Petrus Resources Ltd. ("
Petrus" or the
"
Company") (TSX: PRQ) is pleased to announce the
acceleration and expansion of its capital program, resulting in
increased 2022 budget guidance and an updated operational outlook.
UPDATED 2022 BUDGET GUIDANCE
Market conditions have improved materially since the release of
Petrus' initial 2022 budget in December of last year. During the
first six months of 2022, due to a combination of increased
production and stronger commodity prices, the Company generated
significantly higher funds flow from operations than originally
budgeted. Given the increased funds flow to date and the forecast
for the remainder of the year, the Board of Directors has approved
a revised 2022 capital budget of $105 million to $115 million (up
from $50-$55 million), of which $90 to $100 million is cash to be
directed toward the 2022 capital program with the balance having
been directed toward a previously announced non-cash strategic
acquisition that closed in March 2022. Capital spending and
operational efforts will continue to be largely focused on further
development of the Company’s core Ferrier area with approximately
$80 million to $90 million directed to drilling, completion and
tie-ins; an increase of nearly 70%. The remaining $10 million is
primarily budgeted for land, seismic, and facilities for which
minimal capital had been allocated in the original 2022 budget.
The revised 2022 capital budget was developed
using an average price forecast for September through December 2022
of US$73/bbl WTI for oil, an AECO gas price of CAD$3.80/GJ and a
foreign exchange rate of US$0.79. Under these pricing assumptions,
through the execution of this capital plan, Petrus is expecting
to:
- Achieve a 2022 exit production rate
of 10,500 to 11,000 boe1 per day, which is a projected increase of
73% to 81% compared to the 2021 exit rate of 6,084 boe per
day.
- Generate $85 million to $90 million
in annual funds flow2 for 2022, representing an anticipated 155% to
170% improvement compared to 2021 annual funds flow of $33.4
million.
Given the inherent volatility of commodity
prices, the Company recognizes it is prudent to remain disciplined
and flexible from an operational and financial perspective. Petrus
will continue to monitor Canadian light oil and natural gas prices
and will evaluate capital investments on an ongoing basis.
OPERATIONAL OUTLOOKPetrus’ 2022
capital program is well underway, with spending largely focused on
drilling in our core Ferrier area. There are two rigs actively
running; drilling operations have been finalized on the first two
pads in the program and completion operations have commenced on
both pads. The Company looks forward to providing updates on the
results of the capital program as the year progresses.
ABOUT PETRUSPetrus is a public
Canadian oil and gas company focused on property exploitation,
strategic acquisitions and risk-managed exploration in Alberta.
For further information, please
contact:
Ken GrayPresident and Chief Executive OfficerT:
403-930-0889E: kgray@petrusresources.com
READER ADVISORIES
Non-GAAP and Other Financial MeasuresThis press
release refers to the term "funds flow" (on both a fiscal 2021
historical basis and a fiscal 2022 forecast basis). These non-GAAP
and other financial measures are not recognized measures under GAAP
(IFRS) and do not have a standardized meaning prescribed by GAAP
(IFRS). Accordingly, the Company's use of these terms may not be
comparable to similarly defined measures presented by other
companies. These non-GAAP and other financial measures should not
be considered to be more meaningful than GAAP measures which are
determined in accordance with IFRS as indicators of our
performance. Management uses these non-GAAP and other financial
measures for the reasons set forth below.
Funds FlowFunds flow is a common non-GAAP
financial measure used in the oil and natural gas industry that
evaluates the Company’s profitability at the corporate level.
Management believes that funds flow provides information to assist
a reader in understanding the Company's profitability relative to
current commodity prices. The most directly comparable financial
measure that is disclosed in the Company's primary financial
statements is oil and natural gas revenue, which was $81.268
million for the year ended December 31, 2021. For additional
information regarding funds flow (including a reconciliation of
funds flow to oil and natural gas revenue), see the disclosure
under "Non-GAAP and Other Financial Measures – Corporate Netback"
in the Company's Management's Discussion & Analysis for the
year ended December 31, 2021 which is available on SEDAR at
www.sedar.com, which disclosure is incorporated by reference
herein.
Forward-Looking Statements and FOFICertain
information regarding Petrus set forth in this press release
contains forward-looking statements within the meaning of
applicable securities law, that involve substantial known and
unknown risks and uncertainties. Such statements represent Petrus’
internal projections, estimates, beliefs, plans, objectives,
assumptions, intentions or statements about future events or
performance. These statements are only predictions and actual
events or results may differ materially. Although Petrus believes
that the expectations reflected in the forward-looking statements
are reasonable, it cannot guarantee future results, levels of
activity, performance or achievement since such expectations are
inherently subject to significant business, economic, competitive,
political and social uncertainties and contingencies. Many factors
could cause Petrus’ actual results to differ materially from those
expressed or implied in any forward-looking statements made by, or
on behalf of, Petrus. In particular, forward-looking statements
included in this press release include, but are not limited to,
statements with respect to: our intention to accelerate and expand
our 2022 capital program; the range of our revised 2022 capital
budget, how the revised budget will be allocated, and the intention
to focus our capital spending and operational efforts on further
development of our core Ferrier area; our forecasts for commodity
prices and US/CAD exchange rate for September to December 2022; our
forecast 2022 exit production rate; and our forecast range of
annual funds flow for 2022. These forward-looking statements are
subject to numerous risks and uncertainties, most of which are
beyond the Company’s control, including: the impact of general
economic conditions; volatility in market prices for crude oil, NGL
and natural gas; industry conditions; currency fluctuation;
imprecision of reserve estimates; liabilities inherent in crude oil
and natural gas operations; environmental risks; incorrect
assessments of the value of acquisitions and exploration and
development programs; competition; the lack of availability of
qualified personnel or management; changes in income tax laws or
changes in tax laws and incentive programs relating to the oil and
gas industry; hazards such as fire, explosion, blowouts, cratering,
and spills, each of which could result in substantial damage to
wells, production facilities, other property and the environment or
in personal injury; stock market volatility; ability to access
sufficient capital from internal and external sources; and the
other risks and uncertainties described in our Annual Information
Form. With respect to forward-looking statements contained in this
press release, Petrus has made assumptions regarding: future
commodity prices (including as disclosed herein) and royalty
regimes; availability of skilled labour; timing and amount of
capital expenditures; future exchange rates; the impact of
increasing competition; conditions in general economic and
financial markets; availability of drilling and related equipment
and services; effects of regulation by governmental agencies; the
effects of inflation on our profitability; and future operating
costs. Management has included the above summary of assumptions and
risks related to forward-looking information provided in this press
release in order to provide investors with a more complete
perspective on Petrus’ future operations and such information may
not be appropriate for other purposes. Petrus’ actual results,
performance or achievement could differ materially from those
expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any of the events
anticipated by the forward-looking statements will transpire or
occur, or if any of them do so, what benefits that the Company will
derive therefrom. Readers are cautioned that the foregoing lists of
factors are not exhaustive. This press release contains
future-oriented financial information and financial outlook
information (collectively, "FOFI") about Petrus' prospective
results of operations including, without limitation, our forecasts
for our revised 2022 capital program, 2022 exit production rate and
2022 annual funds flow, which are subject to the same assumptions,
risk factors, limitations, and qualifications as set forth above.
Readers are cautioned that the assumptions used in the preparation
of such information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on FOFI. Petrus' actual results, performance
or achievement could differ materially from those expressed in, or
implied by, these FOFI, or if any of them do so, what benefits
Petrus will derive therefrom. Petrus has included the FOFI in order
to provide readers with a more complete perspective on Petrus'
future operations and such information may not be appropriate for
other purposes.
These forward-looking statements and FOFI are
made as of the date of this press release and the Company disclaims
any intent or obligation to update any forward-looking statements
and FOFI, whether as a result of new information, future events or
results or otherwise, other than as required by applicable
securities laws.
BOE PresentationThe oil and natural gas industry
commonly expresses production volumes and reserves on a barrel of
oil equivalent (“boe”) basis whereby natural gas volumes are
converted at the ratio of six thousand cubic feet to one barrel of
oil. The intention is to sum oil and natural gas measurement units
into one basis for simplified measurement of results and
comparisons with other industry participants. Petrus uses the 6:1
boe measure which is the approximate energy equivalence of the two
commodities at the burner tip. Boe’s do not represent an economic
value equivalence at the wellhead and therefore may be a misleading
measure if used in isolation.
Production and Product Type InformationThe
Company's forecast 2022 exit production rate and 2021 exit
production rate disclosed in this press release consist of the
following product types, as defined in National Instrument 51-101
and using the conversion ratio described above, where applicable,
production consisted of: 12% light oil and condensate, 28% natural
gas liquids and 60% conventional natural gas.
1 Disclosure of production on a per boe basis
consists of the constituent product types and their respective
quantities. Refer to "BOE Presentation" and "Production and Product
Type Information" for further details.
2 Non-GAAP financial measure. Refer to "Non-GAAP
and Other Financial Measures".
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