PRQ:CC - Petrus Resources Announces First Quarter 2024 Financial and Operating Results

May, 08 2024 06:30 PM Petrus Resources Ltd.

CALGARY, Alberta, May 08, 2024 (GLOBE NEWSWIRE) -- Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) is pleased to report financial and operating results as at and for the three months ended March 31, 2024.

Q1 2024 HIGHLIGHTS:

Production – Production was 9,783 boe/d, up 3% from 9,474 boe/d ⁽¹⁾ in the fourth quarter of 2023. Notably, oil production was up 26% quarter over quarter. The increase was due to a full quarter of production from the wells completed in the fourth quarter of 2023.
Commodity Prices – Total realized price was $31.42/boe in the first quarter of 2024 compared to $30.60/boe in the fourth quarter of 2023, up 3% as higher oil weighting offset lower pricing.
Funds Flow ⁽²⁾ – Generated funds flow of $16.3 million ($0.13 per share ⁽³⁾ ) for the first quarter of 2024 compared to $16.5 million ($0.13 per share) in the fourth quarter of 2023.
Capital Activity – Invested $12.3 million of capital during the first quarter of 2024, drilling 10 gross (5.3 net) wells; of these, 3 gross (3.0 net wells) were operated. Due to the timing of capital activity, production from these 5.3 net wells was not realized in the first quarter.
Dividends – Regular monthly dividend of $0.01 per share, for a total of $3.7 million, paid during the first quarter of 2024.
Net Debt ⁽²⁾ – Maintained net debt at $63.1 million at the end of the first quarter of 2024. The net debt to annualized funds flow ratio ⁽³⁾ was 0.9x at March 31, 2024.

OUTLOOK ⁽⁴⁾

The Company expects to realize a full quarter of production in the second quarter from the 2.3 net non-operated wells drilled in the first quarter that are now on stream. Petrus anticipates returning to the 2024 capital program in late spring with completion operations on the 3 operated wells drilled in January tentatively scheduled for June.

For the balance of 2024, the Company has hedged approximately 44% of forecasted production at $2.94/GJ for natural gas and CAD$97/bbl for oil. With this strategy, the Company is well positioned to continue its monthly dividend payment. As always, Petrus will closely monitor changing market conditions and is ready to adjust its capital program accordingly, guided by its commitment to delivering sustainable returns to shareholders.

⁽¹⁾ Disclosure of production on a per boe basis consists of the constituent product types and their respective quantities. Refer to "BOE Presentation" for further details.
⁽²⁾ Non-GAAP measure. Refer to "Non-GAAP and Other Financial Measures".
⁽³⁾ Non-GAAP ratio. Refer to "Non-GAAP and Other Financial Measures".
⁽⁴⁾ Refer to "Advisories - Forward-Looking Statements".

SELECTED FINANCIAL INFORMATION

OPERATIONS
Three months ended Mar. 31, 2024
Three months ended Mar. 31, 2023
Three months ended Dec. 31, 2023
Three months ended Sept. 30, 2023
Three months ended Jun. 30, 2023
Average Production





Natural gas (mcf/d)
40,174

45,237

39,891

42,045

44,010

Oil (bbl/d)
1,529

2,192

1,218

1,316

1,670

NGLs (bbl/d)
1,557

1,654

1,607

1,556

1,486

Total (boe/d)
9,783

11,385

9,474

9,880

10,492

Total (boe) ⁽¹⁾
890,267

1,024,645

871,567

908,985

954,738

Light oil weighting
16
%
19
%
13
%
16
%
18
%
Realized Prices





Natural gas ($/mcf)
2.54

3.78

2.76

2.81

2.64

Oil ($/bbl)
90.38

94.63

98.63

99.33

91.69

NGLs ($/bbl)
43.09

47.55

37.26

37.09

34.82

Total realized price ($/boe)
31.42

40.16

30.60

31.05

30.59

Royalty income
0.07

0.16

0.09

0.06

0.06

Royalty expense
(3.89
)
(6.38
)
(4.78
)
(3.37
)
(3.66
)
Gain on risk management activities
—

1.45

—

—

0.03

Net oil and natural gas revenue ($/boe)
27.60

35.39

25.91

27.74

27.02

Operating expense
(6.76
)
(7.26
)
(5.07
)
(6.70
)
(5.83
)
Transportation expense
(1.81
)
(2.05
)
(1.46
)
(1.54
)
(1.40
)
Operating netback ⁽²⁾ ($/boe)
19.03

26.08

19.38

19.50

19.79

Realized gain on financial derivatives ($/boe)
2.90

1.77

1.99

1.21

3.56

Other income (cash)
0.05

0.16

(0.18
)
0.04

0.04

General & administrative expense
(1.32
)
(1.20
)
(0.37
)
(1.27
)
(1.55
)
Cash finance expense
(1.78
)
(1.11
)
(1.43
)
(1.26
)
(1.33
)
Decommissioning expenditures
(0.61
)
(0.13
)
(0.43
)
(0.34
)
(0.58
)
Funds flow & corporate netback ($/boe) ⁽²⁾
18.27

25.57

18.96

17.88

19.93







FINANCIAL (000s except $ per share)
Three months ended Mar. 31, 2024
Three months ended Mar. 31, 2023
Three months ended Dec. 31, 2023
Three months ended Sept. 30, 2023
Three months ended Jun. 30, 2023
Oil and natural gas sales
28,039

41,319

26,747

28,273

29,266

Net income (loss)
(5,333
)
17,273

39,708

(11,293
)
5,043

Net income (loss) per share





Basic
(0.04
)
0.14

0.32

(0.09
)
0.04

Fully diluted
(0.04
)
0.14

0.32

(0.09
)
0.04

Funds flow ⁽²⁾
16,272

26,216

16,525

16,243

19,040

Funds flow per share ⁽²⁾





Basic
0.13

0.21

0.13

0.13

0.15

Fully diluted
0.13

0.21

0.13

0.13

0.15

Capital expenditures
12,343

29,820

32,029

21,617

3,380

Acquisitions (dispositions)
—

—

—

—

(100
)
Weighted average shares outstanding





Basic
124,299

123,416

123,812

123,743

123,752

Fully diluted
124,299

127,358

124,840

123,743

127,040

As at period end





Common shares outstanding





Basic
124,259

123,239

124,266

123,867

123,849

Fully diluted
134,484

133,377

134,542

134,436

134,423

Total assets
427,574

403,276

437,842

380,100

383,231

Non-current liabilities
59,995

68,056

60,926

59,687

62,630

Net debt ⁽²⁾
63,114

51,754

62,596

42.251

36.186

⁽¹⁾ Disclosure of production on a per boe basis consists of the constituent product types and their respective quantities. Refer to "BOE Presentation" for further details.

⁽²⁾ Non -GAAP ratio or non-GAAP measure. Refer to "Non-GAAP and Other Financial Measures".

OPERATIONS UPDATE

First quarter average production by area was as follows:

For the three months ended March 31, 2024
Ferrier
Foothills
Central Alberta
Total
Natural gas (mcf/d)
34,307
1,279
4,588
40,174
Oil (bbl/d)
1,204
84
241
1,529
NGLs (bbl/d)
1,409
3
145
1,557
Total (boe/d)
8,331
300
1,152
9,783

First quarter average production was 9,783 boe/d, up 3% quarter over quarter compared to 9,474 boe/d in the fourth quarter of 2023. With the North Ferrier to Ferrier pipeline complete, Petrus has combined the two areas to be one core Ferrier area.

Production was 11,385 boe/d in the first quarter of 2023. The decrease in production from the prior year comparative period was mainly due to a decrease in drilling and completion activity, natural declines and uneconomic wells shut-in due to low gas prices.

CAPITAL EXPENDITURES

Capital expenditures (excluding acquisitions) totaled $12.3 million in the first quarter of 2024, compared to $29.8 million in the prior year comparative period. The majority of the capital spending in the first quarter of 2024 was related to the drilling and completion of 10 gross (5.3 net) wells in the Ferrier area. Due to the timing of capital activity, production from these wells was not realized in the first quarter.

The following table shows capital expenditures (excluding acquisitions) for the reporting periods indicated. All capital is presented before decommissioning obligations.

Capital Expenditures ($000s)
Three months ended March 31, 2024
Three months ended March 31, 2023
Drill and complete
9,519
24,264
Oil and gas equipment
2,244
4,605
Geological
—
515
Land and lease
—
160
Office
6
17
Capitalized general and administrative expense
574
259
Total capital expenditures
12,343
29,820
Gross (net) wells drilled
10 (5.3)
7 (7.0)

FIRST QUARTER 2024 CONFERENCE CALL

Date: May 9, 2024
Time: 9:00am (mountain time)
Please refer the events page on Petrus' website for further conference call details and links: www.petrusresources.com/events

ANNUAL GENERAL MEETING

The Company's Annual General Meeting will be held at 240FOURTH (previously BP Centre) Conference Room A, 240, 4th Ave SW Calgary, Alberta, on Wednesday May 29, 2024 at 1:00 p.m. (mountain time).
Please refer the events page on Petrus' website for further AGM details and links: www.petrusresources.com/events

An updated corporate presentation can be found on the Company's website at www.petrusresources.com .

For further information, please contact:
Ken Gray, P.Eng.
President and Chief Executive Officer
T: (403) 930-0889
E: kgray@petrusresources.com

NON-GAAP AND OTHER FINANCIAL MEASURES

This press release makes reference to the terms "operating netback" (on an absolute and $/boe basis), "corporate netback" (on an absolute and $/boe basis), "funds flow" (on an absolute, per share (basic and fully diluted) and $/boe basis), "net debt" and "net debt to annualized funds flow ratio". These non-GAAP and other financial measures are not recognized measures under GAAP (IFRS) and do not have a standardized meaning prescribed by GAAP (IFRS). Accordingly, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. These non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS as indicators of our performance. Management uses these non-GAAP and other financial measures for the reasons set forth below.

Operating Netback

Operating netback is a common non-GAAP financial measure used in the oil and natural gas industry which is a useful supplemental measure to evaluate the specific operating performance by product type at the oil and natural gas lease level. The most directly comparable GAAP measure to operating netback is oil and natural gas sales. Operating netback is calculated as oil and natural gas sales less royalty expenses, operating expenses and transportation expenses, plus or minus the gain (loss) on risk management activities. See below for a reconciliation of operating netback to oil and natural gas sales.

Operating netback ($/boe) is a non-GAAP ratio used in the oil and natural gas industry which is a useful supplemental measure to evaluate the specific operating performance by product type at the oil and natural gas lease level. It is calculated as operating netbacks divided by weighted average daily production on a per boe basis. See below.

Corporate Netback and Funds Flow
Corporate netback or funds flow is a common non-GAAP financial measure used in the oil and natural gas industry which evaluates the Company’s profitability at the corporate level. Corporate netback and funds flow are used interchangeably. Petrus analyzes these measures on an absolute value and on a per unit (boe) and per share (basic and fully diluted) basis as non-GAAP ratios. Management believes that funds flow and corporate netback provide information to assist a reader in understanding the Company's profitability relative to current commodity prices. They are calculated as the operating netback less general and administrative expense, cash finance expense, decommissioning expenditures, plus other income and the realized gain (loss) on financial derivatives . See below for a reconciliation of funds flow and corporate netback to oil and natural gas sales.

Corporate netback ($/boe) or funds flow ($/boe) is a non-GAAP ratio used in the oil and natural gas industry which evaluates the Company’s profitability at the corporate level. Management believes that funds flow ($/boe) or corporate netback ($/boe) provide information to assist a reader in understanding the Company's profitability relative to current commodity prices. It is calculated as corporate netbacks or funds flow divided by weighted average daily production on a per boe basis. See below.

Funds flow per share (basic and fully diluted) is comprised of funds flow divided by basic or fully diluted weighted average common shares outstanding.


Three months ended March 31, 2024
Three months ended Dec. 31, 2023
Three months ended Sept. 30, 2023
Three months ended Jun. 30, 2023
Three months ended March 31, 2023

$000s
$/boe
$000s
$/boe
$000s
$/boe
$000s
$/boe
$000s
$/boe
Oil and natural gas sales
28,039

31.50

26,747

30.70

28,273

31.11

29,266

30.65

41,319

40.33

Royalty expense
(3,461
)
(3.89
)
(4,167
)
(4.78
)
(3,061
)
(3.37
)
(3,492
)
(3.66
)
(6,534
)
(6.38
)
Gain on risk management activities
—

—

—

—

—

—

32

0.03

1,490

1.45

Net oil and natural gas revenue
24,578

27.61

22,580

25.92

25,212

27.74

25,806

27.02

36,275

35.40

Transportation expense
(1,615
)
(1.81
)
(1,271
)
(1.46
)
(1,401
)
(1.54
)
(1,341
)
(1.40
)
(2,102
)
(2.05
)
Operating expense
(6,018
)
(6.76
)
(4,419
)
(5.07
)
(6,086
)
(6.70
)
(5,566
)
(5.83
)
(7,434
)
(7.26
)
Operating netback
16,945

19.04

16,890

19.39

17,725

19.50

18,899

19.79

26,739

26.09

Realized gain on financial derivatives
2,583

2.90

1,737

1.99

1,102

1.21

3,398

3.56

1,814

1.77

Other income (expense) ⁽¹⁾
48

0.05

(161
)
(0.18
)
34

0.04

37

0.04

169

0.16

General & administrative expense
(1,178
)
(1.32
)
(319
)
(0.37
)
(1,158
)
(1.27
)
(1,476
)
(1.55
)
(1,230
)
(1.20
)
Cash finance expense
(1,581
)
(1.78
)
(1,246
)
(1.43
)
(1,148
)
(1.26
)
(1,269
)
(1.33
)
(1,140
)
(1.11
)
Decommissioning expenditures
(545
)
(0.61
)
(376
)
(0.43
)
(312
)
(0.34
)
(549
)
(0.58
)
(136
)
(0.13
)
Funds flow and corporate netback
16,272

18.28

16,525

18.97

16,243

17.88

19,040

19.93

26,216

25.58

⁽¹⁾ Excludes non-cash government grant related to decommissioning expenditures.

Net Debt

Net debt is a non-GAAP financial measure and is calculated as the sum of long term debt and working capital (current assets and current liabilities), excluding the current financial derivative contracts and current portion of the lease obligation and decommissioning obligation. Petrus uses net debt as a key indicator of its leverage and strength of its balance sheet. Net debt is reconciled, in the table below, to long-term debt which is the most directly comparable GAAP measure.

($000s)
As at March 31, 2024

As at Dec. 31, 2023

As at Sept. 30, 2023

As at Jun. 30, 2023

As at Mar. 31, 2023

Long-term debt
25,000

25,000

25,000

25,000

25,000

Current assets
(21,081
)
(30,805
)
(19,375
)
(28,150
)
(31,309
)
Current liabilities
61,099

61,755

40,636

30,032

50,336

Current financial derivatives
(716
)
8,374

(3,397
)
10,224

9,328

Current portion of lease obligation
(263
)
(258
)
(254
)
(249
)
(244
)
Current portion of decommissioning obligation
(925
)
(1,470
)
(359
)
(671
)
(1,357
)
Net debt
63,114

62,596

42,251

36,186

51,754

Net debt to annualized funds flow ratio is a non-GAAP ratio used as a key indicator of our leverage and strength of our balance sheet. It is calculated as net debt divided by funds flow for the relevant period.

ADVISORIES

Basis of Presentation
Financial data presented above has largely been derived from the Company’s financial statements, prepared in accordance with GAAP which require publicly accountable enterprises to prepare their financial statements using IFRS. Accounting policies adopted by the Company are set out in the notes to the audited consolidated financial statements as at and for the twelve months ended December 31, 2023. The reporting and the measurement currency is the Canadian dollar. All financial information is expressed in Canadian dollars, unless otherwise stated.

Forward-Looking Statements
Certain information regarding Petrus set forth in this press release contains forward-looking statements within the meaning of applicable securities law, that involve substantial known and unknown risks and uncertainties. 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. Such statements represent Petrus’ internal projections, estimates, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Petrus believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Petrus’ actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Petrus.

In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to: that we expect to realize a full quarter of production in the second quarter from the non-operated wells drilled in the first quarter; that we anticipate returning to our 2024 capital program in late spring with completion operations on the operated wells drilled in January tentatively scheduled for June; that with our current hedges for 2024, we are well positioned to continue our monthly dividend payment; that we will closely monitor changing market conditions and are ready to adjust our capital program accordingly, guided by our commitment to delivering sustainable returns to shareholders.

These forward-looking statements are subject to numerous risks and uncertainties, most of which are beyond the Company’s control, including: the impact of general economic conditions; volatility in market prices for crude oil, NGL and natural gas; industry conditions; currency fluctuation; changes in interest rates and inflation rates; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition; the lack of availability of qualified personnel or management; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury and/or increase our costs, decrease our production, or otherwise impede our ability to operate our business; extreme weather events, such as wild fires, floods, drought and extreme cold or warm temperatures, each of which could result in substantial damage to our assets and/or increase our costs, decrease our production, or otherwise impede our ability to operate our business; stock market volatility; ability to access sufficient capital from internal and external sources; that the amount of dividends that we pay may be reduced or suspended entirely; that we reduce or suspend the repurchase of shares under our NCIB; and the other risks and uncertainties described in the AIF. With respect to forward-looking statements contained in this press release, Petrus has made assumptions regarding: the amount of dividends that we will pay; the number of shares that we will repurchase; future commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment and services; effects of regulation by governmental agencies; the effects of inflation on our costs and profitability; future interest rates; and future operating costs. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide investors with a more complete perspective on Petrus’ future operations and such information may not be appropriate for other purposes. Petrus’ actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.

These forward-looking statements are made as of the date of this press release and the Company disclaims any intent or obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

BOE Presentation
The oil and natural gas industry commonly expresses production volumes and reserves on a barrel of oil equivalent (“boe”) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet to one barrel of oil. The intention is to sum oil and natural gas measurement units into one basis for improved measurement of results and comparisons with other industry participants. Petrus uses the 6:1 boe measure which is the approximate energy equivalence of the two commodities at the burner tip. Boe’s do not represent an economic value equivalence at the wellhead and therefore may be a misleading measure if used in isolation.

Abbreviations

$000’s

thousand dollars

$/bbl

dollars per barrel

$/boe

dollars per barrel of oil equivalent

$/GJ

dollars per gigajoule

$/mcf

dollars per thousand cubic feet

bbl

barrel

mbbl

thousand barrel

bbl/d

barrels per day

boe

barrel of oil equivalent

mboe

thousand barrel of oil equivalent

mmboe

million barrel of oil equivalent

boe/d

barrel of oil equivalent per day

gigajoule

GJ/d

gigajoules per day

mcf

thousand cubic feet

mcf/d

thousand cubic feet per day

mmcf/d

million cubic feet per day

bcf

billion cubic feet

NGLs

natural gas liquids

WTI

West Texas Intermediate

Company Name:	Petrus Resources Ltd.
Stock Symbol:	PRQ:CC
Market:	TSXC
Website:	petrusresources.com

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