Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) announces
its second quarter 2021 financial and operating results. Selected
financial, operational and reserves information is outlined below
and should be read in conjunction with Razor’s unaudited condensed
consolidated interim financial statements and management’s
discussion and analysis for the quarter ended June 30, 2021 which
are available on SEDAR at www.sedar.com and the Company’s website
www.razor-energy.com.
HIGHLIGHTS
Acquisition
- On August 12, 2021, the Company
completed an agreement to acquire certain non-operated working
interest assets in its Swan Hills, Alberta core region for a total
purchase price of $5 million cash, subject to certain closing
adjustments. The Assets consist of Swan Hills Unit No.1, Judy Creek
Gas Plant and South Swan Hills Unit Gas Gathering System at 32.5%,
8.6% and 27.6% working interest, respectively.
Financing
- The August 12, 2021, acquisition
was funded by Arena Investors, LP. Razor has signed an amended term
loan agreement (“Amended Term Loan”) with Arena for an increase of
US$8.8 million (CAD $11.0 million) resulting in an amended total
principal amount of US$18.1 million (CAD $22.7 million). The
Amended Term Loan will be amortized and repaid over a total of 37
months and will conclude in April 2024. The increase in principal
will fund the purchase of the Assets, associated joint account
liability and interim purchase price adjustments. The funded
principal amount, after the original issuer discount is US$8.0
million (CAD $10.0 million) less related fees and expenses. Other
terms of the Amended Term Loan are materially unchanged from the
initial term loan.
InnovationRazor continues to
identify opportunities to alternative sources of energy and manage
the environmental and social impacts of our business.
- FutEra Power Corp. (“FutEra”), a
subsidiary of Razor, has commenced project execution of its
Co-produced Geothermal Power Generation Project in Swan Hills,
Alberta (“Geothermal Project”). Stage Gate 1 is fully funded and
FutEra is securing additional financing to complete Stage Gate 2.
Construction of the power plant has commenced with estimated
completion within the first quarter of 2022.
- Razor operates a new and
responsible crypto mining operation in Swan Hills, Alberta. The
project is built entirely on pre-existing assets to limit our
environmental footprint. The project hosts leading energy-efficient
miners and relies on natural gas generators for cleaner and more
economic power than is available through the local grid and has 10
Petahash of nameplate hashing capacity.
- Razor operates a natural
gas-powered electricity generation program which allows the Company
to reduce its reliance on coal-biased grid electricity and has
reduced GHG emissions by 6,000 tCO2 annually and has reduced
electricity costs by $7.1 million since the program was implemented
in 2018.
- Razor implemented cost saving
measures by internalizing certain oilfield services through its
subsidiary, Blade Energy Services Corp. ("Blade"), which provides
services such as crude oil hauling, earthworks and environmental
services. Blade conducted $1.3 million of services on behalf of
Razor during the second quarter of 2021 (Q2 2020 - $0.8 million)
and $2.4 million of services during the first six months of 2021
(2020 - $1.1 million).
- The Company completed construction
during Q2 2021 to repurpose certain facilities in Virginia Hills to
become a Waste Management Component employing bioremediation to
treat hydrocarbon-impacted soils. This Soil Treatment Facility will
use naturally occurring microbes to digest hydrocarbons in soils
and will be integral to Razor’s Area Based Closure operations in
the Virginia Hills area. The facility will begin treating its first
soil in Q3 2021. FutEra is developing a pure green power supply
solution for the waste management facility.
Operating
- Production volumes in the second
quarter of 2021 averaged 3,145 boe/d, down 17% from the production
volumes in the same period of 2020. Decreased production volumes in
Q2 2021 are largely due to non-operated production temporarily
shut-in at Kaybob and Southern Alberta, operated and non-operated
facility turnarounds in June, temporary curtailment at South Swan
Hills pending a pipeline repair, reduced spending on well
reactivations and repairs throughout 2020 and into early 2021, and
natural annual base decline.
- Razor commenced its 2021 operated
production enhancement program in February 2021 with funds acquired
from the Arena Term Loan. The Company is required to use at least
US$6.7 million (CAD$8.4 million) to complete the activities
outlined in an agreed upon development plan which resulted in an
average production increase during the second quarter 2021 of 638
boe/d and an exit rate production increase as at June 30, 2021 of
637 boe/d.
- Net revenues were 73% higher
compared to the second quarter of 2020. The decline in production
in the second quarter of 2021 was offset by a 126% increase in
commodity prices as compared to the same period in 2020.
Capital
- Progressed our Geothermal Project,
which will be capable of generating 18 MW of grid connected power,
of which up to 30 percent will be sustainable clean power
generation.
Decommissioning
- In the first six months of 2021,
the Company settled $1,208 thousand (twelve months 2020 - $538
thousand) of decommissioning obligations which includes $925
thousand (twelve months 2020 - $198 thousand) related to government
grants received for well site rehabilitation through Alberta’s Site
Rehabilitation Program (“SRP”).
2021
OUTLOOKRazor
Razor continues to look forward and plan for the
future while remaining focused on its long-term sustainability. On
February 16, 2021, Razor secured an extension to the AIMCo Term
Loan, for an amended principal amount of $50.1 million. There
were no additional proceeds received from the AIMCo Term Loan. On
the same date, a subsidiary of Razor entered into the Arena Term
Loan in the principal amount of US$11.0 million (CAD$14.0 million)
which was subsequently amended on August 12, 2021, with the
principal amount increasing to US$18.1 million ($CAD 22.7
million).
The Arena Term Loan amendment on August 12,
2021, was used to fund the acquisition of certain non-operated
working interest assets in the Company’s Swan Hills, Alberta core
region. Razor has intimate knowledge of the Assets through its
existing working interest positions and is excited with the
opportunity to consolidate assets in their core region. Razor now
owns a 49.7 percent non-operated working interest in the Unit while
the Operator, Canadian Natural Resources Ltd., maintains its 41.9
percent working interest. The Company will also benefit from
increasing its working interest in critical area infrastructure,
including the Plant and Gathering System to 38.1 and 43.9 percent,
respectively. The Acquisition enables the Company to
cost-effectively add long-life, industry-leading ten percent annual
base decline, low-risk, light oil reserves (41o API), production
and cash flow underpinned by an improving commodity price
environment as crude oil supply/demand returns to balance in the
post-COVID era.
A portion of the proceeds from the Amended Arena
Term Loan will continue to be required to be used to invest US$6.7
million (CAD$8.4 million) in 2021 and 2022 on production
enhancement. The Company has an extensive opportunity set of
high-quality wells requiring reactivation. Most activities involve
repairs and maintenance work which will be expensed for accounting
purposes and operating netbacks will be reduced during this
timeframe. In aggregate, the annual base decline of these wells is
anticipated to be consistent with the
Company’s current corporate decline of approximately 12
percent. In its history the
Company has reactivated over 60 wells adding
approximately 2,000 boe/d and it expects
that this program will result in similar favorable
metrics. The production enhancement program has resulted in an
average production increase during Q2 2021 of 638 boe/d and an exit
rate production increase as at June 30, 2021 of 637 boe/d.
The Company continues to focus on cost control
on its operated properties. In addition to the planned production
enhancement program, Razor will take a cautious and case-by-case
approach to spending in 2021 and into 2022, focusing on low risk,
low investment capital opportunities to increase field and
corporate netbacks.
FutEra
In May 2021 FutEra Power Corp. (“FutEra”), a
subsidiary of Razor entered the project execution stage of its
Geothermal Project. FutEra expects the total capital cost of the
Geothermal Project to be $34 million. Stage Gate 1 is fully funded.
Stage Gate 2 requires additional financing which FutEra continues
to seek. With both Stage Gate 1 and 2 of the Geothermal Project
complete, the total nameplate electricity output will be 18 MW, of
which up to 30% will be sustainable clean power generation. FutEra
has partnered with provincial and federal government agencies to
invigorate the emerging geothermal industry. Provincially, Alberta
Innovates (“AI”) and Emissions Reduction Alberta (“ERA”), and
federally, Natural Resources Canada (“NRCan”), have provided grants
to complete funding. To date, Razor has received $8.6 million in
government grants to support this power generation project.
FutEra has identified and is in the process of
reviewing and capturing additional projects including solar, wind,
and well head geothermal. As at June 30, 2021, FutEra has installed
and is operating a 10 Petahash Bitcoin mining operation supplying
both power generation and the behind-the-fence mining offtake
installation. In addition, FutEra is in discussions with an
industry resource partner to evaluate its renewable energy options
and to develop a long term Environmental, Social and Governance
plan.
NEAR AND MEDIUM-TERM
OBJECTIVES
- Safely execute our production
enhancement program and Geothermal Project.
- Reduce net debt through continued
optimization of capital spending and increased efficiencies to
reduce operating and general and administrative costs.
- Actively identify and consider
business combinations with other oil and gas producers as well as
service companies.
- Further analyze ancillary
opportunities including power generating projects, oil blending and
vertical services integration.
SELECT QUARTERLY HIGHLIGHTSThe
following tables summarizes key financial and operating highlights
associated with the Company’s financial performance.
|
Three Months Ended June 30, |
Six Months Ended June 30, |
($000's, except for per share amounts and production) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Production |
|
|
|
|
Light Oil (bbl/d) |
1,983 |
|
1,996 |
|
1,968 |
|
2,319 |
|
Gas (mcf/d) 1 |
3,673 |
|
5,528 |
|
3,707 |
|
4,602 |
|
NGL (boe/d) |
549 |
|
865 |
|
492 |
|
902 |
|
Total (boe/d) |
3,145 |
|
3,782 |
|
3,077 |
|
3,989 |
|
Sales volumes |
|
|
|
|
Light Oil (bbl/d) |
2,010 |
|
1,971 |
|
1,959 |
|
2,254 |
|
Gas (mcf/d)1 |
3,301 |
|
4,287 |
|
3,382 |
|
3,621 |
|
NGL (bbl/d) |
549 |
|
865 |
|
492 |
|
902 |
|
Total (boe/d) |
3,110 |
|
3,550 |
|
3,014 |
|
3,760 |
|
Oil inventory volumes (bbls) |
9,784 |
|
21,111 |
|
9,784 |
|
21,111 |
|
Revenue |
|
|
|
|
Oil and NGLs sales |
15,320 |
|
7,896 |
|
27,813 |
|
20,372 |
|
Natural gas sales |
940 |
|
742 |
|
1,831 |
|
1,366 |
|
Blending and processing income |
776 |
|
1,061 |
|
2,144 |
|
2,674 |
|
Other revenue |
149 |
|
(171 |
) |
552 |
|
761 |
|
Total
revenue |
17,185 |
|
9,528 |
|
32,340 |
|
25,173 |
|
Cash flows from (used in)
operating activities |
403 |
|
(540 |
) |
(3,115 |
) |
1,714 |
|
Per share -basic and diluted |
0.02 |
|
(0.03 |
) |
(0.15 |
) |
0.08 |
|
Funds flow 2 |
339 |
|
1,985 |
|
(1,085 |
) |
(1,673 |
) |
Per share -basic and diluted |
0.03 |
|
0.09 |
|
(0.05 |
) |
(0.08 |
|
Adjusted funds flow 2 |
578 |
|
2,010 |
|
(285 |
) |
(1,303 |
) |
Per share -basic and diluted |
0.03 |
|
0.10 |
|
(0.01 |
) |
(0.06 |
|
Net income (loss) |
(5,544 |
) |
(4,083 |
) |
(11,179 |
) |
(38,311 |
) |
Per share - basic and diluted |
(0.26 |
) |
(0.19 |
) |
(0.53 |
) |
(1.82 |
) |
Dividend paid |
- |
|
- |
|
- |
|
263 |
|
Dividends per share |
- |
|
- |
|
- |
|
0.01 |
|
Weighted average number of
shares outstanding (basic and diluted) |
21,064 |
|
21,064 |
|
21,064 |
|
21,064 |
|
Capital expenditures |
4,810 |
|
(583 |
) |
5,669 |
|
(133 |
) |
Netback
($/boe) |
|
|
|
|
Oil and gas sales 3 |
56.81 |
|
25.10 |
|
53.22 |
|
29.95 |
|
Royalties |
(7.66 |
) |
(2.53 |
) |
(6.20 |
) |
(3.38 |
) |
Adjusted operating expenses 2 4 |
(37.67 |
) |
(21.14 |
) |
(38.08 |
) |
(26.44 |
) |
Production enhancement expenses 2 |
(4.94 |
) |
(0.24 |
) |
(6.41 |
) |
(2.18 |
) |
Transportation and treating |
(2.04 |
) |
(1.69 |
) |
(2.19 |
) |
(1.72 |
) |
Operating netback 2 |
4.50 |
|
(0.50 |
) |
0.34 |
|
(3.77 |
) |
Net blending and processing income 2 |
0.89 |
|
3.34 |
|
2.12 |
|
3.23 |
|
Realized loss on commodity contracts settlement 3 |
(0.18 |
) |
(2.72 |
) |
(0.09 |
) |
(2.41 |
) |
Unrealized gain/(loss) on commodity risk management |
(3.43 |
) |
0.29 |
|
(1.61 |
) |
0.05 |
|
Other revenues |
2.47 |
|
7.02 |
|
3.01 |
|
4.61 |
|
General and administrative |
(3.45 |
) |
(2.19 |
) |
(3.95 |
) |
(3.66 |
) |
Other expenses |
(0.29 |
) |
(0.02 |
) |
(0.25 |
) |
- |
|
Impairment |
- |
|
- |
|
- |
|
(34.08 |
) |
Interest |
(5.11 |
) |
(3.68 |
) |
(5.33 |
) |
(3.55 |
) |
Corporate netback 2 |
(4.60 |
) |
1.54 |
|
(5.76 |
) |
(39.58 |
) |
1) Natural gas production includes internally
consumed natural gas primarily used in power generation.2) Refer to
"Non-IFRS measures".3) Excludes the effects of financial risk
management contracts but includes the effects of fixed price
physical delivery contracts.4) Excludes production enhancement
expenses incurred in the period.
SELECT QUARTERLY HIGHLIGHTS
(continued)
|
June 30, |
|
December 31, |
|
($000's, except for share amounts) |
2021 |
|
2020 |
|
Total assets |
155,385 |
|
163,709 |
|
Cash |
2,710 |
|
1,098 |
|
Long-term debt
(principal) |
62,678 |
|
50,878 |
|
Minimum lease obligation |
2,737 |
|
3,469 |
|
Net debt 1 |
83,260 |
|
72,789 |
|
Number
of shares outstanding |
21,064,466 |
|
21,064,466 |
|
1) Refer to "Non-IFRS
measures.”
OPERATIONAL
UPDATE
Production volumes in the second quarter of 2021
averaged 3,145 boe/d, down 17% from the production volumes in the
same period of 2020. Decreased production volumes in Q2 2021 are
largely due to a number of factors including: non-operated
production temporarily shut-in at Kaybob (anticipated to resume
production in September) and Southern Alberta (anticipated to
resume production in the fourth quarter of 2021), operated and
non-operated facility turnarounds in June in Swan Hills resulting
in an approximate 850 boe/day reduction for the month, temporary
curtailment at South Swan Hills pending a pipeline repair
anticipated to be completed in early Q4 2021, reduced spending on
well and pipeline reactivations and repairs throughout 2020 and
into early 2021, and natural annual base decline.
Net revenues were 73% higher compared to the
second quarter of 2020. The decline in production in the second
quarter of 2021 was offset by a 126% increase in commodity prices
as compared to the same period in 2020. The Edmonton light sweet
crude oil differential to West Texas Intermediate ("WTI") was 5% in
the second quarter of 2021 compared to 23% in the same quarter of
2020. Realized NGL prices increased 139% in the second quarter of
2021 from the same period in 2020.
During the second quarter of 2021, the Company
realized an operating netback of $4.50/boe, a significant
improvement from the operating loss of ($0.50)/boe in the second
quarter of 2020. Realized prices increased by $31.71/boe, however
the impact of increased prices was offset by a significant royalty
increase of $5.13/boe which is tied to the higher commodity prices,
an increase in adjusted operating expenses of $16.53/boe as well as
an increase in production enhancement expenses of $4.70/boe in
comparison to the same period in 2020. For the six months ended
June 30, 2021, the operating netback was $0.34/boe compared to an
operating loss of $3.77/boe for the same period in 2020 mainly as a
result of a $23.27/boe increase in realized prices which were up
78%, offset by royalty rate increases of $2.82/boe, increased
adjusted operating expenses of $11.64/boe and increased production
enhancement expenses of $4.23/boe.
Royalty rates averaged 13% in the second quarter
of 2021 as compared to 10% for the same period in 2020 due to an
increase in the Government of Alberta’s PAR prices used in the
calculation of crown royalties in Q2 2021 as compared to Q2 2020
and offset somewhat by lower production in Q2 2021 compared to Q2
2020. For the six months ended June 30, 2021, royalties averaged
12% compared to 11% in the same period in 2020 mainly due to an
increase in PAR prices and lower production.
Adjusted operating expenses increased $3.5
million or 48% on a total dollar basis but increased 78% on a per
boe basis in the second quarter of 2021 compared to the same period
in 2020 due to a 17% decrease in production. The increase in the
adjusted operating expense per boe was due primarily to surface
repairs and maintenance (including non-capitalized turnaround
costs) which averaged $5.45/boe in Q2 2021 versus $0.17/boe in Q2
2020, fuel and electricity costs which averaged $12.01/boe in Q2
2021 as compared to $7.61/boe in 2020 and transportation and
treating costs which averaged $2.44/boe in Q2 2021 as compared to
($0.10)/boe in 2020. Chemical costs were consistent and averaged
$1.17/boe in Q2 2021 as compared to $0.99/boe in 2020. For the six
months ended June 30, 2021, adjusted operating expenses increased
$2.0 million or 10% on a total dollar basis but increased 44% on a
per boe basis primarily driven by a 23% decrease in production
compared to the same period in 2020.
The Company continued its production enhancement
activity in Q2 2021 in response to the stronger commodity price
environment. Production enhancement expenses per boe averaged
$4.94/boe in the second quarter 2021 as compared to $0.24/boe in
2020. The production enhancement program has resulted in an
average production increase during Q2 2021 of 638 boe/d and an exit
rate production increase as at June 30, 2021, of 637 boe/d. For the
six months ended June 30, 2021, production enhancement expenses
averaged $6.41/boe as compared to $2.18/boe for the same period in
2020.
Razor has focused on cost control on all
expenditures within its operations by implementing a procurement
system, internalizing field services and producing its own
electricity. Blade Energy Services Corp. ("Blade"), a wholly owned
subsidiary of Razor, provides services such as crude oil hauling,
earthworks and environmental services. Blade conducted $1.3 million
of services on behalf of Razor during Q2 2021 (Q2 2020 - $0.8
million) and $2.4 million of services during the first six months
of 2021 (2020 - $1.1 million).
The top cost drivers of the adjusted operating
expenses consist of fuel and electricity, labour, property taxes,
lease rentals, fluid hauling and chemicals pipeline repairs and
maintenance and environmental work. The top cost drivers accounted
for 54% of the adjusted operating expenses in the second quarter of
2021 (comparable costs in Q2 2020 – 72%). For the six months ended
June 30, 2021, the same top cost drivers accounted for 57% of the
adjusted operating expenses (comparable costs for the same period
in 2020 – 79%).
The cost of electricity and fuel increased 31%
in Q2 2021 as compared to the same quarter of last year mostly due
to a 249% increase in average electricity pool prices which was
offset by a 40% decrease in consumption, decreased reliance on
non-operated fuel gas and lower production levels. For the six
months ended June 30, 2021, the cost of electricity and fuel
increased 13% as compared to the same period of last year mostly
due to a 110% increase in average electricity pool prices offset by
a 37% decrease in consumption.
Other revenue and income received during the
three months ended June 30, 2021, was $0.7 million which primarily
consisted of $0.5 million SRP grant income and a combined $0.2
million of road use, road maintenance and other revenue. For the
six months ended June 30, 2021, other revenue and income received
was $1.7 million compared to $3.3 million for the same period in
2020. The decrease for the six months is mainly due to insurance
proceeds received in 2020 offset somewhat by SRP grant income
received in 2021.
During the second quarter of 2021, the Company
received funds from Canada Emergency Wage Subsidy of $0.3 million.
These grants were recognized as a $0.15 million reduction to both
general and administrative expense and a reduction of operating
expenses.
For the six months ended June 30, 2021, the
Company received $0.5 million ($0.7 million for six months ended
June 2020) and the grants were recognized as a $0.3 million
reduction to general and administrative expense and a $0.2 million
reduction of operating expenses ($0.5 million and $0.2 million
respectively for the six month period ended June 30 2020).
CAPITAL
PROGRAM
During the second quarter of 2021, Razor
invested $0.5 million in field equipment for its service company
subsidiary, $1.1 million on its Geothermal Project and $0.3 million
in its Bitcoin mining project. The company also capitalized
$3.9 million of turnaround costs related to operated turnaround
activities and non-operated turnaround activities in the quarter.
As of June 30, 2021, Razor has received $7.2 million since
inception in government grants to support its Geothermal Project,
with an additional $1.4 million funding received in July 2021.
Razor did not initiate any projects related to
finding and development capital and minimal capital reactivations
were conducted during this period as the Company’s focus is on
investing in its 2021 production enhancement program to increase
production and cash flow.
RAZOR'S RESPONSE TO
COVID-19
Razor is dedicated to ensuring the health,
safety and security of its employees, contractors, partners and
residents within all of its operating areas and communities. The
Company is following all applicable rules and regulations as set
out in Alberta Health and Health Canada guidelines to protect the
well-being of all stakeholders.
About Razor
Razor is a publicly traded junior oil and gas
development and production company headquartered in Calgary,
Alberta, concentrated on acquiring, and subsequently enhancing, and
producing oil and gas from properties primarily in Alberta. The
Company is led by experienced management and a strong, committed
Board of Directors, with a long-term vision of growth focused on
efficiency and cost control in all areas of the business. Razor
currently trades on TSX Venture Exchange under the ticker
“RZE.V”.
www.razor-energy.com
About FutEra
FutEra leverages Alberta’s resource industry
innovation and experience to create transitional power and
sustainable infrastructure solutions to commercial markets and
communities, both in Canada and globally. Currently, it is
developing an 18 MW co-produced geothermal and natural gas hybrid
power project in Swan Hills, Alberta.
www.futerapower.com
About Blade
Blade Energy Services is a subsidiary of Razor.
Operating in west central Alberta, Blade’s primary services include
fluid hauling, road maintenance, earth works including well site
reclamation and other oilfield services.
www.blade-es.com
For additional
information
please
contact:
Doug BaileyPresident and Chief Executive Officer Kevin
BraunChief Financial Officer
Razor Energy Corp.800, 500-5th Ave SW Calgary, Alberta T2P
3L5Telephone: (403) 262-0242
READER
ADVISORIES
FORWARD-LOOKING STATEMENTS:
This press release may contain certain statements that may be
deemed to be forward-looking statements. Such statements relate to
possible future events, including, but not limited to, the
Company’s ability to continue to operate in accordance with
developing public health efforts to contain COVID-19, the Company’s
objectives, including the Company’s capital program and other
activities, including ancillary opportunities such as power
generation, oil blending and services integration, restarting
wells, future rates of production, anticipated abandonment,
reclamation and remediation costs for 2021, possible business
combination transactions, assistance from government programs
including under the SRP and Canadian Emergency Wage Subsidy,
commitments under the ABC program and energy management program and
other environmental, social and governance initiatives. 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”, “believe”, "expect", “plan”, “estimate”, “potential”,
“will”, “should”, “continue”, “may”, “objective” and similar
expressions. The forward-looking statements are based on certain
key expectations and assumptions made by the Company, including but
not limited to expectations and assumptions concerning the
availability of capital, current legislation, receipt of required
regulatory approvals, the timely performance by third-parties of
contractual obligation, the success of future drilling and
development activities, the performance of existing wells, the
performance of new wells, the Company’s growth strategy, general
economic conditions, availability of required equipment and
services prevailing commodity prices, price volatility, price
differentials and the actual prices received for the Company's
products. Although the Company believes that the expectations and
assumptions on which the forward-looking statements are based are
reasonable, undue reliance should not be placed on the
forward-looking statements because the Company can give no
assurance that they will prove to be correct. Since forward-
looking statements address future events and conditions, by their
very nature they involve inherent risks and uncertainties. Actual
results could differ materially from those currently anticipated
due to a number of factors and risks. These include, but are not
limited to, risks associated with the oil and gas industry and
geothermal electricity projects in general (e.g., operational risks
in development, exploration and production; delays or changes in
plans with respect to exploration or development projects or
capital expenditures; variability in geothermal resources; as the
uncertainty of reserve estimates; the uncertainty of estimates and
projections relating to production, costs and expenses, and health,
safety and environmental risks), electricity and commodity price
and exchange rate fluctuations, changes in legislation affecting
the oil and gas and geothermal industries and uncertainties
resulting from potential delays or changes in plans with respect to
exploration or development projects or capital expenditures. In
addition, the Company cautions that COVID-19 may continue to have a
material adverse effect on global economic activity and worldwide
demand for certain commodities, including crude oil, natural gas
and NGL, and may continue to result in volatility and disruption to
global supply chains, operations, mobility of people and the
financial markets, which could continue to affect commodity prices,
interest rates, credit ratings, credit risk, inflation, business,
financial conditions, results of operations and other factors
relevant to the Company. The duration of the current commodity
price volatility is uncertain. Please refer to the risk factors
identified in the annual information form and management discussion
and analysis of the Company which are available on SEDAR at
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and the Company
undertakes no obligation to update publicly or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise, unless so required by
applicable securities laws.
This press release contains future-oriented
financial information and financial outlook information
(collectively, "FOFI") about Razor's prospective results of
operations, sales volumes, including sale of inventory volumes,
production and production efficiency, balance sheet, capital
spending, cost and net debt reductions, operating efficiencies,
investment infrastructure and components thereof, all of which are
subject to the same assumptions, risk factors, limitations, and
qualifications as a set forth in the above paragraph. 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 Razor's future business operations. Razor
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.
NON-IFRS MEASURES: This press
release contains the terms "funds flow", "adjusted funds flow",
"net blending and processing income", "net debt", "income (loss) on
sale of commodities purchased from third parties", "operating
netback", "corporate netback", “adjusted operating expenses” and
“production enhancement expenses” which do not have standardized
meanings prescribed by International Financial Reporting Standards
("IFRS") and therefore may not be comparable with the calculation
of similar measures by other companies. Funds flow represents cash
generated from operating activities before changes in non-cash
working capital. Adjusted funds flow represents cash flow from
operating activities before changes in non-cash working capital and
decommissioning obligation expenditures incurred. Management uses
funds flow and adjusted funds flow to analyze operating performance
and leverage, and considers funds flow and adjusted funds flow from
operating activities to be key measures as it demonstrates the
Company's ability to generate cash necessary to fund future capital
investments and repay debt. Net blending and processing income is
calculated by adding blending and processing income and deducting
blending and processing expense. Net debt is calculated as the sum
of the long-term debt and lease obligations, less working capital
(or plus working capital deficiency), with working capital
excluding mark-to-market risk management contracts. Razor believes
that net debt is a useful supplemental measure of the total amount
of current and long-term debt of the Company. Income (loss) on sale
of commodities purchased from third parties is calculated by adding
sales of commodities purchased from third parties and deducting
commodities purchased from third parties. Income (loss) on sale of
commodities purchased from third parties may not be comparable to
similar measures used by other companies. Operating netback equals
total petroleum and natural gas sales less royalties and operating
costs calculated on a boe basis. Razor considers operating netback
as an important measure to evaluate its operational performance as
it demonstrates its field level profitability relative to current
commodity prices. Corporate netback is calculated by deducting
general & administration, acquisition and transaction costs,
and interest from operating netback. Razor considers corporate
netback as an important measure to evaluate its overall corporate
performance. Adjusted operating expenses are regular field or
general operating costs that occur throughout the year and do not
include production enhancement expenses. Management believes that
removing the expenses related to production enhancements from total
operating expenses is a useful supplemental measure to analyze
regular operating expenses. Adjusted operating expenses may not be
comparable to similar measures used by other companies. Production
enhancement expenses are expenses made by the company to increase
production volumes which are not regular field or general operating
costs that occur throughout a year. Management believes that
separating the expenses related to production enhancements is a
useful supplemental measure to analyze the cost of bringing wells
back on production and the related increases in production volumes.
Production enhancement expenses may not be comparable to similar
measures used by other companies.
ADVISORY PRODUCTION
INFORMATION: Unless otherwise indicated herein, all
production information presented herein is presented on a gross
basis, which is the Company's working interest prior to deduction
of royalties and without including any royalty interests.
BARRELS OF OIL EQUIVALENT: The
term "boe" or barrels of oil equivalent may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet of natural gas to one barrel of oil equivalent
(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. Additionally, given that the
value ratio based on the current price of crude oil, as compared to
natural gas, is significantly different from the energy equivalency
of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an
indication of value.
Neither the
TSX
Venture
Exchange
nor its
Regulation
Services
Provider
(as that
term is
defined in the
policies of the
TSX
Venture
Exchange)
accepts
responsibility for the adequacy
or accuracy of this
news release.
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