TSX: TVE
CALGARY,
AB, May 3, 2022 /CNW/ - Tamarack Valley
Energy Ltd. ("Tamarack" or the "Company") (TSX: TVE)
is pleased to announce its financial and operating results for the
three months ended March 31, 2022.
Selected financial and operating information is outlined below and
should be read with Tamarack's consolidated financial statements
and related management's discussion and analysis (MD&A) for the
three months ended March 31, 2022,
which are available on SEDAR at www.sedar.com and on Tamarack's
website at www.tamarackvalley.ca.
Brian Schmidt, President and CEO
of Tamarack commented: "We successfully executed on our first
quarter capital program, closed and integrated the Crestwynd
Exploration acquisition and grew our Clearwater oil footprint
through the execution of strategic agreements with the Peavine
Metis Settlement and crown land sales. The Company delivered on its
return of capital framework with the inaugural payment of our base
dividend and look forward to further enhancing shareholder returns
through our focus on generating sustainable free funds
flow(1). We have provided updated 2022 guidance,
inclusive of the previously announced Rolling Hills Energy
acquisition that is expected to close in June, which reflects our
updated greater Peavine Clearwater appraisal program that is set to
commence in the second half of the year."
Q1 2022 Financial and Operating Highlights
- Achieved quarterly production volumes of 41,335
boe/d(2) in Q1/22, representing an 73% increase compared
to the same period in 2021.
- Generated adjusted funds flow(1) of $166.6 million in Q1/22 ($0.40/share basic and $0.39/share diluted) compared to $42.0 million in the same period in 2021
($0.16/share basic and diluted).
- Generated free funds flow(1), excluding acquisition
expenditures, of $41.2 million.
- Generated net income of $26.5
million ($0.06/share basic and
diluted) during the quarter as compared to a net loss of
$0.2 million ($0.00/share basic and diluted) in the same period
of 2021.
- Dividends declared of $10.6
million during the quarter ($0.0083/share per month), delivering on the
Company's return of capital framework.
- Invested $106.8 million in
exploration and development (E&D) capital expenditures,
excluding acquisition expenditures, and $18.6 million on undeveloped land in the
Clearwater and Charlie Lake areas
during Q1/22.This contributed to the drilling of 18 (17.5 net)
Clearwater oil wells, eight (8.0 net) Viking oil wells, seven (7.0
net) Charlie Lake oil wells and
five (5.0 net) water source and injector wells.
- Exited the quarter with $556.4
million of net debt(1)and net debt to Q1/22
annualized adjusted funds flow(1) of 0.8x.
- Issued $200.0 million aggregate
principal amount of 7.25% senior unsecured sustainability-linked
notes due May 10, 2027.
- Successfully closed the acquisition of Crestwynd Exploration
Ltd. during the quarter, further consolidating the Company's
position in the Southern Clearwater Fairway.
Financial & Operating Results
|
Three months
ended
|
March 31,
|
|
2022
|
2021
|
%
change
|
($ thousands, except per
share)
|
|
|
|
Total oil, natural
gas and processing revenue
|
298,895
|
93,434
|
220
|
Cash flow from
operating activities
|
132,853
|
38,436
|
246
|
Per share – basic
|
$
0.32
|
$ 0.14
|
129
|
Per share – diluted
|
$
0.31
|
$ 0.14
|
121
|
Adjusted funds
flow(1)
|
166,581
|
41,952
|
297
|
Per share – basic(1)
|
$
0.40
|
$ 0.16
|
150
|
Per share – diluted(1)
|
$
0.39
|
$ 0.16
|
144
|
Net income
(loss)
|
26,457
|
(166)
|
16,038
|
Per share – basic
|
$
0.06
|
(0.00)
|
-
|
Per share – diluted
|
$
0.06
|
(0.00)
|
-
|
Net
debt(1)
|
(556,374)
|
(286,175)
|
94
|
Capital
expenditures(3)
|
125,367
|
48,704
|
157
|
Weighted average shares outstanding
(thousands)
|
|
|
|
Basic
|
419,251
|
265,415
|
58
|
Diluted
|
427,546
|
265,415
|
61
|
Share Trading (thousands, except share
price)
|
|
|
|
High
|
$
6.09
|
$ 2.46
|
148
|
Low
|
$
3.90
|
$ 1.25
|
212
|
Trading volume
(thousands)
|
233,689
|
181,132
|
29
|
Average daily production
|
|
|
|
Light
oil (bbls/d)
|
17,868
|
10,120
|
77
|
Heavy
oil (bbls/d)
|
7,522
|
2,654
|
183
|
NGL
(bbls/d)
|
4,113
|
2,420
|
70
|
Natural
gas (mcf/d)
|
70,989
|
52,466
|
35
|
Total
(boe/d)
|
41,335
|
23,938
|
73
|
Average sale prices
|
|
|
|
Light
oil ($/bbl)
|
110.07
|
64.01
|
72
|
Heavy
oil ($/bbl)
|
94.43
|
48.00
|
97
|
NGL
($/bbl)
|
56.21
|
37.17
|
51
|
Natural
gas ($/mcf)
|
5.70
|
3.15
|
81
|
Total
($/boe)
|
80.17
|
43.03
|
86
|
Operating netback(1)
($/Boe)
|
|
|
|
Average
realized sales
|
80.17
|
43.03
|
86
|
Royalty
expenses
|
(15.72)
|
(5.37)
|
193
|
Net
production and transportation expenses
|
(12.07)
|
(11.17)
|
8
|
Operating field netback(1)
($/Boe)
|
52.38
|
26.49
|
98
|
Realized
commodity hedging loss
|
(4.00)
|
(3.81)
|
5
|
Operating netback(1)
($/Boe)
|
48.38
|
22.68
|
113
|
Adjusted funds flow(1)
($/Boe)
|
44.78
|
19.47
|
130
|
|
|
|
|
Return of Capital
Base Dividend
In accordance with the Company's dividend program, monthly
dividends of $0.0083/share were
declared January – April 2022.
Effective the June 2022 dividend
declaration, the Company expects to increase the monthly dividend
to $0.0100/share per month or ~20%
(as previously announced on April
21st) in conjunction with the closing of the
acquisition of Rolling Hills Energy Ltd. The base dividend increase
has been driven by improved sustainable free funds
flow(1) along with the Crestwynd Exploration Ltd. and
Rolling Hills acquisitions which
are accretive at flat pricing of US$55/bbl WTI and $2.50/GJ AECO.
Enhanced Return
The Company remains committed to balancing long-term sustainable
free funds flow(1) growth with returning capital to
shareholders. Based on the forecasted commodity price outlook,
Tamarack anticipates the declaration of an enhanced return, through
special dividend and/or share buybacks, in Q3 2022 for free funds
flow(1) from Q2 2022.
The incremental net debt associated with the current 2022 tax
expense, which has not yet impacted adjusted funds
flow(1), along with the cash considerations for the
Rolling Hills Acquisition and Q1 2022 land purchases, will be
adjusted accordingly when considering the enhanced return debt
target.
2022 Capital Budget and Guidance Update
To reflect the pro-forma Rolling
Hills acquisition, announced on April
21, 2022, as well as changes in the commodity price
environment, Tamarack has updated its 2022 corporate guidance. The
Company remains focused on capital discipline and growing
sustainable free funds flow(1) and will proactively
adapt our spending plans within the context of the market and
inflationary pressures to maximize returns
Capital Budget
Total capital expenditures for the year have been updated to a
range of $280 to $300 million. The revised capital guidance is
inclusive of the future E&D capital associated with the
previously announced Rolling Hills
acquisition, along with capital directed towards the Company's
Clearwater appraisal program, and is inclusive of forecasted
inflationary pressures with respect to the higher service and
material costs and supply chain constraints that the industry is
facing at this time.
Production
Production guidance has been increased to a range of 46,200 to
47,200 boe/d to reflect the Rolling
Hills acquisition that is expected to close on or about
June 10, 2022. Production volumes
from the Rolling Hills acquisition
are expected to average ~2,100 bbl/d of heavy oil from close
through to year end.
|
Original 2022
Guidance(4)
|
Revised 2022
Guidance(5)
|
Capital Budget
(including ARO)(6) ($mm)
|
$250–$270
|
$280–$300
|
Annual Average
Production(7) (boe/d)
|
45,000–46,000
|
46,200–47,200
|
Expenses:
|
|
|
Royalty Rate
(%)
|
16–17%
|
19–21%
|
Operating
($/boe)
|
$8.50–$8.70
|
$9.45–$9.65
|
Transportation
($/boe)
|
$2.00–$2.10
|
$2.35–$2.45
|
General and
Administrative ($/boe)(8)
|
$1.30–$1.35
|
$1.35–$1.45
|
Interest(9) ($/boe)
|
$1.60–$1.65
|
$1.65–$1.70
|
Taxes
($/boe)
|
$1.60–$1.70
|
$4.75–$4.80
|
Leasing Expenditures
($mm)
|
$3.7
|
$3.7
|
Asset Retirement
Obligations ($mm)
|
$7.5
|
$7.5
|
Revenue:
|
|
|
Average Oil &
Natural Gas Liquids Weighting
|
74%
|
75%
|
Light Oil Wellhead
Differential
|
$3.00-$3.50
|
$3.50-$4.00
|
Heavy Oil Wellhead
Differential
|
$4.50-$5.00
|
$4.50-$5.00
|
Price
Assumptions:
|
|
|
WTI
(US$/bbl)
|
$70.00
|
$90.00
|
AECO
(CAD$/GJ)
|
$3.00
|
$4.70
|
Operations Update
Clearwater
Peavine Metis Settlement Strategic Land Agreement(s) –
Tamarack has expanded its strategic partnership with the Peavine
Metis Settlement in the High
Prairie area to include an additional 15 sections of land
prospective for the Clearwater formation. This addition
results in a total of 44.5 sections included in the strategic
partnership in proximity to competitor activity with strong well
results to date. Tamarack plans to begin its appraisal program in
the second half of 2022.
Greater Peavine Land Acquisition – Tamarack has
accumulated 26 net sections of land in the greater Peavine
Clearwater trend prospective for both Clearwater and Bluesky oil. The Company plans to drill on
these lands in the second half of the year through its outlined
Clearwater de-risk/appraisal capital
program.
West Marten Hills Exploration – The successful West
Marten Hills 02/8-33 appraisal well, which exhibited IP30 rates of
~150 bopd, has been shut-in due to road access; however, planning
is underway to upgrade the road into the area, enabling further
future full season development of the lands. The success of the
02/8-33 well has de-risked 6 sections of land in the West Marten
area. The Company plans to drill an additional eight wells at West
Marten Hills in 2022.
West Nipisi – Tamarack's strategy at West Nipisi is
focused on waterflood development moving forward. The Company has
rig released five of six wells planned on the 15-20 pad, all of
which are being developed under Tamarack's Nipisi Clearwater
waterflood configuration. All six wells are expected to be on
production by the end of May, with the two of the six wells that
are currently producing oil in line with expectations at ~200
bopd. Surface facilities and downhole work is completed on
the three planned injection wells and injection is expected to
commence in May. Further to this, Tamarack plans to drill an
appraisal well in H2 2022 testing the northwest Nipisi Clearwater
sands based on encouraging offsetting competitor well results.
Southern Clearwater –
Tamarack continues to actively develop its Clearwater assets in the
Jarvie, Perryvale and Meanook
areas with four rigs currently operating. Nineteen wells have been
rig released to date in 2022, with 13 wells currently onstream. The
wells currently producing have averaged peak rates of greater than
150 bopd with additional optimization upside as production is moved
to permanent facilities. The Company plans to drill 45 gross (45.0
net) wells in the area in 2022 and execute on operational synergies
on recently acquired production.
Charlie Lake
In the Charlie Lake, Tamarack
has brought nine of 16 planned wells onstream in 2022. Results
continue to exceed expectations. Most notably, the
100/05-30-073-07W6 well achieved an IP60 of 775 bopd (1260
boe/d(10)) and the Company's first Upper Charlie Lake
well exceeded expectations adding further inventory upside in the
Charlie Lake. The most recent
three Pipestone wells to come
onstream successfully piloted a pumpjack artificial lift to reduce
capital and are exceeding expectations with an average test rate of
560 bopd.
Veteran/Eyehill Waterfloods
Tamarack has drilled 13 wells through its Q1 program targeting
the Viking (6.0 net) and Sparky (7.0 net) at its Veteran and
Eyehill properties. Tamarack continues to add injection to
its Veteran waterflood with the addition of one injection well and
six injector conversions in Q1.
Environmental, Social and Governance
Phase two of the Nipisi gas conservation project was completed
ahead of schedule in the first quarter. The project is
currently conserving 0.5 mmcf/d. Conserved volumes from the
project are anticipated to increase to 1 mmcf/d by the end of 2022
with continued drilling in the area.
Risk Management
The Company manages commodity price risk and volatility through
a prudent hedging management program, with approximately 50%, on
average, of gross oil production hedged against WTI for the
remainder of 2022, through instruments including puts and enhanced
collars. Tamarack also has WTI-MSW and WCS differential hedges in
place on approximately 46% of our production in 2022. For 2023, we
have entered into WTI put floors and enhanced collars as we
systematically roll our risk management program forward on
approximately 20% of our first half production. Our strategy
provides protection to the sustainability of the business and
dividend while maximizing upside. Additional details of the current
hedges in place can be found in the corporate presentation on the
Company website (www.tamarackvalley.ca).
Investor Webcast & Annual General Meeting
Tamarack will host a webcast at 9:00 AM
MDT (11:00 AM EDT) on
May 4, 2022 to discuss the first
quarter results and operations update. Participants can access the
live webcast via this link or through links provided on the
Company's website. A recorded archive of the webcast will be
available on the Company's website following the live webcast.
In addition, the Company wishes to remind shareholders of the
annual general meeting of the holders of common shares of Tamarack,
which will be held in person at the Calgary Petroleum Club, and
simultaneously webcast for online viewing in real-time at this
link, on Wednesday, May 11,
2022 at 3:00 PM MDT. More
information on the meeting can be found in the Management
Information Circular dated March 22,
2022, which is filed on SEDAR and available on the Company's
website.
About Tamarack Valley Energy Ltd.
Tamarack is an oil and gas exploration and production company
committed to creating long-term value for its shareholders through
sustainable free funds flow generation, financial stability and the
return of capital. The Company has an extensive inventory of
low-risk, oil development drilling locations focused primarily on
Charlie Lake, Clearwater and EOR
plays in Alberta. Operating as a
responsible corporate citizen is a key focus to ensure we deliver
on our environmental, social and governance (ESG) commitments and
goals. For more information, please visit the Company's website at
www.tamarackvalley.ca.
Abbreviations
AECO
|
the natural gas
storage facility located at Suffield, Alberta connected to TC
Energy's Alberta System
|
ARO
|
asset retirement
obligation
|
bbls
|
barrels
|
bbls/d
|
barrels per
day
|
boe
|
barrels of oil
equivalent
|
boe/d
|
barrels of oil
equivalent per day
|
Bopd
|
barrels of oil per
day
|
GJ
|
gigajoule
|
IFRS
|
International
Financial Reporting Standards as issued by the International
Accounting Standards Board
|
IP30
|
average production
for the first 30 days that a well is onstream
|
IP60
|
average production
for the first 60 days that a well is onstream
|
Mcf
|
thousand cubic
feet
|
mcf/d
|
thousand cubic feet
per day
|
Mm
|
Million
|
mmcf/d
|
million cubic feet
per day
|
MSW
|
Mixed sweet blend,
the benchmark for conventionally produced light sweet crude oil in
Western Canada
|
WCS
|
Western Canadian
select, the benchmark for conventional and oil sands heavy
production at Hardisty in Western Canada
|
WTI
|
West Texas
Intermediate, the reference price paid in U.S. dollars at Cushing,
Oklahoma for the crude oil standard grade
|
Reader Advisories
Notes to Press Release
(1)
|
See "Specified
Financial Measures"; free funds flow (FFF) was previously referred
to as free adjusted funds flow
|
(2)
|
Comprised of 17,868
bbl/d light and medium oil, 7,522 bbl/d heavy oil, 4,113 bbl/d NGL
and 70,989 mcf/d natural gas
|
(3)
|
Capital expenditures
include exploration and development capital, ARO, ESG initiatives,
facilities land and seismic but excludes asset acquisitions and
dispositions
|
(4)
|
As per the original
budget guidance released on January 13, 2022, with pricing
assumptions of: 70.00 USD/bbl WTI; 3.00 CAD/GJ AECO; 1.282 CAD/USD;
4.00 USD/bbl MSW; and 14.00 USD/bbl WCS.
|
(5)
|
Pro forma the Rolling
Hills acquisition effective June 10, 2022, with pricing assumptions
of: $90.00 USD/bbl WTI; 4.70 CAD/GJ AECO; 1.271 CAD/USD; 2.04
USD/bbl MSW; and 13.55 USD/bbl WCS.
|
(6)
|
Capital budget includes
exploration and development capital, ARO, ESG initiatives,
facilities and seismic but excludes asset acquisitions and
dispositions and strategic Clearwater land purchases.
|
(7)
|
Original comprised of
16,750-17,250 bbl/d light and medium oil, 13,000-13,250 bbl/d heavy
oil, 3,750-4,000 bbl/d NGL and 69,000-71,000 mcf/d natural gas;
revised comprised of 16,500-17,500 bbl/d light and medium oil,
14,000-15,000 bbl/d heavy oil, 3,750-4,000 bbl/d NGL and
69,000-71,000 mcf/d natural gas
|
(8)
|
G&A costs in the
revised guidance exclude the effect of one-time, non-recurring
costs incurred in Q1 2022
|
(9)
|
Includes the impact of
the $200 million in sustainability linked notes issued February 10,
2022
|
(10)
|
Comprised of 775 bbl/d
light and medium oil, ~50 bbl/d NGL and ~2,490 mcf/d natural
gas
|
Disclosure of Oil and Gas Information
Unit Cost Calculation. For the purpose of calculating
unit costs, natural gas volumes have been converted to a boe using
six thousand cubic feet equal to one barrel unless otherwise
stated. A boe conversion ratio of 6:1 is based upon an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
This conversion conforms with Canadian Securities Administrators'
National Instrument 51‑101 - Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"). Boe may be misleading, particularly
if used in isolation.
Forward Looking Information
This press release contains certain forward-looking information
(collectively referred to herein as "forward-looking statements")
within the meaning of applicable Canadian securities laws.
Forward-looking statements are often, but not always, identified by
the use of words such as "guidance", "outlook", "anticipate",
"target", "plan", "continue", "intend", "consider", "estimate",
"expect", "may", "will", "should", "could" or similar words
suggesting future outcomes. More particularly, this press release
contains statements concerning: Tamarack's business strategy,
objectives, strength and focus; future consolidation activity and
organic growth, including pursuant to the Rolling Hills acquisition; future intentions
with respect to return of capital, including enhanced dividends and
share buybacks; oil and natural gas production levels, adjusted
funds flow, free funds flow; anticipated operational results for
2022 including, but not limited to, estimated or anticipated
production levels, capital expenditures and drilling plans; the
Company's capital program, guidance and budget for 2022 and 2022
capital program; expectations regarding commodity prices; the
performance characteristics of the Company's oil and natural gas
properties; the ability of the Company to achieve drilling success
consistent with management's expectations; risk management
activities, Tamarack's commitment to ESG principles and
sustainability; and the source of funding for the Company's
activities including development costs. Future dividend payments,
if any, and the level thereof, is uncertain, as the Company's
dividend policy and the funds available for the payment of
dividends from time to time is dependent upon, among other things,
free funds flow financial requirements for the Company's operations
and the execution of its growth strategy, fluctuations in working
capital and the timing and amount of capital expenditures, debt
service requirements and other factors beyond the Company's
control. Further, the ability of Tamarack to pay dividends will be
subject to applicable laws (including the satisfaction of the
solvency test contained in applicable corporate legislation) and
contractual restrictions contained in the instruments governing its
indebtedness, including its credit facility.
The forward-looking statements contained in this document are
based on certain key expectations and assumptions made by Tamarack,
including relating to: the business plan of Tamarack; the timing of
and success of future drilling, development and completion
activities; the geological characteristics of Tamarack's
properties; the characteristics of recently acquired assets; the
successful integration of recently acquired assets into Tamarack's
operations; prevailing commodity prices, price volatility, price
differentials and the actual prices received for the Company's
products; the availability and performance of drilling rigs,
facilities, pipelines and other oilfield services; the timing of
past operations and activities in the planned areas of focus; the
drilling, completion and tie-in of wells being completed as
planned; the performance of new and existing wells; the application
of existing drilling and fracturing techniques; prevailing weather
and break-up conditions; royalty regimes and exchange rates; the
application of regulatory and licensing requirements; the continued
availability of capital and skilled personnel; the ability to
maintain or grow the banking facilities; the accuracy of Tamarack's
geological interpretation of its drilling and land opportunities,
including the ability of seismic activity to enhance such
interpretation; and Tamarack's ability to execute its plans and
strategies.
Although management considers these assumptions to be reasonable
based on information currently available, undue reliance should not
be placed on the forward-looking statements because Tamarack can
give no assurances that they may prove to be correct. By their very
nature, forward-looking statements are subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to: counterparty risk to
closing the Rolling Hills
acquisition; the risk that future dividend payments thereunder are
reduced, suspended or cancelled; unforeseen difficulties in
integrating of recently acquired assets into Tamarack's operations;
incorrect assessments of the value of benefits to be obtained from
acquisitions and exploration and development programs; risks
associated with the oil and gas industry in general (e.g.
operational risks in development, exploration and production; and
delays or changes in plans with respect to exploration or
development projects or capital expenditures); commodity prices;
the uncertainty of estimates and projections relating to
production, cash generation, costs and expenses, including
increased operating and capital costs due to inflationary
pressures; health, safety, litigation and environmental risks;
access to capital; the COVID-19 pandemic; and Russia's military actions in Ukraine. Due to the nature of the oil and
natural gas industry, drilling plans and operational activities may
be delayed or modified to react to market conditions, results of
past operations, regulatory approvals or availability of services
causing results to be delayed. Please refer to the annual
information form for the year ended December
31, 2021 and the MD&A for additional risk factors
relating to Tamarack, which can be accessed either on Tamarack's
website at www.tamarackvalley.ca or under the Company's profile on
www.sedar.com.The forward-looking statements contained in this
press release are made as of the date hereof and the Company does
not undertake any obligation to update publicly or to revise any of
the included forward-looking statements, except as required by
applicable law. The forward-looking statements contained herein are
expressly qualified by this cautionary statement.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about generating sustainable long-term growth in free funds
flow, prospective results of operations and production, weightings,
tax horizon, operating costs, 2022 capital budget and expenditures,
balance sheet strength, adjusted funds flow and free funds flow,
including pro forma the acquisition of Rolling Hills, all of which are subject to the
same assumptions, risk factors, limitations and qualifications as
set forth in the above paragraphs. FOFI contained in this document
was approved by management as of the date of this document and was
provided for the purpose of providing further information about
Tamarack's future business operations. Tamarack and its management
believe that FOFI has been prepared on a reasonable basis,
reflecting management's best estimates and judgments, and
represent, to the best of management's knowledge and opinion, the
Company's expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. Tamarack disclaims any
intention or obligation to update or revise any FOFI contained in
this document, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this document
should not be used for purposes other than for which it is
disclosed herein. Changes in forecast commodity prices, differences
in the timing of capital expenditures, and variances in average
production estimates can have a significant impact on the key
performance measures included in Tamarack's guidance. The Company's
actual results may differ materially from these estimates.
References in this press release to peak rates, test rates,
IP30, IP60 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 the aggregate production of Tamarack. The Company
cautions that test rates should be considered to be
preliminary.
Specified Financial Measures
This press release includes various specified financial
measures, including non-IFRS financial measures, non-IFRS financial
ratios and capital management measures as further described herein.
These measures do not have a standardized meaning prescribed by
International Financial Reporting Standards ("IFRS") and,
therefore, may not be comparable with the calculation of similar
measures by other companies.
"Adjusted funds flow (capital management
measure)" is calculated by taking cash-flow from operating
activities and adding back changes in non-cash working capital,
expenditures on decommissioning obligations and transaction costs
since Tamarack believes the timing of collection, payment or
incurrence of these items is variable. Expenditures on
decommissioning obligations may vary from period to period
depending on capital programs and the maturity of the Company's
operating areas. Expenditures on decommissioning obligations are
managed through the capital budgeting process which considers
available adjusted funds flow. Tamarack uses adjusted funds flow as
a key measure to demonstrate the Company's ability to generate
funds to repay debt and fund future capital investment. Adjusted
funds flow per share is calculated using the same weighted average
basic and diluted shares that are used in calculating loss per
share.
"Free funds flow (capital management
measure)" (previously referred to as "free adjusted
funds flow") is calculated by taking adjusted funds flow and
subtracting capital expenditures, excluding acquisitions and
dispositions. Management believes that free funds flow provides a
useful measure to determine Tamarack's ability to improve returns
and to manage the long-term value of the business.
"Operating field netback (non-IFRS
financial measure or ratio)" is calculated as total petroleum
and natural gas sales, less royalties, net production expenses and
transportation expense. These metrics can also be calculated on a
per boe basis. Management considers operating netback and operating
field netback important measures to evaluate Tamarack's operational
performance, as it demonstrates field level profitability relative
to current commodity prices. See the MD&A for a detailed
calculation and reconciliation of operating field netback per boe
to the most directly comparable measure calculated and presented in
accordance with IFRS.
"Operating netback (non-IFRS financial
measure or ratio)" is calculated as total petroleum and natural
gas sales, including realized gains and losses on commodity and
foreign exchange derivative contracts, less royalties, net
production expenses and transportation expense (non-IFRS financial
measure). This metrics can also be calculated on a per boe basis
(non-IFRS financial ratio). Management considers operating field
netback an important measure to evaluate Tamarack's operational
performance, as it demonstrates field level profitability relative
to current commodity prices. See the MD&A for a detailed
calculation and reconciliation of operating netback per boe to the
most directly comparable measure calculated and presented in
accordance with IFRS.
"Net debt (capital management measure)"
is calculated as bank debt plus working capital surplus or deficit,
plus other liability, including the fair value of cross-currency
swaps and excluding the fair value of financial instruments and
lease liabilities.
"Net Debt to Annualized Adjusted Funds Flow
(capital management measure)" is calculated as estimated period
end net debt divided by the annualized adjusted funds flow for the
preceding quarter (multiplied by 4 for annualization).
Please refer to the MD&A for additional information relating
to specified financial measures including non-IFRS financial
measures, non-IFRS financial ratios and capital management
measures. The MD&A can be accessed either on Tamarack's website
at www.tamarackvalley.ca or under the Company's profile on
www.sedar.com.
SOURCE Tamarack Valley Energy