All amounts herein are in
2019 Financial and Operational Highlights
- Annual oil and natural gas production in 2019 averaged 52,687 barrels of oil equivalent per day ("boe/d") (98% crude oil), representing a production per share increase of 26% over the prior year comparative period;
- Earned net income of
$328.0 million ($2.24 (CAD$2.97 )(1) per share basic) for the year endedDecember 31, 2019 compared to net income of$402.9 million ($2.59 (CAD$3.36 )(1) per share basic) for the year endedDecember 31, 2018 ; - Generated an operating netback of
$37.51 /boe and a funds flow provided by operations ("FFO") netback of$29.61 /boe from an average Brent price of$64.21 /bbl; - FFO of
$570.5 million ($3.90 (CAD$5.17 )1 per share basic), a 42% increase from the year endedDecember 31, 2018 of$400.6 million ($2.58 (CAD$3.34 )1 per share basic) with a 10% decrease in Brent reference pricing year over year; - For the year ended
December 31, 2019 the Company recognized$362.3 million in free funds flow, compared to the previous year of$98.3 million ; - Utilized a portion of free funds flow,
$223.9 million , to purchase 14,679,474 of the Company's common shares at an average price ofCAD$20.41 pursuant to the Company's normal course issuer bid ("NCIB") referred to as share buy back; - Capital expenditures ("Capex") were
$208.2 million compared to$302.3 million for the year endedDecember 31, 2018 . Capital expenditures were funded from FFO; - Increased net working capital to
$344.0 million atDecember 31, 2019 compared to a net working capital position of$218.5 million atDecember 31, 2018 , and exited 2019 with no bank or term debt; and - Participated in drilling 43 gross wells in
Colombia resulting in 38 oil wells, 1 abandoned well, 2 suspended wells and 2 wells under test, for a success rate of 97%.
Fourth Quarter Financial and Operational Highlights
- Achieved a record quarterly oil and natural gas production of 54,221 boe/d (98% oil), representing a production per share increase of 3% over the previous quarter ended
September 30, 2019 and an increase of 20% on a per basic share basis over the fourth quarter of 2018; - Earned net income of
$87.2 million ($0.61 (CAD$0.81 )(1) per share basic) compared to net income of$54.1 million ($0.35 (CAD$0.46 )(1) per share basic) in Q4 2018; - Fourth quarter sales volumes, excluding purchased oil, averaged 55,831 boe/d (98% oil);
- Realized an operating netback of
$36.43 /boe and an FFO netback of$27.89 /boe from an average Brent price of$62.49 /bbl; - Generated FFO of
$143.3 million , a 7% decrease compared to$154.2 million in Q4 2018. On a per share basic basis FFO was$1.00 (CAD$1.32 )1 compared to$0.99 (CAD$1.31 )1 per share basic compared to Q4 2018. The increase in FFO on a per share basis is a result of the Company's share buyback program; - Capex was
$58.3 million in the period compared to$76.8 million in the comparative period of 2018 and$208.2 million for the full year in 2019. The fourth quarter capital expenditure program included$52.7 million for drilling and completion; - For the three months ended
December 31, 2019 , the Company recognized free funds flow of$84.9 million ; and - Participated in drilling 15 gross (9.25 net)(2) wells in
Colombia resulting in 11 oil wells, 1 abandoned well, 1 suspended well and 2 wells under test, for a success rate of 92% in Q4 2019 compared to 28 gross wells in the preceding nine months of 2019 and 8 gross wells in the fourth quarter of 2018.
In 2019,
(1) Using USD-CAD Bank of
(2) Oil wells: Block LLA-32: Azogue-1; Block LLA-34: Tigana Norte-13, 15 & 18, Jacana-32, 34 & 35 and Tigui-18 &21; Block VIM-1: La Belleza-1; and Block Cabrestero: Akira-17. Abandoned: Block LLA-10: Tautaco-1. Suspended: Block Cabrestero: Bacano Oeste-5. Under test: Block LLA-34: Jacana-33 and Tigui-12.
Three Months Ended | Year Ended | |||||||||||||
2019 | 2018 | 2019 | 2019 | 2018 | 2017 | |||||||||
Operational | ||||||||||||||
Average daily production(1) | ||||||||||||||
Oil & Gas (boe/d) | 54,221 | 49,300 | 53,045 | 52,687 | 44,408 | 35,541 | ||||||||
Average daily sales of produced oil and natural gas(1) | ||||||||||||||
Oil (bbl/d) | 54,696 | 51,420 | 51,353 | 51,799 | 43,903 | 35,183 | ||||||||
Gas (Mcf/d) | 6,810 | 4,446 | 6,288 | 5,874 | 3,720 | 1,974 | ||||||||
Oil & Gas (boe/d) | 55,831 | 52,161 | 52,401 | 52,778 | 44,523 | 35,512 | ||||||||
Oil inventory - end of period (bbls) | 27,653 | 60,977 | 175,813 | 27,653 | 60,977 | 103,018 | ||||||||
Operating netback ($/boe)(2) | ||||||||||||||
Reference price - Brent ($/bbl) | 62.49 | 68.32 | 62.03 | 64.21 | 71.59 | 54.75 | ||||||||
Oil and gas revenue (excluding hedging) | 53.00 | 55.42 | 53.59 | 54.70 | 58.64 | 43.73 | ||||||||
Royalties | (7.15 | ) | (7.93 | ) | (6.72 | ) | (7.06 | ) | (8.17 | ) | (4.52 | ) | ||
Net revenue | 45.85 | 47.49 | 46.87 | 47.64 | 50.47 | 39.21 | ||||||||
Production expense | (5.68 | ) | (5.62 | ) | (6.15 | ) | (5.76 | ) | (5.54 | ) | (5.34 | ) | ||
Transportation expense | (3.74 | ) | (3.98 | ) | (4.51 | ) | (4.37 | ) | (3.49 | ) | (4.18 | ) | ||
Operating netback ($/boe)(2) | 36.43 | 37.89 | 36.21 | 37.51 | 41.44 | 29.69 | ||||||||
Funds flow provided by operations ($/boe)(2)(5) | 27.89 | 32.14 | 29.61 | 29.61 | 24.65 | 22.29 | ||||||||
Financial ($000s except per share amounts) | ||||||||||||||
Oil and natural gas revenue | 289,585 | 270,599 | 275,693 | 1,113,622 | 965,723 | 572,768 | ||||||||
Net income | 87,218 | 54,060 | 57,257 | 327,994 | 402,904 | 155,078 | ||||||||
Per share - basic | 0.61 | 0.35 | 0.40 | 2.24 | 2.59 | 1.01 | ||||||||
Funds flow provided by operations(2)(5) | 143,269 | 154,211 | 142,733 | 570,480 | 400,627 | 288,884 | ||||||||
Per share - basic | 1.00 | 0.99 | 0.99 | 3.90 | 2.58 | 1.87 | ||||||||
Capital expenditures and property acquisitions | 58,321 | 76,758 | 48,600 | 208,196 | 302,343 | 212,346 | ||||||||
Free funds flow(2) | 84,948 | 77,453 | 94,133 | 362,284 | 98,284 | 76,538 | ||||||||
Total assets | 1,684,581 | 1,642,120 | 1,593,802 | 1,684,581 | 1,642,120 | 1,085,065 | ||||||||
Working capital surplus | 344,031 | 218,526 | 279,949 | 344,031 | 218,526 | 163,401 | ||||||||
Bank debt(3) | — | — | — | — | — | — | ||||||||
Cash | 396,839 | 462,891 | 350,210 | 396,839 | 462,891 | 235,042 | ||||||||
Outstanding shares (end of period) (000s) | ||||||||||||||
Basic | 143,295 | 155,014 | 143,304 | 143,295 | 155,014 | 154,742 | ||||||||
Weighted average basic | 142,967 | 155,403 | 144,081 | 146,380 | 155,417 | 154,209 | ||||||||
Diluted(4) | 147,848 | 161,991 | 148,453 | 147,848 | 161,991 | 164,055 |
(1) Disclosure of production and sales volumes by product type, are included in the Company’s Annual Information Form dated
(2) The table above contains Non-GAAP measures. See “Non-GAAP Terms” for further discussion.
(3) Borrowing limit of
(4) Diluted shares include the effects of common shares and in-the-money stock options outstanding at the period-end. The
(5) In the second quarter of 2019,
Guidance
The table below is a summary of Parex’ original annual guidance for 2019 and 2020, and a review of 2019 actual results:
2020 Guidance (as released | 2019 Guidance (as released | 2019 Actuals | % Variance from 2019 Guidance | |||||||||
Brent crude average ($/bbl) | 60.00 | 60.00 | 64.21 | 7 | ||||||||
Production (average for period) (boe/d) | 54,500-56,250 | 52,000-54,000 | 52,687 | — | ||||||||
Operating netback ($/boe)(1) | 33.50 | — | 37.51 | — | ||||||||
Funds Flow provided by Operations (FFO) netback(1) ($/boe) | 26.50 | — | 29.61 | — | ||||||||
Total Capital Expenditures ($ millions) | 210-240 | 200-230 | 208 | — | ||||||||
Funds Flow provided by Operations (FFO)(1)(2) ($ millions) | 520-550 | 450-500 | 570 | 14 | ||||||||
Free Funds Flow (FFO less Total Capex mid-points)(1) ($ millions) | 310 | 260 | 362 | 40 | ||||||||
Outstanding shares (end of period)(3) (millions) | 130 | — | 143 | — | ||||||||
Production per share growth % | 14% | — | 26% | — | ||||||||
Current tax effective rate on FFO (%) | 17% | 14-17% | 17% | — |
(1) The table above contains Non-GAAP measures. See “Non-GAAP Terms” for further discussion.
(2) 2020 Guidance assumes Brent/Vasconia crude differential less than
(3) It is expected FFO will be used to fund the 2020 share buy-back program. Outstanding shares at
Balance Sheet Strength and Resiliency provides Optionality
With the recent decrease in world crude oil prices, the table below summarizes the operational sensitivities to
Brent crude average ($/bbl) (March - | 30.00 | 40.00 | 50.00 | |||
Production (average for period) (boe/d) | 54,500 | 54,500 | 54,500 | |||
Operating netback ($/boe)(1) | 12.00 | 19.00 | 26.00 | |||
Funds Flow provided by Operations (FFO) netback(1) ($/boe) | 10.00 | 15.00 | 20.00 | |||
2020 Total Capital Expenditures ($ millions) (4) | 160 | 175 | 230 | |||
2020 Funds Flow provided by Operations (FFO)(1)(2)(4) ($ millions) | 190 | 295 | 410 | |||
2020 Free Funds Flow (FFO less Total Capex)(1)(4) ($ millions) | 30 | 120 | 180 | |||
Outstanding shares (end of period)(3) (millions) | 130 | 130 | 130 | |||
2020 Current tax effective rate on FFO (%) | 4% | 12% | 14% |
(1) The table above contains Non-GAAP measures. See “Non-GAAP Terms” for further discussion.
(2) Assumes Brent/Vasconia crude differential of
(3) It is expected FFO will be used to fund the 2020 share buy-back program. Outstanding shares at
(4) 2020 total capital, funds flow from operations, and free funds flow include January and February actuals at an average Brent crude price of
At current oil prices and
Operational Update
Q1 2020 Production:
Cabrestero (Operated, 100% WI): Parex is currently drilling a 7 well program, using 2 drilling rigs. We expect to complete drilling in
CPO-11 (WI 50%): The Montuno-1 exploration well was drilled and abandoned.
Shareholder Return: 2020 Share Buy Back of 10% of Outstanding shares
As of
Environmental, Social & Governance Update
Providing Stakeholders with greater ESG disclosure -
Sharing benefits of our success with the community -
Inclusion in Bloomberg Gender-Equality Index - On
Appointment of VP
Annual General Meeting
Q4 2019 Conference Call & Webcast
The live audio webcast will be carried at: https://edge.media-server.com/mmc/p/etxrjg2h
Individuals located outside of
https://www.confsolutions.ca/ILT?oss=7P1R8666965910
This news release does not constitute an offer to sell securities, nor is it a solicitation of an offer to buy securities, in any jurisdiction.
For more information, please contact:
Senior Vice President, Capital Markets & Corporate Planning
Phone: (403) 517-1733
Investor.relations@parexresources.com
NOT FOR DISTRIBUTION FOR DISSEMINATION IN
Non-GAAP Terms
The Company discloses several financial measures ("non-GAAP Measures") herein that do not have any standardized meaning prescribed under International Financial Reporting Standards ("IFRS"). These financial measures include operating netback per boe, funds flow provided by operations ("FFO") netback, FFO per boe, FFO per share and free funds flow. Management uses these non-GAAP measures for its own performance measurement and to provide shareholders and investors with additional measurements of the Company’s efficiency and its ability to fund a portion of its future capital expenditures.
The Company considers operating netback per boe to be a key measure as it demonstrates
- Oil and natural gas sales per boe is determined by sales revenue excluding risk management contracts divided by total equivalent sales volume including purchased oil volume;
- Royalties per boe is determined by dividing royalty expense by the total equivalent sales volume and excludes purchased oil volumes;
- Production expense per boe is determined by dividing production expense by total equivalent sales volume and excludes purchased oil volumes; and
- Transportation expense per boe is determined by dividing transportation expense by the total equivalent sales volumes including purchased oil volumes.
Funds flow provided by operations is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. In Q2 2019, the Company changed how it presents funds flow provided by operations to present a more comparable basis to industry presentation.
FFO netback or FFO per boe, is a non-GAAP measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by produced oil and natural gas sales volumes.
FFO per share is determined by FFO divided by basic shares outstanding.
Free funds flow is determined by funds flow provided by operations less capital expenditures.
Shareholders and investors should be cautioned that these measures should not be construed as an alternative to net income or other measures of financial performance as determined in accordance with IFRS.
Oil & Gas Matters Advisory
The term "Boe" means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil ("bbl"). Boe’s may be misleading, particularly if used in isolation. A boe conversation ratio of 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. Given 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 Mcf: 1Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value.
This press release contains a number of oil and gas metrics, including finding, operating netbacks and FFO netbacks. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods and therefore such metrics should not be unduly relied upon. Management uses these oil and gas metrics for its own performance measurements and to provide security holders with measures to compare the Company's operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.
Advisory on Forward Looking Statements
Certain information regarding
In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to the performance characteristics of the Company's oil properties; the Company's expected 2020 capital expenditures, including the allocation of capital expenditures, the anticipated effect of the recent decrease in world oil prices on such capital expenditures and the Company's expectation that even in a lower oil price environment, it can fund its 2020 capital program (including its NCIB) from funds flow provided by operations or use its existing cash reserves, or adjust its capital expenditures as required based on certain oil prices; anticipated shares outstanding at the end of the applicable period, forecasted 2020 full year average production rate based on certain oil prices and anticipated year-over-year production growth; the Company's ability to generate free cash flow and its allocation; estimated tax effective rate on FFO for 2020; expected average production for Q1 2020; the Company's anticipated drilling program at Cabrestero and CPO-11; and the Company's plans in respect of the
These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in
Although the forward-looking statements contained in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this document,
Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on
This press release and, in particular the information in respect of the Company's expected capital expenditures, FFO and free funds flow for 2020, may contain future oriented financial information ("FOFI") within the meaning of applicable securities laws. The FOFI has been prepared by management to provide an outlook of the Company's financial results and activities and may not be appropriate for other purposes. The FOFI has been prepared based on a number of assumptions including the assumptions discussed in this press release. The actual results of operations of the Company and the resulting financial results may vary from the amounts set forth herein, and such variations may be material. The Company and management believe that the FOFI has been prepared on a reasonable basis, reflecting management’s best estimates and judgments. FOFI contained in this press release was made as of the date of this press release and
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