Key Highlights
- Q2 2022 net income of
$143.1 million . - Record Q2 2022 funds flow from operations ("FFO")(1) of
$227.8 million . - Declared Q3 2022 regular dividend of
C$0.25 per share orC$1.00 per share annualized. - Year-to-date Q2 2022 returned
$184.4 million to shareholders through dividends and share buybacks. - On track to meet full-year 2022 production guidance of 54,000 to 56,000 boe/d.
“In the second quarter of 2022,
“Over the last 18 months we have strategically increased our capital deployment in operated fields to increase production, allowing
2022 Second Quarter Results
- Quarterly average oil and natural gas production was pre-released at 51,143 boe/d(4), an increase of 16% over the second quarter of 2021; production was relatively consistent with the first quarter of 2022 primarily due to well timing as well as higher than expected downtime.
- Net income of
$143.1 million or$1.24 per share basic. - Record quarterly FFO(1) of
$227.8 million , up by 73% from the second quarter of 2021 and up by 11% from the first quarter of 2022. - Generated a strong operating netback(2) of
$65.66 per boe and an FFO netback(2) of$50.12 per boe from an average Brent oil price of$111.98 per bbl. - Incurred
$132.8 million of capital expenditures(3), participating in the drilling of 15 gross (12.25 net) wells. - Paid a
C$0.25 per share dividend and repurchased 2.7 million shares through the company’s normal course issuer bid. - Working capital surplus(1) was
$311.5 million , which increased by$24.8 million from the first quarter of 2022, but is expected to decrease in the third quarter of 2022 due to the timing of capital expenditures as well as the acceleration of share buybacks that were announced onJuly 13, 2022 .
(1) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory.”
(2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory.”
(3) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory.”
(4) See “Operational and Financial Highlights” for a breakdown of production by product type.
Operational and Financial Highlights
Three Months Ended | Six months ended | |||||||
2022 | 2021 | 2022 | 2022 | |||||
Operational | ||||||||
Average daily production | ||||||||
Light Crude Oil and Medium Crude Oil (bbl/d) | 6,734 | 5,881 | 5,687 | 6,214 | ||||
Heavy Crude Oil (bbl/d) | 42,373 | 36,308 | 43,865 | 43,114 | ||||
Crude oil (bbl/d) | 49,107 | 42,189 | 49,552 | 49,328 | ||||
12,216 | 10,266 | 12,816 | 12,516 | |||||
Oil & Gas (boe/d)(1) | 51,143 | 43,900 | 51,688 | 51,414 | ||||
Operating netback ($/boe) | ||||||||
Reference price - Brent ($/bbl) | 111.98 | 69.08 | 97.90 | 104.94 | ||||
Oil & natural gas revenue(4) | 98.22 | 59.68 | 86.24 | 92.08 | ||||
Royalties(4) | (22.71 | ) | (8.69 | ) | (17.70 | ) | (20.01 | ) |
Net revenue(4) | 75.51 | 50.99 | 68.54 | 72.07 | ||||
Production expense(4) | (6.82 | ) | (6.70 | ) | (6.24 | ) | (6.48 | ) |
Transportation expense(4) | (3.03 | ) | (3.00 | ) | (2.99 | ) | (3.01 | ) |
Operating netback ($/boe)(2) | 65.66 | 41.29 | 59.31 | 62.58 | ||||
Funds flow provided by operations ($/boe)(2) | 50.12 | 32.02 | 43.73 | 46.87 | ||||
Financial ($000s except per share amounts) | ||||||||
Net income | 143,128 | 91,662 | 152,650 | 295,778 | ||||
Per share - basic(6) | 1.24 | 0.72 | 1.29 | 2.53 | ||||
Funds flow provided by operations(5)(8) | 227,796 | 131,602 | 205,488 | 433,284 | ||||
Per share - basic(4)(6) | 1.98 | 1.03 | 1.73 | 3.71 | ||||
Capital expenditures(3) | 132,781 | 44,847 | 122,498 | 255,279 | ||||
Free funds flow(3) | 95,015 | 86,755 | 82,990 | 178,005 | ||||
Dividends paid | 22,226 | — | 13,115 | 35,341 | ||||
Per share - Cdn$(4)(6) | 0.25 | — | 0.14 | 0.39 | ||||
Shares repurchased | 51,697 | 75,923 | 97,404 | 149,101 | ||||
Number of shares repurchased (000s) | 2,686 | 4,212 | 4,425 | 7,111 | ||||
Outstanding shares (end of period) (000s) | ||||||||
Basic | 113,810 | 124,938 | 116,413 | 113,810 | ||||
Weighted average basic | 115,134 | 127,346 | 118,541 | 116,828 | ||||
Diluted(8) | 114,648 | 126,818 | 117,331 | 114,648 | ||||
Working capital surplus(5) | 311,496 | 352,188 | 286,684 | 311,496 | ||||
Bank debt(7) | — | — | — | — | ||||
Cash | 392,786 | 371,353 | 362,103 | 392,786 | ||||
(1) Reference to crude oil or natural gas in the above table and elsewhere in this press release refer to the light and medium crude oil and heavy crude oil and conventional natural gas, respectively, product types as defined in National Instrument 51-101 - Standard of Disclosure for Oil and Gas Activities.
(2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory.”
(3) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures Advisory."
(4) Supplementary financial measure. See "Non-GAAP and Other Financial Measures Advisory."
(5) Capital management measure. See "Non-GAAP and Other Financial Measures Advisory.”
(6) Per share amounts (with the exception of dividends) are based on weighted average common shares.
(7) Borrowing limit of
(8) Diluted shares as stated include the effects of common shares and stock options outstanding at the period end;
Operational Update – 2022 Program
Drilling Schedule
- Seven drilling rigs on operated blocks.
- Three non-operated drilling rigs at Block LLA-34.
- At the Cabrestero Block, accelerating infill drilling and waterflood optimization as previously announced as well as executing on near-field exploration.
- Drilling rigs are currently moving to execute on previously communicated short-cycle opportunistic production adds in the Southern Llanos; spudding of those wells expected in Q3 2022.
- At the Capachos Block, have successfully drilled into multiple prospective formations utilizing synthetic drilling fluid with testing actively underway. Debottlenecking of facility to increase capacity is expected to be completed in late 2022.
- At the Arauca Block, civil works is completed for the first well, with plans to mobilize a rig and begin drilling operations on the block before year end.
- Third drilling rig is now on the block, which is expected to start spudding wells in
August 2022 to support the previously revised well program of 28-32 total wells and implementation of the initial waterflood pattern.
- Continuing to assess the exploitation potential of the Boranda Block. Successfully drilled the first ever horizontal well on the block in
July 2022 , with testing of this well to commence inAugust 2022 . - At the Fortuna Block, finalizing the drilling and assessment of the four prospective formations. Three of the four prospective formations have already been tested so far and once the final well is completed in Q3 2022, all wells will be put on beam pump. Full results of the Fortuna program will be assessed following the completion of the fourth formation, with a full evaluation to be completed prior to further investment.
Parex believes that multiple technologies that have been utilized by the Company in the Boranda and Fortuna programs, such as horizontal drilling, advanced stimulations and synthetic drilling fluid, are already providing long-term benefits across the Company’s inventory.- At the VIM-1 Block, gas processing facilities were brought online in Q2 2022, which is expected to increase liquids production following the completion of a development well that is currently being drilled.
Exploration
- Exploration has approximately four wells to be spud over the remainder of 2022, of which three are planned in the Southern Llanos and one in the Magdalena.
Production Guidance
- Third quarter 2022 production is expected to average 53,000 boe/d to 55,000 boe/d.
- Full-year 2022 production to be 54,000 to 56,000 boe/d, with a projected exit rate of over 60,000 boe/d.
Return of Capital Update
Dividend
Parex’s Board of Directors has approved a third quarter 2022 regular dividend of
Share Buybacks
As previously disclosed, starting
2022 Second Quarter Conference Call & Webcast
Toll-free dial number ( | 1-800-952-5114 | |
International dial-in numbers | https://www.confsolutions.ca/ILT?oss=7P1R8009525114 | |
Passcode | 5806112# | |
Webcast | https://edge.media-server.com/mmc/p/f3hy7o9c | |
About
For more information, please contact:
Senior Vice President, Capital Markets & Corporate Planning
403-517-1733
investor.relations@parexresources.com
Investor Relations & Communications Advisor
587-293-3286
investor.relations@parexresources.com
NOT FOR DISTRIBUTION FOR DISSEMINATION IN
Non-GAAP and Other Financial Measures Advisory
This press release uses various “non-GAAP financial measures”, “non-GAAP ratios”, “supplementary financial measures” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below. Such measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Investors are cautioned that non-GAAP financial measures should not be construed as alternatives to or more meaningful than the most directly comparable GAAP measures as indicators of
These measures facilitate management’s comparisons to the Company’s historical operating results in assessing its results and strategic and operational decision-making and may be used by financial analysts and others in the oil and natural gas industry to evaluate the Company’s performance. Further, management believes that such financial measures are useful supplemental information to analyze operating performance and provide an indication of the results generated by the Company's principal business activities.
Set forth below is a description of the non-GAAP financial measures, non-GAAP ratios, supplementary financial measures and capital management measures used in this press release.
Non-GAAP Financial Measures
Capital expenditures, is a non-GAAP financial measure which the Company uses to describe its capital costs associated with oil and gas expenditures. The measure considers both property, plant and equipment expenditures and exploration and evaluation asset expenditures which are items in the Company’s statement of cash flows for the period.
For the three months ended | For the six months ended | |||||||||||
($000s) | 2022 | 2021 | 2022 | 2022 | ||||||||
Property, plant and equipment expenditures | $ | 93,346 | $ | 45,547 | $ | 83,868 | $ | 177,214 | ||||
Exploration and evaluation expenditures | 39,435 | (700 | ) | 38,630 | 78,065 | |||||||
Total capital expenditures | $ | 132,781 | $ | 44,847 | $ | 122,498 | $ | 255,279 | ||||
Free funds flow, is a non-GAAP financial measure that is determined by funds flow provided by operations less capital expenditures. The Company considers free funds flow to be a key measure as it demonstrates Parex’ ability to fund return of capital, such as the NCIB, without accessing outside funds and is calculated as follows:
For the three months ended | For the six months ended | ||||||||||||
($000s) | 2022 | 2021 | 2022 | 2022 | |||||||||
Cash provided by operating activities | $ | 244,783 | $ | 111,858 | $ | 190,607 | $ | 435,390 | |||||
Net change in non-cash working capital | (16,987 | ) | 19,744 | 14,881 | (2,106 | ) | |||||||
Funds flow provided by operations | 227,796 | 131,602 | 205,488 | 433,284 | |||||||||
Capital expenditures, excluding corporate acquisitions | 132,781 | 44,847 | 122,498 | 255,279 | |||||||||
Free funds flow | $ | 95,015 | $ | 86,755 | $ | 82,990 | $ | 178,005 | |||||
Operating netback – the Company considers operating netbacks to be a key measure as they demonstrate Parex’ profitability relative to current commodity prices.
Non-GAAP Financial Ratios
Operating netback per boe – the Company considers operating netback per boe to be a key measure as they demonstrate Parex’ profitability relative to current commodity prices.
Funds flow provided by operations per boe or funds flow netback per boe, is a non-GAAP ratio 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. The Company considers funds flow netback to be a key measure as it demonstrates Parex’ profitability after all cash costs relative to current commodity prices.
Basic funds flow provided by operations per share is calculated by dividing funds flow provided by operations by the weighted average number of basic shares outstanding.
Capital Management Measures
Funds flow provided by operations, is a capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. A reconciliation from cash provided by operating activities to funds flow provided by operations is as follows:
For the three months ended | For the six months ended | ||||||||||||
($000s) | 2022 | 2021 | 2022 | 2022 | |||||||||
Cash provided by operating activities | $ | 244,783 | $ | 111,858 | $ | 190,607 | $ | 435,390 | |||||
Net change in non-cash working capital | (16,987 | ) | 19,744 | 14,881 | (2,106 | ) | |||||||
Funds flow provided by operations | $ | 227,796 | $ | 131,602 | $ | 205,488 | $ | 433,284 | |||||
Working capital surplus, is a capital management measure which the Company uses to describe its liquidity position and ability to meet its short-term liabilities. Working capital surplus is defined as current assets less current liabilities.
For the three months ended | For the six months ended | ||||||||||
($000s) | 2022 | 2021 | 2022 | 2022 | |||||||
Current assets | $ | 695,053 | $ | 505,781 | $ | 626,916 | $ | 695,053 | |||
Current liabilities | 383,557 | 153,593 | 340,232 | 383,557 | |||||||
Working capital surplus | $ | 311,496 | $ | 352,188 | $ | 286,684 | $ | 311,496 | |||
Supplementary Financial Measures
Throughout this press release, the Company presents certain financial figures, in accordance with IFRS, stated in dollars per boe. These figures are determined by dividing the applicable financial figure as prescribed under IFRS by the Company's total production for the respective period. Below is a list of figures which have been presented in this press release in $ per boe:
"Oil and natural gas revenue per boe" is determined by sales revenue excluding risk management contracts, as determined in accordance with IFRS, divided by total equivalent sales volume including purchased oil volumes.
"Production expense per boe" is comprised of production expense, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.
"Royalties per boe" is comprised of royalties, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.
"Transportation expense per boe" is comprised of transportation expense, as determined in accordance with IFRS, divided by the total equivalent sales volumes including purchased oil volumes.
"Dividends paid per share" is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.
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, 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.
The following abbreviations used in this press release have the meanings set forth below:
bbl | one barrel |
bbls | barrels |
bbls/d | barrels per day |
boe | barrels of oil equivalent of natural gas; one barrel of oil or NGLs for six thousand cubic feet of natural gas |
boe/d | barrels of oil equivalent of natural gas per day |
mcf | thousand cubic feet |
mcf/d | thousand cubic feet per day |
Distribution Advisory
The Company's future shareholder distributions, including but not limited to the payment of dividends and the acquisition by the Company of its shares pursuant to its NCIB, if any, and the level thereof is uncertain. Any decision to pay further dividends on the common shares (including the actual amount, the declaration date, the record date and the payment date in connection therewith and any special dividends) or acquire shares of the Company will be subject to the discretion of the Board of Directors of
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; the terms of the dividends payable on
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 information that may be considered a financial outlook under applicable securities laws about the Company's potential financial position, including, but not limited to: the terms of the dividends payable on
PDF available: http://ml.globenewswire.com/Resource/Download/a0050baf-a504-4c78-857a-42d1043b913b
Source:
2022 GlobeNewswire, Inc., source