CALGARY, Alberta, Aug. 10, 2022 (GLOBE NEWSWIRE) -- Petrus Resources Ltd. (“Petrus” or the “Company”) (TSX: PRQ) is pleased to report financial and operating results as at and for the three and six months ended June 30, 2022.

Q2 2022 HIGHLIGHTS:

  • Production up 15% – Production was up 15% from 6,309 boe/d in the second quarter of 2021 to 7,280 boe/d in the second quarter of 2022 due to the new wells drilled in late 2021 and the strategic acquisition of Cardium assets located in Petrus' Ferrier area that closed in March 2022.
  • Funds flow(1) increased 188% – Generated funds flow of $23.2 million ($0.21 per share(2)) for the second quarter of 2022, 188% higher than funds flow of $8.1 million ($0.16 per share) for the second quarter of 2021.
  • Operating netback(2) up 118% – Operating netback increased by 118% from $20.55/boe in the second quarter of 2021 to $44.86/boe in the second quarter of 2022.
  • Commodity price improvement Realized price per boe increased by 87% in the second quarter of 2022 compared to the second quarter of 2021; from $33.87/boe to $63.33/boe. The realized oil, natural gas and NGL prices increased by 75%, 136% and 88%, respectively.
  • Backstopped rights offering – Petrus closed a $20 million rights offering that was backstopped by the Company's major shareholders. The rights offering was oversubscribed by 84%.
  • Net debt(1) reduction – Net debt was $13.9 million at June 30, 2022, an 87% decrease from the second quarter of 2021 and a 78% decrease from December 31, 2021. The Company continues to manage its balance sheet with the goal of maintaining a net debt to funds flow ratio(2) of under 1x.
  • Debt restructuring complete – The Company entered into agreements with new lenders providing two new credit facilities ("New Facilities") totaling $55 million; at June 30, 2022, $18 million was drawn on the New Facilities. The refinancing completes the Company’s debt restructuring, moving forward with supportive lenders that provide stability and liquidity.

2022 CAPITAL PROGRAM

The Company's 2022 capital program resumed in the second quarter with 2 (1.6 net) operated wells spud and an additional 3 (0.15 net) non-operated wells spud in late June. Given the inherent volatility of commodity prices, the Company recognizes it is prudent to remain disciplined and flexible from an operational and financial perspective. Petrus will continue to monitor the price of Canadian light oil and natural gas and will evaluate capital investments on an ongoing basis.

(1)Non-GAAP measure. Refer to "Non-GAAP and Other Financial Measures".
(2)Non-GAAP ratio. Refer to "Non-GAAP and Other Financial Measures".

SELECTED FINANCIAL INFORMATION

OPERATIONS Three months ended 

 Jun. 30, 2022
Three months ended 

Jun. 30, 2021
Three months ended  

Mar. 31, 2022
Three months ended  

Dec. 31, 2021
Three months ended 

Sept. 30, 2021
Average Production     
Natural gas (mcf/d)30,913 24,291 29,530 23,494 23,942 
Oil (bbl/d)1,073 1,214 1,250 1,002 937 
NGLs (bbl/d)1,055 1,046 1,207 962 1,010 
Total (boe/d)7,280 6,309 7,379 5,880 5,937 
Total (boe)662,456 574,084 664,010 540,924 546,227 
Light oil weighting15%19%17%20%21%
Realized Prices     
Natural gas ($/mcf)7.74 3.28 5.20 5.45 4.04 
Oil ($/bbl)133.36 75.99 110.12 89.71 82.56 
NGLs ($/bbl)74.63 39.76 60.12 56.35 45.10 
Total realized price ($/boe)63.33 33.87 49.31 46.29 37.00 
Royalty income0.25 0.19 0.29 0.06 0.18 
Royalty expense(8.64)(4.87)(6.89)(6.34)(3.94)
Net oil and natural gas revenue ($/boe)54.94 29.19 42.71 40.01 33.24 
Operating expense(7.92)(6.80)(6.76)(5.02)(5.57)
Transportation expense(2.16)(1.84)(2.17)(1.87)(1.81)
Operating netback(1) ($/boe)44.86 20.55 33.78 33.12 25.86 
Realized loss on financial derivatives ($/boe) (3.21)(6.98)(9.52)(6.41)
Loss on risk management activities ($/boe)(6.76)    
Other income0.04 1.77 0.07 0.04 0.02 
General & administrative expense(1.70)(2.41)(0.82)(2.24)(1.47)
Cash finance expense(1.46)(2.52)(1.04)(1.58)(3.30)
Decommissioning expenditures0.06 (0.14)(0.02)(0.56)(0.27)
Funds flow & corporate netback(1) ($/boe)35.04 14.04 24.99 19.26 14.43 
      
FINANCIAL (000s except $ per share)Three months ended 

Jun. 30, 2022
Three months ended 

Jun. 30, 2021
Three months ended 

Mar. 31, 2022
Three months ended 

 Dec. 31, 2021
Three months ended 
 
Sept. 30, 2021
Oil and natural gas revenue42,119 19,553 32,940 25,070 20,306 
Net income (loss)18,046 (4,265)10,903 114,633 7,343 
Net income (loss) per share     
Basic0.16 (0.09)0.11 1.19 0.04 
Fully diluted0.15 (0.09)0.11 1.11 0.03 
Funds flow(2)23,208 8,070 16,601 10,418 7,874 
Funds flow per share(1)     
Basic0.21 0.16 0.17 0.11 0.15 
Fully diluted0.20 0.16 0.16 0.10 0.14 
Capital expenditures4,932 763 5,064 12,235 6,101 
Acquisitions (dispositions)364 (100)15,200   
Weighted average shares outstanding     
Basic111,795 49,513 99,189 96,660 54,167 
Fully diluted117,203 49,513 103,250 102,868 57,638 
As at period end     
Common shares outstanding     
Basic122,017 49,559 106,907 96,708 96,603 
Fully diluted131,302 49,559 113,883 103,889 100,074 
Total assets302,472 176,629 308,744 290,492 173,101 
Non-current liabilities50,924 40,838 46,702 42,172 40,200 
Net debt(2)13,895 110,346 50,044 61,779 60,071 

(1)Non-GAAP ratio. Refer to "Non-GAAP and Other Financial Measures".
(2)Non-GAAP measure. Refer to "Non-GAAP and Other Financial Measures".

OPERATIONS UPDATE

Second quarter average production by area was as follows:

For the three months ended June 30, 2022FerrierNorth FerrierFoothillsCentral AlbertaKakwaTotal
Natural gas (mcf/d)19,0204,0932,6964,91519230,916
Oil (bbl/d)57014591248311,085
NGLs (bbl/d)7781146130161,044
Total (boe/d)4,5189405461,198787,280

Second quarter average production was 7,280 boe/d in 2022 compared to 6,309 boe/d in 2021. The increase in production is due to the capital activity in the second half of 2021, the strategic acquisition of Cardium assets located in Petrus' Ferrier area that closed in March 2022, and certain wells in the Foothills area being brought back on-stream due to improved pricing.

An updated corporate presentation can be found on the Company's website at www.petrusresources.com.

For further information, please contact:

Ken Gray, P.Eng.
President and Chief Executive Officer
T: (403) 930-0889
E: kgray@petrusresources.com


NON-GAAP AND OTHER FINANCIAL MEASURES

This press release makes reference to the terms "operating netback" (on an absolute and $/boe basis), "corporate netback" (on an absolute and $/boe basis), "funds flow" (on an absolute, per share and $/boe basis), "net debt" and "net debt to funds flow ratio". These non-GAAP and other financial measures are not recognized measures under GAAP (IFRS) and do not have a standardized meaning prescribed by GAAP (IFRS). Accordingly, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. These non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS as indicators of our performance. Management uses these non-GAAP and other financial measures for the reasons set forth below.

Operating Netback
Operating netback is a common non-GAAP financial measure used in the oil and natural gas industry which is a useful supplemental measure to evaluate the specific operating performance by product type at the oil and natural gas lease level. The most directly comparable GAAP measure to operating netback is oil and natural gas revenue. Operating netback is calculated as oil and natural gas revenue less royalty expenses, operating expenses and transportation expenses. See below for a reconciliation of operating netback to oil and natural gas revenue.

Operating netback ($/boe) is a non-GAAP ratio used in the oil and natural gas industry which is a useful supplemental measure to evaluate the specific operating performance by product type at the oil and natural gas lease level . It is calculated as operating netbacks divided by weighted average daily production on a per boe basis. See below.

Corporate Netback and Funds Flow
Corporate netback or funds flow is a common non-GAAP financial measure used in the oil and natural gas industry which evaluates the Company’s profitability at the corporate level. Corporate netback and funds flow are used interchangeably. Petrus analyzes these measures on an absolute value and on a per unit (boe) basis as a non-GAAP ratio. Management believes that funds flow and corporate netback provide information to assist a reader in understanding the Company's profitability relative to current commodity prices. They are calculated as the operating netback less general and administrative expense, finance expense, decommissioning expenditures, plus other income and the net realized gain (loss) on financial derivatives and risk management activities. See below for a reconciliation of funds flow and corporate netback to oil and natural gas revenue.

Corporate netback ($/boe) or funds flow ($/boe) is a non-GAAP ratio used in the oil and natural gas industry which evaluates the Company’s profitability at the corporate level. Management believes that funds flow ($/boe) or corporate netback ($/boe) provide information to assist a reader in understanding the Company's profitability relative to current commodity prices. It is calculated as corporate netbacks or funds flow divided by weighted average daily production on a per boe basis. See below.

Funds flow per share (basic and fully diluted) is comprised of funds flow divided by basic or fully diluted weighted average common shares outstanding.

 Three months ended  

Jun. 30, 2022
Three months ended 

Jun. 30, 2021
Six months ended 

June 30, 2022
Six months ended 

June 30, 2021
 $000s$/boe$000s$/boe$000s$/boe$000s$/boe
Oil and natural gas revenue42,119 63.58 19,553 34.06 75,059 56.58 35,892 32.44 
Royalty expense(5,721)(8.64)(2,794)(4.87)(10,297)(7.76)(4,783)(4.32)
Net oil and natural gas revenue36,398 54.94 16,759 29.19 64,762 48.82 31,109 28.12 
Transportation expense(1,434)(2.16)(1,057)(1.84)(2,874)(2.17)(1,920)(1.74)
Operating expense(5,249)(7.92)(3,903)(6.80)(9,741)(7.34)(7,157)(6.47)
Operating netback29,715 44.86 11,799 20.55 52,147 39.31 22,032 19.91 
Realized loss on financial derivatives  (1,843)(3.21)(4,632)(3.49)(3,058)(2.77)
Loss on risk management activities(4,476)(6.76)  (4,476)(3.37)  
Other income28 0.04 1,018 1.77 75 0.06 1,041 0.94 
General & administrative expense(1,127)(1.70)(1,381)(2.41)(1,670)(1.26)(2,257)(2.04)
Cash finance expense(1)(969)(1.46)(1,444)(2.52)(1,655)(0.34)(2,474)(2.24)
Decommissioning expenditures37 0.06 (79)(0.14)21 0.02 (222)(0.20)
Funds flow and corporate netback23,208 35.04 8,070 14.04 39,810 30.93 15,062 13.60 

(1)Excludes non-cash Term Loan interest payment-in-kind

Net Debt
Net debt is a non-GAAP financial measure and is calculated as the sum of long term debt and working capital (current assets and current liabilities), excluding the current financial derivative contracts and current portion of the lease obligation. Petrus uses net debt as a key indicator of its leverage and strength of its balance sheet. Net debt is reconciled, in the table below, to long-term debt which is the most directly comparable GAAP measure.

($000s)As at June 30, 2022As at March 31, 2022As at December 31, 2021
Long-term debt12,000   
Current assets(18,783)(17,356)(15,611)
Current liabilities18,785 67,625 80,095 
Current financial derivatives2,124  (2,488)
Current portion of lease obligation(231)(225)(217)
Net debt13,895 50,044 61,779 

Net debt to funds flow ratio is a non-GAAP ratio used as a key indicator of our leverage and strength of our balance sheet. It is calculated as net debt divided by funds flow for the relevant period.

ADVISORIES

Basis of Presentation
Financial data presented above has largely been derived from the Company’s financial statements, prepared in accordance with GAAP which require publicly accountable enterprises to prepare their financial statements using IFRS. Accounting policies adopted by the Company are set out in the notes to the audited consolidated financial statements as at and for the twelve months ended December 31, 2021. The reporting and the measurement currency is the Canadian dollar. All financial information is expressed in Canadian dollars, unless otherwise stated.

Forward-Looking Statements
Certain information regarding Petrus set forth in this press release contains forward-looking statements within the meaning of applicable securities law, that involve substantial known and unknown risks and uncertainties. The use of any of the words “anticipate”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “should”, “believe” and similar expressions are intended to identify forward-looking statements. Such statements represent Petrus’ internal projections, estimates, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions and actual events or results may differ materially. Although Petrus believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Petrus’ actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Petrus.

In particular, forward-looking statements included in this press release include, but are not limited to, statements with respect to: that the Company will continue to manage its balance sheet with the goal of maintaining a net debt to funds flow ratio of under 1x; that the Company will remain disciplined and flexible from an operational and financial perspective; and that Petrus will continue to monitor the price of Canadian light oil and natural gas and will evaluate capital investments on an ongoing basis. In addition, statements relating to “reserves” are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

These forward-looking statements are subject to numerous risks and uncertainties, most of which are beyond the Company’s control, including: the impact of general economic conditions; volatility in market prices for crude oil, NGL and natural gas; industry conditions; currency fluctuation; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition; the lack of availability of qualified personnel or management; changes in income tax laws or changes in tax laws and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, cratering, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; stock market volatility; ability to access sufficient capital from internal and external sources; and the other risks and uncertainties described in the AIF. With respect to forward-looking statements contained in this press release, Petrus has made assumptions regarding: future commodity prices (including as disclosed herein) and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment and services; effects of regulation by governmental agencies; the effects of inflation on our profitability; and future operating costs. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide investors with a more complete perspective on Petrus’ future operations and such information may not be appropriate for other purposes. Petrus’ actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that the Company will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.

This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Petrus' prospective results of operations including, without limitation, its forecast for net debt to funds flow ratio, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth above. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. Petrus' actual results, performance or achievement could differ materially from those expressed in, or implied by, these FOFI, or if any of them do so, what benefits Petrus will derive therefrom. Petrus has included the FOFI in order to provide readers with a more complete perspective on Petrus' future operations and such information may not be appropriate for other purposes.

These forward-looking statements and FOFI are made as of the date of this press release and the Company disclaims any intent or obligation to update any forward-looking statements and FOFI, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

BOE Presentation
The oil and natural gas industry commonly expresses production volumes and reserves on a barrel of oil equivalent (“boe”) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet to one barrel of oil. The intention is to sum oil and natural gas measurement units into one basis for improved measurement of results and comparisons with other industry participants. Petrus uses the 6:1 boe measure which is the approximate energy equivalence of the two commodities at the burner tip. Boe’s do not represent an economic value equivalence at the wellhead and therefore may be a misleading measure if used in isolation.

Abbreviations

$000’s  thousand dollars 
$/bbl dollars per barrel 
$/boe dollars per barrel of oil equivalent
$/GJ dollars per gigajoule 
$/mcf dollars per thousand cubic feet
bbl  barrel 
bbl/d  barrels per day 
boe barrel of oil equivalent 
mboe thousand barrel of oil equivalent
mmboe million barrel of oil equivalent
boe/d  barrel of oil equivalent per day
GJ  gigajoule 
GJ/d  gigajoules per day 
mcf  thousand cubic feet 
mcf/d  thousand cubic feet per day
mmcf/d  million cubic feet per day 
NGLs  natural gas liquids 
WTI West Texas Intermediate 

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