TSX: PNE
WWW.PINECLIFFENERGY.COM
Long-term Value Focus
Annual Report 2023
MESSAGE TO SHAREHOLDERS
2023
I hope everyone is doing well. Pine Cliff has been busy integrating our acquisition of Certus Oil and Gas, which closed on | ||||
December 13th. We are pleased to report that the performance of these assets thus far has exceeded our expectations. | ||||
Concurrently, we are managing the challenges posed by the unusually mild winter weather and its impact on the North | ||||
American natural gas market, where prices have been halved in recent months. Key highlights from our fourth quarter and | ||||
the entirety of 2023 include: | ||||
• | exited Q4 and the 2023 year with production at ~26,000 Boe/d , the highest yearly exit production rate in Pine Cliff's | |||
12 year history; | ||||
TSX: PNE | ||||
• | generated $9.7 million ($0.03 per basic and fully diluted share) and $58.7 million ($0.17 per basic and $0.16 per fully | |||
WWW.PINECLIFFENERGY.COM | 1 | |||
diluted share) of adjusted funds flow | 2 | for the three months and year-ended December 31, 2023, compared to $40.2 | ||
• | million ($0.11 per basic and fully diluted share) and $163.2 million ($0.47 per basic and $0.45 per fully diluted share) | |||
for the comparable periods in 2022; | ||||
• | net present value for proved plus probable reserves of $476.8 million, discounted at 10%, an increase of $67 million | |||
or 16.3%, from December 31, 2022, primarily as a result of the Certus acquisition; | ||||
paid dividends of $11.6 million ($0.03 per basic and fully diluted share) and $46.0 million ($0.13 per basic and fully | ||||
• | diluted share) during the three and 12 months ended December 31, 2023, compared to $10.8 million ($0.03 per basic | |||
and diluted share) and $23.6 million3 ($0.07 per basic and3 | diluted share) for the comparable periods in 2022; and | |||
production averaged 21,454 Boe/d | and 20,660 Boe/d | for the three and the year ended December 31, 2023, 2% | ||
higher and 2% lower respectively than the comparable periods in 2022. |
Dividend Adjustment
Pine Cliff has been consistent with our messaging to shareholders about our dividend sustainability. We promised to defend it strongly while emphasizing we would not use debt to maintain it, nor would we keep it at its current level if we thought that doing so could impair the underlying value of Pine Cliff. We have worked too hard, for too many years, to weaken the Company right before we enter an expected prosperous period for Pine Cliff and our industry. We believe this conservative fiscal strategy will continue to be the foundation of our future success and growth, as it has been in the past.
The precipitous fall in natural gas spot prices over the past five months has dampened our 2024 cash flow projections to the point where maintaining our dividend at its current level will result in Pine Cliff paying dividends using debt and not free cash flow. This scenario is not sustainable. Although we are optimistic that external factors and reduced drilling activity may support higher natural gas prices later this year, hope is not a strategy. Therefore, starting in March, we are reducing our regular monthly to $0.005 per share or $0.06 per share on an annualized basis. We are confident that with this reduction, combined with our physical hedge contracts in place and a limited capital expenditure budget for 2024, the dividend payout ratio will not exceed 100% of Pine Cliff's estimated 2024 adjusted funds flow.
We have increased our dividend twice since its inception in June 2022, however I have always considered the Pine Cliff dividend to be a variable dividend. Of course, my preference would be that the dividend would continue to rise and never drop, but I know that if you maintain a high payout ratio like we have done to return maximum cash to our shareholders, there is a risk the dividend may have to be reduced in a low commodity price environment. I do believe that with low decline assets in your portfolio, it is possible to continue to manage a dividend in an oil and gas business. It requires a strong focus on operating costs and a team that will continue to opportunistically add production through the drill bit or through acquisitions, as appropriate. It requires disciplined capital allocation decision makers who share the goal of making their company more valuable in the future. Pine Cliff has these skills and capabilities, and because management are PNE shareholders, our motivations are aligned with our other owners. We will continue to make difficult capital allocation decisions to protect the integrity of the business and improve shareholder value.
2024 CAPEX and Production Guidance
Pine Cliff successfully exceeded our 2023 annual production guidance, averaging 20,660 Boe/d on developmental capital of $12.6 million. In 2024, we are anticipating spending approximately $7 million of developmental3 capital, and we expect that level of spending to result in average annual production of between 24,000 and 25,000 Boe/d , with approximately 79% of
that production being natural gas. The reason our 2024 CAPEX is 40% lower than our 2023 CAPEX,3 even though Pine Cliff
MESSAGE TO SHAREHOLDERS
2023
production is 30% higher this year, is that we do not believe 2024 is a time to be drilling natural gas wells. We will save our locations for better commodity prices.
InHedgingthe earlyAndyearsMarketof PineDiversificationCliff, we did notStratusegyhedging in our marketing strategy. Our production was over 90% natural gas and we were fully exposed to the volatility of the commodity. Over the past few years, we have increased our use of physical hedges as we transitioned to a dividend paying company. We anticipate another volatile year for commodity prices in 2024, and to reduce this risk, we proactively increased our 2024 hedge exposure from previous years to approximately 22% of our naturalTSX:gasPNEproduction at an average price of $3.19 Mcf and 33% of our crude oil production at an average price of $99.48 Bbl.
WeWWWwill.continuePINECLIFFENERGYto selectively.COM utilize hedging in the coming years to support our business and our dividend.
In addition to using physical hedges, our marketing group works closely with our operations team to determine the best strategies to utilize our three pipelines that take natural gas production out of the Province of Alberta. Their work has resulted in realized natural gas pricing 14% higher than the AECO 5A benchmark in the 12 months ended December 31, 2023. Our preference is to use flexible and shorter-term solutions to optimize pricing rather than entering long-term pipeline commitments to other markets. We believe that the attractiveness of the AECO marketing hub in Alberta will rise in the coming years and we want to ensure we retain maximum flexibility to take advantage of that trend.
PineCFO TransitionCliff's Chief Financial Officer, Alan MacDonald, will be retiring from his position. I am happy to announce that Kris Zack, who joined Pine Cliff last September as Vice-President Finance, has been appointed Pine Cliff's Chief Financial Officer effective May 1, 2024. Kris has over two decades of capital market and auditing experience and has been invaluable to Pine Cliff through the Certus integration.
On a personal note, Alan has been a pleasure to work with. His calm demeanour and sage advice have helped us navigate some choppy waters during his tenure. Pine Cliff and its shareholders are forever indebted to his significant contributions in making our company into what it is today. Thanks Alan.
Webcast
There was a lot of information in this quarter, so we are going to give our shareholders another way to receive this information and ask management some questions. We will be conducting
5th. Participants can access the live webcast via this Linkor througha live webcastthe linksatprovided10:00 AMon MSTthe Company's(12:00 NoonwebsiteEST). on March
Outlook
The short-term attention on weather and natural gas storage has overshadowed an exciting time in our industry with new oil and gas pipelines being completed to the West Coast in Western Canada. AECO forward strip natural gas prices in Western Canada are over $3 Mcf in 2025 and LNG exports are expected to more than double in North America in the next four years. We believe that Pine Cliff is a unique investment option in this environment with our dividend, strong balance sheet, low production decline rate and significant leverage to Western Canada natural gas prices. Our job at Pine Cliff is to continue to deliver to our investors the same discipline of capital allocation and business judgment we have demonstrated over the past 12 years to increase shareholder value and build a stronger company. Thank you for your confidence in our team and for trusting in our process.
Yours truly,
Phil Hodge
President and Chief Executive Officer
March 4, 2024
1Comprised of 123,150 Mcf/d natural gas, 2,950 Bbl/d NGLs and 2,525 Bbl/d light and medium oil.
2Please refer to the attached Management's Discussion and Analysis for Reader Advisories regarding forward-looking information, non-GAAP measures and oil and gas measurements and definitions. This President's Message should be read in conjunction with the audited consolidated financial statements of Pine Cliff Energy Ltd. together with Management's Discussion and Analysis for the period ended December 31, 2023, which can be found on www.sedarplus.com and is subject to the same cautionary statements as set out therein.
3Refer to the March 4, 2024 Press Release for commodity split by product.
RESERVES INFORMATION
2023
Reserves Information | ") was engaged to prepare evaluations of the reserves of Pine Cliff Energy | |||||
McDaniel & Associates Consultants Limited (" | ||||||
Ltd. (" | " or the " | ") at December 31, 2023. The evaluations of petroleum and natural gas reserves were conducted | ||||
McDaniel | ") with the effective | |||||
in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (" | ||||||
Pine Cliff | Company | |||||
date of December 31, 2023. The gross reserves in the following tables represent Pine Cliff's ownership interest before royalties and | ||||||
NI 51-101 | ||||||
before consideration of the Company's royalty interest reserves. As defined in NI 51-101, 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. Tables may not add due to rounding. | ||||||
Where amounts are expressed on a Boe basis, natural gas volumes have been converted to oil equivalence at six Mcf per one Bbl. | ||||||
Where amounts are expressed in Mcfe, natural gas liquids and oil volumes are converted to one Mcfe using the same ratio. The terms | ||||||
Boe and Mcfe may be misleading, particularly if used in isolation. This conversion ratio is based on an energy equivalency conversion | ||||||
method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. | ||||||
Highlights of Pine Cliff's reserves for the 2023 year include: | ||||||
• | Net present value for proved plus probable ("P+P") reserves of $476.8 million, discounted at 10%, an increase of $65.3 | |||||
million, or 16%, from December 31, 2022, primarily as a result of the Acquisition, as defined herein, offsetting the impact | ||||||
• | of lower natural gas benchmark pricing; | |||||
• | Pine Cliff increased its 2023 P+P reserves by 29.0 MMBoe prior to adjusting for 2023 production, a reserve replacement | |||||
ratio of 325% of 2024 estimated production5 as a result of the 31.5 MMBoe added from the Acquisition; | ||||||
• | Remaining P+P reserves of 89.2 MMboe (71% conventional natural gas and coal bed methane) at December 31, 2023 | |||||
increased 31% from 67.6 MMboe at December 31, 2022 largely as a result of the Acquisition; and | ||||||
Approximately 70% of total reserve volumes are classified as total proved reserves, 30% are classified as probable reserves. |
Pine Cliff's Reserves | ||||||
McDaniel has used a three-consultant average price (McDaniel, GLJ & Sproule) forecast, resulting in a price forecast of $2.20 and | ||||||
$3.37 per MMBtu for AECO natural gas and US$73.67 and US$74.98 per Bbl for WTI oil in 2024 and 2025 respectively. | ||||||
Summary of Remaining Working Interest Reserves, as of December 31, 2023 | ||||||
Natural Gas | Conventional | Coal Bed | Oil | |||
Reserve Category | Oil1,2 | Liquids | Natural Gas | Methane | Equivalent | |
Pro | MBbl | MBbl | MMcf | MMcf | MBoe | |
Developed Producing | 3,210.0 | 6,283.0 | 204,978.9 | 22,133.9 | 47,345.1 | |
Developed Non-Producing | 218.8 | 90.2 | 1,956.6 | - | 635.1 | |
Undeveloped | 944.0 | 2,804.2 | 20,059.4 | - | 7,091.4 | |
Total Proved | 4,372.9 | 9,177.4 | 226,9 4.9 | 22,133.9 | 55,071.8 | |
Probable | 2,400.6 | 5,451.7 | 87,299.8 | 6,668.1 | 23,513.6 | |
2 Amounts may not add due to rounding. | 6,773.5 | 14,629.1 | 314,294.7 | 28,802.0 | 78,585.4 | |
1 | Total Proved plus Probable | |||||
Oil includes light and medium and heavy oil. Light and medium oil represents 100 per cent of total proved and P+P reserves. | ||||||
3 PINE CLIFF ENERGY LTD.
RESERVES INFORMATION
2023
Summary of Net Present Values of Future Net Revenue, Before Income Taxes, as of December 31, 2023 Discounted at (% per year)
($ millions) | 0% | 5% | 10% | 15% | 20% |
Reserve Category1 | |||||
Pro | 51.1 | 199.9 | 213.7 | 198.1 | 178.1 |
Developed Producing | |||||
Developed Non-Producing | 21.1 | 12.8 | 8.7 | 6.3 | 4.9 |
Undeveloped | 142.2 | 87.7 | 57.3 | 39.0 | 27.3 |
Total Proved | 214 4 | 300 4 | 279 7 | 3 5 | 210 3 |
Total Proved plus Probable | 699.0 | 593.2 | 476.8 | 142 | 318.2 |
385.9 | |||||
Probable | 484.6 | 292.9 | 197.2 | .4 | 107.9 |
1 Amounts may not add due to rounding.
Reconciliation of Gross Reserves by Principal Product Type, as of December 31, 2023
Reserve Reconciliation Company Gross1 | Oil2 | Natural Gas Liquids | Natual Gas3 | Oil Equivalent |
Total Proved | MBbl | MBbl | MMcf | MBoe |
December 31, 2022 | 3,099.3 | 3,663.1 | 270,514.8 | 51,848.3 |
Extension | 91.6 | 23.2 | 751.1 | 240.0 |
Technical Revisions | (23.9) | 193.1 | (5,933.4) | (819.8) |
Acquisitions | 2,439.6 | 7,987.3 | 53,881.2 | 19,407.1 |
Economic Factors | 3.3 | (195.6) | (5,680.5) | (1,139.1) |
December 31, 2023 | 5,152.0 | 11,126.2 | 274,303.8 | 61,995.5 |
Production | (458.0) | (544.8) | (39,229.4) | (7,541.0) |
Total Proved plus Probable | 4,882.9 | 4,834.2 | 347,587.80 | 67,648.4 |
December 31, 2022 | ||||
Extension | 374.6 | 91.3 | 3,035.40 | 971.8 |
Technical Revisions | (61.9) | 211.4 | (8,783.80) | (1,314.4) |
Acquisitions | 3,387.8 | 13,461.3 | 87,872.50 | 31,494.5 |
Economic Factors | 9.3 | (251.1) | (11,164.10) | (2,102.5) |
1 Amounts may not add due to rounding.
December 31, 2023 | 8,134.7 | 17,802.3 | 379,318.3 | 89,156.7 |
Production | (458.0) | (544.8) | (39,229.40) | (7,541.0) |
2 Oil includes light and medium and heavy oil. Light and medium oil represents 100 per cent of total proved and P+P reserves.
3 Natural gas includes conventional natural gas and coal bed methane. Conventional natural gas represents 90 per cent total proved and P+P reserves.
4 PINE CLIFF ENERGY LTD.
RESERVES INFORMATION
2023
Commodity Prices
The Commodity prices used in the above calculations of reserves are as follows:
Year | WTI Oil (US$/Bbl)1 | $C exchangeto US$ Foreignrate1 | Edmonton Light(CdnCrude$/Bbl)Oil | (Cdn$/MMBtu)AECO Gas1 | ||
2024 | 73.67 | 1.33 | 92.91 | 2.20 | ||
2025 | 74.98 | 1.33 | 95.04 | 3.37 | ||
2026 | 76.14 | 1.32 | 96.07 | 4.05 | ||
2027 | 77.66 | 1.32 | 97.99 | 4.13 | ||
2028 | 79.22 | 1.32 | 99.95 | 4.21 | ||
2029 | 80.80 | 1.32 | 101.94 | 4.30 | ||
2030-2037 | 88.42 | 1.32 | 111.56 | 4.70 | ||
1 | Source: Average of three consultant price forecasts, effective January 1, 2024 (McDaniel, GLJ Petroleum Consultants Ltd. and Sproule Associates | |||||
Thereafter | +2.0%/yr | 1.32 | +2.0%/yr | +2.0%/yr | ||
Limited). |
Please refer to the attached Management's Discussion and Analysis for Reader Advisories regarding forward-looking information, non-GAAP measures and oil and gas measurements and definitions. This Reserves Information should be read in conjunction with the audited consolidated financial statements of Pine Cliff Energy Ltd. together with Management's Discussion and Analysis and Annual Information Form for the year ended December 31, 2023, which can be found on www.sedarplus.com and is subject to the same cautionary statements as set out therein.
5 PINE CLIFF ENERGY LTD.
MANAGEMENT DISCUSSION AND ANALYSIS | 2023 | |||||||||||
This Management's Discussion and Analysis (" | ") is a review of the operations and current financial position | of Pine Cliff Energy | ||||||||||
Ltd. (" | " or the " | ") for the year ended December 31, 2023. This MD&A is dated and based on information available | ||||||||||
MD&A | ||||||||||||
as at March 4, 2024 and should be read in conjunction with the audited consolidated financial statements for the year ended | ||||||||||||
Pine Cliff | Company | IFRS | "). The Financial Statements have been prepared in accordance with | |||||||||
December 31, 2023 and 2022 (" | ||||||||||||
International Accounting Standards (" | ") issued by the International Accounting Standards Board. Additional information | |||||||||||
Financial Stateme ts | "), may be found on www.sedarplus.caand by | |||||||||||
relating to the Company, including the Company's annual information form (" | ||||||||||||
visiting Pine Cliff's website at http://www.pinecliffenergy.com. | AIF | Common | ||||||||||
Pine Cliff is a dividend-paying company headquartered in Calgary, Alberta, Canada. Common shares of the Company (" | ||||||||||||
") are listed for trading on the Toronto Stock Exchange (" | ") under the symbol " | ". | ||||||||||
Shares | TSX | PNE |
READER ADVISORIES
This MD&A contains financial measures that are not defined under IFRS and forward-looking statements. Please refer to the sections titled "NON-GAAPMEASURES" and "FORWARD LOOKING INFORMATION".
Other Mea urements | |||||||||
All amounts herein are presented in Canadian dollars unless otherwise specified. All references to $CAD or $ are to Canadian dollars | |||||||||
and monetary references to $US are to United States dollars. | |||||||||
Please refer to the section titled "GLOSSARY" for measurements and abbreviations that may be used in the MD&A. | |||||||||
Natural gas liquids (" | ") and oil volumes are recorded in barrels of oil (" ") and are converted to a thousand cubic feet | ||||||||
equivalent (" | ") using a ratio of one (1) Bbl to six (6) thousand cubic feet. Natural gas volumes recorded in thousand cubic feet | ||||||||
(" | NGLs | Bbl | |||||||
") are converted to barrels of oil equivalent (" | ") using the ratio of six (6) thousand cubic feet to one (1) Bbl. This conversion | ||||||||
Mcfe | |||||||||
ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at the wellhead. The | |||||||||
Mcf | Boe | ||||||||
terms Boe or Mcfe may be misleading, particularly if used in isolation. | |||||||||
2023 AND FOURTH QUARTER 2023 RESULTS | |||||||||
Results from 2023 are as follows: | |||||||||
Generated $9.7 million ($0.03 per basic and fully diluted per share) and $58.7 million ($0.17 per basic and $0.16 per fully | |||||||||
• | diluted share) of adjusted funds flow for the three months and year ended December 31, 2023, compared to $40.2 million | ||||||||
• | ($0.11 per basic and fully diluted share) and $163.2 million ($0.47 per basic and $0.45 per fully diluted share) for | ||||||||
comparable periods in 2022; | |||||||||
Generated net income of $0.8 million ($0.00 per basic and fully diluted share) and $9.1 million ($0.03 per basic and fully | |||||||||
diluted share) for the three months and year ended December 31, 2023, compared to $24.7 million ($0.07 per basic and | |||||||||
• | fully diluted share) and $108.9 million ($0.31 per basic and $0.30 per fully diluted share) for the comparable periods in | ||||||||
2022; | |||||||||
• | Production averaged 21,454 Boe/d and 20,660 Boe/d during the three months and year-ended December 31, 2023, | ||||||||
representing a 2% increase and 2% decrease from the comparable periods in 2022; | |||||||||
Paid dividends of $11.6 million ($0.03 per basic and fully diluted share) and $46.0 million ($0.13 per basic and fully diluted | |||||||||
• | share) for the three months and year ended December 31, 2023, compared to $10.8 million ($0.03 per basic and fully diluted | ||||||||
share) and $23.6 million ($0.07 per basic and fully diluted share) in the comparable periods in 2022; | |||||||||
• | Completed the acquisition of Certus Oil & Gas (" | ") for total consideration of $108.9 million on December 13, | |||||||
2023, expanding Pine Cliff's operations in Central Alberta and providing a new core area; and | |||||||||
Acquisition | |||||||||
Entered into a three-year secured term debt facility in the amount of $56.3 million to fund a portion of the Acquisition. |
6 PINE CLIFF ENERGY LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
2023
SELECTED ANNUAL FINANCIAL INFORMATION | Year ended December 31, | |||||||||
2023 | ||||||||||
2022 | 2021 | |||||||||
FINANCIAL1 | ||||||||||
($000s, unless otherwise indicated) | ||||||||||
Commodity sales (before royalties) | 188,852 | 306,208 | 163,985 | |||||||
Commodity sales (net of royalties) | 168,889 | |||||||||
Cash provided by operating activities | 66,627 | 270,448 | 146,976 | |||||||
Adjust d funds flow2 | 58,687 | 150,452 | 49,483 | |||||||
Per share - Basic ($/share) | 0.17 | 163,206 | 59,106 | |||||||
0.16 | 0.47 | 0.18 | ||||||||
Net | income | 9,121 | 0.45 | 0.17 | ||||||
Per share - Diluted ($/share) | ||||||||||
Per share - Basic ($/share) | 0.03 | 108,939 | 81,421 | |||||||
0.03 | 0.31 | 0.24 | ||||||||
assets | 477,072 | 0.30 | 0.23 | |||||||
Total Per share - Diluted ($/share) | ||||||||||
Total liabilities | 377,144 | 375,053 | 378,997 | |||||||
Capital expenditures | 20,966 | 241,325 | 333,579 | |||||||
Acquisitions | 109,326 | 29,077 | 21,568 | |||||||
Dispositions | (379) | 1,119 | 23,147 | |||||||
Dividends | 46,015 | (2,649) | (320) | |||||||
Pershare - Basic ($/share) | 0.13 | 23,574 | - | |||||||
0.13 | 0.07 | - | ||||||||
Positive net cash (net debt)2 | (71,679) | 0.07 | - | |||||||
Per share - Diluted ($/share) | ||||||||||
Total non-cu rent financial liabilities | 48,578 | 55,913 | (49,652) | |||||||
3 | 2,296 | 44,521 | ||||||||
Weighted average common shares outstanding (000s) - Basic | 354,057 | |||||||||
359,375 | 346,443 | 337,254 | ||||||||
OPERATIONS | 360,033 | 348,285 | ||||||||
Weighted average common shares outstanding (000s) - Diluted | ||||||||||
Production | 107,471 | |||||||||
Natural gas (Mcf/d) | 109,801 | 100,655 | ||||||||
1,493 | ||||||||||
NGLs (Bbl/d) | 1,255 | 1,459 | 1,250 | |||||||
Total (Boe/d) | 20,660 | 1,256 | 419 | |||||||
Crude oil (Bbl/d) | ||||||||||
Total (Mcfe/d) | 123,960 | 21,015 | 18,445 | |||||||
Realized commodity sales prices | 126,090 | 110,670 | ||||||||
Natural gas ($/Mcf) | 2.99 | 5.43 | 3.55 | |||||||
53.51 | ||||||||||
NGLs ($/Boe) | 92.29 | 72.38 | 48.65 | |||||||
Total ($/Boe) | 25.04 | 108.79 | 73.47 | |||||||
Crude oil ($/Bbl) | ||||||||||
Netback ($/Boe) | 2 | 8.57 | 39.92 | 24.36 | ||||||
Operating netback | 2 | 7.77 | 22.41 | 10.36 | ||||||
Netback ($/Mcfe) | 21.28 | 8.78 | ||||||||
Corporate netback | ||||||||||
Operating netback | 2 | 1.43 | 3.74 | 1.73 | ||||||
1 | Corporate netback2 | 3.55 | 1.46 | |||||||
2 | Includes results for acquisitions and excludes results for dispositions from the closing dates. | |||||||||
3 This is a non-GAAP measure, see NON-GAAP MEASURES for additional information. | ||||||||||
Includes lease liabilities, Term Loan, as defined herein, Demand Loan, as defined herein, term debt, due to related party and promissory notes. | ||||||||||
7 | PINE CLIFF ENERGY LTD. | |||||||||
MANAGEMENT DISCUSSION AND ANALYSIS | 2023 | ||||||||||||||||||
Three months ended December 31, | Year | ended December 31, | |||||||||||||||||
FINANCIAL($000s, unless otherwise indicated) | 2022 | 2022 | |||||||||||||||||
2023 | 2023 | ||||||||||||||||||
16,559 | 76,928 | 66,627 | 306,208 | ||||||||||||||||
Cash provided by operating activities | |||||||||||||||||||
Commodity sales (before royalty expense) | 45,465 | 33,791 | 188,852 | 150,452 | |||||||||||||||
Adjusted funds flow1 | 9,700 | 58,687 | |||||||||||||||||
Per share - Basic ($/share)1 1 | 0.03 | 40,200 | 0.17 | 163,206 | |||||||||||||||
0.03 | 0.11 | 0.16 | 0.47 | ||||||||||||||||
Per share - Diluted ($/share) | 841 | 0.11 | 9,121 | 0.45 | |||||||||||||||
Net income | 0.00 | 24,685 | 0.03 | 108,939 | |||||||||||||||
Per share - Basic ($/share) | 0.00 | 0.07 | 0.03 | 0.31 | |||||||||||||||
Per share - Diluted ($/share) | 3,616 | 0.07 | 20,966 | 0.30 | |||||||||||||||
Capital expenditures | 6,637 | 29,077 | |||||||||||||||||
Acquisitions | 109,014 | 109,326 | |||||||||||||||||
Dividends | 0.03 | 10,797 | 0.13 | 23,574 | |||||||||||||||
11,567 | 528 | 46,015 | 1,119 | ||||||||||||||||
Per share - Basic ($/share) | 0.03 | 0.03 | 0.13 | 0.07 | |||||||||||||||
Per share - Diluted ($/share) | 355,969 | 0.03 | (71,679) | 0.07 | |||||||||||||||
Weighted-average common shares outstanding (000s) | 55,913 | 354,057 | 55,913 | ||||||||||||||||
Positive net cash (net debt)1 | (71,679) | ||||||||||||||||||
Basic | 359,262 | 350,216 | 359,375 | 346,443 | |||||||||||||||
OPERATIONSDiluted | 360,322 | 360,033 | |||||||||||||||||
Prod ction | 1,690 | 109,307 | 1,493 | 109,801 | |||||||||||||||
Natural gas (Mcf/d) | |||||||||||||||||||
NGLs (Bbl/d) | 110,499 | 1,463 | 107,471 | 1,459 | |||||||||||||||
1,347 | 1,255 | ||||||||||||||||||
Crude oil (Bbl/d) | 21,454 | 1,360 | 20,660 | 1,256 | |||||||||||||||
Total (Boe/d) | 21,041 | 21,015 | |||||||||||||||||
Realized commodity sales prices | 48.51 | 5.53 | 53.51 | 5.43 | |||||||||||||||
Natural gas ($/Mcf) | |||||||||||||||||||
NGLs ($/Boe) | 2.59 | 65.91 | 2.99 | 72.38 | |||||||||||||||
93.15 | 92.29 | ||||||||||||||||||
Crude oil ($/Bbl) | 23.03 | 99.13 | 25.04 | 108.79 | |||||||||||||||
Combined ($/Boe) | 39.74 | 39.92 | |||||||||||||||||
Netback ($/Boe) | 0.75 | 39.74 | 0.68 | 39.92 | |||||||||||||||
Commodity sales | |||||||||||||||||||
Processing and gathering | 23.03 | 0.54 | 25.04 | 0.49 | |||||||||||||||
(2.63) | (2.65) | ||||||||||||||||||
Royalty expense | (1.45) | (4.42) | (1.43) | (4.66) | |||||||||||||||
Transportation expenses | (13.66) | (1.42) | (13.07) | (1.41) | |||||||||||||||
Operating expenses | 6.04 | (13.38) | 8.57 | (11.93) | |||||||||||||||
Operating netback ($/Boe)1 | (1.03) | 21.06 | (0.99) | 22.41 | |||||||||||||||
General and administrative expenses | (0.26) | (0.41) | (0.10) | (0.89) | |||||||||||||||
Interest and bank charges | 0.16 | (0.06) | 0.29 | (0.31) | |||||||||||||||
Interest income | 4.91 | 0.17 | 7.77 | 0.07 | |||||||||||||||
Corporate netback ($/Boe)1 | 1.01 | 20.76 | 1.43 | 21.28 | |||||||||||||||
Operating netback ($ per Mcfe)1 | 0.82 | 3.51 | 1.30 | 3.74 | |||||||||||||||
Corporate netback ($ per Mcfe)1 | 3.46 | 3.55 | |||||||||||||||||
1 This is a non-GAAP measure, see NON-GAAP MEASURES for additional information. |
8 PINE CLIFF ENERGY LTD.
MANAGEMENT DISCUSSION AND ANALYSIS
2023
SENSITIVITIES
Pine Cliff's results are sensitive to changes in the business environment in which it operates. The following chart shows the Company's sensitivity to key commodity price variables. The sensitivity calculations are performed independently showing the effect of the change of one variable; all other variables are held constant.
Business environment sensitivities | Impact on annual adjusted funds flow1,2 | ||
Change | $000s | $ per share4 | |
Realized natural gas price3 | $0.10 | 3,491 | 0.01 |
Realized NGLs price3 | $1.00 | 485 | 0.00 |
Realized crude oil price3 | $1.00 | 408 | 0.00 |
21 This analysisa non-GAAPdoes notmeasure,adjust seefor changesNON-GAAPin workingMEASUREScapitalfor andadditionaluses corporateinformationroyalty. rates from the year ended December 31, 2023.
- Pine Cliff has prepared this analysis using its Q4 2023 production volumes annualized for twelve months.
- Based on the Q4 2023 basic weighted average shares outstanding.
BENCHMARK PRICES
Three months ended December 31, | Year ended December 31, | ||||
2023 | 2022 | % Change | 2023 | 2022 | % Change |
Natural gas1 NYMEX (US$/MMBtu) 2 AECO Daily 5A (C$/Mcf)
Crude oil
WTI (US$/Bbl) Edmonton Light (C$/Bbl)
2.30 | 6.26 | (54) | 2.63 |
2.88 | 5.09 | (55) | 2.79 |
99.79 | 82.64 | (5) | 100.58 |
78.32 | 110.13 | (9) | 77.62 |
6.64 (58)
5.29 (50)
94.23 (18)
120.10 (16)
Foreign exchange
1 MMBtuUS$is/Cthe$ abbreviation for millions of British thermal1.362units. One Mcf1.358of natural gas is approximately- 11.02.350MMBtu. 2 AECO prices are quoted in $/Gigajoule. Price has been converted from $/GJ to $/Mcf by multiplying by 1.05.
1.3034
Quarterly Benchmark Prices
Pine Cliff's financial results are influenced by fluctuations in commodity prices, foreign exchange rates and price differentials. The following table shows select market benchmark average prices and foreign exchange rates in the last eight quarters to assist in understanding the volatility in prices and foreign exchange rates that have impacted Pine Cliff's business.
Natural gas | Q4-2023 | Q3-2023 | Q2-2023 | Q1-2023Q4-2022Q3-2022 | Q2-2022Q1-2022 | ||||
2.30 | |||||||||
NYMEX (US$/MMBtu) | 1 | 2.55 | 2.30 | 3.42 | 6.26 | 8.20 | 7.17 | 4.95 | |
2.88 | 2.58 | 2.44 | 3.21 | 5.09 | 4.14 | 7.20 | 4.72 | ||
AECO Daily 5A (C$/Mcf) 2 | |||||||||
Pine Cliff realized natural | 2.59 | 2.88 | 2.79 | 3.74 | 5.53 | 4.85 | 6.45 | 4.88 | |
gas price (C$/Mcf) | 78.32 | ||||||||
Crude oil | 82.26 | 73.78 | 76.13 | 82.64 | 91.56 | 108.41 | 94.29 | ||
WTI (US$/Bbl) | 99.79 | ||||||||
Edmonton Light (C$/Bbl) | 48.51 | 107.85 | 95.33 | 99.34 | 110.13 | 116.79 | 137.84 | 115.66 | |
Pine Cliff realized NGLs | 52.69 | 49.39 | 64.19 | 65.91 | 72.02 | 81.73 | 69.72 | ||
price (C$/Bbl) | 93.15 | ||||||||
Pine Cliff realized Oil | 96.44 | 86.27 | 92.44 | 99.13 | 103.56 | 126.23 | 108.68 | ||
price (C$/Bbl) | |||||||||
Foreign exchange | 1.341 | 1.343 | 1.352 | 1.358 | 1.306 | 1.277 | 1.266 | ||
1 | US$/C$ | 1.362 | |||||||
2 | AECO prices are quoted in $/Gigajoule. Price has been converted from $/GJ to $/Mcf by multiplying by 1.05. | ||||||||
MMBtu is the abbreviation for millions of British thermal units. One Mcf of natural gas is approximately 1.02 MMBtu. |
9 PINE CLIFF ENERGY LTD.
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Pine Cliff Energy Ltd. published this content on 05 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 March 2024 01:36:04 UTC.