CALGARY, AB, Nov. 19, 2020
/CNW/ - Altura Energy Inc. ("Altura" or the "Corporation") (TSXV:
ATU) announces its financial and operating results for the three
and nine months ended September 30,
2020. The unaudited interim condensed consolidated financial
statements and related management's discussion and analysis
("MD&A") are available at www.sedar.com and
www.alturaenergy.ca. Selected financial and operating
information for the three and nine months ended September 30, 2020 appear below and should be
read in conjunction with the related financial statements and
MD&A.
OPERATIONAL AND FINANCIAL SUMMARY
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Three Months
Ended
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Nine months
ended
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September 30,
2020
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June 30,
2020
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September 30,
2019
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September 30,
2020
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September 30,
2019
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Operating
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Average daily
production
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Heavy oil
(bbls/d)
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512
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213
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1,150
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464
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1,190
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Light & medium oil
(bbls/d)
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16
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-
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-
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8
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22
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Natural gas
(Mcf/d)
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2,118
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1,154
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3,733
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2,066
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3,057
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NGLs
(bbls/d)
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38
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30
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108
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52
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81
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Total
(boe/d)
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919
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435
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1,880
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868
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1,803
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Total boe/d per
million shares – diluted
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8.4
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4.0
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17.2
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8.0
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16.4
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Average realized
prices
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Heavy oil
($/bbl)
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40.19
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21.39
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55.31
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33.93
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56.01
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Light & medium oil
($/bbl)
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43.79
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-
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-
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36.21
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48.97
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Natural gas
($/Mcf)
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2.45
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2.06
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0.95
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2.26
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1.36
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NGLs
($/bbl)
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25.83
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6.46
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24.42
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19.97
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26.80
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Average realized price
($/boe)
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29.87
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16.36
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37.12
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25.04
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41.09
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($/boe)
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Petroleum and natural
gas sales
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29.87
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16.36
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37.12
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25.04
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41.09
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Realized gain (loss)
on financial instruments
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0.51
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16.60
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(0.22)
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5.59
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0.28
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Royalties
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(2.63)
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0.28
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(4.20)
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(1.83)
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(4.09)
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Operating
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(13.85)
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(16.27)
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(6.92)
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(13.46)
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(8.14)
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Transportation
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(2.51)
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(2.46)
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(2.93)
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(2.49)
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(3.79)
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Operating
netback(1)
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11.39
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14.51
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22.85
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12.85
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25.35
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General and
administrative
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(5.71)
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(7.98)
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(2.16)
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(5.03)
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(2.56)
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Exploration
expense
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-
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-
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-
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-
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(0.04)
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Interest and financing
expense (cash)
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(1.21)
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(1.42)
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(0.27)
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(0.75)
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(0.35)
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Adjusted funds flow
per boe(1)
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4.47
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5.11
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20.42
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7.07
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22.40
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Financial
($000, except per share amounts)
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Petroleum and natural
gas sales
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2,526
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647
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6,420
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5,956
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20,226
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Cash flow from
operating activities
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505
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512
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3,181
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2,200
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9,039
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Per share –
diluted
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-
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-
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0.03
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0.02
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0.08
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Adjusted funds
flow(1)
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378
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204
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3,532
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1,684
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11,031
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Per share –
diluted(1)
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-
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-
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0.03
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0.02
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0.10
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Net income
(loss)
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(360)
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(1,247)
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298
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(33,136)
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2,271
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Per share –
basic
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-
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(0.01)
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-
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(0.30)
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0.02
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Per share –
diluted
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-
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(0.01)
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-
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(0.30)
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0.02
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Capital
expenditures
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469
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218
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3,553
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7,769
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11,356
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Property acquisitions
(dispositions), net
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(875)
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(871)
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-
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(1,746)
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-
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Total capital
expenditures, net
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(406)
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(653)
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3,553
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6,023
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11,356
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Net
debt(1)
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4,560
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5,335
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5,130
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4,560
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5,130
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Common shares
outstanding (000)
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End of period –
basic
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108,921
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108,921
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108,921
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108,921
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108,921
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Weighted average for
the period – basic
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108,921
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108,921
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108,921
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108,921
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108,921
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Weighted average for
the period – diluted
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108,921
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108,921
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109,517
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108,921
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110,191
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(1)
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Adjusted funds flow,
net debt and operating netback are non-GAAP measures that do not
have any standardized meaning under IFRS and therefore may not be
comparable to similar measures presented by other companies.
Refer to the heading entitled "Non-GAAP Measures" contained within
the "Advisories" section of Altura's MD&A.
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THIRD QUARTER 2020 REVIEW
Production volumes averaged 919 boe per day in the third
quarter, a 111% increase from the second quarter of 2020 due to the
Corporation restarting wells in the Leduc-Woodbend area that
were voluntarily curtailed in the second quarter due to the
severe decline in crude oil prices caused by the COVID-19 pandemic
and OPEC production quota concerns. Third-party gas
processing restrictions delayed approximately 125 boe per day of
production in the quarter which is expected to be back online in
January 2021.
The Entice well was restarted in June and then shut-in in August
to manage gas conservation requirements and evaluate the next steps
to continue the production test. The well was drilled over 20
kms away and 100m down-dip from the
nearest production analog with 33,000 barrels of 31° API oil
proving the large extent of this hydrocarbon accumulation.
Management is continuing technical work on the play and is planning
on testing the up-dip portion of the pool through the recompletion
of an existing vertical well in 2021.
Altura's realized heavy oil price increased 88% to $40.19 per barrel in the third quarter compared
to $21.39 per barrel in the second
quarter of 2020 but decreased 27% compared to $55.31 per barrel in the third quarter of
2019.
Operating expenses in the third quarter were $13.85 per boe, compared to $16.27 per boe in the second quarter of
2020. The decrease was due to higher production
volumes, partially offset by repair and maintenance costs
associated with well workovers in the third quarter.
Transportation expenses were $2.51
per boe, consistent with $2.46 per
boe in the second quarter of 2020.
The Corporation's operating netback1 averaged
$11.39 per boe, down 22% from the
second quarter of 2020 due to a decreased realized gain on
financial instruments and increased royalty expenses, partially
offset by higher crude oil and natural gas prices and lower
operating expenses.
Adjusted funds flow1 was $378,000 in the quarter, up 85% from the second
quarter of 2020 due to higher production volumes, increased crude
oil and natural prices and lower per unit operating expenses,
partially offset by higher royalties and a decreased realized gain
on financial instruments.
Altura received $74,000 under the
Canada Emergency Wage Subsidy in
the third quarter, which was applied against G&A
expenses.
Altura recorded a net loss of $360,000 in the quarter compared to a net loss of
$1.2 million in the second quarter of
2020.
Third quarter capital expenditures of $469,000 focused primarily on land-related
expenditures at Altura's core Leduc-Woodbend area.
In August, Altura and its lender completed the redetermination
of its revolving operating demand loan (the "Operating Loan") and
the borrowing base was confirmed at $6.0
million. Additionally, Altura secured a $3.0 million term loan from its lender through
the Business Credit Availability Program from the Export
Development Bank of Canada (the
"Term Loan"). The Operating Loan and the Term Loan
(collectively the "Credit Facilities") provide Altura with
$9.0 million of total Credit
Facilities.
Altura reduced its net debt by $775,000 during the third quarter.
Considering Altura's net debt of $4.6
million as at September 30,
2020, the Corporation has sufficient liquidity to execute
its business plan in the current volatile commodity
market.
On September 30, 2020, Altura
divested of a 1.375% working interest in the Corporation's
production, wells, lands and facilities for cash of $875,000 as outlined in the Corporation's
September 30, 2020 news
release.
Altura has been approved for abandonment and reclamation funding
of $508,000 under the Alberta Site
Rehabilitation Program ("SRP"). The grant funding consists of
$373,000 under Period 1 and
$135,000 under Period 3. The
Corporation expects to start utilizing the grants in the fourth
quarter of 2020 to abandon up to five inactive wells and reclaim
three wells that were previously abandoned at an estimated total
cost of $251,000.
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_______________________________
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1 Adjusted
funds flow, net debt and operating netback are non-GAAP measures
that do not have any standardized meaning under IFRS and therefore
may not be comparable to similar measures presented by other
companies. Refer to the heading entitled "Non-GAAP Measures"
contained within the "Advisories" section of Altura's
MD&A.
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OUTLOOK
Crude oil and natural gas prices have improved since the
beginning of May, but volatility remains high with continued
uncertainty surrounding the COVID-19 pandemic. Altura remains
focused on protecting balance sheet strength and no new wells are
currently planned to be drilled or completed in the fourth quarter
of 2020.
October 2020 production is
estimated at approximately 975 boe per day based on field
estimates. 125 boe per day remains shut-in from the
second quarter due to third party curtailment and is expected to be
restarted in January 2021. The Corporation forecasts
production volumes to range between 900 and 1,000 boe per day for
the second half of 2020. Through cash flow, Altura is
forecasting to reduce its net debt to approximately $4.2 million by the end of the
year2.
Altura expects to close two additional dispositions of a 1.375%
working interest for $875,000 each on
January 31, 2021 and June 30, 2021 (total remaining disposition of
2.75% working interest for $1,750,000), as disclosed in the June 30, 2020 news release.
On behalf of the Board of Directors and the Altura management
team, we would like to thank our shareholders for their ongoing
support during these very difficult times.
ABOUT ALTURA ENERGY INC.
Altura is a junior oil and gas exploration, development and
production company with operations in central Alberta. Altura
predominantly produces from the Rex member in the Upper Mannville
group and is focused on delivering per share growth and attractive
shareholder returns through a combination of organic growth and
strategic acquisitions.
READER ADVISORIES
Forward–looking Information and
Statements
This press release contains certain forward-looking information
and statements within the meaning of applicable securities laws.
The use of any of the words "expect", "anticipate", "budget",
"forecast", "continue", "estimate", "objective", "ongoing", "may",
"will", "project", "should", "believe", "plans", "intends",
"strategy" and similar expressions are intended to identify
forward-looking information or statements. In particular, but
without limiting the foregoing, this press release contains
forward-looking information and statements pertaining to:
- uncertainty about the COVID-19 pandemic and the impact it will
have on Altura's operations, the demand for Altura's products, and
economic activity in general;
- Altura's plan to bring shut-in wells on production at
Leduc-Woodbend in January 2021;
- plans to test the up-dip portion of the Entice pool through the
recompletion of an existing vertical well in 2021;
- forecasted production volumes to range between 900 and 1,000
boe per day for the second half of 2020;
- the expected closing of two additional dispositions of a 1.375%
working interest for $875,000 each on
January 31, 2021 and June 30, 2021; and,
- forecasted reduction of net debt to approximately $4.2 million by the end of the year.
The forward-looking information and statements contained in this
press release reflect several material factors and expectations and
assumptions of Altura including, without limitation:
- the continued performance of Altura's oil and gas properties in
a manner consistent with its past experiences;
- that Altura will continue to conduct its operations in a manner
consistent with past operations;
- the return of industry conditions to pre-COVID-19 levels;
- the continuance of existing (and in certain circumstances, the
implementation of proposed) tax, royalty and regulatory
regimes;
- the accuracy of the estimates of Altura's reserves and resource
volumes;
- certain commodity price and other cost assumptions;
- the continued availability of oilfield services; and
- the continued availability of adequate debt and equity
financing and cash flow from operations to, among other things,
fund its planned expenditures.
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___________________________
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1 Key
assumptions for net debt forecast:
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Second half of 2020
WTI US$40.56/bbl, WCS diff US$9.23/bbl, FX 0.758 $US/$,
AECO CAD$2.35/GJ, average production 900 – 1,000 boe per day,
and operating and transportation costs of $16.00 per boe
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Altura believes the material factors, expectations and
assumptions reflected in the forward-looking information and
statements are reasonable based on prior operating history but no
assurance can be given that these factors, expectations and
assumptions will prove to be correct particularly in the current
operating environment which is unprecedented by any standard.
To the extent that any forward-looking information contained herein
may be considered future oriented financial information or a
financial outlook, such information has been included to provide
readers with an understanding of management's assumptions used for
budgeted and developing future plans and readers are cautioned that
the information may not be appropriate for other purposes.
The forward-looking information and statements included in this
press release are not guarantees of future performance and should
not be unduly relied upon. Such information and statements
involve 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 or statements
including, without limitation:
- the COVID-19 pandemic and related disruptions in oil and gas
markets, including the duration and impacts thereof;
- changes in commodity prices including, without limitation, as a
result of COVID-19 pandemic;
- changes in commodity prices including, without limitation, as a
result of the COVID-19 pandemic and related disruptions in oil and
gas markets;
- unanticipated operating results or production declines;
- public health crises, such as the recent outbreak of COVID-19
and the related economic disruption that can result in volatility
in financial markets, disruption to global supply chains, and the
ability to directly and indirectly staff the Corporation's day to
day operations;
- changes in tax or environmental laws, royalty rates or other
regulatory matters;
- changes in development plans of Altura or by third-party
operators of Altura's properties;
- increased debt levels or debt service requirements;
- inaccurate estimation of Altura's oil and gas reserve and
resource volumes;
- limited, unfavorable or a lack of access to capital or debt
markets;
- increased costs;
- a lack of adequate insurance coverage;
- the impact of competitors; and
- certain other risks detailed from time to time in Altura's
public documents.
The forward-looking information and statements contained in this
press release speak only as of the date of this press release, and
Altura does not assume any obligation to publicly update or revise
them to reflect new events or circumstances, except as may be
required pursuant to applicable laws.
Oil and Gas Advisories
Barrels of Oil Equivalent
The term barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. Per boe amounts have been
calculated by using the conversion ratio of six thousand cubic feet
(6 Mcf) of natural gas to one barrel (1 Bbl) of crude oil.
The boe conversion ratio of 6 Mcf to 1 Bbl is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current
price of crude oil as compared to natural gas is significantly
different from the energy equivalent of 6:1, utilizing a conversion
on a 6:1 basis may be misleading as an indication of value.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Altura Energy Inc.
