CALGARY,
AB, Aug. 21, 2024 /CNW/ - Logan Energy
Corp. (TSXV: LGN) ("Logan" or the "Company")
announces its financial and operating results for the three and six
months ended June 30, 2024, an
increase to the borrowing base available under the Company's credit
facility to $75.0 million, and
enhancements to the executive management team.
Selected financial and operational information set out below
should be read in conjunction with the Company's unaudited interim
financial statements and related management's discussion and
analysis ("MD&A") as at and for the three and six months
ended June 30, 2024 and 2023. These
documents are filed on SEDAR+ at www.sedarplus.ca and are available
on the Company's website at www.loganenergycorp.com. The highlights
reported throughout this press release include certain non-GAAP
measures and ratios which have been identified using capital
letters and are defined herein. The reader is cautioned that these
measures may not be directly comparable to other issuers; refer to
additional information under the heading "Reader Advisories –
Non-GAAP Measures and Ratios".
SECOND QUARTER 2024 HIGHLIGHTS
- Logan spent $46.1 million in the
second quarter to advance development in its core operating areas.
- At Pouce Coupe, Logan
completed and brought on production a three well pad in
mid-May.
- At Simonette, Logan completed its first well at Lator and
commenced completion operations on a three well pad located on its
southern acreage.
- Production averaged 7,277 BOE per day (36% liquids), an
increase of 45% from 5,015 BOE per day (22% liquids) in the same
quarter of the previous year.
- A major turnaround was completed at the Simonette 13-11 Gas
Plant as planned in June. Budgeted downtime reduced average
production for the second quarter by approximately 360 BOE per day.
Certain debottlenecking projects were also completed during the
outage.
- Logan is on track to deliver H2 2024 average production in
excess of 10,000 BOE per day and to meet or exceed its annual
production guidance of approximately 8,700 BOE per
day1.
- The Company's Operating Netback averaged $15.75 per BOE before hedging ($15.38 per BOE after hedging) for the second
quarter of 2024 and was impacted by weak natural gas prices and
higher per unit operating expenses due to plant turnaround costs
and other maintenance operations.
- Logan expects to realize a material reduction in its per unit
operating costs as it scales production and is forecasting H2 2024
operating costs to average between $10.00 to $10.50
per BOE, and for calendar year average operating costs to be
in-line with guidance1.
- Driven by oil production growth and strong crude oil prices,
Logan's Adjusted Funds Flow increased by 178% to $8.7 million for the three months ended
June 30, 2024, compared to
$3.1 million in the same period of
2023.
- As of June 30, 2024, Logan had
Net Debt of $21.4 million or 0.6
times its annualized Adjusted Funds Flow for the second quarter.
Subsequent to the quarter, the Company's lender increased the
authorized borrowing amount available under its credit facility
from $50.0 million to $75.0 million (refer to "Subsequent
Events").
_______________________
|
1 Refer to
guidance published in the Company's press release dated May 22,
2024.
|
The following table summarizes selected highlights for the three
and six month periods ended June 30,
2024 and June 30, 2023:
|
Three months ended June
30
|
Six months ended June
30
|
(CA$ thousands,
except as otherwise noted)
|
2024
|
2023
|
%
|
2024
|
2023
|
%
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
|
|
|
Oil and gas
sales
|
26,544
|
13,701
|
94
|
50,974
|
32,717
|
56
|
Net income (loss) and
comprehensive income (loss)
|
416
|
(3,856)
|
(111)
|
(1,575)
|
(34,482)
|
(95)
|
$ per common share, basic
and diluted
|
0.00
|
(0.02)
|
(100)
|
(0.00)
|
(0.20)
|
(100)
|
Cash provided by
operating activities
|
3,394
|
2,897
|
17
|
20,194
|
11,604
|
74
|
Adjusted Funds Flow
(1)
|
8,744
|
3,142
|
178
|
18,589
|
8,797
|
111
|
$ per common share, basic
and diluted (1)
|
0.02
|
0.02
|
-
|
0.04
|
0.05
|
(20)
|
Capital Expenditures
before A&D (1)
|
46,104
|
5,378
|
757
|
81,286
|
6,302
|
nm
|
Acquisitions
|
-
|
100
|
(100)
|
300
|
100
|
200
|
Total assets
|
248,390
|
94,913
|
162
|
248,390
|
94,913
|
162
|
Net Debt
(1)
|
21,364
|
5,227
|
309
|
21,364
|
5,227
|
309
|
Shareholders'
equity
|
175,122
|
56,791
|
208
|
175,122
|
56,791
|
208
|
Common shares
outstanding (000s), end of period (2)
|
465,537
|
173,201
|
169
|
465,537
|
173,201
|
169
|
OPERATING HIGHLIGHTS
AND NETBACKS (5)
|
|
|
|
|
|
|
Average daily
production
|
|
|
|
|
|
|
Crude oil
(bbls/d)
|
2,148
|
660
|
225
|
1,965
|
706
|
178
|
Condensate (bbls/d)
(3)
|
223
|
271
|
(18)
|
244
|
277
|
(12)
|
Natural gas liquids (bbls/d)
(3)
|
250
|
185
|
35
|
270
|
191
|
41
|
Natural gas
(mcf/d)
|
27,934
|
23,396
|
19
|
28,006
|
23,871
|
17
|
BOE/d
|
7,277
|
5,015
|
45
|
7,147
|
5,153
|
39
|
% Liquids
(4)
|
36 %
|
22 %
|
64
|
35 %
|
23 %
|
52
|
Average realized
prices, before financial instruments
|
|
|
|
|
|
|
Crude oil ($/bbl)
|
100.54
|
92.41
|
9
|
95.73
|
97.30
|
(2)
|
Condensate ($/bbl)
(3)
|
99.44
|
92.66
|
7
|
93.68
|
94.34
|
(1)
|
Natural gas liquids ($/bbl)
(3)
|
53.68
|
40.92
|
31
|
52.76
|
47.51
|
11
|
Natural gas
($/mcf)
|
1.44
|
2.43
|
(41)
|
1.96
|
3.22
|
(39)
|
Combined average
($/BOE)
|
40.09
|
30.02
|
34
|
39.19
|
35.08
|
12
|
Netbacks ($/BOE)
(5)
|
|
|
|
|
|
|
Oil and gas sales
|
40.09
|
30.02
|
34
|
39.19
|
35.08
|
12
|
Processing and other
revenue
|
1.04
|
1.83
|
(43)
|
1.20
|
1.77
|
(32)
|
Royalties
|
(4.35)
|
(2.49)
|
75
|
(3.77)
|
(4.61)
|
(18)
|
Operating
expenses
|
(17.46)
|
(15.77)
|
11
|
(16.08)
|
(16.15)
|
(0)
|
Transportation
expenses
|
(3.57)
|
(3.58)
|
(0)
|
(3.75)
|
(3.43)
|
9
|
Operating Netback,
before hedging (5)
|
15.75
|
10.01
|
57
|
16.79
|
12.66
|
33
|
Realized loss on derivative
financial instruments
|
(0.37)
|
-
|
-
|
(0.35)
|
-
|
-
|
Operating Netback,
after hedging (5)
|
15.38
|
10.01
|
54
|
16.44
|
12.66
|
30
|
General and administrative
expenses
|
(2.33)
|
(3.08)
|
(24)
|
(2.35)
|
(2.96)
|
(21)
|
Financing income (expenses)
(6)
|
0.35
|
(0.01)
|
nm
|
0.60
|
(0.01)
|
nm
|
Realized foreign exchange
gain
|
0.01
|
-
|
-
|
-
|
-
|
-
|
Settlement of
decommissioning obligations
|
(0.20)
|
(0.04)
|
400
|
(0.39)
|
(0.27)
|
44
|
Adjusted Funds Flow
Netback (5)
|
13.21
|
6.88
|
92
|
14.30
|
9.42
|
52
|
(1)
|
"Adjusted Funds Flow",
"Capital Expenditures before A&D", and "Net Debt" do not have
standardized meanings under IFRS Accounting Standards, refer to
"Non-GAAP Measures and Ratios" section of this press
release.
|
(2)
|
Refer to "Share
Capital" section of this press release.
|
(3)
|
Condensate is a natural
gas liquid ("NGL") as defined by NI 51-101. See "Other
Measurements".
|
(4)
|
"Liquids" includes
crude oil, condensate and NGLs.
|
(5)
|
"Netbacks" are non-GAAP
financial ratios calculated per unit of production. "Operating
Netback", and "Adjusted Funds Flow Netback" do not have
standardized meanings under IFRS, refer to "Non-GAAP Measures and
Ratios" section of this press release.
|
(6)
|
Excludes non-cash
accretion of decommissioning obligations.
|
(7)
|
Logan was spun-out from
Spartan Delta Corp. ("Spartan") on June 20, 2023.
Comparative information for the three and six months ended June 30,
2023 is prepared on a "carve-out" basis from the historical records
of Spartan. The information should be read in conjunction with the
Company's unaudited condensed interim financial statements and
MD&A as at June 30, 2024 and 2023 and the audited annual
financial statements and related MD&A as at and for the years
ended December 31, 2023 and 2022.
|
OPERATIONS UPDATE
Logan has successfully completed its drilling and completion
program for the 2024 onstream wells.
At Pouce Coupe, the three well
"7-12" pad was brought onstream in mid-May. For the first 60 days
on production, the pad averaged 422 bbls/d of oil, 12 bbls/d of
NGLs and 1.5 mmcf/d of natural gas (685 BOE/d, 63% liquids) per
well. Initial performance of the 7-12 pad is consistent with our
budgeted type curves despite flowing against substantially elevated
system pressure due to constrained infrastructure. This elevated
gathering system pressure is expected to persist until Logan's
planned new Pouce Coupe gas plant
is operational.
At Simonette, Logan brought onstream the three well "4-10" pad
in mid-July and began flowing back the single well at Lator in late
July. Logan will provide additional details on these wells upon
receiving sufficient production data in future updates.
Logan plans to resume drilling in the fourth quarter for its
2025 program.
SUBSEQUENT EVENTS
Upsized Credit Facility
Effective August 21, 2024, the
Company's lender increased the authorized borrowing amount
available under its revolving demand credit facility from
$50.0 million to $75.0 million. The next scheduled borrowing base
review is set to occur in May 2025.
The terms of the credit facility are otherwise unchanged.
Commodity Hedging Update
In August 2024, the Company
entered into a derivative financial contract to fix the price of
WTI crude oil at CA$102.05 per barrel on a notional 500 barrels per
day for calendar year 2025. The contract price represented a
premium of approximately CA$5.75 per barrel relative to WTI strip
pricing at the time of entering the swap. To earn this premium, the
Company also sold monthly call options on an incremental 500
barrels per day of WTI crude oil at CA$102.05 per barrel for
calendar year 2025.
EXECUTIVE APPOINTMENTS
The Board of Directors is pleased to announce that Brendan Paton (currently Vice President,
Engineering and COO) has been promoted to President and COO.
Richard McHardy will continue as
Chief Executive Officer and will continue to be involved in the
execution of the Company's strategic growth plans and the
day-to-day operations of the Company. Mr. McHardy stated,
"Brendan's appointment as President of the Company represents
Logan's long-term commitment to succession planning and to
advancing the next generation of leaders in the oil and gas
industry in Canada".
The Board of Directors is also pleased to announce that
Dylan Van Brunt (currently Manager,
Engineering) has been appointed Vice President, Engineering and
Victoria Biersteker (currently
Manager, Geoscience) has been appointed Vice President,
Geoscience. Mr. Van Brunt and
Ms. Biersteker are both key members of Logan's Montney development team and bring a wealth of
technical experience in the Montney from their tenure at Spartan Delta and
Velvet Energy, as well as their previous positions. Mr. McHardy
stated, "We are pleased to welcome Dylan and Victoria to Logan's
executive team, and I want to congratulate each of Brendan, Dylan
and Victoria on their well-deserved promotions."
ABOUT LOGAN ENERGY CORP.
Logan is a growth-oriented exploration, development and
production company formed through the spin-out of Spartan's early
stage Montney assets. Logan is
founded with a strong initial capitalization and three high quality
and opportunity rich Montney
assets located in the Simonette and Pouce
Coupe areas of northwest Alberta and the Flatrock area of northeastern British Columbia. The management team brings
proven leadership and a track record of generating excess returns
in various business cycles.
Logan's corporate presentation has been updated as of
August 2024 and can be accessed on
the Company's website at www.loganenergycorp.com.
READER ADVISORIES
Non-GAAP Measures and Ratios
This press release contains certain financial measures and
ratios which do not have standardized meanings prescribed by
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS Accounting
Standards"), also known as Canadian Generally Accepted
Accounting Principles ("GAAP"). As these non-GAAP financial
measures and ratios are commonly used in the oil and gas industry,
Logan believes that their inclusion is useful to investors. The
reader is cautioned that these amounts may not be directly
comparable to measures for other companies where similar
terminology is used.
The non-GAAP measures and ratios used in this press release,
represented by the capitalized and defined terms outlined below,
are used by Logan as key measures of financial performance and are
not intended to represent operating profits nor should they be
viewed as an alternative to cash provided by operating activities,
net income or other measures of financial performance calculated in
accordance with IFRS.
The definitions below should be read in conjunction with the
"Non-GAAP and Other Financial Measures" section of the Company's
MD&A dated August 21, 2024, which
includes discussion of the purpose and composition of the specified
financial measures and detailed reconciliations to the most
directly comparable GAAP financial measures.
Operating Income and Operating Netback
Operating Income, a non-GAAP financial measure, is a useful
supplemental measure that provides an indication of the Company's
ability to generate cash from field operations, prior to
administrative overhead, financing and other business expenses.
"Operating Income, before hedging" is calculated by Logan as
oil and gas sales, net of royalties, plus processing and other
revenue, less operating and transportation expenses. "Operating
Income, after hedging" is calculated by adjusting Operating
Income, before hedging for realized gains or losses on derivative
financial instruments.
The Company refers to Operating Income expressed per unit of
production as an "Operating Netback" and reports the
Operating Netback before and after hedging, both of which are
non-GAAP financial ratios. Logan considers Operating Netback an
important measure to evaluate its operational performance as it
demonstrates its field level profitability relative to current
commodity prices.
Adjusted Funds Flow
Cash provided by operating activities is the most directly
comparable measure to Adjusted Funds Flow. "Adjusted Funds
Flow" is reconciled to cash provided by operating activities by
excluding changes in non-cash working capital, adding back
transaction costs on acquisitions (if applicable). Logan utilizes
Adjusted Funds Flow as a key performance measure in the Company's
annual financial forecasts and public guidance.
The Company refers to Adjusted Funds Flow expressed per unit of
production as an "Adjusted Funds Flow Netback".
Capital Expenditures before A&D
"Capital Expenditures before A&D" is used by Logan to
measure its capital investment level compared to the Company's
annual budgeted capital expenditures for its organic drilling
program. It includes capital expenditures on exploration and
evaluation assets and property, plant and equipment, before
acquisitions and dispositions. The directly comparable GAAP measure
to capital expenditures is cash used in investing activities.
Net Debt
Throughout this press release, references to "Net Debt"
includes bank debt (if any), net of Adjusted Working Capital. Net
Debt and Adjusted Working Capital are both non-GAAP financial
measures. "Adjusted Working Capital" is calculated as current
liabilities less current assets, excluding derivative financial
instrument assets and liabilities and the current portion of bank
debt (if any).
Supplementary Financial Measures
The supplementary financial measures used in this press release
(primarily average sales price per product type and certain per BOE
and per share figures) are either a per unit disclosure of a
corresponding GAAP measure, or a component of a corresponding GAAP
measure, presented in the financial statements. Supplementary
financial measures that are disclosed on a per unit basis are
calculated by dividing the aggregate GAAP measure (or component
thereof) by the applicable unit for the period. Supplementary
financial measures that are disclosed on a component basis of a
corresponding GAAP measure are a granular representation of a
financial statement line item and are determined in accordance with
GAAP.
Other Measurements
All dollar figures included herein are presented in Canadian
dollars, unless otherwise noted. This press release contains
various references to the abbreviation "BOE" which means barrels of
oil equivalent. Where amounts are expressed on a BOE basis, natural
gas volumes have been converted to oil equivalence at six thousand
cubic feet (mcf) per barrel (bbl). The term BOE may be misleading,
particularly if used in isolation. A BOE conversion ratio of six
thousand cubic feet per barrel is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead and is
significantly different than the value ratio based on the current
price of crude oil and natural gas. This conversion factor is an
industry accepted norm and is not based on either energy content or
current prices. Such abbreviation may be misleading, particularly
if used in isolation.
References to "oil" in this press release include light crude
oil, medium crude oil, heavy oil and tight oil combined. NI 51-101
includes condensate within the product type of "natural gas
liquids". References to "natural gas liquids" or "NGLs" include
pentane, butane, propane and ethane. References to "gas" or
"natural gas" relates to conventional natural gas. References to
"liquids" includes crude oil, condensate and NGLs.
References in this press release to peak rates, peak monthly
production, first 60 days of production, producing day rates and
other short-term production rates are useful in confirming the
presence of hydrocarbons, however such rates are not determinative
of the rates at which such wells will commence production and
decline thereafter and are not indicative of long-term performance
or of ultimate recovery. While encouraging, readers are cautioned
not to place reliance on such rates in calculating the aggregate
production of Logan.
Share Capital
Common shares of Logan trade on the TSX Venture Exchange
("TSXV") under the symbol "LGN".
As of the date hereof, there are 465.5 million common shares
outstanding. There are no preferred shares or special shares
outstanding. Logan's convertible securities outstanding as of the
date of this press release include: 64.3 million common share
purchase warrants with an exercise price of $0.35 per share expiring July 12, 2028; and 22.6 million stock options
with an exercise price of $0.89 per
share expiring November 22, 2028.
Forward-Looking and Cautionary Statements
Certain statements contained within this press release
constitute forward-looking statements within the meaning of
applicable Canadian securities legislation. All statements other
than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always,
identified by the use of words such as "anticipate", "budget",
"plan", "endeavor", "continue", "estimate", "evaluate", "expect",
"forecast", "monitor", "may", "will", "can", "able", "potential",
"target", "intend", "consider", "focus", "identify", "use",
"utilize", "manage", "maintain", "remain", "result", "cultivate",
"could", "should", "believe" and similar expressions. Logan
believes that the expectations reflected in such forward-looking
statements are reasonable as of the date hereof, but no assurance
can be given that such expectations will prove to be correct and
such forward-looking statements should not be unduly relied upon.
Without limitation, this press release contains forward-looking
statements pertaining to: the Company's opportunity rich assets;
management's track record of generating excess returns in various
business cycles; success of the Company's drilling program based on
initial results; future drilling plans; continuing to advance key
infrastructure projects; forecast production for the second half of
2024; and the expectation that per unit operating expenses will
decrease with production growth.
The forward-looking statements and information are based on
certain key expectations and assumptions made in respect of Logan
including expectations and assumptions concerning the business plan
of Logan, the timing of and success of future drilling, development
and completion activities, the performance of existing wells, the
performance of new wells, the availability and performance of
facilities and pipelines, the geological characteristics of Logan's
properties, the successful integration of the recently acquired
assets into Logan's operations, the successful application of
drilling, completion and seismic technology, prevailing weather
conditions, prevailing legislation affecting the oil and gas
industry, prevailing commodity prices, price volatility, price
differentials and the actual prices received for Logan's products,
impact of inflation on costs, royalty regimes and exchange rates,
the application of regulatory and licensing requirements, the
availability of capital (including under the upsized credit
facility), labour and services, the creditworthiness of industry
partners and the ability to source and complete acquisitions.
Although Logan believes that the expectations and assumptions on
which such forward-looking statements and information are based are
reasonable, undue reliance should not be placed on the
forward-looking statements and information because Logan can give
no assurance that they will prove to be correct. By its nature,
such forward-looking information is subject to various risks and
uncertainties, which could cause the actual results and
expectations to differ materially from the anticipated results or
expectations expressed. These risks and uncertainties include, but
are not limited to, fluctuations in commodity prices, changes in
industry regulations and political landscape both domestically and
abroad, wars, hostilities, civil insurrections, changes in
legislation, including but not limited to tax laws, royalties and
environmental regulations (including greenhouse gas emission
reduction requirements and other decarbonization or social policies
and including uncertainty with respect to the interpretation of
omnibus Bill C-59 and the related amendments to the
Competition Act (Canada)),
foreign exchange or interest rates, increased operating and capital
costs due to inflationary pressures (actual and anticipated),
volatility in the stock market and financial system, impacts of
pandemics, the retention of key management and employees, risks
with respect to unplanned pipeline outages and risks relating to
inclement and severe weather events and natural disasters, such as
fire, drought, flooding and extreme hot or cold temperatures,
including in respect of safety, asset integrity and shutting-in
production. Ongoing military actions in the Middle East and between Russia and Ukraine and related sanctions have the
potential to threaten the supply of oil and gas from those regions.
The long-term impacts of these actions remains uncertain. The
foregoing list is not exhaustive. Please refer to the MD&A and
AIF for discussion of additional risk factors relating to Logan,
which can be accessed on its SEDAR+ profile at www.sedarplus.ca.
Readers are cautioned not to place undue reliance on this
forward-looking information, which is given as of the date hereof,
and to not use such forward-looking information for anything other
than its intended purpose. Logan undertakes no obligation to update
publicly or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as
required by law.
This press release contains future-oriented financial
information and financial outlook information (collectively,
"FOFI") about Logan's guidance for 2024, including with
respect to prospective results of operations, production and
operating costs, all of which are subject to the same assumptions,
risk factors, limitations, and qualifications as set forth in the
above paragraphs. FOFI contained in this document was approved by
management as of the date of this document and was provided for the
purpose of providing further information about Logan's proposed
business activities in the remainder of 2024. Logan and its
management believe that FOFI has been prepared on a reasonable
basis, reflecting management's best estimates and judgments, and
represent, to the best of management's knowledge and opinion, the
Company's expected course of action. However, because this
information is highly subjective, it should not be relied on as
necessarily indicative of future results. Logan disclaims any
intention or obligation to update or revise any FOFI contained in
this document, whether as a result of new information, future
events or otherwise, unless required pursuant to applicable law.
Readers are cautioned that the FOFI contained in this document
should not be used for purposes other than for which it is
disclosed herein. Changes in forecast commodity prices, exchange
rates, differences in the timing of capital expenditures, and
variances in average production estimates can have a significant
impact on the key performance measures included in Logan's
guidance. The Company's actual results may differ materially from
these estimates.
Neither 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 news release.
Abbreviations
A&D
|
acquisitions and
dispositions
|
AEC
|
Alberta Energy Company
"C" Meter Station of the NOVA Pipeline System
|
AIF
|
refers to the Company's
Annual Information Form dated March 18, 2024
|
bbl
|
barrel
|
bbls/d
|
barrels per
day
|
bcf
|
one billion cubic
feet
|
BOE
|
barrels of oil
equivalent
|
BOE/d
|
barrels of oil
equivalent per day
|
CA$ or CAD
|
Canadian
dollar
|
GJ
|
gigajoule
|
H2 2024
|
second half of 2024 or
six month period ending December 31, 2024
|
Mbbl
|
one thousand
barrels
|
MBOE
|
one thousand barrels of
oil equivalent
|
mcf
|
one thousand cubic
feet
|
mcf/d
|
one thousand cubic feet
per day
|
MMbtu
|
one million British
thermal units
|
MMcf
|
one million cubic
feet
|
MD&A
|
refers to Management's
Discussion and Analysis of the Company dated August 21,
2024
|
MM
|
millions
|
$MM
|
millions of
dollars
|
MPa
|
megapascal unit of
pressure
|
NGL(s)
|
natural gas
liquids
|
NI 51-101
|
National Instrument
51-101 – Standards of Disclosure for Oil and Gas
Activities
|
nm
|
"not meaningful",
generally with reference to a percentage change
|
NYMEX
|
New York Mercantile
Exchange, with reference to the U.S. dollar "Henry Hub" natural gas
price index
|
TSXV
|
TSX Venture
Exchange
|
US$ or USD
|
United States
dollar
|
WTI
|
West Texas
Intermediate, the reference price paid in U.S. dollars at Cushing,
Oklahoma for crude oil of standard grad
|
SOURCE Logan Energy Corp.