Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) announces
its first quarter financial and operating results. Selected
financial and operational information is outlined below and should
be read in conjunction with Razor’s unaudited interim condensed
consolidated financial statements, management’s discussion and
analysis for the quarter ended March 31, 2023 which are available
on SEDAR at www.sedar.com and the Company’s website
www.razor-energy.com.
All amounts are expressed in Canadian dollars.
Certain metrics, including those expressed on an adjusted basis,
are non-IFRS and other financial measures. See “Non-IFRS and Other
Financial Measures” below.
RECAPITALIZATION
TRANSACTION
SummaryOn May 1, 2023, the Company announced a
recapitalization transaction (the “Recapitalization Transaction”),
including debt settlement (“Debt Settlement”) and a rights offering
to all holders of common shares in the capital of Razor (“Razor
Common Shares”) by way of a rights offering circular (the “Rights
Offering”), pursuant to which:
- Razor will dispose of 70% of its
common share holdings in FutEra Power Corp. (“FutEra”) and 100% of
a class of newly created voting, convertible preferred shares in
FutEra to settle $63.2 million of secured debt with Alberta
Investment Management Corporation (“AIMCo”), on behalf of certain
designated entities managed and advised by AIMCo;
- Razor will retain a 30% common
share position in FutEra (subject to dilution upon preferred share
conversion); and
- FutEra will be responsible for
repayment of US$7.9 million of Razor’s current senior secured debt
owed to Arena Investors, LP (“Arena”) under Razor’s Amended and
Restated Term Loan Agreement dated March 9, 2022 (the “Arena
Debt”).
No Razor Common Shares will be issued as part of
the Debt Settlement.
As a condition to the completion of the
transactions contemplated by the Debt Settlement Agreement, Razor
is launching the Rights Offering to re-accelerate production
development. It anticipates investing approximately $5 million to
increase corporate production by 800 boe/d. Closing of the Rights
Offering is conditional upon and will happen concurrently with the
closing of the Debt Settlement.
The Recapitalization Transaction deleverages
Razor, reducing interest expense with an increased potential for
transactions that would improve the oil and gas asset
portfolio.
Please refer to Razor’s May 1, 2023 press
release for further details.
Rights OfferingOn May 9, 2022, the Company
announced the Rights Offering to eligible holders of its common
shares (the “Common Shares”) of record at the close of business on
May 16, 2023 (the “Record Date”).
Pursuant to the Rights Offering, each holder of
Common Shares resident in a province or territory in Canada or in
the United States (subject to restrictions in certain states) (the
“Eligible Jurisdictions”) will receive one right (a “Right”) for
each one Common Share held. Each whole Right will entitle the
holder to subscribe for 0.494555 of a unit (a “Rights Unit”). Each
Rights Unit will consist of one Common Share (a “Unit Share”) and
one transferable Common Share purchase warrant (a “Unit Warrant”).
Each Unit Warrant will entitle the holder to purchase, subject to
adjustment in certain circumstances, one Common Share at a price of
$1.20 per Common Share for a period of five years from the date of
issuance.
Holders of Common Shares will need to exercise
2.022 Rights to acquire one Right Unit. A holder of Rights must pay
$0.80 (the “Subscription Price”) to purchase one Right Unit. No
fractional Rights Units, fractional Unit Shares or fractional Unit
Warrants will be issued and, where the exercise of Rights would
otherwise entitle the holder of Rights to a fractional Rights Unit,
fractional Unit Share or fractional Unit Warrant, the holder’s
entitlement will be reduced to the next lowest whole number of
Rights Unit, Unit Share or Unit Warrant, as applicable, and no cash
or other consideration will be paid in lieu thereof.
Razor expects to raise gross proceeds of up to
$10 million from the Rights Offering and intends to use the
proceeds to fund certain production enhancement activities and for
general working capital purposes. The expected closing date of the
Rights Offering and the Recapitalization Transaction is June 12,
2023.
Pursuant to a standby purchase agreement dated
May 1, 2023 between AIMCo and the Corporation (the “Standby
Purchase Agreement), up to $5,825,000 of the Rights Offering has
been guaranteed by AIMCo, assuming the fulfilment of all closing
conditions to the Standby Purchase Agreement (the “Standby
Commitment”), including that a minimum of $1,000,000 of
subscription proceeds (the “Minimum Additional Proceeds”) have been
received from holders of Rights other than AIMCo and its
affiliates.
In the event that the Minimum Additional
Proceeds are not received, the Corporation will not receive any
funds from AIMCo and the Rights Offering will not be completed. In
such circumstances, Alliance Trust Company, as subscription agent,
will return all subscription funds delivered by subscribers without
interest or deduction.
Assuming the Minimum Additional Proceeds are
received and the Standby Commitment is completed in full to the
standby maximum of $4 million in accordance with the terms and
conditions of the Standby Purchase Agreement, the Corporation will
issue a minimum of 8,531,250 Unit Shares and 8,531,250 Unit
Warrants in connection with the Rights Offering and pursuant to the
terms of the Standby Purchase Agreement for aggregate gross
proceeds of $6,825,000.
AIMCo currently holds approximately 18.25% of
Razor’s issued and outstanding Common Shares. If all of the holders
of Rights do not exercise their Rights in full then AIMCo’s
ownership percentage of Common Shares owned will increase. AIMCo
would own or control approximately 35.18% of the outstanding Common
Shares following the completion of the Rights Offering, assuming
the Minimum Additional Proceeds are the only proceeds that have
been received from holders of Rights other than AIMCo and its
affiliates and the Standby Commitment is completed in full to the
standby maximum of $4 million.
In addition, Arena has agreed to waive the
production covenant found in the Amended and Restated Term Loan
Agreement from November 1, 2022 to April 30, 2023 and has further
amended the production covenant for the period from May 1, 2023 to
September 30, 2023.
The Recapitalization Transaction is subject to
the satisfaction of a number of conditions, including concurrent
completion of the Internal Reorganization, the FutEra Share
Transfer Transaction and the Rights Offering, as well as the
receipt by Razor and FutEra of all necessary third party and
regulatory approvals, including the approval of the TSXV and
consent of Arena as a secured lender under Razor’s amended and
restated term loan agreement dated March 9, 2022 (the “Amended and
Restated Term Loan Agreement”), no occurrence of a material adverse
change or material adverse effect, satisfactory completion of due
diligence, and other customary closing conditions.
OUTLOOKRazorRazor continues to
look forward with plans for the future while remaining focused on
its mid to long-term sustainability. Razor recognizes multiple deep
value streams in its assets and is actively engaged in liberating
them for the benefit of shareholders. The Company has an extensive
opportunity set of high-quality wells requiring reactivation, many
of which have payout metrics which exceed the Company’s economic
thresholds. Razor will continue production enhancement activity
into 2023. Certain activities involve repairs and maintenance work
which will be expensed for accounting purposes and operating
netbacks will be reduced during this timeframe. In aggregate, the
annual base decline of these wells is anticipated to
be consistent with the Company’s current
corporate rate of approximately 12%. The Company continues to
focus on cost control on its operated properties. In addition to
the planned production enhancement program, Razor will take a
cautious and case-by-case approach to capital spending in 2023,
focusing on low risk, capital efficient opportunities to increase
field efficiencies and corporate netbacks.
While the Company anticipates reducing its
working capital deficit and net debt1 over time, it is still
projecting to have a working capital deficit throughout 2023.
Razor has high reservoir quality, low decline,
isolate carbonate Swan Hills reef light oil pools that contain
large original oil in place with over 60 years of production
history. Razor believes these reefs are ideally suited for
open-hole horizontal development drilling upside.
FutEraFutEra, a subsidiary of
Razor Energy, is now commissioning the first co-produced geothermal
power plant in Canada with a nameplate capacity of 21 MW of which
up to 30% will be sustainable clean power generation. The Swan
Hills Geothermal Power Project began producing power to the grid on
September 9, 2022. The final stages of construction were completed
in January 2023, with commissioning nearing completion.
Power generation revenue for September 2022 to
March 2023 from the Swan Hills Geothermal Power Project was $10.1
million, which exceeded expectations due to a historically higher
than average merchant power price which averaged $216/MWH. FutEra
has successfully partnered with provincial and federal government
agencies to invigorate the emerging geothermal industry. To date,
Razor has received $18.6 million in government grants to support
this power generation project. The total construction budget for
the Swan Hills Geothermal Power Project is $49 million.
Wildfire Update and Production
ImpactOn May 17, 2023, the Company announced that as a
result of recent developments in the status of the Alberta
wildfires, it has shut-in its operated and non-operated production
in Kaybob and Swan Hills. The production impact is approximately
2,500 boe/d between the two areas. As of today, a significant
portion of production has come back online and the Company will
provide an update once all production has been restored. Razor is
not aware of any significant damage to the Company’s assets.
________________________________________
1 See "Non-IFRS and other financial measures".
SELECT QUARTERLY HIGHLIGHTS
The following tables summarizes key financial
and operating highlights associated with the Company’s financial
performance.
|
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
($000s, except for per share amounts and production) |
|
|
|
2023 |
|
2022 |
|
% Change |
|
|
Production |
|
Light oil (bbl/d) |
|
|
|
2,441 |
|
2,830 |
|
(14 |
) |
|
Natural gas (mcf/d)1 |
|
|
|
6,245 |
|
4,350 |
|
44 |
|
|
NGLs (boe/d) |
|
|
|
531 |
|
902 |
|
(41 |
) |
|
Total (boe/d) |
|
|
|
4,013 |
|
4,457 |
|
(10 |
) |
|
Sales Volumes |
|
|
|
|
|
|
|
Light oil (bbl/d) |
|
|
|
2,430 |
|
2,876 |
|
(16 |
) |
|
Natural gas (mcf/d)1 |
|
|
|
5,509 |
|
3,906 |
|
41 |
|
|
NGLs (boe/d) |
|
|
|
654 |
|
902 |
|
(27 |
) |
|
Total (boe/d) |
|
|
|
4,002 |
|
4,429 |
|
(10 |
) |
|
Oil inventory volumes (bbls) |
|
|
|
11,082 |
|
11,058 |
|
- |
|
|
Financial |
|
|
|
|
|
|
|
Oil and NGL sales |
|
|
|
23,874 |
|
32,924 |
|
(27 |
) |
|
Natural gas sales |
|
|
|
1,756 |
|
1,710 |
|
3 |
|
|
Power generation |
|
|
|
2,207 |
|
- |
|
100 |
|
|
Blending and processing income |
|
|
|
510 |
|
903 |
|
(44 |
) |
|
Other revenue |
|
|
|
596 |
|
482 |
|
24 |
|
|
Total Revenue |
|
|
|
28,943 |
|
36,019 |
|
(20 |
) |
|
Cash flow from (used in) operating activities |
|
|
|
4,702 |
|
2,404 |
|
96 |
|
|
Funds flow2 |
|
|
|
(1,759 |
) |
9,883 |
|
(118 |
) |
|
Adjusted funds flow2 |
|
|
|
(1,690 |
) |
9,661 |
|
(117 |
) |
|
Net income (loss) |
|
|
|
(8,404 |
) |
(776 |
) |
989 |
|
|
Per share – basic and diluted |
|
|
|
(0.33 |
) |
(0.03 |
) |
1,000 |
|
|
Common shares outstanding, end of period |
|
|
|
25,275 |
|
23,314 |
|
8 |
|
|
Weighted average, basic |
|
|
|
25,275 |
|
23,314 |
|
8 |
|
|
Weighted average, diluted4 |
|
|
|
25,275 |
|
23,314 |
|
8 |
|
|
Total Assets |
|
|
|
188,123 |
|
225,255 |
|
(16 |
) |
|
Cash |
|
|
|
1,471 |
|
9,000 |
|
(84 |
) |
|
Total debt |
|
|
|
88,606 |
|
84,003 |
|
5 |
|
|
Net debt2 |
|
|
|
127,189 |
|
96,940 |
|
31 |
|
|
Netback ($/boe)2 |
|
|
|
|
|
|
|
Oil and gas sales |
|
|
|
70.97 |
|
86.34 |
|
(18 |
) |
|
Royalties |
|
|
|
(16.27 |
) |
(19.03 |
) |
(15 |
) |
|
Adjusted net operating expenses2 3 |
|
|
|
(46.28 |
) |
(32.99 |
) |
40 |
|
|
Production enhancement expenses2 |
|
|
|
- |
|
(7.50 |
) |
(100 |
) |
|
Transportation and treating |
|
|
|
(3.65 |
) |
(2.39 |
) |
53 |
|
|
Operating Netback prior to Realized Gain (Loss) |
|
|
|
4.77 |
|
24.43 |
|
(80 |
) |
|
Realized gain (loss) on commodity contracts |
|
|
|
(5.19 |
) |
1.57 |
|
(431 |
) |
|
Operating Netback2 |
|
|
|
(0.42 |
) |
26.00 |
|
(102 |
) |
|
1) Natural gas production includes internally consumed natural gas
primarily used in power generation.2) See "Non-IFRS and other
financial measures".3) Excludes production enhancement expenses
incurred in the period.4) The Company uses the weighted average
common shares (basic) when there is a net loss for the period to
calculate net income (loss) per share diluted. |
FIRST QUARTER OPERATIONAL UPDATE
Production volumes in Q1 2023 averaged 4,013
boe/d, a decrease of 10% from Q1 2022 volumes of 4,457 boe/d and
increased 4% from 3,859 boe/d from Q4 2022. Highlights of the
changes in production volumes are as follows:
- Swan Hills –
production volumes decreased 18% for Q1 2023 as compared to Q1 2022
and decreased 1% as compared to Q4 2022. The decrease in production
volumes for the three months ended March 31, 2023, is the result of
third-party infrastructure that went offline in the second half of
2022 and has not yet been put back on online. Production was
consistent with Q4 2022.
- Kaybob –
production volumes increased 11% for Q1 2023 as compared to Q1 2022
and increased 11% from Q4 2022. The increase in production volumes
for the three months ended March 31, 2023 was the result of the
Company’s 2022 reactivation program which increased production in
the second half of 2022 and into 2023.
- Southern Alberta –
production volumes increased 9% for Q1 2023 as compared to Q1 2022
and increased 19% from Q4 2022. The increase in production volumes
for the three months ended March 31, 2023 was the result of the
Company’s 2022 reactivation program which increased production in
the second half of 2022 and into 2023.
Adjusted net operating expenses increased $3.5
million or 26% on a total dollar basis and increased 40% on a per
boe basis in Q1 2023 compared to the same period in 2022. The
increase in the adjusted net operating expense on a total dollar
basis was due to increased operating costs associated with
environmental activities as well as higher utility costs related to
the increase in the AESO pool price by 57% as compared to the same
period in the prior year. This increase was partially offset by no
production enhancement activity taking place in Q1 2023. Operating
costs increased on a per boe basis as a result of this increase in
operating costs combined with lower production volumes for Q1
2023.
The primary factors affecting operating costs on
a $/boe basis are production levels, workover activity and
electricity pricing. Inherent within the Company’s hydrocarbon
operations is a prominent fixed cost element, or those costs that
are not correlated to production levels. On a relative basis these
costs are higher with lower production. Razor’s reactivation
program took place throughout 2022 and will resume in June
2023.
CAPITAL EXPENDITURESTotal
capital expenditures, before grant proceeds was $2.3 million in Q1
2023. For the quarter ended March 31, 2023, Razor executed pipeline
work of $0.5 million, spent $0.4 million on capitalized
turnarounds, invested $1.0 million in its Swan Hills Geothermal
Power Project and received grant proceeds of $2.3 million.
About Razor
Razor is a publicly traded junior oil and gas
development and production company headquartered in Calgary,
Alberta, concentrated on acquiring, and subsequently enhancing, and
producing oil and gas from properties primarily in Alberta. The
Company is led by experienced management and a strong, committed
Board of Directors, with a long-term vision of growth focused on
efficiency and cost control in all areas of the business. Razor
currently trades on TSX Venture Exchange under the ticker
“RZE.V”.
www.razor-energy.com
About FutEra
FutEra leverages Alberta’s resource industry
innovation and experience to create transformational power and
sustainable infrastructure solutions to commercial markets and
communities, both in Canada and globally. FutEra has constructed
and is commissioning Canada’s first co-produced geothermal and
natural gas hybrid power project in Swan Hills, Alberta.
www.futerapower.com
About Blade
Blade Energy Services is a subsidiary of Razor.
Operating in west central Alberta, Blade’s primary services include
fluid hauling, road maintenance, earth works including well site
reclamation and other oilfield services.
www.blade-es.com
For additional information please contact:
Doug
Bailey |
Kevin
Braun |
President and Chief Executive Officer |
Chief Financial Officer |
|
|
Razor Energy Corp.800, 500-5th Ave SW Calgary
Alberta T2P 3L5Telephone: 403-262-0242 |
|
READER ADVISORIES
FORWARD-LOOKING STATEMENTS:
This press release may contain certain
statements that may be deemed to be forward-looking statements.
Such statements relate to possible future events, including, but
not limited to, the Company’s objectives and anticipated results,
including the completion of the Recapitalization Transaction
(including the various elements thereof), the potential benefits
and effects of the Recapitalization Transaction on Razor, the
ability of Razor to satisfy the closing conditions for the
Recapitalization Transaction and related matters, the conditions to
closing of the Recapitalization Transaction, the Company’s capital
program and other activities; the Swan Hills Geothermal Power
Project and its capacity, construction and commissioning budget;
opportunities for power generation, oil blending and services
integration; restarting wells; execution of production enhancement
programs; future rates of production; expectations regarding
commodity prices, cash flow from operating activities, working
capital and net debt; and possible business combination
transactions. 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”, “believe”, "expect", “plan”, “estimate”, “potential”,
“will”, “should”, “continue”, “may”, “objective” and similar
expressions. The forward-looking statements are based on certain
key expectations and assumptions made by the Company, including but
not limited to expectations and assumptions concerning the ability
of Razor to complete the Rights Offering and all other portions of
the Recapitalization Transaction in the manner described herein,
the availability of capital, current legislation, receipt of
required regulatory approvals, the timely performance by
third-parties of contractual obligation, the success of future
geothermal, drilling and development activities, the performance of
existing wells, the performance of new wells, the Company’s growth
strategy, general economic conditions, availability of required
equipment and services prevailing commodity prices, price
volatility, price differentials and the actual prices received for
the Company's products. Although the Company 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 the Company 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 oil and gas
industry and geothermal electricity projects 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; variability in
geothermal resources; as the uncertainty of reserve estimates; the
uncertainty of estimates and projections relating to production,
costs and expenses, and health, safety and environmental risks),
electricity and commodity price and exchange rate fluctuations,
changes in legislation affecting the oil and gas and geothermal
industries and uncertainties resulting from potential delays or
changes in plans with respect to exploration or development
projects or capital expenditures. In addition, the Company cautions
that COVID-19 or other global pandemics may have a material adverse
effect on global economic activity and worldwide demand for certain
commodities, including crude oil, natural gas and NGL, and may
continue to result in volatility and disruption to global supply
chains, operations, mobility of people and the financial markets,
which could continue to affect commodity prices, interest rates,
credit ratings, credit risk, inflation, business, financial
conditions, results of operations and other factors relevant to the
Company. The duration of the current commodity price volatility is
uncertain. Please also refer to the risk factors identified in the
most recent annual information form and management discussion and
analysis of the Company which are available on SEDAR at
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and the Company
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.
This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about Razor's prospective results of
operations, sales volumes, including sale of inventory volumes,
production and production efficiency, balance sheet, capital
spending, cost and net debt reductions, operating efficiencies,
investment infrastructure and components thereof, all of which are
subject to the same assumptions, risk factors, limitations, and
qualifications as a set forth in the above paragraph. 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 Razor's future business operations. Razor
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.
NON-IFRS AND OTHER FINANCIAL
MEASURESThis press release contains certain specified
measure consisting of non-IFRS measures and non-IFRS financial
ratios. Since these specified financial measures may not have a
standardized meaning, they must be clearly defined and, where
required, reconciled with their nearest IFRS measure. Accordingly,
they may not be comparable to similar measures used by other
companies.
FUNDS FLOW AND ADJUSTED FUNDS
FLOWFunds Flow
Management utilizes funds flow as a useful
measure of Razor’s ability to generate cash not subject to
short-term movements in non-cash operating working capital. As
shown below, funds flow is calculated as cash flow from operating
activities excluding change in non-cash working capital.
Adjusted funds flow
Management utilizes adjusted funds flow as a key
measure to assess the ability of the Company to generate the funds
necessary for financing activities, operating activities, and
capital expenditures. As shown below, adjusted funds flow is
calculated as funds flow excluding purchasing of commodity
contracts, and decommissioning expenditures since Razor believes
the timing of collection, payment or incurrence of these items
involves a high degree of discretion and variability. Expenditures
on decommissioning obligations vary from period to period depending
on the maturity of the Company’s operating areas and availability
of adjusted funds flow and are viewed as part of the Company’s
capital budgeting process.
The following table reconciles cash flow
from operating activities, funds flow and adjusted funds
flow:
|
|
The Months Ended |
|
|
|
March 31, |
|
($000’s) |
|
|
|
|
2023 |
|
2022 |
|
Cash flow from (used in) operating activities |
|
|
|
|
4,702 |
|
2,404 |
|
Changes
in non-cash working capital |
|
|
|
|
(6,461 |
) |
7,479 |
|
Funds flow |
|
|
|
|
(1,759 |
) |
9,883 |
|
Decommissioning costs
incurred |
|
|
|
|
- |
|
318 |
|
Sale
(purchase) of commodity contracts |
|
|
|
|
69 |
|
(540 |
) |
Adjusted funds flow |
|
|
|
|
(1,690 |
) |
9,661 |
|
NET DEBT
Net debt is calculated as the sum of the
long-term debt (includes AIMCo Term Loan, Arena Amended and
Restated Term Loan and Promissory Notes) and lease obligations,
less working capital (or plus working capital deficiency), with
working capital excluding mark-to-market risk management contracts.
Razor believes that net debt is a useful supplemental measure of
the total amount of current and long-term debt of the Company.
Reconciliation of net debt |
March 31, |
|
December 31, |
|
($000’s) |
2023 |
|
2022 |
|
Long term debt |
(677 |
) |
(632 |
) |
Long
term lease obligation |
(1,930 |
) |
(2,014 |
) |
|
(2,607 |
) |
(2,646 |
) |
Less: Working capital |
|
|
Current assets |
18,112 |
|
21,293 |
|
Exclude current liability
commodity contracts |
867 |
|
2,338 |
|
Current liabilities |
(146,170 |
) |
(146,577 |
) |
|
(127,191 |
) |
(122,946 |
) |
Net debt |
129,798 |
|
125,592 |
|
Adjusted operating expenses
Adjusted operating expenses are regular field or
general operating costs that occur throughout the year and do not
include production enhancement expenses. Management believes that
removing the expenses related to production enhancements from total
operating expenses is a useful supplemental measure to analyze
regular operating expenses.
Production enhancement
expenses
Production enhancement expenses are expenses
made by the Company to increase production volumes which are not
regular field or general operating costs that occur throughout a
year. Management believes that separating the expenses related to
production enhancements is a useful supplemental measure to analyze
the cost of bringing wells back on production and the related
increases in production volumes.
Reconciliation of Adjusted Operating
expenses, Production Enhancement Expenses and Operating
Expenses
|
|
Three Months Ended |
|
|
|
March 31, |
|
($000's) |
|
|
|
|
2023 |
|
2022 |
|
Operating expenses |
|
|
|
|
17,816 |
|
16,822 |
|
Production enhancement
expenses |
|
|
|
|
- |
|
(3,010 |
) |
Other
operating segments & elimination entries1 |
|
|
|
|
(888 |
) |
- |
|
Adjusted operated expenses |
|
|
|
|
16,928 |
|
13,812 |
|
1) Represents operating costs and intercompany eliminations on
the Company’s non-oil & gas production activities. Please see
segment reporting section of MD&A for additional details.
Adjusted Net Operating
Expenses
Adjusted net operating expenses equals adjusted
operating expenses less net blending and processing income.
Management considers adjusted net operating expenses and important
measure to evaluate its operational performance.
|
|
Three Months Ended |
|
|
|
March 31, |
|
($000's) |
|
|
|
|
2023 |
|
2022 |
|
Adjusted operating expenses |
|
|
|
|
16,928 |
|
13,821 |
|
Net
blending and processing income |
|
|
|
|
(215 |
) |
(579 |
) |
Adjusted net operating expenses |
|
|
|
|
16,713 |
|
13,233 |
|
NET BLENDING AND PROCESSING
INCOME
Net blending and processing income is calculated
by adding blending and processing income and deducting blending and
processing expense. Net blending and processing income may not be
comparable to similar measures used by other companies.
|
|
Three Months Ended |
|
|
|
March 31, |
|
($000’s) |
|
|
|
|
2023 |
|
2022 |
|
Blending and processing income |
|
|
|
|
510 |
|
903 |
|
Blending and processing
expenses |
|
|
|
|
(295 |
) |
(324 |
) |
Net blending and processing income |
|
|
|
|
(215 |
) |
579 |
|
OPERATING NETBACK
Operating netback is a measure that represents
sales net of royalties and operating expenses. Management believes
that operating netback is a useful supplemental measure to analyze
operating performance and provide an indication of the results
generated by the Company’s principal business activities prior to
the consideration of other income and expenses.
|
|
Three Months Ended |
|
|
|
December 31, |
|
($000’s) |
|
|
|
|
2023 |
|
2022 |
|
Petroleum and natural gas sales1 |
|
|
|
|
25,630 |
|
34,634 |
|
Royalties |
|
|
|
|
(5,875 |
) |
(7,632 |
) |
Adjusted net operating
expenses |
|
|
|
|
(16,713 |
) |
(13,233 |
) |
Production enhancement
expenses |
|
|
|
|
- |
|
(3,010 |
) |
Transportation and treating expenses |
|
|
|
|
(1,317 |
) |
(957 |
) |
Operating netback prior to realized derivative gain (loss) |
|
|
|
|
1,725 |
|
9,802 |
|
Realized derivative gain (loss) on settlement |
|
|
|
|
(1,875 |
) |
628 |
|
Operating netback2 |
|
|
|
|
(150 |
) |
10,430 |
|
1) Natural gas production includes
internally consumed natural gas primarily used in power generation
and excludes certain intercompany eliminations.
2) Please see segment reporting section of MD&A for
additional details.
NON-IFRS AND FINANCIAL
RATIOSOperating expenses per BOE
Operating expenses per boe is consists of
adjusted operating expenses per boe and production enhancement
expenses per boe. Operating expense per boe is a useful
supplemental measure to calculate the efficiency of its operating
expenses on a per unit of production basis.
|
|
Three Months Ended |
|
|
|
March 31, |
|
($/boe)1 |
|
|
|
|
2023 |
|
2022 |
|
Operating expenses per BOE |
|
|
|
|
49.33 |
|
41.93 |
|
Production enhancement
expenses |
|
|
|
|
- |
|
(7.50 |
) |
Other
corporate operating expenses & elimination entries2 |
|
|
|
|
(2.46 |
) |
- |
|
Adjusted operating expenses |
|
|
|
|
46.87 |
|
34.43 |
|
1) $/boe amounts are calculated using production
volumes2) Represents operating costs and intercompany eliminations
on the Company’s non-oil & gas production activities. See
segmented reporting section of the MD&A.
|
|
Three Months Ended |
|
|
|
March 31, |
|
($/boe)1 |
|
|
|
|
2023 |
|
2022 |
|
Adjusted operating expenses |
|
|
|
|
46.87 |
|
34.43 |
|
Net
blending and processing income |
|
|
|
|
(0.59 |
) |
(1.44 |
) |
Adjusted net operating expenses per BOE |
|
|
|
|
46.28 |
|
32.99 |
|
1) $/boe amounts are calculated using production
volumes |
|
|
|
|
|
|
|
|
Operating Netback per
BoeOperating netback per boe is used to calculate the
results of Razor’s operating efficiency of its petroleum and
natural gas assets on a per unit of production basis. Net operating
expense per boe is a useful supplemental measure to analyze
operating performance and provide an indication of the results
generated by the Company’s principal business activities prior to
the consideration of other income and expenses.
|
|
Three Months Ended |
|
|
|
March 31, |
|
($/boe)2 |
|
|
2023 |
|
2022 |
|
Petroleum and natural gas sales1 |
|
|
70.97 |
|
86.34 |
|
Royalties |
|
|
(16.27 |
) |
(19.03 |
) |
Adjusted net operating
expenses |
|
|
(46.28 |
) |
(32.99 |
) |
Production enhancement
expenses |
|
|
- |
|
(7.50 |
) |
Transportation and treating expenses |
|
|
(3.65 |
) |
(2.39 |
) |
Operating net back per BOE before realized gain (loss) |
|
|
4.78 |
|
24.43 |
|
Realized derivative gain (loss) on settlement |
|
|
(5.19 |
) |
1.57 |
|
Operating netback per BOE |
|
|
(0.41 |
) |
26.00 |
|
1) Please see segment reporting
section of MD&A for additional details. 2) $/boe
amounts are calculated using production volumes
ADVISORY PRODUCTION
INFORMATIONUnless otherwise indicated herein, all
production information presented herein is presented on a gross
basis, which is the Company's working interest prior to deduction
of royalties and without including any royalty interests.
BARRELS OF OIL EQUIVALENTThe
term "boe" or barrels of oil equivalent may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet of natural gas to one barrel of oil equivalent
(6 Mcf: 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. Additionally, 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 ratio of 6:1 may be misleading as an
indication of value.
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
news release.
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