Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) announces
its second quarter 2022 financial and operating results. Selected
financial and operational information is outlined below and should
be read in conjunction with Razor’s unaudited interim condensed
consolidated financial statements and management’s discussion and
analysis for the three and six months ended June 30, 2022 which are
available on SEDAR at www.sedar.com and the Company’s website
www.razor-energy.com.
All amounts are expressed in Canadian dollars.
Certain metrics, including those expressed on an adjusted basis,
are non-IFRS and other financial measures. See “Non-IFRS and Other
Financial Measures” below.
RECENT HIGHLIGHTS
- Increased
Production: Completed work on a group
pipeline and associated wells in the Swan Hills area and in
mid-August which, in conjunction with other activities, increased
field estimated production to over 4,900 boe/d.
- Geothermal
Project: FutEra Power Corp. (“FutEra”), a
subsidiary of Razor entered the final construction stage of its
Co-produced Geothermal Power Generation Project in Swan Hills,
Alberta (“Geothermal Project”). The Geothermal Project will be
capable of generating up to 21 MW of grid connected electricity, of
which up to 30% will be sustainable clean power generation.
-
CO2 Enhanced Oil
Recovery: Razor recently engaged Sproule
Associates Limited to review the results of the CO2 enhanced oil
recovery (“EOR”) pilot in Razor’s South Swan Hills Unit
(“SSHU”).
Q2 2022 FINANCIAL AND OPERATIONAL
HIGHLIGHTS
-
Production: Averaged 4,340 boe/d
in Q2 2022, representing a 38% increase from Q1 2021 and averaged
4,398 boe/d for the six months ended June 30, 2022, an increase of
43% compared to the same period in 2021.
- Adjusted Funds
Flow1: Generated
adjusted funds flow of $6.0 million ($0.25/share (basic and
diluted)) in Q2 2022, representing an increase of $5.4 million from
Q2 2021 driven by improved operating netbacks and higher
production.
- Operating
Netback1: Achieved an
operating netback of $24.90/boe in Q2 2022, compared to $5.20/boe
in Q2 2021.1) Refer to "Non-IFRS and other
financial measures.”
NEAR AND MEDIUM-TERM
OBJECTIVES
- Safely execute our production
enhancement programs and commission the Geothermal Project.
- Reduce net debt through a measured
investment in production enhancement while continuing to optimize
operational and administrative costs.
- Actively identify and consider
asset acquisitions and business combinations with other oil and gas
producers, energy related service companies, and lower carbon
electricity producers and technologies.
SELECT QUARTERLY HIGHLIGHTSThe
following tables summarizes key financial and operating highlights
associated with the Company’s financial performance.
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
June 30 |
|
|
|
June 30 |
|
|
($000s, except for per share amounts and production) |
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Production |
|
|
|
|
|
|
|
Light oil (bbl/d) |
|
2,619 |
|
1,983 |
|
32 |
|
2,724 |
|
1,968 |
|
38 |
|
Natural gas (mcf/d)1 |
|
4,907 |
|
3,673 |
|
34 |
|
4,630 |
|
3,707 |
|
25 |
|
NGLs (boe/d) |
|
904 |
|
549 |
|
65 |
|
903 |
|
492 |
|
84 |
|
Total (boe/d) |
|
4,340 |
|
3,145 |
|
38 |
|
4,398 |
|
3,077 |
|
43 |
|
Sales Volumes |
|
|
|
|
|
|
|
Light oil (bbl/d) |
|
2,597 |
|
2,010 |
|
29 |
|
2,736 |
|
1,959 |
|
40 |
|
Natural gas (mcf/d)1 |
|
4,514 |
|
3,301 |
|
37 |
|
4,211 |
|
3,382 |
|
25 |
|
NGLs (boe/d) |
|
904 |
|
549 |
|
65 |
|
903 |
|
492 |
|
84 |
|
Total (boe/d) |
|
4,253 |
|
3,110 |
|
37 |
|
4,340 |
|
3,014 |
|
44 |
|
Oil inventory volumes (bbls) |
|
13,009 |
|
9,784 |
|
33 |
|
13,009 |
|
9,784 |
|
33 |
|
Financial |
|
|
|
|
|
|
|
Oil and NGL sales |
|
36,624 |
|
15,320 |
|
139 |
|
69,548 |
|
27,813 |
|
150 |
|
Natural gas sales |
|
3,242 |
|
940 |
|
245 |
|
4,952 |
|
1,831 |
|
170 |
|
Blending and processing income |
|
916 |
|
776 |
|
18 |
|
1,819 |
|
2,144 |
|
(15 |
) |
Other revenue |
|
521 |
|
149 |
|
250 |
|
1,003 |
|
552 |
|
86 |
|
Total Revenue |
|
41,303 |
|
17,185 |
|
140 |
|
77,322 |
|
32,340 |
|
139 |
|
Cash flow from operating activities |
|
1,315 |
|
403 |
|
226 |
|
3,719 |
|
(3,119 |
) |
(219 |
) |
Funds flow2 |
|
5,866 |
|
362 |
|
1,520 |
|
15,749 |
|
(1,060 |
) |
(1,586 |
) |
Adjusted funds flow2 |
|
6,047 |
|
601 |
|
906 |
|
15,708 |
|
(260 |
) |
(6,142 |
) |
Net loss |
|
(2,278 |
) |
(5,544 |
) |
(59 |
) |
(3,054 |
) |
(11,179 |
) |
(73 |
) |
Per share – basic and diluted |
|
(0.09 |
) |
(0.26 |
) |
(65 |
) |
(0.13 |
) |
(0.53 |
) |
(75 |
) |
Weighted average number of shares outstanding |
|
24,392 |
|
21,064 |
|
16 |
|
23,856 |
|
21,064 |
|
13 |
|
Total number of shares outstanding |
|
25,275 |
|
21,064 |
|
20 |
|
25,275 |
|
21,064 |
|
20 |
|
Total Assets |
|
197,980 |
|
155,385 |
|
27 |
|
197,980 |
|
155,385 |
|
27 |
|
Cash |
|
2,971 |
|
2,710 |
|
10 |
|
2,971 |
|
2,710 |
|
10 |
|
Long-term debt (principal) |
|
82,718 |
|
62,678 |
|
32 |
|
82,718 |
|
62,678 |
|
32 |
|
Net debt2 |
|
99,617 |
|
83,260 |
|
20 |
|
99,617 |
|
83,260 |
|
20 |
|
Netback ($/boe)2 |
|
|
|
|
|
|
|
Oil and gas sales |
|
100.94 |
|
56.81 |
|
78 |
|
93.59 |
|
53.22 |
|
76 |
|
Royalties |
|
(25.93 |
) |
(7.66 |
) |
238 |
|
(22.45 |
) |
(6.20 |
) |
262 |
|
Adjusted net operating expenses2 3 |
|
(37.88 |
) |
(36.79 |
) |
3 |
|
(35.42 |
) |
(35.09 |
) |
1 |
|
Production enhancement expenses2 |
|
(8.45 |
) |
(4.94 |
) |
71 |
|
(7.97 |
) |
(6.41 |
) |
24 |
|
Transportation and treating |
|
(2.52 |
) |
(2.04 |
) |
24 |
|
(2.45 |
) |
(2.19 |
) |
12 |
|
Realized gain (loss) on commodity contracts |
|
(1.26 |
) |
(0.18 |
) |
600 |
|
0.17 |
|
(0.09 |
) |
(289 |
) |
Operating Netback2 |
|
24.90 |
|
5.20 |
|
379 |
|
25.47 |
|
3.24 |
|
686 |
|
1) Natural gas production includes internally consumed natural gas
primarily used in power generation.2) See "Non-IFRS and other
financial measures"3) Excludes production enhancement expenses
incurred in the period. |
SECOND QUARTER OPERATIONAL UPDATE
Production volumes in Q2 2022 averaged 4,340
boe/d, an increase of 37% from Q2 2021 volumes of 3,145 boe/d and
represents a 3% decrease from Q1 2022 of 4,457 boe/d. Production
volumes averaged 4,340 boe/d for the six months ended June 30,
2022, an increase of 44% from the same period in the prior year.
Highlights of the causes for the differences in production volumes
as compared to Q1 2022 are as follows:
- Swan Hills –
production volumes increased 38% from the same period of 2021.
Production in Q2 2022 was negatively impacted by decreased
production of approximately 500 boe/d as a result of a non-operated
partner reclaiming their working interest in certain properties.
This decrease was partially offset by the Company beginning a
production enhancement program in Swan Hills in Q2 2022, which has
increased production by approximately 29 boe/d in Q2 2022 as
compared to Q1 2022. In addition, the operator in Swan Hills Unit
No.1 has embarked on various production enhancement activities and
the Company anticipates production enhancement activities to
continue throughout 2022.
- Kaybob –
production volumes increased 41% from the same period in 2021 as
the Company’s production enhancement program was focused in the
Kaybob area in Q1 2022 increasing production by 125 boe/d in Q2
2022 as compared to the prior quarter.
- Southern Alberta –
production volumes increased 26% from the same period in 2021 as
the result of the Company’s production enhancement program
positively impacting volumes for Q2 2022, increasing production 14
boe/d as compared to Q1 2022.
The increase in production volumes for both the
three and six months ended June 30, 2022 as compared to the three
and six months ended June 30, 2021 is largely due to production
enhancement activities increased production 168 boe/d in Q2 2022
and 304 boe/d for the six months ended June 30, 2022 offset by
various third party operational downtime, temporary infrastructure
issues and reclaimed working interest by a non-operated partner as
discussed above.
Adjusted net operating expenses increased $4.7
million or 44% on a total dollar basis and increased 3% on a per
boe basis in Q2 2022 compared to the same period in 2021. The
increase in the adjusted net operating expense on a total dollar
basis was due primarily to fuel and electricity costs which
increased $2.3 million in Q2 2022 as compared to Q2 2021, downhole
service which increased $1.6 million in Q2 2022 as compared to Q2
2021, surface repairs and maintenance costs increased $0.9 million
in Q2 2022 as compared to Q2 2021 and labour costs which increased
$0.8 million in Q2 2022 as compared to Q1 2021. Adjusted net
operating expenses on a per boe basis in Q2 2022 were consistent
with Q2 2021.
The primary factors affecting operating costs on
a $/boe basis are production levels, workover activity and
electricity pricing. Inherent within the Company’s hydrocarbon
operations is a prominent fixed cost element, or those costs that
are not correlated to production levels. On a relative basis these
costs are higher with lower production. Razor’s reactivation
program continued during Q2 2022 and will extend into 2022/2023
with the majority of the costs being expensed. Furthermore, the
electricity market has seen a continual rise in prices.
CAPITAL EXPENDITURESTotal
capital expenditures, before grant proceeds was $9.4 million in Q2
2022 and $14.8 million for the six months ended June 30, 2022. For
the six months ended June 30, 2022, Razor invested $13.1 million on
its Geothermal Project.
CO2
ENHANCED OIL RECOVERYRazor recently engaged
Sproule Associates Limited to review the results of the CO2 EOR
pilot in Razor’s SSHU. The CO2 pilot ran from June 2008 to August
2010 with 2 injectors and 6 oil producers. The review of the
pilot project indicated the project appears to have resulted in
incremental oil recovery of 4% in the pilot area from the lower
reservoir layers with total CO2 injection during the pilot totaling
approximately 7% of the original hydrocarbon pore volume in the
flooded layers. Additional and continued CO2 injection should
result in higher recoveries. It is expected the CO2 flood
could be expanded to additional regions of SSHU in future years to
increase overall unit recoveries.
Currently, Razor is evaluating local, pipelined
supplies of CO2 as potential sources to possibly restart CO2
injection in the original CO2 pilot project region within the SSHU,
which includes the possible use of emissions from FutEra’s soon to
be completed Geothermal Project.
The overall objectives of reactivating the pilot
project and expand thereafter are to economically reduce CO2
emissions and increase oil recovery in SSHU.
OUTLOOKRazor
Razor continues to look forward with plans for
the future while remaining focused on its mid to long-term
sustainability. Razor recognizes multiple deep value streams in its
assets and is actively engaged in liberating them for the benefit
of shareholders. The Company has an extensive opportunity set of
high-quality wells requiring reactivation, many of which have
payout metrics which exceed the Company’s economic thresholds.
Razor will continue production enhancement activity throughout
2022. 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 rate of approximately 12%.
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 capital spending in 2022, focusing on low risk, capital
efficient opportunities to increase field efficiencies and
corporate netbacks.
The significant improvement in oil prices thus
far in 2022 combined with a strong price outlook in the medium
term, provides Razor with improved cash flow from operations and
the Company anticipates reducing its net debt throughout 2022.
Razor has high reservoir quality, low decline,
isolate carbonate Swan Hills reef light oil pools that contain
large original oil in place with over 60 years of production
history. Razor believes these reefs are ideally suited for carbon
capture, utilization and storage and EOR purposes1, in addition to
geothermal power production and conventional open-hole horizontal
development drilling upside.
____________1 These programs have been
successfully demonstrated by the previous operator’s SSHU CO2 EOR
Injection Pilot which ran from 2008 to 2010 in addition to CO2
injection programs carried out in the Swan Hills Unit No. 1 and
Judy Creek oil pools from 2004 to 2010.
FutEra
In May 2021, FutEra, a subsidiary of Razor
entered the project execution stage of its Geothermal Project. On
March 9, 2022, FutEra announced that it is fully financed and in
final construction of its 21 MW Geothermal Project, of which up to
30% will be sustainable clean power generation. FutEra has
successfully partnered with provincial and federal government
agencies to invigorate the emerging geothermal industry. To date,
Razor has received $16.3 million in government grants to support
this power generation project. The total construction and
commissioning budget for the Geothermal Project is $43.0 million.
The Project is in final construction with commissioning and startup
will commence in the fall.
Legacy oil and gas fields can face economic
challenges with lower production levels and high fixed costs.
However, these fields also have practical advantages when
considering the existing infrastructure, pipelines, wells, and
operational footprints. The Geothermal Project is an example of
leveraging existing assets to lower carbon economic outcomes. Razor
and FutEra continue to demonstrate the synergies and cooperation
needed to define a type of transformation energy and sets the
standard of how oil and gas companies can evolve into the ‘energy
and technology’ companies necessary for the future of the Alberta
energy complex.
FutEra’s next phase of the Geothermal Project
will be the design and implementation of a Carbon Capture with
Usage and/or Sequestration (“CCUS”) solution, with the objective to
create a net negative carbon emitting power generation facility.
This initiative is currently under evaluation for technical
feasibility and economic viability.
With Razor’s strategic acquisition of additional
working interest in the Swan Hills area in the third quarter of
2021, FutEra has identified the potential for additional geothermal
and/or natural gas power generation projects in Swan Hills Unit
No.1. The volume and temperature of the produced fluids processed
through two of the Unit’s main facilities are highly analogous to
FutEra’s current Geothermal Project.
FutEra has identified and is in the process of
reviewing and capturing additional projects including solar,
geothermal, CCUS and other low carbon technologies. The long-term
strategy of large scale power is also underway.
Continuing on the transition energy theme, on
May 11, 2022 Razor closed a rights offering for $5.0 million of
common shares issued on a flow-through basis in respect of Canadian
renewable and conservation expense (“CRCE”) within the meaning of
the Income Tax Act (Canada). The proceeds will be used to fund
certain eligible expenses yet to be incurred on the Geothermal
Project, solar and eligible expenses on various early stage power
projects including additional geothermal initiatives in 2022 and
2023.
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 transformational power and
sustainable infrastructure solutions to commercial markets and
communities, both in Canada and globally. Currently, it is
developing a 21 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
objectives and anticipated results, including the Company’s capital
program and other activities; the Geothermal Project and its
capacity, construction and commissioning budget; the CO2 enhanced
oil recovery; opportunities for power generation, oil blending and
services integration; restarting wells; execution of production
enhancement programs; future rates of production; expectations
regarding commodity prices, cash flow from operating activities,
working capital and net debt; possible business combination
transactions; and future projects including solar, wind and other
low carbon technologies. 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
geothermal, 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 or other global pandemics may 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 also refer to the risk factors identified in the
most recent 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 AND OTHER FINANCIAL
MEASURESThis press release contains certain specified
measure consisting of non-IFRS measures and non-IFRS financial
ratios. Since these specified financial measures may not have a
standardized meaning, they must be clearly defined and, where
required, reconciled with their nearest IFRS measure. Accordingly,
they may not be comparable to similar measures used by other
companies
FUNDS FLOW AND ADJUSTED FUNDS
FLOWFunds Flow
Management utilizes funds flow as a useful
measure of Razor’s ability to generate cash not subject to
short-term movements in non-cash operating working capital. As
shown below, funds flow is calculated as cash flow from operating
activities excluding change in non-cash working capital.
Adjusted funds flow
Management utilizes adjusted funds flow as a key
measure to assess the ability of the Company to generate the funds
necessary for financing activities, operating activities, and
capital expenditures. As shown below, adjusted funds flow is
calculated as funds flow excluding purchasing of commodity
contracts, and decommissioning expenditures since Razor believes
the timing of collection, payment or incurrence of these items
involves a high degree of discretion and variability. Expenditures
on decommissioning obligations vary from period to period depending
on the maturity of the Company’s operating areas and availability
of adjusted funds flow and are viewed as part of the Company’s
capital budgeting process.
The following table reconciles cash flow
from operating activities, funds flow and adjusted funds
flow:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($000’s) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Cash flow from (used in) operating activities |
1,315 |
|
403 |
|
3,719 |
|
(3,115 |
) |
Changes
in non-cash working capital |
4,551 |
|
(41 |
) |
12,030 |
|
2,055 |
|
Funds flow |
5,866 |
|
362 |
|
15,749 |
|
(1,060 |
) |
Decommissioning costs
incurred |
127 |
|
229 |
|
445 |
|
282 |
|
Sale
(purchase) of commodity contracts |
54 |
|
10 |
|
(486 |
) |
518 |
|
Adjusted funds
flow |
6,047 |
|
601 |
|
15,708 |
|
(260 |
) |
NET DEBT
Net debt is calculated as the sum of the
long-term debt (includes AIMCo Term Loan, Amended Arena Term Loan
and Promissory Notes) 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.
Reconciliation of net debt |
June 30, |
|
December 31, |
|
($000’s) |
2022 |
|
2021 |
|
Long term debt |
(74,111 |
) |
(64,047 |
) |
Long
term lease obligation |
(1,448 |
) |
(435 |
) |
|
(75,559 |
) |
(64,482 |
) |
Less: Working capital |
|
|
Current assets |
30,699 |
|
22,108 |
|
Exclude commodity
contracts |
1,915 |
|
573 |
|
Current liabilities |
(56,672 |
) |
(57,219 |
) |
|
(24,058 |
) |
(34,538 |
) |
Net debt |
99,617 |
|
99,020 |
|
Adjusted operating expenses
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.Production enhancement
expenses
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.
Reconciliation of Adjusted Operating
expenses, Production Enhancement Expenses and Operating
Expenses
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($000's) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Adjusted operating expenses |
15,496 |
|
10,780 |
|
29,308 |
|
21,208 |
|
Production enhancement expenses |
3,337 |
|
1,413 |
|
6,347 |
|
3,573 |
|
Operating expenses |
18,333 |
|
12,193 |
|
35,655 |
|
24,781 |
|
Adjusted Net Operating
Expenses
Adjusted net operating expenses equals adjusted
operating expenses less net blending and processing income.
Management considers adjusted net operating expenses and important
measure to evaluate its operational performance.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($000's) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Adjusted operating expenses |
15,496 |
|
10,780 |
|
29,308 |
|
21,208 |
|
Net
blending and processing income |
(535 |
) |
(255 |
) |
(1,114 |
) |
(1,182 |
) |
Adjusted net operating expenses |
14,961 |
|
10,525 |
|
28,194 |
|
20,026 |
|
NET BLENDING AND PROCESSING
INCOME
Net blending and processing income is calculated
by adding blending and processing income and deducting blending and
processing expense. Net blending and processing income may not be
comparable to similar measures used by other companies.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($000’s) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Blending and processing income |
916 |
|
776 |
|
1,819 |
|
2,144 |
|
Blending and processing
expenses |
(381 |
) |
(521 |
) |
(705 |
) |
(962 |
) |
Net blending and processing income |
535 |
|
255 |
|
1,114 |
|
1,182 |
|
1) Natural gas
production includes internally consumed natural gas primarily used
in power generation. |
|
OPERATING NETBACK
Operating netback is a measure that represents
sales net of royalties and operating expenses. Management believes
that operating netback is a useful supplemental measure to analyze
operating performance and provide an indication of the results
generated by the Company’s principal business activities prior to
the consideration of other income and expenses.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($000’s) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Petroleum and natural gas sales1 |
39,866 |
|
16,260 |
|
74,500 |
|
29,644 |
|
Royalties |
(10,241 |
) |
(2,193 |
) |
(17,873 |
) |
(3,454 |
) |
Adjusted net operating
expenses |
(15,496 |
) |
(10,780 |
) |
(29,308 |
) |
(21,208 |
) |
Production enhancement
expenses |
(3,337 |
) |
(1,413 |
) |
(6,347 |
) |
(3,573 |
) |
Transportation and treating
expenses |
(995 |
) |
(583 |
) |
(1,952 |
) |
(1,221 |
) |
Realized derivative gain (loss) on settlement |
(496 |
) |
(52 |
) |
132 |
|
(52 |
) |
Operating netback |
9,301 |
|
1,239 |
|
19,152 |
|
136 |
|
1) Natural gas
production includes internally consumed natural gas primarily used
in power generation. |
|
NON-IFRS AND FINANCIAL
RATIOSOperating expenses per BOE
Operating expenses per boe is consists of
adjusted operating expenses per boe and production enhancement
expenses per boe. Operating expense per boe is a useful
supplemental measure to calculate the efficiency of its operating
expenses on a per unit of production basis.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($/boe)1 |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Adjusted operating expenses |
39.24 |
|
37.67 |
|
36.82 |
|
38.07 |
|
Production enhancement expenses |
8.45 |
|
4.94 |
|
7.97 |
|
6.41 |
|
Operating expenses per BOE |
47.69 |
|
42.61 |
|
44.79 |
|
44.48 |
|
1) $/boe amounts are calculated using production
volumes |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($/boe)1 |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Adjusted operating expenses |
39.24 |
|
37.67 |
|
36.82 |
|
38.07 |
|
Net
blending and processing income |
(1.36 |
) |
(0.89 |
) |
(1.40 |
) |
(2.12 |
) |
Adjusted net operating expenses per BOE |
37.88 |
|
36.78 |
|
35.42 |
|
35.95 |
|
1) $/boe amounts are calculated using production
volumes |
|
Operating Netback per
BoeOperating netback per boe is used to calculate the
results of Razor’s operating efficiency of its petroleum and
natural gas assets on a per unit of production basis. Net operating
expense per boe is a useful supplemental measure to analyze
operating performance and provide an indication of the results
generated by the Company’s principal business activities prior to
the consideration of other income and expenses.
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
($/boe)2 |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Petroleum and natural gas sales1 |
101.56 |
|
56.81 |
|
93.89 |
|
53.22 |
|
Royalties |
(25.93 |
) |
(7.66 |
) |
(22.45 |
) |
(6.20 |
|
Adjusted net operating
expenses |
(37.88 |
) |
(36.79 |
) |
(35.42 |
) |
(35.09 |
|
Production enhancement
expenses |
(8.45 |
) |
(4.94 |
) |
(7.97 |
) |
(6.41 |
|
Transportation and treating
expenses |
(2.52 |
) |
(2.04 |
) |
(2.45 |
) |
(2.19 |
|
Realized derivative gain (loss) on settlement |
(1.26 |
) |
(0.18 |
) |
0.17 |
|
(0.09 |
|
Operating netback per BOE |
25.52 |
|
5.20 |
|
25.07 |
|
3.24 |
|
1) Natural gas production includes internally
consumed natural gas primarily used in power
generation.2) $/boe amounts are calculated using
production volumes |
|
ADVISORY PRODUCTION
INFORMATIONUnless 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 EQUIVALENTThe
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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