Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) announces
its third 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 nine months ended September 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
- Geothermal
Project: FutEra Power Corp. (“FutEra”), a subsidiary of
Razor Energy, has partially commissioned the first co-produced
geothermal power plant in Canada (“Swan Hills Geothermal Power
Project”), with a nameplate capacity of 21 MW of which up to 30%
will be sustainable clean power generation. The Swan Hills
Geothermal Power Project began producing power to the grid on
September 9th, 2022 and generated revenue of $1.9 million in
September. The final stages of construction and commissioning are
ongoing, with the Swan Hills Geothermal Power Project anticipated
to be fully operational by the end of 2022.
-
CO2 Enhanced Oil Recovery
Engineering Review: Sproule Associates
Limited (“Sproule”) completed an engineering review of the results
of a previous operator’s CO2 enhanced oil recovery (“EOR”) pilot
(the “CO2 Pilot”) in Razor’s South Swan Hills Unit (“SSHU”) and
Sproule’s work confirmed additional and continued injection of CO2
should result in incremental recoverable reserves.
-
CO2 Enhanced Oil Recovery
Scheme Approval: Razor received approval
from the Alberta Energy Regulator for a miscible CO2 EOR scheme in
the Beaverhill Lake U and V Pools located in the SSHU. Razor is
actively developing a long-term plan to inject CO2 and expects
incremental recovery of hydrocarbons when CO2 is injected into the
reservoir.
Q3 2022 FINANCIAL AND OPERATIONAL
HIGHLIGHTS
-
Production: Averaged 4,514 boe/d,
an increase of 27% from Q3 2021 and 4% from Q2 2022. Average
production was 4,437 boe/d for the nine months ended September 30,
2022, an increase of 37% compared to the same period in 2021.
- Cash Flow From Operating
Activities: Generated cash flow from operating activities
of $12.2 million in Q3 2022, representing an increase of $14.6
million from Q3 2021.
- Capital
Expenditures: Invested $6.7 million in Q3
2022, with $4.3 million attributed to the advance the Swan Hills
Geothermal Power Project and the remaining $2.4 million attributed
to Razor and Blade Energy Services Corp.
NEAR AND MEDIUM-TERM
OBJECTIVES
- Safely execute our production
enhancement programs and commission the Swan Hills Geothermal Power
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 |
|
|
|
Nine Months Ended |
|
|
|
September 30 |
|
|
|
September 30 |
|
|
($000s, except for per share amounts and production) |
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
|
Production |
Light oil (bbl/d) |
2,816 |
|
2,282 |
|
23 |
|
2,755 |
|
2,074 |
|
33 |
|
Natural gas (mcf/d)1 |
4,948 |
|
4,381 |
|
13 |
|
4,737 |
|
3,934 |
|
20 |
|
NGLs (boe/d) |
873 |
|
554 |
|
58 |
|
893 |
|
513 |
|
74 |
|
Total (boe/d) |
4,514 |
|
3,567 |
|
27 |
|
4,437 |
|
3,242 |
|
37 |
|
Sales Volumes |
|
|
|
|
|
|
Light oil (bbl/d) |
2,831 |
|
2,304 |
|
23 |
|
2,768 |
|
2,075 |
|
33 |
|
Natural gas (mcf/d)1 |
4,342 |
|
3,831 |
|
13 |
|
4,255 |
|
3,533 |
|
20 |
|
NGLs (boe/d) |
873 |
|
554 |
|
58 |
|
893 |
|
513 |
|
74 |
|
Total (boe/d) |
4,428 |
|
3,497 |
|
27 |
|
4,370 |
|
3,177 |
|
38 |
|
Oil inventory volumes(bbls) |
11,645 |
|
7,752 |
|
50 |
|
11,645 |
|
7,752 |
|
50 |
|
Financial |
|
|
|
|
|
|
Oil and NGL sales |
33,158 |
|
19,295 |
|
72 |
|
102,706 |
|
47,108 |
|
118 |
|
Natural gas sales |
1,979 |
|
1,348 |
|
47 |
|
6,931 |
|
3,179 |
|
118 |
|
Power generation |
1,893 |
|
- |
|
100 |
|
1,893 |
|
- |
|
100 |
|
Blending and processing income |
873 |
|
455 |
|
92 |
|
2,692 |
|
2,599 |
|
4 |
|
Other revenue |
667 |
|
248 |
|
169 |
|
1,670 |
|
800 |
|
109 |
|
Total Revenue |
38,570 |
|
21,346 |
|
81 |
|
115,892 |
|
53,686 |
|
116 |
|
Cash flow from (used in) operating activities |
12,235 |
|
(2,340 |
) |
623 |
|
15,954 |
|
(5,454 |
) |
393 |
|
Funds flow2 |
3,426 |
|
306 |
|
1,020 |
|
19,175 |
|
(755 |
) |
2,640 |
|
Adjusted funds flow2 |
2,929 |
|
1,113 |
|
163 |
|
18,637 |
|
852 |
|
2,087 |
|
Net income (loss) |
(8,788 |
) |
9,669 |
|
(191 |
) |
(11,842 |
) |
(1,510 |
) |
684 |
|
Per share – basic and diluted |
(0.36 |
) |
0.46 |
|
(178 |
) |
(0.50 |
) |
(0.07 |
) |
614 |
|
Common shares outstanding, end of period |
25,275 |
|
21,064 |
|
20 |
|
25,275 |
|
21,064 |
|
20 |
|
Weighted average, basic |
25,275 |
|
21,064 |
|
20 |
|
24,334 |
|
21,064 |
|
16 |
|
Weighted average, diluted |
25,275 |
|
21,064 |
|
20 |
|
24,334 |
|
21,064 |
|
16 |
|
Total Assets |
200,861 |
|
199,233 |
|
1 |
|
200,861 |
|
199,233 |
|
1 |
|
Cash |
3,681 |
|
3,952 |
|
(7 |
) |
3,681 |
|
3,952 |
|
(7 |
) |
Long-term debt (principal) |
84,750 |
|
72,251 |
|
17 |
|
84,750 |
|
72,251 |
|
17 |
|
Net debt2 |
110,746 |
|
91,968 |
|
20 |
|
110,746 |
|
91,968 |
|
20 |
|
Netback($/boe)2 |
|
|
|
|
|
|
Oil and gas sales |
84.61 |
|
62.91 |
|
34 |
|
90.51 |
|
56.81 |
|
59 |
|
Royalties |
(24.39 |
) |
(11.39 |
) |
114 |
|
(23.12 |
) |
(8.13 |
) |
184 |
|
Adjusted net operating expenses2 3 |
(42.99 |
) |
(39.52 |
) |
9 |
|
(39.41 |
) |
(38.61 |
) |
2 |
|
Production enhancement expenses2 |
(6.23 |
) |
(3.87 |
) |
61 |
|
(7.38 |
) |
(5.47 |
) |
35 |
|
Transportation and treating |
(2.75 |
) |
(2.65 |
) |
4 |
|
(2.56 |
) |
(2.36 |
) |
8 |
|
Realized gain (loss) on commodity contracts |
(2.73 |
) |
(0.42 |
) |
550 |
|
(0.83 |
) |
(0.21 |
) |
295 |
|
Operating Netback2 |
5.52 |
|
5.06 |
|
9 |
|
17.21 |
|
2.03 |
|
748 |
|
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. |
THIRD QUARTER OPERATIONAL UPDATE
Production volumes in Q3 2022 averaged 4,514
boe/d, an increase of 27% from Q3 2021 volumes of 3,567 boe/d and
represents a 4% increase from Q2 2022 of 4,340 boe/d. Production
volumes averaged 4,437 boe/d for the nine months ended September
30, 2022, an increase of 37% from the same period in the prior
year. Highlights of the causes for the differences in production
volumes are as follows:
- Swan Hills –
production volumes increased 25% from the same period of 2021.
Production in both Q2 and Q3 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 extended into Q3 2022. This program has increased production
by approximately 216 boe/d in Q3 2022 and 348 boe/d for the nine
months ended September 30, 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 Q4 2022.
- Kaybob –
production volumes increased 30% from the same period in 2021 as
the Company’s production enhancement program was focused in the
Kaybob area in the first half of 2022 increasing production by 4
boe/d in Q3 2022 and 238 boe/d for the nine months ended September
30, 2022.
- Southern Alberta –
production volumes increased 27% from the same period in 2021 as
the result of the Company’s production enhancement program
positively impacting volumes by 12 boe/d for the nine months ended
September 30, 2022.
The increase in production volumes for both the
three and nine months ended September 30, 2022, as compared to the
three and nine months ended September 30, 2021, is largely due to
production enhancement activities increasing production 220 boe/d
in Q3 2022 and 598 boe/d for the nine months ended September 30,
2022, offset by natural declines, 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 $5.0
million or 39% on a total dollar basis and increased 9% on a per
boe basis in Q3 2022 compared to the same period in 2021. The
increase in the adjusted net operating expense on a both a total
dollar basis and a per boe basis was due primarily to fuel and
electricity costs which increased $3.5 million in Q3 2022 as
compared to Q3 2021 as well as additional operating costs incurred
due to increase in operating activity with the improved price
environment.
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 Q3 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.
In the nine months ended September 30, 2022,
Razor experienced more than expected operational spending in both
operated and non-operated areas. Over the last couple of years, due
to lower commodity prices, Razor and its operating partners
deferred certain operations where possible. These operations were
deferable at the time but had to be executed in the 2022 year. A
majority of these deferred projects will be completed in the 2022
year, which will allow for normal operations and spending in future
years.
CAPITAL EXPENDITURESTotal
capital expenditures, before grant proceeds was $6.7 million in Q3
2022 and $18.2 million for the nine months ended September 30,
2022. For the nine months ended September 30, 2022, Razor invested
$17.4 million on its Swan Hills Geothermal Power Project.
CO2
ENHANCED OIL RECOVERYSproule Associates Limited
has completed an engineering review of the results of a previous
operator’s CO2 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 CO2 Pilot indicated the project appears to have
resulted in incremental oil recovery of 4% in the CO2 Pilot area
from the lower reservoir layers with total CO2 injection during the
CO2 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.
In addition, Razor recently received approval
from the Alberta Energy Regulator for a miscible CO2 EOR scheme in
the Beaverhill Lake U and V Pools located in the SSHU. Razor is
actively developing a plan to inject CO2 and expects incremental
recovery of hydrocarbons when CO2 is injected into the reservoir.
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 Swan Hills Geothermal Power
Project.
The overall objectives of reactivating the CO2
Pilot and expanding thereafter are to economically reduce CO2
emissions and increase oil recovery in SSHU.
OUTLOOK
RazorRazor 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
into 2023. 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 2023, focusing on low risk, capital
efficient opportunities to increase field efficiencies and
corporate netbacks.
The significant improvement in oil prices in
2022, combined with a strong price outlook in the medium term,
offset by historically high electricity prices, provides Razor with
improved cash flow from operations and the Company anticipates
reducing its net debt over time.
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 South Swan Hills Unit 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.
FutEraFutEra, a subsidiary of
Razor Energy, has partially commissioned the first co-produced
geothermal power plant in Canada, with a nameplate capacity of 21
MW of which up to 30% will be sustainable clean power generation.
The Swan Hills Geothermal Power Project began producing power to
the grid on September 9th, 2022. The final stages of construction
and commissioning are ongoing, with the Power Plant anticipated to
be fully operational by the end of 2022.
Power generation revenue for September 2022 from
the natural gas turbine was $1.9 million, which exceeded
expectations due to a historically higher than average merchant
power price of $280/MWH. 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
Swan Hills Geothermal Power Project is project to be $48
million.
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 Swan Hills Geothermal Power 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.
Continuing on the transition energy theme, on
May 11, 2022, Razor closed a rights offering for $5.0 million of
common shares (“Rights Offering”). The common shares were 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 on the Swan Hills Geothermal Power Project, solar and
eligible expenses on various early-stage power projects including
additional geothermal initiatives in 2022 and 2023 of which $0.8
million was spent in Q3 2022.
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 in final
construction and commissioning of 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
Bailey |
Kevin
Braun |
President and Chief Executive Officer |
Chief Financial Officer |
|
|
Razor Energy Corp. |
|
800, 500-5th Ave SW |
|
Calgary Alberta T2P 3L5 |
|
Telephone: 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
Swan Hills Geothermal Power 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 |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
($000’s) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Cash flow from (used in) operating activities |
12,235 |
|
(2,340 |
) |
15,954 |
|
(5,454 |
) |
Changes
in non-cash working capital |
(8,809 |
) |
2,646 |
|
3,221 |
|
4,699 |
|
Funds flow |
3,426 |
|
306 |
|
19,175 |
|
(755 |
) |
Decommissioning costs
incurred |
550 |
|
758 |
|
995 |
|
1,040 |
|
Sale
(purchase) of commodity contracts |
(1,047 |
) |
49 |
|
(1,533 |
) |
567 |
|
Adjusted funds
flow |
2,929 |
|
1,113 |
|
18,637 |
|
852 |
|
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 |
September 30, |
|
December 31, |
|
($000’s) |
2022 |
|
2021 |
|
Long term debt |
(75,328 |
) |
(64,047 |
) |
Long
term lease obligation |
(2,932 |
) |
(435 |
) |
|
(78,260 |
) |
(64,482 |
) |
Less: Working capital |
|
|
Current assets |
31,174 |
|
22,108 |
|
Exclude commodity
contracts |
3,275 |
|
573 |
|
Current liabilities |
(66,935 |
) |
(57,219 |
) |
|
(32,486 |
) |
(34,538 |
) |
Net debt |
110,746 |
|
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 |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
($000's) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Operating expenses |
21,499 |
|
14,240 |
|
57,154 |
|
39,021 |
|
Production enhancement
expenses |
(2,588 |
) |
(1,271 |
) |
(8,935 |
) |
(4,844 |
) |
Other corporate operating expenses & elimination entries1 |
(481 |
) |
- |
|
(481 |
) |
- |
|
Adjusted operated expenses |
18,430 |
|
12,969 |
|
47,738 |
|
34,177 |
|
1) Represents
operating costs and intercompany eliminations on the Company’s
non-oil & gas production activities. |
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 |
|
Nine Months Ended |
|
|
September 30 |
|
September 30 |
|
($000's) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Adjusted operating expenses |
18,430 |
|
12,969 |
|
47,738 |
|
34,177 |
|
Net blending and processing income |
(577 |
) |
(304 |
) |
(1,691 |
) |
(1,486 |
) |
Adjusted net operating expenses |
17,853 |
|
12,665 |
|
46,047 |
|
32,691 |
|
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, |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
($000’s) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Blending and processing income |
873 |
|
455 |
|
2,692 |
|
2,599 |
|
Blending and processing
expenses |
(296 |
) |
(151 |
) |
(1,001 |
) |
(1,113 |
) |
Net blending and processing income |
577 |
|
304 |
|
1,691 |
|
1,486 |
|
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 |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
($000’s) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Petroleum and natural gas sales1 |
35,137 |
|
20,643 |
|
109,637 |
|
50,287 |
|
Royalties |
(10,128 |
) |
(3,738 |
) |
(28,001 |
) |
(7,192 |
) |
Adjusted net operating
expenses |
(17,853 |
) |
(12,969 |
) |
(46,047 |
) |
(34,177 |
) |
Production enhancement
expenses |
(2,588 |
) |
(1,271 |
) |
(8,935 |
) |
(4,844 |
) |
Transportation and treating
expenses |
(1,144 |
) |
(870 |
) |
(3,096 |
) |
(2,091 |
) |
Realized derivative gain (loss) on settlement |
(1,135 |
) |
(138 |
) |
(1,003 |
) |
(190 |
) |
Operating netback |
2,289 |
|
1,657 |
|
22,555 |
|
1,793 |
|
1) Natural gas
production includes internally consumed natural gas primarily used
in power generation. |
|
|
|
|
|
|
|
NON-IFRS AND FINANCIAL
RATIOSOperating expenses per BOE
Operating expenses per boe is consists of
adjusted operating expenses per boe and production enhancement
expenses per boe. Operating expense per boe is a useful
supplemental measure to calculate the efficiency of its operating
expenses on a per unit of production basis.
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
($/boe)1 |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Operating expenses per BOE |
50.61 |
|
43.39 |
|
46.79 |
|
44.08 |
|
Production enhancement expenses |
(6.23 |
) |
(3.87 |
) |
(7.38 |
) |
(5.47 |
) |
Adjusted operating expenses |
44.38 |
|
39.52 |
|
39.41 |
|
38.61 |
|
1) $/boe
amounts are calculated using production volumes |
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
($/boe)1 |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Adjusted operating expenses |
44.38 |
|
39.52 |
|
39.41 |
|
38.61 |
|
Net blending and processing income |
(1.39 |
) |
(0.93 |
) |
(1.40 |
) |
(1.68 |
) |
Adjusted net operating expenses per BOE |
42.99 |
|
38.59 |
|
38.01 |
|
36.93 |
|
1) $/boe amounts are calculated using production volumes |
Operating Netback per
BoeOperating netback per boe is used to calculate the
results of Razor’s operating efficiency of its petroleum and
natural gas assets on a per unit of production basis. Net operating
expense per boe is a useful supplemental measure to analyze
operating performance and provide an indication of the results
generated by the Company’s principal business activities prior to
the consideration of other income and expenses.
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
($/boe)2 |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Petroleum and natural gas sales1 |
84.61 |
|
62.91 |
|
90.51 |
|
56.81 |
|
Royalties |
(24.39 |
) |
(11.39 |
) |
(23.12 |
) |
(8.13 |
) |
Adjusted net operating
expenses |
(42.99 |
) |
(39.52 |
) |
(39.41 |
) |
(38.61 |
) |
Production enhancement
expenses |
(6.23 |
) |
(3.87 |
) |
(7.38 |
) |
(5.47 |
) |
Transportation and treating
expenses |
(2.75 |
) |
(2.65 |
) |
(2.56 |
) |
(2.36 |
) |
Realized derivative gain (loss) on settlement |
(2.73 |
) |
(0.42 |
) |
(0.83 |
) |
(0.21 |
) |
Operating netback per BOE |
5.52 |
|
5.06 |
|
17.21 |
|
2.03 |
|
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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