CALGARY, AB, Aug. 28, 2020 /CNW/ - Altura Energy Inc.
("Altura" or the "Corporation") (TSXV: ATU) announces its financial
and operating results for the three and six months ended
June 30, 2020 and the renewal of its
credit facility. 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 six months ended June 30, 2020 appear below and should be read in
conjunction with the related financial statements and MD&A.
Operational and Financial Summary
|
Three Months
Ended
|
Six months
ended
|
|
June 30,
2020
|
March 31,
2020
|
June 30,
2019
|
June 30,
2020
|
June 30,
2019
|
OPERATING
|
|
|
|
|
|
Average daily
production
|
|
|
|
|
|
Heavy oil
(bbls/d)
|
213
|
667
|
1,016
|
440
|
1,210
|
Light & medium oil
(bbls/d)
|
-
|
8
|
-
|
4
|
34
|
Natural gas
(Mcf/d)
|
1,154
|
2,926
|
2,914
|
2,040
|
2,713
|
NGLs
(bbls/d)
|
30
|
87
|
88
|
59
|
68
|
Total
(boe/d)
|
435
|
1,250
|
1,591
|
843
|
1,764
|
Total boe/d per
million shares – diluted
|
4.0
|
11.5
|
14.4
|
7.7
|
16.0
|
Average realized
prices
|
|
|
|
|
|
Heavy oil
($/bbl)
|
21.39
|
33.06
|
62.83
|
30.24
|
56.36
|
Light & medium oil
($/bbl)
|
-
|
20.85
|
-
|
20.85
|
48.97
|
Natural gas
($/Mcf)
|
2.06
|
2.20
|
1.30
|
2.16
|
1.65
|
NGLs
($/bbl)
|
6.46
|
22.02
|
24.23
|
18.03
|
28.70
|
Total
($/boe)
|
16.36
|
24.46
|
43.89
|
22.37
|
43.24
|
($/boe)
|
|
|
|
|
|
Petroleum and natural
gas sales
|
16.36
|
24.46
|
43.89
|
22.37
|
43.24
|
Realized gain on
financial instruments
|
16.60
|
5.53
|
1.23
|
8.39
|
0.56
|
Royalties
|
0.28
|
(1.96)
|
(4.08)
|
(1.38)
|
(4.03)
|
Operating
|
(16.27)
|
(12.19)
|
(9.56)
|
(13.24)
|
(8.81)
|
Transportation
|
(2.46)
|
(2.49)
|
(4.92)
|
(2.48)
|
(4.25)
|
Operating
netback(1)
|
14.51
|
13.35
|
26.56
|
13.66
|
26.71
|
General and
administrative
|
(7.98)
|
(3.50)
|
(2.94)
|
(4.66)
|
(2.78)
|
Exploration
expense
|
-
|
-
|
-
|
-
|
(0.07)
|
Interest and financing
expense (cash)
|
(1.42)
|
(0.17)
|
(0.50)
|
(0.49)
|
(0.39)
|
Adjusted funds flow
per boe(1)
|
5.11
|
9.68
|
23.12
|
8.51
|
23.47
|
FINANCIAL
($000, except per share amounts)
|
|
|
|
|
Petroleum and natural
gas sales
|
647
|
2,783
|
6,353
|
3,430
|
13,806
|
Cash flow from
operating activities
|
512
|
1,183
|
3,568
|
1,695
|
5,858
|
Per share –
diluted
|
-
|
0.01
|
0.03
|
0.02
|
0.05
|
Adjusted funds
flow(1)
|
204
|
1,102
|
3,346
|
1,306
|
7,499
|
Per share –
diluted(1)
|
-
|
0.01
|
0.03
|
0.01
|
0.07
|
Net income
(loss)
|
(1,247)
|
(31,529)
|
1,044
|
(32,776)
|
1,973
|
Per share –
basic
|
(0.01)
|
(0.29)
|
0.01
|
(0.30)
|
0.02
|
Per share –
diluted(2)
|
(0.01)
|
(0.29)
|
0.01
|
(0.30)
|
0.02
|
Capital
expenditures
|
218
|
7,082
|
6,350
|
7,300
|
7,803
|
Property
disposition
|
(871)
|
-
|
-
|
(871)
|
-
|
Total capital
expenditures, net
|
(653)
|
7,082
|
6,350
|
6,429
|
7,803
|
Net
debt(1)
|
5,335
|
6,183
|
5,109
|
5,335
|
5,109
|
Common shares
outstanding (000)
|
|
|
|
|
|
End of period –
basic
|
108,921
|
108,921
|
108,921
|
108,921
|
108,921
|
Weighted average for
the period – basic(2)
|
108,921
|
108,921
|
108,921
|
108,921
|
108,921
|
Weighted average for
the period – diluted(2)
|
108,921
|
108,936
|
110,503
|
108,921
|
110,947
|
|
|
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.
|
2.
|
Basic weighted
average shares are used to calculate diluted per share amounts when
the Corporation is in a loss
position.
|
SECOND QUARTER 2020 REVIEW
Production volumes averaged 435 boe per day in the second
quarter, a 65% decrease from the first quarter of 2020.
Production in the quarter was impacted by Altura's voluntary
production curtailment of approximately 700 boe per day in response
to the severe decline in crude oil prices caused by the COVID-19
pandemic and OPEC production quota concerns. Altura curtailed
approximately 525 boe per day in April and as crude oil prices
continued to rapidly decline in April, Altura made the decision to
shut in all corporate production for the month of May. The
Corporation began restoring curtailed volumes in June as oil prices
improved, and production volumes increased to approximately 1,050
boe per day in July. Wet weather and third-party restrictions
delayed approximately 300 boe per day of production from three
wells that are expected to be back online in
mid-September.
Altura's realized heavy oil price decreased 35% to $21.39 per barrel in the second quarter compared
to $33.06 per barrel in the first
quarter of 2020 and decreased 66% compared to $62.83 per barrel in the second quarter of
2019.
The Corporation realized a gain on financial instruments of
$658,000 ($16.60 per boe) which reflected cash settlements
received on Western Canadian Select ("WCS") contracts.
Operating expenses in the second quarter were $16.27 per boe, compared to $12.19 per boe in the first quarter of
2020. The increase was mainly due to lower volumes from
the voluntary production curtailment. Transportation expenses
were $2.46 per boe, consistent with
$2.49 per boe in the first quarter of
2020.
The Corporation's operating netback1 averaged
$14.51 per boe, up 9% from the first
quarter of 2020 due to an increased gain on financial instruments
and lower royalty expenses, partially offset by lower crude oil
prices and higher operating expenses.
Adjusted funds flow1 was $0.2
million in the quarter, down 81% from the first quarter of
2020 due to lower production volumes, lower crude oil prices and
higher per unit operating expenses.
Altura received $88,000 under the
Canada Emergency Wage Subsidy in
the second quarter, which was applied against G&A
expenses.
Altura recorded a net loss of $1.2
million in the quarter due mainly to an unrealized loss on
financial instruments of $1.5
million, partially offset by a gain on property disposition
of $0.6 million.
On June 30, 2020, Altura divested
of a 1.375% working interest in the Corporation's production,
wells, lands and facilities for cash of $871,000 after transaction costs as outlined in
the Corporation's June 30, 2020 news
release.
Altura's net debt1 was $5.3
million as at June 30, 2020, a
decrease of $0.9 million from
March 31, 2020.
CREDIT FACILITY RENEWAL
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 ("BCAP") from the Export
Development Bank of Canada ("EDC")
(the "Term Loan"). The Operating Loan and the Term Loan
(collectively the "Credit Facilities") will provide Altura with
$9.0 million of total Credit
Facilities. Considering Altura's net debt of $5.3 million as at June
30, 2020, the Corporation has sufficient liquidity to
execute its business plan in the current volatile commodity
market. The next review date for the Credit Facilities has
been scheduled for May 31, 2021 but
may be set at an earlier or later date at the sole discretion of
the lender.
The Term Loan is a non-revolving term facility to be used
exclusively to provide additional liquidity to finance Altura's
business operations. It has a five-year maturity with no less
than 50% of amounts outstanding due on August 27, 2024 and the remaining balance due on
August 27, 2025.
The interest rate on the Credit Facilities is the Lender's prime
rate plus 4.5 percent per annum. Please refer to Altura's
second quarter of 2020 MD&A and financial statements for
additional information on the Credit Facilities.
___________________________
|
|
|
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.
|
HEDGING
Altura had the following crude oil contracts as at June 30, 2020 hedged to June 30, 2021:
Period
|
Commodity
|
Type of
Contract
|
Quantity
|
Pricing
Point
|
Contract
Price
|
Jul 1/20ꟷSep
30/20
|
Crude Oil
|
Fixed
|
300 bbls/d
|
WCS
|
CAD $43.75
|
Oct 1/20ꟷDec
31/20
|
Crude Oil
|
Fixed
|
300 bbls/d
|
WTI
|
CAD $71.35
|
Oct 1/20ꟷDec
31/20
|
Crude Oil
|
Fixed
|
300 bbls/d
|
WCS-WTI
Differential
|
CAD
($24.00)
|
Jan 1/21ꟷJun
30/21
|
Crude Oil
|
Fixed
|
100 bbls/d
|
WCS
|
CAD $32.25
|
Subsequent to June 30, 2020,
Altura entered into the following commodity contracts:
Period
|
Commodity
|
Type of
Contract
|
Quantity
|
Pricing
Point
|
Contract
Price
|
Jan 1/21ꟷJun
30/21
|
Crude Oil
|
Fixed
|
100 bbls/d
|
WCS
|
CAD $39.20
|
Sep 1/20ꟷOct
31/20
|
Natural
Gas
|
Fixed
|
1,000 GJ/d
|
AECO 5A
|
CAD $2.380
|
Nov
1/20ꟷMar/21
|
Natural
Gas
|
Fixed
|
1,000 GJ/d
|
AECO 5A
|
CAD $2.825
|
Apr 1/21ꟷJun
30/21
|
Natural
Gas
|
Fixed
|
1,000 GJ/d
|
AECO 5A
|
CAD $2.455
|
ENTICE UPDATE
The Entice exploration horizontal well was shut-in on
March 18, 2020 due to the severe
decline in oil prices and was placed back on production on
June 11, 2020 to continue the
production test. During this test, the well operated for 58
days and produced 1,500 barrels of 20° API oil, 33 MMcf of natural
gas, which was flared, and 6,850 barrels of water with 104%
cumulative completion load water recovered.
During the last 7 days of the production test, the water cut
dropped significantly from an average of 82% to a current average
of under 50%. This drop in water cut and the high gas to oil
ratio has created challenges with the current form of high-volume
artificial lift. The Corporation has shut-in the well and is
evaluating alternative forms of artificial lift before deciding to
continue the evaluation or suspend the well indefinitely.
Altura has acquired 89 gross (83 net) sections of land on this
exploratory play at Entice where vertical well data, combined with
extensive 3D seismic coverage, provided a means to identify and map
the hydrocarbon accumulation. Altura believes that the crude
oil gravity varies across the play and that a higher oil quality
than demonstrated by the initial exploration well could be
achievable. Altura will continue assessing the technical and
commercial potential of this play over these lands to determine the
next steps.
OUTLOOK
July 2020 production is estimated
at approximately 1,050 boe per day based on field estimates.
Altura continues to have three Leduc-Woodbend wells shut-in that
are expected to be brought on production by mid-September.
The Corporation forecasts production volumes to range between 1,000
and 1,100 boe per day for the second half of 2020.
There has been some optimism in respect to the global crude oil
supply/demand balance and oil prices have improved significantly
since the beginning of May. The Corporation, however, is
focused on protecting balance sheet strength during the current
volatile commodity price environment and no new wells are currently
planned to be drilled or completed in the second half of
2020.
Further to the June 30, 2020
amending agreement as disclosed in the June
30, 2020 news release, Altura expects to close three
additional dispositions of a 1.375% working interest for
$875,000 each on September 30, 2020, January 31, 2021 and June
30, 2021 (total remaining disposition of 4.125% working
interest for $2,625,000).
Through cash flow and the September 30,
2020 disposition, Altura is forecasting to reduce its net
debt to approximately $3.5 million by
the end of the year1.
________________________________
|
|
|
1
|
Key assumptions for
net debt forecast:
|
|
|
|
Second half of 2020
WTI US$41.42/bbl, WCS diff US$11.23/bbl, FX 0.75 $US/$,
AECO CAD$2.05/GJ, average production 1,000 – 1,100 boe per
day, operating and transportation costs of $12.50 per boe and
closing stage 2 of the asset disposition on September 30,
2020
|
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 on three shut-in Leduc-Woodbend wells by
mid-September;
- forecasted production volumes to range between 1,000 and 1,100
boe per day for the second half of 2020;
- the expected closing of three additional dispositions of a
1.375% working interest for $875,000
each on September 30, 2020,
January 31, 2021 and June 30, 2021; and,
- forecasted reduction of net debt to approximately $3.5 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.
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.
Initial Production Rates
Any references in this press release to initial production rates
are useful in confirming the presence of hydrocarbons, however,
such rates are not determinative of the rates at which such wells
will continue production and decline thereafter. Oil and gas
formations are inherently unpredictable, particularly in the early
stage of their development. Readers are cautioned not to
place reliance on such rates in calculating the aggregate
production for the Corporation.
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.