CALGARY,
AB, Dec. 6, 2023 /CNW/ - Tamarack Valley
Energy Ltd. ("Tamarack" or the "Company") (TSX: TVE)
is pleased to announce its 2024 capital and operating budget. The
2024 budget prioritizes near term free funds flow(1)
generation with realization of long term net asset value capture
and is supported by a culture focused on safety and operational
excellence.
Highlights of the 2024 Budget
- Two Phase Capital Budget – Tamarack has
designed a two-phase capital budget, which allows the Company to
align spending with on-stream timing of the new CSV Albright sour
gas plant in the Charlie Lake
area. Capital spending for 2024 will be funded through adjusted
funds flow(1) at US$75/bbl
WTI budget pricing:
- Base Budget: $410 to $460MM
- CSV Albright Growth Budget: $450
to $500MM assumes Q4/24 CVS Albright on-stream timing
- Oil Weighted Production – Base Budget
average 61,000 to 63,000 boe/d(2) (84 to 86% oil and
NGLs); CSV Albright Growth Budget average 61,000 to 64,000
boe/d(3) (84 to 86% oil and NGLs)..
- Optimizing Capital Programs – Spending
allocated 60% and 40% for H1 and H2 2024 respectively, reflecting
higher Clearwater activity in H1
to align with expected TMX expansion onstream timing.
- Generating Free Funds Flow(1) – At
US$75/bbl WTI budget pricing, the
Base Budget expects to deliver over $250MM of free funds
flow(1). Free funds flow(1) will be directed
to further debt repayment and enhanced return initiatives.
- Top Tier Margins Driven by Low
Corporate Breakeven(1) –
Low corporate cost structure will achieve a sustaining free funds
flow breakeven(1) of ~US$37/bbl WTI, inclusive of the base dividend
over our five year plan.
- Delivering ESG Performance – Allocated
$13MM to ARO spending. Investing $27MM to expand gas conservation
in support of ongoing success with our Clearwater development. These gas conservation
projects are expected to mitigate approximately 276,000 tonnes of
CO2e while saving an estimated $32MM(4) of carbon tax
within the window of our 5-year plan.
"Our top priority remains maintaining a culture of safe and
responsible operations that continues to drive near and long-term
value creation for our investors. Tamarack's portfolio, focused on
our highly economic Clearwater and
Charlie Lake plays, supports
scalable development capable of delivering long term sustainable
free funds flow(1). Building on assets acquired in 2022,
organic drilling and waterflood projects increased our Clearwater production by ~16% year over year.
Success of the 2023 capital program and strategic divestments are
accelerating our debt repayment with 2023 exit net debt expected to
be reduced by over $300MM relative to 2022. Long term we continue
to maximize the net asset value of our highly economic Charlie Lake oil resource and estimated 8.7
billion barrels of Clearwater OOIP, investing in infrastructure and
lowering our overall cost structure." – Brian Schmidt, President and CEO
2024 Base Budget
Overview
Tamarack's Base Budget production of 61,000 to 63,000
boe/d(2) is focused on delivering free funds
flow(1) and supporting long term value creation. Year
over year, sustaining capital has been reduced from $370MM in 2023
to approximately $330MM in 2024. This reflects Tamarack's success
in balancing the pace of development in Charlie Lake, advancing Clearwater primary and secondary recovery
programs and investment in key infrastructure.
The 2024 Base Budget builds on the success of the 2023 program
which added strategic owned and operated Charlie Lake infrastructure and is backed by
strong well results that enabled long term commitments to
additional firm service capacity. The Charlie Lake drilling program is designed to
balance new well activity with area processing and egress capacity.
Approximately $65 - $70MM and
$220 - $240MM will be allocated to
primary DCET activity in the Charlie
Lake and Clearwater
respectively. In the North Clearwater Tamarack will expand its core
area through the development of East Nipisi and West Marten Hills
in both the "B" and "C" sands. In the South Clearwater, we will continue to leverage
the "Fan" well design to advance development. Within the budget
$40 to $45MM is allocated for
secondary recovery spending focused on expansion of Clearwater waterflood projects at Nipisi and
Marten Hills.
2024 CSV Albright Growth Budget
Overview
Tamarack proactively secured firm processing capacity at the new
CSV Albright sour gas plant to support near term growth and
long-term development in the Charlie
Lake. Firm capacity through CSV Albright could see Tamarack
potentially add 700 to 900 boe/d(6) in Q4 2024, and over
2,000 boe/d(7) in Q1 2025.
In support of this opportunity, the Tamarack Board has approved
an incremental CSV Albright Growth Budget which includes an
additional $40 to $50MM capital over
Q3 and Q4 2024. This incremental capital would ensure production is
available to fill Tamarack's capacity at the CSV Albright gas plant
which is currently under construction and estimated to be onstream
in Q4 2024. Timing on capital deployment will be informed by the
plant start up schedule.
2024 Annual Guidance Summary at
2024 Budget Pricing(8)
|
Units
|
|
|
Base
Capital
|
Base + CSV
Albright Growth
|
Capital
Budget(9)
|
$MM
|
|
|
$410 – $460
|
$450 – $500
|
Annual Average
Production
|
boe/d
|
|
|
61,000 –
63,000(2)
|
61,000 –
64,000(3)
|
Average Oil & NGL
Weighting
|
%
|
|
|
84% – 86%
|
84% – 86%
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Royalty
Rate
|
%
|
|
|
20% – 22%
|
Operating
|
$/boe
|
|
|
$8.75 –
$9.25
|
Transportation
|
$/boe
|
|
|
$3.25 –
$3.60
|
Carbon
Tax(5)
|
$/boe
|
|
|
$1.00 –
$1.50
|
General and
Administrative(10)
|
$/boe
|
|
|
$1.35 –
$1.50
|
Interest
|
$/boe
|
|
|
$3.80 –
$4.20
|
Income
Taxes(11)
|
%
|
|
|
9% – 11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base 2024 Budget Details
Secondary Oil Recovery - Waterflood
Expenditures
Tamarack's 2023 waterflood investment resulted in a reduction of
our corporate decline by approximately 2%. For each 1% improvement,
or reduction, in decline rate Tamarack realizes an estimated annual
sustaining capital savings of approximately $12MM to $15MM.
With an estimated 8.7 billion barrels of OOIP across our
Clearwater portfolio Tamarack is
well positioned to deliver sustainable long-term value for
investors through investment in waterflood initiatives which have
potential to double primary recovery rates. Currently, 6% of
Tamarack's Clearwater production
is supported by waterflood and this will increase substantially
moving through the Company's five-year plan.
Tamarack has increased water injection in the Clearwater from 1,500 bbl/d at January 2023 to an estimated 4,000 bbl/d in
December 2023 and is expected to
further increase to 15,000 bbl/d by year end 2024. Results from
increased injection in 2023 demonstrated material reservoir
response that will lead to significant increases in ultimate
recovery factors. In 2024, the Company plans to direct $35 to $40MM of capital towards our
Clearwater waterflood projects, following on the excellent
results demonstrated to date.
Infrastructure Initiatives Driving Higher
Margins
Tamarack realized material benefits from investment in key
strategic infrastructure through 2023. This included projects in
the Charlie Lake, highlighted by
the Wembley gas plant, and
Clearwater, including the Nipisi
pipeline and terminal projects. Combined, these 2023 projects
served to drive material year over year operating and
transportation cost reductions while also providing for top line
price margin improvements.
The 2024 Base Budget includes capital to expand the Wembley 16-35-073-08W6 battery. At a cost of
~$5MM the expansion will result in an incremental 1,600 boe/d of
liquids and gas handling capacity for Tamarack operated and
controlled volumes. Some associated downtime is expected during the
first quarter as we shut in volumes to accommodate the expansion
work.
Exploration/Delineation Capital
The 2023 exploration program successfully tested three
Clearwater equivalent sands at
Seal establishing the potential for up to 1.0 billion bbls of OOIP.
In addition, Tamarack was successful with our West Nipisi joint
venture where the first wells drilled have delivered average IP30
rates of ~240 bopd per well.
At West Marten Hills, in 2023 Tamarack further tested the
Clearwater "C" sand with initial rates averaging ~220 bopd per
well. These results expand Tamarack's Upper Clearwater inventory,
with 380 MMbbls of potential OOIP across 27 net sections of land
where the Clearwater "B" sand is already being developed, enabling
Clearwater "C" sand locations to truly benefit from half-cycle
economics given that required surface locations and infrastructure
are already in place.
Looking ahead, Tamarack plans to direct ~$20MM of the 2024
capital program to exploration projects. This includes testing
additional zones and targets across our Clearwater and Charlie Lake land base.
Environmental, Social and Governance &
Corporate
Given the success and expansion of our Clearwater development, in 2024 Tamarack plans
to invest $27MM in a large natural gas and emulsion gathering
system which will serve to reduce corporate emissions and trucking
as volumes are tied directly into pipelines. Opex and
transportation savings associated with the project are estimated to
reduce 2024 corporate costs by $0.05-$0.10/boe.
Over the next five years this investment is also expected to reduce
annual CO2 emissions by approximately 276,000 tonnes and our
potential carbon tax exposure by ~$32MM(4).
To support the commitments and goals outlined in Tamarack's
Sustainability Report and the performance targets specified as part
of Tamarack's sustainability linked lending, the Company has
allocated $13MM to ARO in 2024. Actions undertaken in 2023 and
2024, including the divestment of certain non-core assets along
with extensive abandonments across remaining non-core holdings will
materially reduce Tamarack's ARO. It is expected that these
projects will result in a significant reduction in required 2025
spending.
Debt Reduction and Enhanced Return Delivery
The Company remains committed to balancing long-term sustainable
free funds flow growth with returning capital to shareholders. Key
strategic initiatives executed through 2023, including the
divestment of the non-core Cardium assets, coupled with growing
production from our high netback core assets reduced Tamarack's
expected exit debt at year-end 2023 by over $300MM relative to
year-end 2022. The Company now expects to exit the year below
$1.1 billion of net debt,
representing a 27% improvement on a year over year basis. The 2024
budget will see a further reduction while continuing to support
returns within our return of capital ("ROC") framework. In 2023,
Tamarack expects to pay out over $83MM in base dividends to our
shareholders. As Tamarack looks to confirm achievement of the first
threshold of the ROC framework, share buybacks remain the preferred
mechanism to enhance shareholder returns at this time.
Risk Management
The Company takes a systematic approach to manage commodity
price risk and volatility to ensure sustaining capital, debt
servicing requirements and the base dividend are protected through
a prudent hedging management program. For 2024, approximately ~50%
of net after royalty oil production is hedged against WTI with an
average floor price of ~US$70/bbl
with structures that allow for upside price participation into the
mid US$90/bbl range. Our strategy
provides protection to the downside while maximizing upside
exposure. Additional details of the current hedges in place can be
found in the corporate presentation on the Company website
(www.tamarackvalley.ca).
We would like to thank our employees, shareholders and other
stakeholders for all of their support over the past year. Tamarack
materially advanced our multi-year transformation and would not
have been able to achieve this without the dedication and hard work
of our employees. We look forward to continuing to develop our
high-quality assets to create shareholder value in a sustainable
and responsible way.
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 and Clearwater plays in Alberta while also pursuing EOR upside in
these core areas. 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; may also be referred to as decommissioning
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
|
CGU
|
cash generating
unit
|
DCET
|
drilling, completions,
equip and tie-in costs
|
EOR
|
enhanced oil
recovery
|
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
|
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
|
NGL
|
Natural gas
liquids
|
OOIP
WCS
|
original oil in
place
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
- See "Specified Financial Measures"
- Comprised of 12,800-13,200 bbl/d light and medium oil,
36,600-37,800 bbl/d heavy oil, 2,400-2,500 bbl/d NGL and
54,900-56,700 mcf/d natural gas
- Comprised of 12,800-13,400 bbl/d light and medium oil,
36,600-38,400 bbl/d heavy oil, 2,400-2,600 bbl/d NGL and
54,900-57,600 mcf/d natural gas
- $32MM of savings represents tax that would otherwise be payable
in the absence of these projects and reflects Alberta TIER
compliance which follows the Federal Carbon pricing model of
$80/tonne in 2024 and increasing by
$15/tonne annually until 2030. This
pricing is applied to annual emissions reduction forecasts,
assuming that corporate emissions intensity levels are in excess of
the compliance baseline.
- The Company's acquisitions in 2022 and a more stringent
emissions regulatory framework increased taxable emissions in 2023
and 2024. Carbon tax of
$1.00-$1.50/boe is anticipated in 2024, a significant
increase from 2023 as the price of carbon escalates 23% to
$80/tonne and the emissions intensity
benchmark tightens. Carbon tax was
previously included in net production costs but will be reported
separately going forward. Tamarack's gas conservation initiatives
that continue into 2024 are expected to substantively decrease the
carbon tax burden in 2025 and subsequent years.
- Comprised of 490-630 bbl/d light and medium oil, 60-70
bbl/d NGL and 900-1,200 mcf/d natural gas
- Comprised of 1,200-1,300 bbl/d light and medium oil,
150-200 bbl/d NGL and 3,100-3,400 mcf/d natural gas
- Annual guidance numbers are based on 2024 average pricing
assumptions of:
2024 Budget
Pricing
|
|
Crude Oil – WTI
($US/bbl)
|
$75.00
|
Crude Oil – MSW
Differential ($US/bbl)
|
($4.00)
|
Crude Oil – WCS
Differential ($US/bbl)
|
($17.00)
|
Natural Gas – AECO
($CAD/GJ)
|
$2.50
|
Foreign Exchange –
CAD/USD
|
1.3450
|
- Capital budget includes exploration and development
capital, ARO, ESG initiatives, facilities land and seismic but
excludes asset acquisitions and dispositions.
- G&A noted excludes the effect of cash settled stock-based
compensation.
- Tamarack estimates a tax rate on funds flow of 9%-11%
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.
References in this press release to "crude oil" or "oil" refers
to light, medium and heavy crude oil product types as defined by NI
51-101. References to "NGL" throughout this press release comprise
pentane, butane, propane, and ethane, being all NGL as defined by
NI 51-101. References to "natural gas" throughout this press
release refers to conventional natural gas as defined by NI
51-101.
The term original oil in place (OOIP) is equivalent to total
petroleum initially in place ("TPIIP"). TPIIP, as defined in the
most recent publication of the Canadian Oil and Gas Evaluation
Handbook (the "COGE Handbook"), is that quantity of petroleum that
is estimated to exist in naturally occurring accumulations. It
includes that quantity of petroleum that is estimated, as of a
given date, to be contained in known accumulations, prior to
production, plus those estimated quantities in accumulations yet to
be discovered. A portion of the TPIIP is considered undiscovered
and there is no certainty that any portion of such undiscovered
resources will be discovered. If discovered, there is no certainty
that it will be commercially viable to produce any portion of such
undiscovered resources. With respect to the portion of the TPIIP
that is considered discovered resources, there is no certainty that
it will be commercially viable to produce any portion of such
discovered resources. A significant portion of the estimated
volumes of TPIIP will never be recovered. OOIP disclosed herein was
internally estimated by the Company's internal qualified reserves
evaluator ("QRE") and prepared in accordance with NI 51-101 and the
COGE Handbook. "Internally estimated" means an estimate that is
derived by the Company's internal QRE and prepared in accordance
with NI 51-101. Internal estimates contained in this press release
were prepared effective as of January 1,
2023.
References in this press release to peak rates, initial
production rates, IP30 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.
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, including the Company's five-year
plan; future consolidation activity, organic growth and development
and portfolio rationalization; future intentions with respect to
debt repayment and reduction and the Company's ROC framework,
including enhanced dividends and share buybacks; oil and natural
gas production levels, adjusted funds flow and free funds flow;
anticipated operational results for 2024 including, but not limited
to, estimated or anticipated production levels, capital
expenditures, drilling plans and infrastructure initiatives,
including on-stream timing of the new CSV Albright sour gas plant
in the Charlie Lake and the
expansion o the Wembley gas plant
and anticipated margin improvements; the Company's capital program,
guidance and two-phase budget for 2024 and the funding thereof;
expectations regarding commodity prices; the performance
characteristics of the Company's oil and natural gas properties;
decline rates and EOR, including waterflood initiatives and long
term net asset value capture; the continued successful integration
of acquired assets; the ability of the Company to achieve drilling
success consistent with management's expectations, including
leveraging the "Fan" well design; risk management activities; ARO
reduction; Tamarack's commitment to ESG principles and
sustainability, including gas conservation projects, emissions
reductions and carbon tax savings; and the source of funding for
the Company's activities including development costs. Future
dividend payments and share buybacks, if any, and the level
thereof, are uncertain, as the Company's return of capital
framework and the funds available for such activities 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 and buyback
shares 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 those 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 continued successful integration of 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,
including TMX expansion onstream timing; 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; impact
of inflation on costs; 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: risks with respect
to unplanned third party pipeline outages and risks relating to
inclement and severe weather events and natural disasters, such as
fire, drought and flooding, including in respect of safety, asset
integrity and shutting-in production, maintaining 2024 guidance and
resumption of operations; risks with respect to unplanned
third-party pipeline outages; 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, including the impact of the
actions of OPEC and OPEC+ members; 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; and pandemics. In addition,
ongoing military actions between Russia and Ukraine and the recent crisis in Israel and Gaza have the potential to threaten the supply
of oil and gas from those regions. The long-term impacts of the
actions between these nations remains uncertain. Due to the nature
of the oil and natural gas industry, drilling plans and operational
activities may be delayed or modified to respond 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, 2022 and the
management's discussion and analysis for the period ended
September 30, 2023 (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.sedarplus.ca. 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 (including the Base Budget delivering over $250MM of free
funds flow), dividends and share buybacks, prospective results of
operations and production, oil weightings, operating costs, 2024
two-phase capital budget and expenditures, decline rates, balance
sheet strength, adjusted funds flow and free funds flow, net debt,
debt repayments, total returns and components thereof, 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.
Specified Financial
Measures
This press release includes various specified financial
measures, including non-IFRS financial measures, non-IFRS financial
ratios, capital management measures and supplemental financial
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, on a
periodic basis, deducting current income tax expense and interest
expense (excluding fees) and adding back income tax paid, interest
paid, changes in non-cash working capital, expenditures on
decommissioning obligations and transaction costs settled during
the applicable period. since Tamarack believes the timing of
collection, payment or incurrence of these items is variable.
Management believes adjusting for estimated current income taxes
and interest in the period expensed is a better indication of the
adjusted funds generated by the Company. 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, pay dividends 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 income per share, which results in the measure being
considered a supplemental financial measure. Adjusted funds flow
can also be calculated on a per boe basis, which results in the
measure being considered a supplemental financial measure.
"Free funds flow (capital management measure)" 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.
"Free funds flow breakeven (capital management
measure)" (previously referred to as "free adjusted
funds flow breakeven") is determined by calculating the minimum WTI
price in US/bbl required to generate free funds flow equal to zero,
sustaining current production levels and all other variables held
constant. Management believes that free funds flow breakeven
provides a useful measure to establish corporate financial
sustainability.
"Net debt (capital management measure)" is
calculated as credit facilities plus senior unsecured notes, plus
deferred acquisition payment notes, plus working capital surplus or
deficiency, plus other liability, including the fair value of
cross-currency swaps, plus government loans, plus facilities
acquisition payments, less notes receivable and excluding the
current portion of fair value of financial instruments,
decommissioning obligations, lease liabilities and the cash award
incentive plan liability.
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.sedarplus.ca.
SOURCE Tamarack Valley Energy Ltd.