Petrus Resources Announces First Quarter Capital Budget and Outlook for 2020
January 14 2020 - 06:00AM
Petrus Resources Ltd. ("Petrus" or the "Company") (TSX: PRQ) is
pleased to provide its first quarter capital budget and outlook for
2020. With the risk of volatility in the price of Canadian
light oil and natural gas, the Company believes that it is prudent
to maintain a disciplined capital budget that is flexible from an
operational and financial perspective. Petrus’ Board of
Directors has approved a first quarter 2020 capital budget of $9.0
million. Petrus will continue to monitor the Canadian
commodity price environment and will evaluate subsequent quarter
capital spending as the year progresses. The first quarter
capital budget is focused on the highest rates of return, lowest
risk, condensate rich drilling opportunities in the Company’s
inventory at Ferrier, Alberta. Petrus is focused on designing
its 2020 capital plan to invest capital systematically each quarter
within funds flow, permitting excess funds each quarter to reduce
debt.
Petrus’ Board of Directors has approved a first
quarter 2020 capital budget of $9.0 million to drill two (2.0 net)
Cardium wells in the Ferrier area. First quarter funds flow
combined with proceeds from the previously announced non-core asset
disposition are expected to total $9.5 million which will permit
excess funds to be directed toward debt repayment. We
estimate that the wells will each have payouts of less than one
year. The commodity price assumptions used for the first
quarter 2020 capital budget were an average price of $2.18 C$/GJ
for natural gas (AECO) and $62.81 US$/bbl for oil (WTI). Our
estimated first quarter average differential for Western Canadian
light oil is estimated at $6.72 US$/bbl.
Petrus is committed to maintaining its financial
flexibility and the Company will determine subsequent quarter
capital spending as the year progresses. For the coming year
we have significant optionality in the number, the commodity
composition and the location of drilling opportunities. Given
our growing infrastructure system, Petrus expects that it will
drill the majority of its anticipated 2020 capital plan from
existing surface leases which will not only decrease cost and
environmental disturbance, but can increase flexibility through
reduction of lead time required to begin drilling. Management
anticipates that the 2020 capital plan will be funded by funds
flow, and will continue to systematically reduce debt each quarter
by approximately $1 to $2 million. The objectives of the 2020
capital plan are to reduce debt, maintain or grow production, grow
funds flow per share and increase the Company’s liquids
weighting.
ABOUT PETRUSPetrus is a public
Canadian oil and gas company focused on property exploitation,
strategic acquisitions and risk-managed exploration in Alberta.
For further information, please
contact:Neil Korchinski, P.Eng.President and Chief
Executive OfficerT: 403-930-0889E:
nkorchinski@petrusresources.com
READER ADVISORIES
This press release contains forward-looking
statements. More particularly, this press release contains
statements concerning plans related to: (i) the sources of funds
for and focus of Petrus' 2020 capital budget, including its first
quarter 2020 capital budget; (ii) the objectives of Petrus' 2020
capital budget, including its first quarter 2020 capital budget;
(iii) the source of and amount of expected debt reduction; (iv) the
estimated payout and production mix of Cardium condensate wells;
(v) the number of wells expected to be included in Petrus' 2020
capital budget, including its first quarter 2020 capital budget;
(vi) Petrus' ability to reduce or increase capital spending; (vii)
Petrus' total liquid production; (viii) the release date of Petrus'
annual reserve information as well as its annual financial results;
(ix) the results of Petrus' 2020 capital budget, budget, including
its first quarter 2020 capital budget; Petrus' estimated first
quarter 2020 funds flow; (x) the payout of Cardium wells and the
impact of the development thereof on Petrus' condensate and light
oil production weighting and funds flow. The forward-looking
statements contained in this document are based on certain key
expectations and assumptions made by Petrus, including: (i) with
respect to capital expenditures, generally, and at particular
locations, the availability of adequate and secure sources of
funding for Petrus' proposed capital expenditure program and the
availability of appropriate opportunities to deploy capital; (ii)
with respect to drilling plans, the availability of drilling rigs,
expectations and assumptions concerning the success of future
drilling and development activities and prevailing commodity
prices; (iii) with respect to Petrus' ability to execute on its
exploration and development program, the performance of Petrus'
personnel, the availability of capital and prevailing commodity
prices; and (iv) with respect to anticipated production, the
ability to drill and operate wells on an economic basis, the
performance of new and existing wells and accounting risks
typically associated with oil and gas exploration and production;
(v) oil and gas prices; (vi) currency exchange rates; (vii) royalty
rates; (viii) operating costs; (ix) transportation costs; and (x)
the availability of opportunities to deploy capital effectively.
Although Petrus 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 Petrus 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, the
failure to obtain necessary regulatory approvals, 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; health, safety and environmental risks;
commodity price and exchange rate fluctuations; and uncertainties
resulting from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures).
Readers are cautioned that the foregoing list is not exhaustive of
all possible risks and uncertainties.
The forward-looking statements contained in this
document are made as of the date hereof and Petrus 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.
The term barrels of oil equivalent ("boe") may
be misleading, particularly if used in isolation. A boe conversion
ratio of six thousand cubic feet of natural gas to one boe (6
mcf/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. All boe conversions in this
report are derived from converting gas to oil in the ratio of six
thousand cubic feet of gas to one barrel of oil. Given that the
value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
of 6:1, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value. The forward-looking statements contained in
this document are made as of the date hereof and Petrus 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.
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