|
547.6
|
389.2
|
455.6
|
1,003.2
|
666.1
|
Capital
expenditures
|
(297.4)
|
(231.7)
|
(286.1)
|
(583.5)
|
(460.4)
|
Decommissioning
costs
|
(2.9)
|
(4.9)
|
(11.6)
|
(14.5)
|
(16.7)
|
Free Cash
Flow
|
247.3
|
152.6
|
157.9
|
405.2
|
189.0
|
"Effective royalty rate" is calculated by dividing
royalties by oil and natural gas sales and sales of purchased
product, net of blending and purchased product. This metric allows
management to analyze the movement of royalty expenses in relation
to realized and benchmark commodity prices.
"Operating Return on Equity" is calculated by dividing
Operating Earnings for the six months ended June 30, 2024, annualized for the remainder of
the current year, by the sum of retained earnings and total number
of common shares valued at $10/share,
in each case as of June 30, 2024.
This metric allows management to analyze the profitability of
Strathcona relative to Waterous
Energy Fund's cash investment in Strathcona and predecessor companies, and
retained earnings. Operating Return on Equity for the six months
ending June 30, 2023 was 18%. In the
calculation of Operating Return on Equity for the six months ended
June 30, 2023, common shares were
adjusted for the 0.089278 share exchange ratio (see footnote 5 to
the "Highlights" table above for more information).
Supplementary Financial Measures
"Interest and finance costs" is an aggregation of
interest and finance costs. Management uses this metric to obtain a
fulsome understanding of all interest and accretion costs the
Company is subject to.
"Other items" is an aggregation of risk management
contracts, foreign exchange, transaction related costs, unrealized
loss (gain) on Sable remediation fund, and deferred tax expense.
They are presented in such a manner to yield prominence to key
financial metrics such as income and comprehensive income, Funds
from Operations and Free Cash Flow.
|
Three Months
Ended
|
Six
Months Ended
|
($ millions, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
(Gain) loss on risk
management contracts
|
(2.1)
|
(142.1)
|
39.7
|
37.6
|
(206.3)
|
Foreign exchange loss
(gain)
|
6.9
|
(12.2)
|
20.4
|
27.3
|
(18.1)
|
Transaction related
costs
|
0.3
|
0.4
|
0.1
|
0.4
|
1.6
|
Unrealized loss (gain)
on Sable remediation fund
|
—
|
0.1
|
0.1
|
0.1
|
(0.1)
|
Deferred tax
expense
|
73.8
|
81.1
|
48.1
|
121.9
|
161.6
|
Other
items
|
78.9
|
(72.7)
|
108.4
|
187.3
|
(61.3)
|
"Non-cash items" is an aggregation of depletion,
depreciation and amortization, finance costs, and other income –
ARO government grant. They are presented in such a manner to yield
prominence to key financial metrics such as income and
comprehensive income, Funds from Operations and Free Cash Flow.
|
Three Months
Ended
|
Six
Months Ended
|
($ millions, unless
otherwise indicated)
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
Depletion, depreciation
and amortization
|
229.1
|
170.7
|
221.8
|
450.9
|
333.8
|
Finance
costs
|
23.1
|
17.8
|
22.3
|
45.4
|
35.6
|
Other income - ARO
government grant
|
0.2
|
—
|
—
|
0.2
|
(0.3)
|
Non-cash
items
|
252.4
|
188.5
|
244.1
|
496.5
|
369.1
|
Presentation of Oil and Gas Information
This press release contains various references to the
abbreviation "boe" which means barrels of oil equivalent. All boe
conversions in this press release are derived by converting gas to
oil at the ratio of six thousand cubic feet ("mcf") of natural gas
to one barrel ("bbl") of crude oil. Boe may be misleading,
particularly if used in isolation. A boe conversion rate of 1 bbl :
6 mcf is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio of oil
compared to natural gas based on currently prevailing prices is
significantly different than the energy equivalency ratio of 1 bbl
: 6 mcf, utilizing a conversion ratio of 1 bbl : 6 mcf may be
misleading as an indication of value.
References to "liquids" in this press release refer to,
collectively, bitumen, heavy oil, condensate and light oil
(comprised of condensate and light oil) and other natural gas
liquids ("NGL") (comprised of ethane, propane and butane only).
References to "oil and condensate" in this press release refer to,
collectively, light and medium crude oil, heavy crude oil, bitumen
and natural gas liquids. References to "natural gas" in this press
release refer to conventional natural gas.
References to initial production rates and other short-term
production rates are useful in confirming the presence of
hydrocarbons, however, such rates are not determinative of the
rates at which such wells will commence production and decline
thereafter and are not indicative of long-term performance or of
ultimate recovery. While encouraging, readers are cautioned not to
place reliance on such rates in calculating aggregate production
for us or the assets for which such rates are provided.
Accordingly, we caution that the initial production rates should be
considered to be preliminary.
Forward-Looking Information
Certain statements contained in this press release constitute
forward-looking information within the meaning of applicable
securities laws. The forward-looking information in this press
release is based on Strathcona's
current internal expectations, estimates, projections, assumptions
and beliefs. Such forward-looking information is not a guarantee of
future performance and involves known and unknown risks,
uncertainties and other factors that may cause actual results or
events to differ materially from those anticipated in such forward-
looking information. The Company believes the material factors,
expectations and assumptions reflected in the forward-looking
information are reasonable as of the time of such information, but
no assurance can be given that these factors, expectations and
assumptions will prove to be correct, and such forward-looking
information included in this press release should not be unduly
relied upon.
The use of any of the words "expect", "target", "anticipate",
"intend", "estimate", "objective", "ongoing", "may", "will",
"project", "believe", "depends", "could" and similar expressions
are intended to identify forward-looking information. In
particular, but without limiting the generality of the foregoing,
this press release contains forward-looking information pertaining
to the following: the Company's business strategy and future plans;
expected operating strategy; the Company's production and capital
spending guidance for 2024; the Company's 2024 capital budget,
including the anticipated composition, timing, benefits thereof,
including increased production capacity at Cold Lake Thermal and
reduced operating costs in the Montney; the expected impact on cash flows of
Strathcona's reduction in
full-year natural gas production; the Company's annual drilling
program, including the Company's first multi-lateral well targeting
the Manville stack; the Company's intention to pay a cash dividend
each quarter subject to Board of Directors approval and expected
future increases to such dividend; further shareholder returns in
the form of special dividends or share buybacks; the Company's
future allocation of excess free cash flow; the brownfield
expansion at one of our Meota West facilities, including the
expected timing thereof; and the targeted final investment decision
date for Strathcona's first
commercial carbon capture project.
All forward-looking information reflects Strathcona's beliefs and assumptions based on
information available at the time the applicable forward-looking
information is disclosed and in light of the Company's current
expectations with respect to such things as: Strathcona's ability to generate sufficient
cash flow to fund debt repayment and dividend payments;
Strathcona's ability to declare
and pay dividends; the success of Strathcona's operations and growth and
expansion projects; expectations regarding production growth,
future well production rates and reserve volumes; expectations
regarding Strathcona's capital
program, including the outlook for general economic trends,
industry trends, prevailing and future commodity prices, foreign
exchange rates and interest rates; the availability of third party
services; prevailing and future royalty regimes and tax laws;
future well production rates and reserve volumes; fluctuations in
energy prices based on worldwide demand and geopolitical events;
the impact of inflation; the integrity and reliability of
Strathcona's assets;
decommissioning obligations; Strathcona's ability to comply with its
financial covenants; and the governmental, regulatory and legal
environment. In addition, certain forward-looking information with
respect to the Company's 2024 capital budget assumes commodity
prices and exchange rates of: US$80 /
bbl WTI, assuming a US$15.75 / bbl
WCS-WTI differential, 0.73 USD-CAD,
and C$3.22 / Mcf AECO. Management
believes that its assumptions and expectations reflected in the
forward-looking information contained herein are reasonable based
on the information available on the date such information is
provided and the process used to prepare the information. However,
it cannot assure readers that these expectations will prove to be
correct.
The forward-looking information included in this press release
is not a guarantee of future performance and involves known and
unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward- looking information, including,
without limitation: changes in commodity prices; changes in the
demand for or supply of Strathcona's products; the continued impact,
or further deterioration, in global economic and market conditions,
including from inflation and/or certain geopolitical conflicts,
such as the ongoing Russia/Ukraine conflict and the conflict in the
Middle East, and other heightened
geopolitical risks and the ability of the Company to carry on
operations as contemplated in light of the foregoing;
determinations by the Organization of the Petroleum Exporting
Countries and other countries as to production levels;
unanticipated operating results or production declines; changes in
tax or environmental laws, climate change, royalty rates or other
regulatory matters; changes in Strathcona's development plans or by third
party operators of Strathcona's
properties; competition from other producers; inability to retain
drilling rigs and other services; failure to realize the
anticipated benefits of the Company's acquisitions; incorrect
assessment of the value of acquisitions; delays resulting from or
inability to obtain required regulatory approvals; increased debt
levels or debt service requirements; inflation; changes in foreign
exchange rates; inaccurate estimation of Strathcona's oil and gas reserve and
contingent resource volumes; limited, unfavourable or a lack of
access to capital markets or other sources of capital; increased
costs; a lack of adequate insurance coverage; the impact of
competitors; and the other factors discussed under the "Risk
Factors" section in Strathcona's
Management's Discussion & Analysis and Annual Information Form,
each for the year ended December 31,
2023, and from time to time in Strathcona's public disclosure documents,
which are available at www.sedarplus.ca.
Declaration of dividends is at the sole discretion of the board
of directors of Strathcona and
will continue to be evaluated on an ongoing basis. There are risks
that may result in Strathcona
changing, suspending or discontinuing its quarterly dividends,
including changes to its free cash flow, operating results, capital
requirements, financial position, debt levels, market conditions or
corporate strategy and the need to comply with requirements under
its credit agreement and applicable laws respecting the declaration
and payment of dividends. There are no assurances as to the
continuing declaration and payment of future dividends or the
amount or timing of any such dividends.
Management approved the capital budget and production guidance
contained herein as of the date of this press release. The purpose
of the capital budget and production guidance is to assist readers
in understanding Strathcona's
expected and targeted financial position and performance, and this
information may not be appropriate for other purposes.
This earnings release contains information that may constitute
future-oriented financial information or financial outlook
information (collectively, "FOFI") about Strathcona's prospective financial
performance, financial position or cash flows, all of which is
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 or inaccurate and, as such, undue reliance should not be
placed on FOFI. Strathcona's
actual results, performance and achievements could differ
materially from those expressed in, or implied by, FOFI.
Strathcona has included FOFI in
order to provide readers with a more complete perspective on
Strathcona's future operations and
management's current expectations relating to Strathcona's future performance. Readers are
cautioned that such information may not be appropriate for other
purposes.
The foregoing risks should not be construed as exhaustive. The
forward-looking information contained in this press release speaks
only as of the date of this press release and Strathcona does not assume any obligation to
publicly update or revise such forward-looking information to
reflect new events or circumstances, except as may be required
pursuant to applicable laws. Any forward-looking information
contained herein is expressly qualified by this cautionary
statement.
Product Type Production Information
The Company's quarterly and year-to-date average daily
production volumes, and the references to "natural gas", "crude
oil" and "condensate", reported in this press release consist of
the following product types, as defined in NI 51-101 and using a
conversion ratio of 6 mcf : 1 bbl where applicable:
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
2024
|
June 30,
2023
|
March 31,
2024
|
June 30,
2024
|
June 30,
2023
|
|
|
|
|
|
|
Heavy crude oil
(bbl/d)
|
51,111
|
53,470
|
51,835
|
51,473
|
55,446
|
Light and medium crude
oil (bbl/d)
|
790
|
672
|
551
|
671
|
697
|
Total crude oil
(bbl/d)
|
51,901
|
54,142
|
52,386
|
52,144
|
56,143
|
Bitumen
(bbl/d)
|
59,581
|
53,825
|
60,150
|
59,865
|
52,469
|
NGLs (bbl/d)
|
30,756
|
17,708
|
30,466
|
30,611
|
16,783
|
Total liquids
(bbl/d)
|
142,238
|
125,675
|
143,002
|
142,620
|
125,395
|
Conventional natural
gas (mcf/d)
|
237,170
|
108,612
|
252,720
|
244,945
|
111,442
|
Total
(boe/d)
|
181,766
|
143,778
|
185,122
|
183,444
|
143,968
|
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SOURCE Strathcona Resources Ltd.