Please note
2020 First Quarter Highlights: Best-in-Class Balance Sheet
- Quarterly average production was 54,295 barrels of oil equivalent per day ("boe/d") (consisting of 53,037 barrels per day ("bbls/d") of crude oil and 7,548 thousand cubic feet per day ("mcf/d') of conventional natural gas) (98% crude oil), an increase of 15% on a per basic share basis over the prior year comparative period;
- Recognized a net loss of
$3.8 million ($0.03 per share basic) compared to net income of$87.2 million ($0.61 per share basic) in the previous quarter endedDecember 31, 2019 and net income of$82.0 million ($0.54 basic per share) in the comparative quarter of 2019. The net loss is primarily a result of a$84.7 million reduction in deferred tax assets as a result of a 24% decrease in the Colombian Peso/USD exchange rate in Q1 2020; - Generated an operating netback of
$24.41 per barrel of oil equivalent ("boe") and funds flow provided by operations ("FFO") netback of$20.63 per boe from an average Brent price of$51.05 per barrel ("bbl"); - FFO of
$97.3 million ($0.69 (or CAD$0.93 )(1) per share basic) as compared to$133.5 million ($0.88 (or CAD$1.17 )(1) per share basic) for the prior year comparative period. FFO was reduced due to a higher percentage of March sales at lower Brent prices and an inventory build; - Utilized free cash flow of
$26.0 million to purchase 3,865,000 of the Company's common shares for a total cost of$51.0 million (average price ofCAD$18.53 /share) pursuant to the Company's normal course issuer bid program ("NCIB"); - Capital expenditures ("Capex") were
$71.3 million in the period. Capex was fully funded from FFO; - Working capital was
$330.4 million (CAD$3.35 per share basic)(2) atMarch 31, 2020 compared to$344.0 million atDecember 31, 2019 and$207.4 million atMarch 31, 2019 . The Company has an undrawn syndicated bank credit facility of$200.0 million ; and - Participated in drilling 20 gross (13.05 net) wells(3) in
Colombia resulting in 10 oil wells, 2 abandoned wells, 3 suspended wells and 5 wells under test, for a success rate of 83%.
- Using USD-CAD Bank of
Canada 2020 Q1 average rate of 1.3449 and 2019 Q1 average rate of 1.3295. - Using USD-CAD Bank of Canada
March 31, 2020 rate of 1.4187 and outstanding shares as atMarch 31, 2020 . - Oil wells: Block LLA-34:Tigana Norte-19, 51 & 52, Jacana-43 & 47, Tigui-3, 7 & 8; Block Cabrestero: Akira-19 and Bacano Oeste-3. Abandoned: Block CPO-11: Daisy-1 & Montuno-1. Suspended: Block LLA-34: Tigana Norte-33, Jacana-45 and Tigui-9. Under test: Aguas Blancas-11 & 24; Block Cabrestero: Akira-20, 21 & 22.
Three Months Ended | ||||||
2020 | 2019 | 2019 | ||||
Operational | ||||||
Average daily production | ||||||
Oil & Gas (boe/d)(1) | 54,295 | 51,208 | 54,221 | |||
Average daily sales of produced oil & natural gas | ||||||
Oil (bbl/d) | 50,589 | 50,042 | 54,696 | |||
Gas (Mcf/d) | 7,548 | 4,992 | 6,810 | |||
Oil & Gas (boe/d) | 51,847 | 50,874 | 55,831 | |||
Oil inventory - end of period (bbls) | 250,405 | 90,999 | 27,653 | |||
Operating netback ($/boe)(2) | ||||||
Reference price - Brent ($/bbl) | 51.05 | 63.83 | 62.49 | |||
Oil & natural gas revenue (excluding hedging) | 38.47 | 52.33 | 53.00 | |||
Royalties | (4.71 | ) | (6.39 | ) | (7.15 | ) |
Net revenue | 33.76 | 45.94 | 45.85 | |||
Production expense | (5.31 | ) | (5.71 | ) | (5.68 | ) |
Transportation expense | (4.04 | ) | (4.06 | ) | (3.74 | ) |
Operating netback ($/boe)(2) | 24.41 | 36.17 | 36.43 | |||
Funds flow provided by operations ($/boe)(2)(5) | 20.63 | 29.16 | 27.89 | |||
Financial (USD$000s except per share amounts) | ||||||
Oil and natural gas revenue | 193,618 | 246,594 | 289,585 | |||
Net (loss) income | (3,779 | ) | 82,014 | 87,218 | ||
Per share - basic | (0.03 | ) | 0.54 | 0.61 | ||
Funds flow provided by operations(2)(5) | 97,313 | 133,505 | 143,269 | |||
Per share - basic | 0.69 | 0.88 | 1.00 | |||
Capital expenditures | 71,266 | 52,533 | 58,321 | |||
Free funds flow(2) | 26,047 | 80,972 | 84,948 | |||
Total assets | 1,610,341 | 1,657,956 | 1,684,581 | |||
Working capital surplus | 330,356 | 207,414 | 344,031 | |||
Bank debt(3) | — | — | — | |||
Cash | 397,424 | 432,906 | 396,839 | |||
Outstanding shares (end of period) (000s) | ||||||
Basic | 139,801 | 149,375 | 143,295 | |||
Weighted average basic | 141,805 | 151,581 | 142,967 | |||
Diluted(4) | 144,211 | 156,176 | 147,848 |
- Refer to the Company's Q1 2020 MD&A for production information by product type.
- The table above contains Non-GAAP measures. See “Non-GAAP Terms” for further discussion.
- Borrowing limit of
$200.0 million as ofMarch 31, 2020 . - Diluted shares as stated include the effects of common shares and in-the-money stock options outstanding at the period-end. The
March 31, 2020 closing stock price wasCdn$11.90 per share. - In the second quarter of 2019,
Parex changed the way it calculates and presents funds flow from operations. For further details refer to the "Non-GAAP Terms" on page 22 of the Company's Q1 2020 MD&A. Comparative periods have also been adjusted for this change.
2020 Corporate Guidance
Due to the significant decline in realized oil prices and the ongoing uncertainty in market conditions resulting from the COVID-19 pandemic, on
For the Second Quarter of 2020, Parex’ guidance is:
- Production
April 2020 average approximately 47,000 boe/d- May-
June 2020 expected average range of 30,000-40,000 boe/d depending on realized crude pricing.Parex is able to voluntarily curtail production volumes without reservoir damage. As such, the Company has voluntarily curtailed production, and will continue to do so, in order to maximize long-term shareholder value as crude oil prices are in contango, versus attempting to maintain funds flow at current low oil prices.
- Capital Expenditures
April 2020 Capex is estimated at approximately$6 million - Total Q2 Capex approximately
$8-$10 million
Share Repurchases
At current market conditions, purchases under the NCIB have been limited, helping
Annual General Meeting (“AGM” or “Meeting”) –
In response to the global COVID-19 public health emergency and to mitigate against its risks,
We invite all interested parties to consult the AGM virtual user guide for detailed instructions on participation or to access the Meeting related materials on the corporate website at https://parexresources.com/annual-general-meeting/ .
Q1 2020 Results Audio Webcast
Following the AGM,
Environment, Social and Governance Update
We plan to release selected ESG performance metrics on
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 OF 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, FFO netback, 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, 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 thousand cubic feet ("Mcf") of natural gas to 1 barrel of oil ("bbl"). Boe may be misleading, particularly if used in isolation. A boe conversion 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 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 Company’s focus, plans, priorities and strategies; Parex’ position in the business environment and its ability to withstand a prolonged period of low and volatile energy pricing; estimated
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 contains future-oriented financial information and financial outlook information (collectively ("FOFI") about the Corporation's prospective capital expenditures. 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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