Selected financial and operational information set out below highlights results from the fourth quarter and second half of 2023 ("H2 2023"), the first full period of operations following the spin-out of the early stage
H2 2023 Financial and Operating Highlights
Since commencing active operations on
- Logan raised net equity proceeds of
$102.2 million through completion of a private placement and the exercise of common share purchase warrants in the third quarter. - Successfully executed on its exploration and development capital expenditure program spending
$74.1 million during the second half of 2023, in line with budgeted Capital Expenditures before A&D of$75.0 million for the period. The Company also incurred$5.3 million of acquisition costs to expand its undeveloped acreage position at Simonette and to acquire certain equipment inventory.- At Simonette, the Company began delineating its land base targeting both crude oil and liquids-rich natural gas prospects in the north and south sections of the play. Logan drilled, completed and brought 2.0 net wells on production in September. During the fourth quarter, Logan drilled two additional wells and a third well was spud in late 2023.
- At
Pouce Coupe , Logan drilled, completed and brought 3.0 net oil wells on production in November driving the significant increase in oil production during the fourth quarter. - Logan added 62.25 net sections of land around our core area of Simonette, consisting of 32.75 net sections of
Montney acreage and 29.5 net sections of land in non-Montney plays on and surrounding our existing asset base. Within theMontney acreage added, Logan has acquired a 14 net section contiguous block of land in the Lator area west of Simonette.
- Achieved production growth to 7,515 BOE per day (35% liquids) on average for the fourth quarter, up 39% from 5,394 BOE per day (24% liquids) during the previous quarter.
- Production for the second half of 2023 exceeded guidance by 8% averaging 6,455 BOE per day (31% liquids) compared to the Company's forecast of 6,000 BOE per day (28% liquids).
- Logan's Operating Netback continues to improve as a result of operating leverage and improved scale in the business. The Company's Operating Netback averaged
$23.63 per BOE during the fourth quarter, up 116% from$10.94 per BOE reported in the previous quarter, resulting in an average Operating Netback of$18.32 per BOE for the second half of 2023. - Generated
$15.4 million and$20.6 million of Adjusted Funds Flow during the respective three and six month periods endedDecember 31, 2023 . Adjusted Funds Flow for the fourth quarter increased by 198% from$5.2 million during the third quarter of 2023, driven by Logan's liquids-weighted production and revenue growth, together with lower average royalties and a decrease in per unit operating and transportation expenses quarter over quarter. - Logan exited 2023 with a working capital surplus of
$41.6 million , including$54.0 million of cash on hand and no bank debt. Subsequent to the reporting period inMarch 2024 , the Company's lender increased the authorized borrowing amount available on its revolving demand credit facility from$15.0 million to$50.0 million (refer to "Subsequent Events" below). Logan is well positioned to execute on its 2024 capital expenditure program.
The table below summarizes selected highlights from the Company's financial and operating results for the three and six month periods ended
(CA$ thousands, except as otherwise noted) | Q4 2023 | H2 2023 |
FINANCIAL HIGHLIGHTS | ||
Oil and gas sales | 28,653 | 46,141 |
Net income and comprehensive income | 11,391 | 683 |
$ per common share, basic and diluted | 0.02 | 0.00 |
Cash provided by operating activities | 11,176 | 16,334 |
Adjusted Funds Flow (1) | 15,392 | 20,551 |
$ per common share, basic (1) | 0.03 | 0.05 |
$ per common share, diluted (1) | 0.03 | 0.04 |
Capital Expenditures before A&D (1) | 40,568 | 74,104 |
Acquisitions | 151 | 5,295 |
Total assets | 234,638 | 234,638 |
Working capital surplus | 41,633 | 41,633 |
Shareholders' equity | 174,116 | 174,116 |
Common shares outstanding (000s), end of period (2) | 465,537 | 465,537 |
OPERATING HIGHLIGHTS AND NETBACKS (5) | ||
Average daily production | ||
Crude oil (bbls/d) | 1,844 | 1,313 |
Condensate (bbls/d) (3) | 456 | 350 |
Natural gas liquids (bbls/d) (3) | 362 | 318 |
Natural gas (mcf/d) | 29,116 | 26,844 |
BOE/d | 7,515 | 6,455 |
% Liquids (4) | 35 % | 31 % |
Average realized prices | ||
Crude oil ($/bbl) | 90.40 | 95.82 |
Condensate ($/bbl) (3) | 102.39 | 103.37 |
Natural gas liquids ($/bbl) (3) | 51.61 | 51.20 |
Natural gas ($/mcf) | 2.72 | 2.70 |
Combined average ($/BOE) | 41.44 | 38.85 |
($/BOE) | Q4 2023 | H2 2023 |
Netbacks ($/BOE) (5) | ||
Oil and gas sales | 41.44 | 38.85 |
Processing and other revenue | 1.25 | 1.46 |
Royalties | (3.37) | (4.41) |
Operating expenses | (11.82) | (13.48) |
Transportation expenses | (3.87) | (4.10) |
Operating Netback ($/BOE) (5) | 23.63 | 18.32 |
General and administrative expenses | (2.58) | (2.56) |
Financing income (6) | 1.35 | 1.61 |
Settlement of decommissioning obligations | (0.13) | (0.08) |
Adjusted Funds Flow Netback ($/BOE) (5) | 22.27 | 17.29 |
(1) | "Adjusted Funds Flow" and "Capital Expenditures before A&D" 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) | The unaudited highlights reported for Q4 2023 and H2 2023 should be read in conjunction with the Company's audited annual financial statements and related MD&A as at and for the years ended |
In late
After the rig completed drilling the three wells at
The rig then moved to drill a single well (02/13-34-062-02W6 or "13-34") in the Lator area, west of Simonette. The Lator lands were acquired in the third quarter of 2023 and the 13-34 well will serve to validate the resource of the 14 section land block which is currently unbooked.
Logan is pleased to provide below select highlights from the results of its first year-end oil and gas reserves evaluation as of
- Logan's proved developed producing ("PDP") reserves are 9.9 MMBOE, total proved ("TP") reserves are 43.3 MMBOE, and total proved plus probable ("
TPP ") reserves are 74.8 MMBOE at year-end 2023. - The before-tax net present value ("NPV") of reserves, discounted at 10%, was approximately
$51.3 million on a PDP basis,$192.6 million on a TP basis, and$393.0 million on aTPP basis. - The McDaniel Report is reflective of the early stage of development of Logans assets. Within the report, there are 68.3 net undeveloped
Montney locations assigned within Simonette andPouce Coupe which Logan expects to drill within the next five years. These booked locations account for approximately 11% of the Company's identifiedMontney inventory. - The McDaniel Report includes future development capital ("FDC") of
$505.1 million in the TP category with 44.6 net locations and$771.7 million in theTPP category with 68.3 net locations.
The following tables highlight the findings of the McDaniel Report. The numbers in the tables below may not add due to rounding.
Summary of Reserves Volumes as at
The Company's reserves volumes and undiscounted FDC costs as at
SUMMARY OF RESERVE VOLUMES(1) | Crude Oil (Mbbls) | NGL(2) (Mbbls) | Natural Gas (MMcf) | Combined (MBOE) | FDC Costs ($MM) |
Proved developed producing | 1,736 | 812 | 44,187 | 9,913 | 15 |
Proved developed non-producing | - | 36 | 1,324 | 256 | - |
Proved undeveloped | 4,712 | 4,992 | 140,719 | 33,157 | 490 |
Total Proved | 6,447 | 5,840 | 186,230 | 43,326 | 505 |
Probable | 6,503 | 3,496 | 128,744 | 31,455 | 267 |
Total Proved plus Probable | 12,950 | 9,336 | 314,974 | 74,781 | 772 |
(1) Gross working interest reserves before royalty deductions. |
(2) Natural gas liquids include condensate volumes. |
Net Present Value of Future Net Revenue as at
The following table summarizes the NPV of the Company's reserves (before-tax) as at
Unit Value (1) | ||||||
NET PRESENT VALUE | 0 % | 5 % | 10 % | 15 % | 20 % | |
Developed Producing | 18 | 45 | 51 | 52 | 52 | 5.97 |
Developed Non-Producing | 2 | 1 | 1 | 1 | 1 | 4.35 |
Undeveloped | 306 | 207 | 140 | 94 | 62 | 4.93 |
Total Proved | 325 | 254 | 193 | 148 | 115 | 5.17 |
Probable | 465 | 297 | 200 | 142 | 106 | 7.79 |
Total Proved plus Probable | 790 | 550 | 393 | 290 | 220 | 6.24 |
(1) Unit values are based on net reserves. Net reserves are the Company's working interest reserves after deduction of royalties, plus its royalty interests in reserves. |
The following table outlines estimated annual future development capital expenditures required to bring TP and
FUTURE DEVELOPMENT CAPITAL | TP Reserves ($MM) | TPP Reserves ($MM) |
2024 | 80 | 80 |
2025 | 82 | 82 |
2026 | 105 | 105 |
2027 | 105 | 105 |
2028 | 116 | 116 |
Thereafter | 17 | 284 |
Total FDC, undiscounted | 505 | 772 |
Total FDC, discounted at 10% | 387 | 533 |
subsequent events
Upsized Credit Facility
Effective
Commodity Hedging Update
Logan has entered into short-term derivative financial contracts to hedge a notional 1,000 bbls/d of WTI oil at CA$102.00/bbl for March to
ABOUT
Logan is a growth-oriented exploration, development and production company formed through the spin-out of Spartan's early stage
Logan's corporate presentation has been updated as of
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
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
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" is calculated by Logan as oil and gas sales, net of royalties, plus processing and other revenue, less operating and transportation expenses.
The Company refers to Operating Income expressed per unit of production as an "Operating Netback" which is a non-GAAP financial ratio. 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.
Capital Management Measures
Working capital
Management uses working capital as a measure to assess the Company's financial position. The working capital surplus (deficit) is calculated as current assets less current liabilities determined in accordance with GAAP.
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.
Reserves Disclosure
The reserves information and data provided in this press release presents only a portion of the disclosure required under NI 51-101. Logan's Statement of Reserves Data and Other Oil and Gas Information on Form 51-101F1 dated
All reserves values, future net revenue and ancillary information contained in this press release are derived from the McDaniel Report unless otherwise noted. All reserve references in this press release are "Company gross reserves". Company gross reserves are the Company's total working interest reserves before the deduction of any royalties payable by the Company. Estimates of reserves and future net revenue for individual properties may not reflect the same level of confidence as estimates of reserves and future net revenue for all properties, due to the effect of aggregation. There is no assurance that the forecast price and cost assumptions applied by McDaniel in evaluating Logan's reserves will be attained and variances could be material.
All evaluations and summaries of future net revenue are stated prior to the provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs and estimated future capital expenditures. It should not be assumed that the estimates of future net revenues presented represent the fair market value of the reserves. The recovery and reserve estimates of Logan's oil, NGLs and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual oil, natural gas and NGL reserves may be greater than or less than the estimates provided herein. There are numerous uncertainties inherent in estimating quantities of crude oil, reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth herein are estimates only.
Proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves. Proved developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty. Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (e.g., when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable, possible) to which they are assigned. Certain terms used in this press release but not defined are defined in NI 51-101, CSA Staff Notice 51-324 – Revised Glossary to NI 51-101, Revised Glossary to NI 51-101, Standards of Disclosure for Oil and Gas Activities ("CSA Staff Notice 51-324") and/or the COGEH and, unless the context otherwise requires, shall have the same meanings herein as in NI 51-101, CSA Staff Notice 51-324 and the COGEH, as the case may be.
Drilling Locations
This press release discloses drilling inventory in two categories: (a) proved locations; and (b) probable locations. Proved locations and probable locations are derived from the McDaniel Report and account for drilling locations that have associated proved and/or probable reserves, as applicable. Of the 68.3 net total booked drilling locations identified herein, 44.6 are net proved locations and 23.7 are net probable locations.
Forecast Prices Used in Estimates
The following table outlines forecasted future prices that McDaniel has used in their evaluation of the Company's reserves at
FUTURE COMMODITY PRICE FORECAST | WTI Cushing US$/bbl | Canadian CA$/bbl | NYMEX US$/MMBtu | AECO-C Spot CA$/GJ | USD/CAD Exchange |
2024 | 73.67 | 92.91 | 2.75 | 2.09 | 0.75 |
2025 | 74.98 | 95.04 | 3.64 | 3.20 | 0.75 |
2026 | 76.14 | 96.07 | 4.02 | 3.84 | 0.76 |
2027 | 77.66 | 97.99 | 4.10 | 3.92 | 0.76 |
2028 | 79.22 | 99.95 | 4.18 | 3.99 | 0.76 |
Five year average | 76.33 | 96.39 | 3.74 | 3.41 | 0.75 |
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 90 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
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
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; the assumption that Logan is well capitalized to execute on its 2024 capital expenditure program and growth strategy; and commodity hedging. In addition, statements relating to expected production, reserves, recovery, costs and valuation are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.
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, 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 (including
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Logan's prospective results of operations and production, organic growth, operating costs, capital expenditures, Adjusted Funds Flow, working capital, Operating Netback, Logan's 2024 capital expenditure program and components thereof, 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 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, 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
Abbreviations
A&D | acquisitions and dispositions |
AECO | |
AIF | refers to the Company's Annual Information Form dated |
bbl | barrel |
bbls/d | barrels per day |
bcf | one billion cubic feet |
BO | barrels of oil equivalent |
BOE/d | barrels of oil equivalent per day |
CA$ or CAD | Canadian dollar |
ESG | Environment, Social and Governance |
GJ | gigajoule |
H2 2023 | six months ending |
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 |
MM | millions |
$MM | millions of dollars |
MPa | megapascal unit of pressure |
NGL(s) | natural gas liquids |
NI 51-101 | National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities |
nm | "not meaningful", generally with reference to a percentage change |
NPV | Net present value, all references to NPV in this press release are before-tax |
NYMEX | |
PDP | Proved developed producing reserves |
Q4 2023 | three months ended |
TP | Total proved reserves |
Total proved plus probable reserves | |
TSXV | |
US$ or USD | |
WTI | West Texas Intermediate, the reference price paid in |
SOURCE
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