Surge's disciplined operating strategy involves focusing growth and development capital to high netback, low cost, light and medium gravity crude oil reservoirs, that possess large original oil in place ("OOIP")1 and low recovery factors.
In Q4/23 Surge achieved an average production rate of 25,050 boepd (86 percent liquids), exceeding the Company's 2023 public guidance production exit rate of 25,000 boepd. Additionally, Surge achieved record annual production in 2023 of 24,438 boe/d (86 percent liquids), an increase of 15 percent over 2022 average production of 21,262 boepd.
FINANCIAL AND OPERATIONAL HIGHLIGHTS
Surge's Board and Management are pleased to report that the Company organically generated free cash flow2 before dividends ("FCF") of
Additional financial and operating highlights for the quarter and year ended
- Generated cash flow from operating activities of
$79.7 million in Q4/23; - Reduced net debt2 by over
$62 million in 2023 to$290.1 million , a decrease of 18 percent; - Distributed cash dividends to shareholders in the amount of
$46.8 million in 2023; - Reduced net operating expenses2 by
$2.36 per boe over the course of 2023, from$22.26 per boe in Q1/23 to$19.90 per boe in Q4/23. This represents an 11 percent decrease in net operating expenses over the year; - Repaid in full Surge's
$47.9 million first lien term loan facility that was set to mature inDecember 2024 ; - Completed a new, oversubscribed,
$48.3 million unsecured convertible debenture financing, with an attractive 8.50% interest rate; - Finalized the early redemption of
$34.5 million of previously issued unsecured convertible debentures that were set to mature onJune 30, 2024 with no pre-payment penalty; - Executed a successful 2023 drilling program of 70 gross (64.5 net) wells, strategically focused on light and medium gravity crude oil in the Company's conventional
SE Saskatchewan and Sparky core areas; and - Continued the Company's focus on ESG efforts, highlighted by spending a total of
$15.6 million on abandonment activities during the year. This resulted in Surge abandoning 132 gross wells during 2023, representing 1.9 wells abandoned for each new gross well drilled in 2023.
___________________ |
1 See Oil & Gas Advisories. |
2 This is a non-GAAP and other financial measure which is defined under Non-GAAP and Other Financial Measures. |
2023 YEAR END RESERVES HIGHLIGHTS
Surge is pleased to announce the results of the independent reserves evaluation of the Company's crude oil and natural gas assets, dated
Building off of the successful 2023 drilling program in the Company's Sparky and
Surge Management is pleased to report that, even after giving effect to increases in industry wide inflationary cost estimates, and a reduction in Sproule's crude oil price deck, the Company's 2023 Total Proved Net Asset Value1 ("TP NAV") is
With Surge's
- 117 million boe of Total Proved & Probable ("TPP") reserves;
- High oil weighting, with Proved Developed Producing ("PDP") reserves comprised of 88% light and medium oil and natural gas liquids, and
TPP reserves comprised of 86% light and medium oil and natural gas liquids; - 543 gross (489 net) booked
TPP drilling locations; 70% of these locations are located in the Company's Sparky andSE Saskatchewan core areas3; - Reported a TPP NAV of
$17.63 per basic share; - Generated a TP NAV of
$11.27 per basic share; - Confirmed a PDP NAV of
$5.66 per basic share; - Delivered a TP Finding, Development & Acquisition ("FD&A") cost of
$21.59 /boe1;- 1.8x Recycle Ratio1 on a 2023 operating netback of
$39.07 /boe (before realized losses on financial contracts);
- 1.8x Recycle Ratio1 on a 2023 operating netback of
- Reported a strong reserve life index1 of 12.8 years on
TPP reserves, 9.3 years on TP reserves, and 4.7 years on PDP reserves; - Replaced 102% of production on a TP basis, and 80% of production on a PDP basis; and
- Total Proved Undeveloped ("PUD") reserve net locations3 increased to 397 net, an increase of 31 locations over last year. All additional PUD locations were added in the Sparky and
SE Saskatchewan core areas.
________________ |
3 See Drilling Inventory. |
FINANCIAL AND OPERATING HIGHLIGHTS
FINANCIAL AND OPERATING HIGHLIGHTS | Three Months Ended | Years Ended | ||||
($000s except per share amounts) | 2023 | 2022 | % Change | 2023 | 2022 | % Change |
Financial highlights | ||||||
Oil sales | 160,755 | 152,465 | 5 % | 640,389 | 672,862 | (5) % |
NGL sales | 3,619 | 3,871 | (7) % | 13,052 | 16,783 | (22) % |
Natural gas sales | 4,079 | 9,472 | (57) % | 16,934 | 37,583 | (55) % |
Total oil, natural gas, and NGL revenue | 168,453 | 165,808 | 2 % | 670,375 | 727,228 | (8) % |
Cash flow from operating activities | 79,712 | 78,975 | 1 % | 266,141 | 276,125 | (4) % |
Per share - basic ($) | 0.79 | 0.90 | (12) % | 2.69 | 3.26 | (17) % |
Per share - diluted ($) | 0.78 | 0.88 | (11) % | 2.63 | 3.17 | (17) % |
Adjusted funds flowa | 77,001 | 71,807 | 7 % | 291,846 | 293,555 | (1) % |
Per share - basic ($)a | 0.77 | 0.82 | (6) % | 2.95 | 3.47 | (15) % |
Per share - diluted ($) | 0.75 | 0.80 | (6) % | 2.89 | 3.37 | (14) % |
Net income (loss) ($)c | (29,676) | 103,502 | (129) % | 15,751 | 231,718 | (93) % |
Per share - basic ($) | (0.30) | 1.17 | (126) % | 0.16 | 2.74 | (94) % |
Per share - diluted ($) | (0.29) | 1.15 | (125) % | 0.16 | 2.66 | (94) % |
Expenditures on property, plant and equipment | 61,305 | 47,728 | 28 % | 181,572 | 169,944 | 7 % |
Net acquisitions and dispositions | 3,813 | 200,302 | (98) % | 1,670 | 200,270 | (99) % |
Net capital expenditures | 65,118 | 248,030 | (74) % | 183,242 | 370,214 | (51) % |
Net debta, end of period | 290,070 | 352,213 | (18) % | 290,070 | 352,213 | (18) % |
Operating highlights | ||||||
Production: | ||||||
Oil (bbls per day) | 20,741 | 18,127 | 14 % | 20,434 | 17,413 | 17 % |
NGLs (bbls per day) | 808 | 695 | 16 % | 704 | 708 | (1) % |
Natural gas (mcf per day) | 21,005 | 19,647 | 7 % | 19,801 | 18,844 | 5 % |
Total (boe per day) (6:1) | 25,050 | 22,097 | 13 % | 24,438 | 21,262 | 15 % |
Average realized price (excluding hedges): | ||||||
Oil ($ per bbl) | 84.24 | 91.43 | (8) % | 85.86 | 105.87 | (19) % |
NGL ($ per bbl) | 48.68 | 60.51 | (20) % | 50.78 | 64.96 | (22) % |
Natural gas ($ per mcf) | 2.11 | 5.24 | (60) % | 2.34 | 5.46 | (57) % |
Netback ($ per boe) | ||||||
Petroleum and natural gas revenue | 73.09 | 81.56 | (10) % | 75.15 | 93.71 | (20) % |
Realized gain (loss) on commodity and FX contracts | 1.02 | (4.71) | nmb | (0.35) | (12.65) | (97) % |
Royalties | (13.55) | (13.50) | — % | (13.40) | (16.44) | (18) % |
Net operating expensesa | (19.90) | (20.98) | (5) % | (21.13) | (19.70) | 7 % |
Transportation expenses | (1.48) | (1.40) | 6 % | (1.54) | (1.45) | 6 % |
Operating netbacka | 39.18 | 40.97 | (4) % | 38.73 | 43.47 | (11) % |
G&A expense | (2.19) | (2.06) | 6 % | (2.15) | (2.14) | — % |
Interest expense | (3.58) | (3.59) | — % | (3.86) | (3.50) | 10 % |
Adjusted funds flowa | 33.41 | 35.32 | (5) % | 32.72 | 37.83 | (14) % |
Common shares outstanding, end of period | 100,314 | 96,477 | 4 % | 100,314 | 96,477 | 4 % |
Weighted average basic shares outstanding | 100,314 | 88,094 | 14 % | 98,790 | 84,619 | 17 % |
Stock-based compensation dilution | 1,808 | 2,097 | (14) % | 2,227 | 2,404 | (7) % |
Weighted average diluted shares outstanding | 102,122 | 90,191 | 13 % | 101,017 | 87,023 | 16 % |
a This is a non-GAAP and other financial measure which is defined in the Non-GAAP and Other Financial Measures section of this document. | ||||||
bThe Company views this change calculation as not meaningful, or "nm". | ||||||
c The three and twelve months ended |
OPERATIONS UPDATE
During 2023, Surge successfully drilled a total of 70 gross (64.5 net) wells spending a total of
The 2023 drilling program consisted of 35 gross (35.0 net) wells in the Sparky core area and 35 gross (29.5 net) wells in SE Saskatchewan. Included in the Sparky drilling program were 3 gross (3.0 net) multi-lateral wells in
In Q4/23 Surge achieved an average production rate of 25,050 boepd (86 percent liquids), exceeding the Company's 2023 public guidance production exit rate of 25,000 boepd. Additionally, Surge achieved record annual production in 2023 of 24,438 boe/d (86 percent liquids), an increase of 15 percent over 2022 average production of 21,262 boepd.
The Company achieved record annual production volumes in both its Sparky and
During 2023, Surge safely executed 8 operated gas plant and oil battery turnarounds at Valhalla, Provost, Betty Lake, Lakeview and Steelman. In addition, the Company experienced 4 additional turnarounds at facilities operated by third parties (including the Sexsmith, Keyera, Steel Reef and TCPL gas plant turnarounds). Although several of these turnarounds were budgeted for by the Company, the impact of the unscheduled turnarounds, in addition to non-core dispositions, reduced production for 2023 by approximately 450 boepd.
Surge has continued the Company's operational momentum into early 2024, with 4 drilling rigs active in its Sparky and
In the Sparky core area, Surge's 2024 capital program will consist of 25 gross (25.0 net) net single-leg frac'ed Sparky horizontal wells, 8 gross (8.0 net) net multi-leg Sparky wells, and 4 gross (4.0 net) horizontal wells in the
The Company commenced Surge's winter drilling program in December of 2023, and has now completed the drilling of 14 gross (14.0 net) Sparky locations and 15 gross (14.5 net) wells in
2023 YEAR-END RESERVES
The Company's reserves were independently evaluated by Sproule in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101") effective
The following tables summarize Surge's working interest oil, natural gas liquids and natural gas reserves and the net present values ("NPV") of future net revenue for these reserves (before taxes) using forecast prices and costs as evaluated in the Sproule reserves report. The evaluation is based on Sproule's forecast pricing and exchange rates at
RESERVES SUMMARY AND NET PRESENT VALUE
Gross Reserves(a) | Crude Oil (Mbbl)(b) | Natural (MMcf)(c) | Oil Equivalent (Mboe) | Before Tax NPV of Future Net | |||
5% ($MM) | 10% ($MM) | 15% ($MM) | |||||
Proved: | |||||||
Proved Producing | 37,864 | 29,696 | 42,814 | 966 | 858 | 766 | |
Proved Non-Producing | 1,667 | 1,639 | 1,940 | 53 | 44 | 38 | |
Proved Undeveloped | 33,959 | 37,262 | 40,170 | 705 | 519 | 390 | |
Total Proved | 73,491 | 68,597 | 84,924 | 1,724 | 1,421 | 1,193 | |
Probable | 27,025 | 28,405 | 31,760 | 859 | 638 | 498 | |
Total Proved Plus Probable | 100,516 | 97,002 | 116,683 | 2,583 | 2,059 | 1,691 |
a) | Amounts may not add due to rounding. |
b) | Includes light, medium, heavy and natural gas liquids. |
c) | Includes non-associated and natural gas, solution gas and coal bed methane. |
d) | Total ADR (Abandonment, Decommissioning, Reclamation) is included in the reserves report, as it is best practice as stated in the COGE Handbook. |
FUTURE DEVELOPMENT CAPITAL ("FDC")
Total Proved | Total Proved | ||
($MM) | ($MM) | ||
2024 | 130 | 138 | |
2025 | 207 | 233 | |
2026 | 208 | 237 | |
2027 | 163 | 209 | |
2028 | 117 | 171 | |
Remaining | 35 | 51 | |
Total (Undiscounted) | 860 | 1,039 | |
Total (Discounted at 10%) | 679 | 806 |
F&D AND FD&A COSTS
2023 | 3-Year Average | |
F&D Costs, including total change in FDC (a) Proved Developed Producing | ||
Total Proved | ||
Total Proved + Probable | ||
FD&A Costs, including total change in FDC (b) Proved Developed Producing | ||
Total Proved | ||
Total Proved + Probable |
a) | 2023 FDC costs calculated using capital of |
b) | 2023 FDC costs calculated using capital of |
NET ASSET VALUE
PDP | TP | ||||
Reserve Value NPV10 BT ($mm) | 858 | 1,421 | 2,059 | ||
Net Debt ($mm) | (290) | (290) | (290) | ||
Total Net Assets ($mm) | 568 | 1,131 | 1,769 | ||
Basic Shares Outstanding (mm) | 100.3 | 100.3 | 100.3 | ||
Estimated NAV per Basic Share ($/share) | 5.66 | 11.27 | 17.63 | ||
SUMMARY OF PRICING AND INFLATION RATE ASSUMPTIONS
As at
Canadian Light | Natural Gas | |||||||||
WTI | Sweet Crude | Select (WCS) Crude | AECO-C | Exchange Rate | ||||||
Sproule | 40° API | 20.5 API | Spot | |||||||
Forecast(a) | ($US/bbl) | ($Cdn/bbl) | ($Cdn/bbl) | ($Cdn/mmbtu) | ($US/$Cdn) | |||||
Year | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
Forecast | ||||||||||
2024 | 0.750 | 0.800 | ||||||||
2025 | 0.750 | 0.800 | ||||||||
2026 | 0.750 | 0.800 | ||||||||
2027 | 0.750 | 0.800 | ||||||||
2028 | 0.750 | 0.800 | ||||||||
2029 | 0.750 | 0.800 | ||||||||
2030 | 0.750 | 0.800 | ||||||||
2031 | 0.750 | 0.800 | ||||||||
2032 | 0.750 | 0.800 | ||||||||
2033 | 0.750 | 0.800 |
a) Prices escalate at two percent after 2033, with the exception of foreign exchange which stays flat. |
OUTLOOK: PREMIUM ASSET QUALITY DRIVES SUPERIOR RETURNS
Surge is a publicly traded intermediate oil company focused on enhancing shareholder returns through free cash flow generation. The Company's defined operating strategy is based on owning and developing high quality, large OOIP, conventional light and medium gravity crude oil reservoirs, and using proven technology to enhance ultimate oil recoveries.
Surge has now assembled dominant operational positions in two of the top four crude oil plays in
In the first half of 2024, Surge continues to execute an active drilling program in both the Sparky and
Surge is well positioned to continue delivering attractive shareholder returns in 2024 and beyond, based on the following key corporate fundamentals:
___________________________ |
4 Source: |
- Ownership of more than 3.1 billion of net (internally estimated) OOIP; with an estimated 7.7 percent recovery factor;
- Estimated 2024 average production 0f 25,000 boepd (87 percent liquids);
- Estimated 24 percent annual corporate decline1;
- Estimated 2024 cash flow from operating activities of
$295 million 5; $48 million annual cash dividend ($0.48 per share annual dividend, paid monthly);- More than 1,000 (net) internally estimated drilling locations providing a 13-year drilling inventory3;
$1.2 billion in tax pools (approximate 4 year tax horizon atUS$75 WTI pricing); and- Total Proved plus Probable net asset value ("NAV") of
$17.63 per share and Total Proved NAV of$11.27 per share1.
With cash flow strategically allocated between high rate of return capital expenditures, debt repayment, and cash dividends paid to shareholders, Management currently forecasts that the Company will achieve its previously announced Phase 2 return of capital net debt target in 2H/24, based on current crude oil pricing.
FORWARD LOOKING STATEMENTS:
This press release contains forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. These 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 statements.
More particularly, this press release contains statements concerning: Surge's declared focus and primary goals; Surge's reserves, reserve life index, drilling inventory and locations and decline rates; the Company's commitment to abandonment and reclamation work; Surge's planned 2024 drilling program and focus; management's belief that Surge is well positioned to deliver attractive shareholder returns; the Company's tax horizon; and management's expectations regarding the timing of the Company achieving Phase 2 of its return of capital net debt target.
The forward-looking statements are based on certain key expectations and assumptions made by Surge, including expectations and assumptions the performance of existing wells and success obtained in drilling new wells; anticipated expenses, cash flow and capital expenditures; the application of regulatory and royalty regimes; prevailing commodity prices and economic conditions; development and completion activities; the performance of new wells; the successful implementation of waterflood programs; the availability of and performance of facilities and pipelines; the geological characteristics of Surge's properties; the successful application of drilling, completion and seismic technology; the determination of decommissioning liabilities; prevailing weather conditions; exchange rates; licensing requirements; the impact of completed facilities on operating costs; the availability and costs of capital, labour and services; and the creditworthiness of industry partners.
Although Surge believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Surge can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the condition of the global economy, including trade, public health (including the impact of COVID-19) and other geopolitical risks; risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks); commodity price and exchange rate fluctuations and constraint in the availability of services, adverse weather or break-up conditions; uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures; and failure to obtain the continued support of the lenders under Surge's bank line. Certain of these risks are set out in more detail in Surge's AIF dated
The forward-looking statements contained in this press release are made as of the date hereof and Surge undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
____________________________ |
5 Pricing Assumptions: |
Oil and Gas Advisories
The term "boe" means barrel of oil equivalent on the basis of 1 boe to 6,000 cubic feet of natural gas. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 1 boe for 6,000 cubic feet of natural gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. "Boe/d" and "boepd" mean barrel of oil equivalent per day. Bbl means barrel of oil and "bopd" means barrels of oil per day. NGLs means natural gas liquids.
This press release contains certain oil and gas metrics and defined terms which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar metrics/terms presented by other issuers and may differ by definition and application. All oil and gas metrics/terms used in this document are defined below:
Original Oil in Place ("OOIP") means
Net Asset Value is calculated as reserve value discounted at 10% on a BTax basis, less Surge's net debt at
PDP F&D (Finding & Development) is calculated on the Capital spent for 2023 development of all properties (other than those Acquired or Disposed of in 2023), divided by the sum of all reserve additions other than those from Acquisitions & Dispositions.
Recycle Ratio is equal to F&D divided by netback.
Finding, Development and Acquisition (FD&A) is the sum of the Capital spent for 2023 development including Acquisition & Divestiture properties, plus 2023 total Acquisition & Disposition capital, plus the delta on Future Development Costs (from 2022YE vs 2023YE), divided by the sum of all reserve additions including those from Acquisitions & Dispositions.
Reserve Life Index is calculated as total Company share reserves divided by Surge's estimated 2024 production (25,000 boe/d).
Sproule's 2023YE reserves have a PDP decline of 29 percent and a P+PDP decline of 26 percent.
Drilling Inventory
This press release discloses drilling locations in two categories: (i) booked locations; and (ii) unbooked locations. Booked locations are proved locations and probable locations derived from an internal evaluation using standard practices as prescribed in the Canadian Oil and Gas Evaluations Handbook and account for drilling locations that have associated proved and/or probable reserves, as applicable.
Unbooked locations are internal estimates based on prospective acreage and assumptions as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Unbooked locations have been identified by Surge's internal certified Engineers and Geologists (who are also Qualified Reserve Evaluators) as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which the Company actually drills wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been de-risked by drilling existing wells in relative close proximity to such unbooked drilling locations, the majority of other unbooked drilling locations are farther away from existing wells where Management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production.
Assuming a
Assuming a
Assuming a
Surge's internally used type curves were constructed using a representative, factual and balanced analog data set, as of
Non-GAAP and Other Financial Measures
This press release includes references to non-GAAP and other financial measures used by the Company to evaluate its financial performance, financial position or cash flow. These specified financial measures include non-GAAP financial measures and non-GAAP ratios, are not defined by IFRS and therefore are referred to as non-GAAP and other financial measures. Certain secondary financial measures in this press release – namely, "adjusted funds flow", "adjusted funds flow per share", "adjusted funds flow per boe", "free cash flow", "net debt", "net operating expenses", "net operating expenses per boe", "operating netback", and "operating netback per boe" are not prescribed by GAAP. These non-GAAP and other financial measures are included because management uses the information to analyze business performance, cash flow generated from the business, leverage and liquidity, resulting from the Company's principal business activities and it may be useful to investors on the same basis. None of these measures are used to enhance the Company's reported financial performance or position. The non-GAAP and other financial measures do not have a standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. They are common in the reports of other companies but may differ by definition and application. All non-GAAP and other financial measures used in this document are defined below, and as applicable, reconciliations to the most directly comparable GAAP measure for the year ended
Adjusted Funds Flow & Adjusted Funds Flow Per Share
Adjusted funds flow is a non-GAAP financial measure. The Company adjusts cash flow from operating activities in calculating adjusted funds flow for changes in non-cash working capital, decommissioning expenditures, and cash settled transaction and other costs. Management believes the timing of collection, payment or incurrence of these items involves a high degree of discretion and as such may not be useful for evaluating Surge's cash flows.
Changes in non-cash working capital are a result of the timing of cash flows related to accounts receivable and accounts payable, which management believes reduces comparability between periods. Management views decommissioning expenditures predominately as a discretionary allocation of capital, with flexibility to determine the size and timing of decommissioning programs to achieve greater capital efficiencies and as such, costs may vary between periods. Transaction and other costs represent expenditures associated with property acquisitions and dispositions, debt restructuring and employee severance costs, which management believes do not reflect the ongoing cash flows of the business, and as such reduces comparability. Each of these expenditures, due to their nature, are not considered principal business activities and vary between periods, which management believes reduces comparability.
Adjusted funds flow per share is a non-GAAP ratio, calculated using the same weighted average basic and diluted shares used in calculating income per share.
Three Months Ended | Years Ended | |||
($000s except per share amounts) | 2023 | 2022 | 2023 | 2022 |
Cash flow from operating activities | 79,712 | 78,975 | 266,141 | 276,125 |
Change in non-cash working capital | (11,261) | (14,152) | 9,350 | 4,271 |
Decommissioning expenditures | 8,255 | 2,367 | 15,560 | 7,895 |
Cash settled transaction and other costs | 295 | 4,617 | 795 | 5,264 |
Adjusted funds flow | 77,001 | 71,807 | 291,846 | 293,555 |
Per share - basic |
The following table reconciles cash flow from operating activities to adjusted funds flow and adjusted funds flow per share:
Free Cash Flow
Free cash flow is a non-GAAP financial measure, calculated as cash flow from operating activities, before changes in non-cash working capital, less expenditures on property, plant and equipment and dividends paid. Management uses free cash flow to determine the amount of funds available to the Company for future capital allocation decisions.
Net Debt
Net debt is a non-GAAP financial measure, calculated as bank debt, term debt, plus the liability component of the convertible debentures plus current assets, less current liabilities, however, excluding the fair value of financial contracts, decommissioning obligations, and lease and other obligations. There is no comparable measure in accordance with IFRS for net debt. This metric is used by management to analyze the level of debt in the Company including the impact of working capital, which varies with the timing of settlement of these balances.
($000s) | As at | As at | As at |
Accounts receivable | 53,354 | 74,624 | 60,623 |
Prepaid expenses and deposits | 5,355 | 3,050 | 3,032 |
Accounts payable and accrued liabilities | (85,390) | (83,978) | (93,373) |
Dividends payable | (4,013) | (4,013) | (3,375) |
Bank debt | (42,797) | (11,900) | (30,597) |
Term debt | (178,731) | (230,624) | (256,032) |
Convertible debentures | (37,848) | (33,454) | (32,491) |
Net Debt | (290,070) | (286,295) | (352,213) |
Net Operating Expenses & Net Operating Expenses per boe
Net operating expenses is a non-GAAP financial measure, determined by deducting processing income, primarily generated by processing third party volumes at processing facilities where the Company has an ownership interest. It is common in the industry to earn third party processing revenue on facilities where the entity has a working interest in the infrastructure asset. Under IFRS this source of funds is required to be reported as revenue. However, the Company's principal business is not that of a midstream entity whose activities are dedicated to earning processing and other infrastructure payments. Where the Company has excess capacity at one of its facilities, it will look to process third party volumes as a means to reduce the cost of operating/owning the facility. As such, third party processing revenue is netted against operating costs when analyzed by management.
Net operating expenses per boe is a non-GAAP ratio, calculated as net operating expenses divided by total barrels of oil equivalent produced during a specific period of time.
Three Months Ended | Years Ended | |||
($000s) | 2023 | 2022 | 2023 | 2022 |
Operating expenses | 47,602 | 44,570 | 196,256 | 160,133 |
Less: processing income | (1,734) | (1,926) | (7,780) | (7,242) |
Net operating expenses | 45,868 | 42,644 | 188,476 | 152,891 |
Net operating expenses ($ per boe) | 19.90 | 20.98 | 21.13 | 19.70 |
Operating Netback, Operating Netback per boe, and Adjusted Funds Flow per boe
Operating netback is a non-GAAP financial measure, calculated as petroleum and natural gas revenue and processing and other income, less royalties, realized gain (loss) on commodity and FX contracts, operating expenses, and transportation expenses. Operating netback per boe is a non-GAAP ratio, calculated as operating netback divided by total barrels of oil equivalent produced during a specific period of time. There is no comparable measure in accordance with IFRS. This metric is used by management to evaluate the Company's ability to generate cash margin on a unit of production basis.
Adjusted funds flow per boe is a non-GAAP ratio, calculated as adjusted funds flow divided by total barrels of oil equivalent produced during a specific period of time.
Operating Netback & Adjusted Funds Flow are Calculated on a per unit basis as follows:
Three Months Ended | Years Ended | |||
($000s) | 2023 | 2022 | 2023 | 2022 |
Petroleum and natural gas revenue | 168,453 | 165,808 | 670,375 | 727,228 |
Processing and other income | 1,734 | 1,926 | 7,780 | 7,242 |
Royalties | (31,235) | (27,449) | (119,513) | (127,548) |
Realized gain (loss) on commodity and FX contracts | 2,351 | (9,580) | (3,164) | (98,145) |
Operating expenses | (47,602) | (44,570) | (196,256) | (160,133) |
Transportation expenses | (3,411) | (2,846) | (13,755) | (11,272) |
Operating netback | 90,290 | 83,289 | 345,467 | 337,372 |
G&A expense | (5,041) | (4,190) | (19,158) | (16,626) |
Interest expense | (8,248) | (7,292) | (34,463) | (27,191) |
Adjusted funds flow | 77,001 | 71,807 | 291,846 | 293,555 |
Barrels of oil equivalent (boe) | 2,304,615 | 2,032,892 | 8,920,018 | 7,760,455 |
Operating netback ($ per boe) | ||||
Adjusted funds flow ($ per boe) |
Neither the TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.
SOURCE
© Canada Newswire, source