Birchcliff Energy Ltd. (“
Birchcliff” or the
“
Corporation”) (TSX: BIR) is pleased to announce
its Q3 2023 financial and operational results and its preliminary
guidance for 2024. Birchcliff is also pleased to announce that its
board of directors (the “
Board”) has declared a
quarterly cash dividend of $0.20 per common share for the quarter
ending December 31, 2023.
“In Q3 2023, we generated adjusted funds flow(1)
of $72.2 million and free funds flow(1) of $5.5 million, with
average production of 74,143 boe/d. In addition, we returned an
aggregate of $53.3 million to shareholders in Q3 2023 through our
base common share dividend. Since September 30, 2022, Birchcliff
has returned an aggregate of $218.5 million to shareholders (or
$0.82 per basic common share) through common share dividends,”
commented Jeff Tonken, Chief Executive Officer of Birchcliff.
“Earlier in the year, we made the strategic decision to defer the
drilling of nine wells from Q2 2023 to Q3 2023, which resulted in
no new wells being brought on production in Q3 2023. These nine
wells were recently brought on production, allowing us to capture
the anticipated strength in natural gas pricing that is typically
seen in winter months, as well as setting us up for stronger
average production in Q4 2023 and Q1 2024.”
“We anticipate that our adjusted funds flow will
be sufficient to fully fund our F&D capital expenditures and
common share dividend payments in 2024 based on our preliminary
budgeting process and current commodity price outlook. We are
targeting F&D capital expenditures of $260 million to $280
million in respect of 2024 and annual average production of 77,000
to 79,000 boe/d(2). We expect to generate adjusted funds flow of
approximately $500 million and free funds flow of approximately
$240 million to $260 million in 2024. As part of Birchcliff’s $260
million to $280 million capital program for 2024, we expect to
spend approximately $20 million in Q4 2023 to commence the drilling
of five wells in Pouce Coupe, which will allow us to maximize
production during the winter months, and $240 million to $260
million in 2024. We are continuing to evolve our plans for 2024 and
expect to announce the details of our formal 2024 capital budget
and updated five-year outlook for 2024 to 2028 on January 17,
2024.”(3)
Q3 2023 FINANCIAL AND OPERATIONAL
HIGHLIGHTS
-
Achieved quarterly average production of 74,143 boe/d.
-
Generated quarterly adjusted funds flow of $72.2 million, or $0.27
per basic common share(4), and quarterly free funds flow of $5.5
million, or $0.02 per basic common share(4).
-
Generated cash flow from operating activities of $67.8
million.
-
Reported quarterly net income to common shareholders of $15.1
million, or $0.06 per basic common share.
-
Realized an operating expense of $3.93/boe.
-
F&D capital expenditures totalled $66.7 million.
-
Total debt(5) at September 30, 2023 was $327.7 million.
-
Returned $53.3 million to shareholders through the Corporation’s
base common share dividend.
Birchcliff’s unaudited interim condensed
financial statements for the three and nine months ended September
30, 2023 and related management’s discussion and analysis will be
available on its website at www.birchcliffenergy.com and on SEDAR+
at www.sedarplus.ca.
______________
(1) Non-GAAP financial measure. See “Non-GAAP
and Other Financial Measures”.
(2) As compared to $255 million of F&D
capital expenditures and 78,000 boe/d of production, as set out in
the Corporation’s five-year outlook for 2023 to 2027. See the
Corporation’s press release dated May 10, 2023.
(3) See “Outlook and Guidance – Preliminary 2024
Guidance” for further information regarding Birchcliff’s
preliminary 2024 guidance and its commodity price and exchange rate
assumptions for such guidance.
(4) Non-GAAP ratio. See “Non-GAAP and Other
Financial Measures”.
(5) Capital management measure. See “Non-GAAP
and Other Financial Measures”.
DECLARATION OF Q4 2023 QUARTERLY
DIVIDEND
The Board has declared a quarterly cash dividend
of $0.20 per common share for the quarter ending December 31, 2023.
The dividend will be payable on December 29, 2023 to shareholders
of record at the close of business on December 15, 2023. The
ex-dividend date is December 14, 2023. The dividend has been
designated as an eligible dividend for the purposes of the Income
Tax Act (Canada). This is the fifth consecutive quarter in which
Birchcliff’s Board has declared a cash dividend of $0.20 per common
share.
This press release contains forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. For further information regarding the
forward-looking statements and forward-looking information
contained herein, see “Advisories – Forward-Looking Statements”.
With respect to the disclosure of Birchcliff’s production contained
in this press release, see “Advisories – Production”. In addition,
this press release uses various “non-GAAP financial measures”,
“non-GAAP ratios” and “capital management measures” as such terms
are defined in National Instrument 52-112 – Non-GAAP and Other
Financial Measures Disclosure (“NI 52-112”).
Non-GAAP financial measures and non-GAAP ratios are not
standardized financial measures under GAAP and might not be
comparable to similar financial measures disclosed by other
issuers. For further information regarding the non-GAAP and other
financial measures used in this press release, see “Non-GAAP and
Other Financial Measures”.
Q3 2023 FINANCIAL AND OPERATIONAL
SUMMARY
|
|
Three months ended September
30, |
Nine months ended September
30, |
|
|
2023 |
2022 |
2023 |
2022 |
|
OPERATING |
|
|
|
|
| Average production |
|
|
|
|
|
Light oil (bbls/d) |
1,728 |
2,254 |
1,916 |
2,159 |
|
Condensate (bbls/d) |
4,850 |
4,601 |
5,221 |
4,631 |
|
NGLs (bbls/d) |
7,412 |
7,593 |
5,852 |
7,305 |
|
Natural gas (Mcf/d) |
360,924 |
381,788 |
374,544 |
371,174 |
|
Total (boe/d) |
74,143 |
78,079 |
75,413 |
75,957 |
|
Average realized sales prices (CDN$)(1) |
|
|
|
|
|
Light oil (per bbl) |
100.46 |
115.94 |
98.77 |
121.49 |
|
Condensate (per bbl) |
107.67 |
115.84 |
103.75 |
125.06 |
|
NGLs (per bbl) |
26.35 |
38.18 |
26.91 |
43.04 |
|
Natural gas (per Mcf) |
2.86 |
6.83 |
3.07 |
6.95 |
|
Total (per boe) |
25.96 |
47.26 |
27.05 |
49.18 |
|
|
|
|
|
|
| NETBACK AND
COST ($/boe) |
|
|
|
|
|
Petroleum and natural gas revenue(1) |
25.97 |
47.26 |
27.06 |
49.18 |
|
Royalty expense |
(2.04) |
(6.04) |
(2.47) |
(6.05) |
|
Operating expense |
(3.93) |
(3.50) |
(3.84) |
(3.46) |
|
Transportation and other expense(2) |
(6.37) |
(5.41) |
(5.74) |
(5.58) |
|
Operating netback(2) |
13.63 |
32.31 |
15.01 |
34.09 |
|
G&A expense, net |
(1.36) |
(0.98) |
(1.43) |
(1.08) |
|
Interest expense |
(0.86) |
(0.44) |
(0.66) |
(0.48) |
|
Realized gain (loss) on financial instruments |
(0.83) |
6.33 |
(1.69) |
2.99 |
|
Other cash income (expense) |
0.01 |
- |
(0.03) |
- |
|
Adjusted funds flow(2) |
10.59 |
37.22 |
11.20 |
35.52 |
|
Depletion and depreciation expense |
(8.08) |
(7.48) |
(8.11) |
(7.49) |
|
Unrealized gain (loss) on financial instruments |
1.20 |
15.30 |
(1.31) |
9.26 |
|
Other expenses(3) |
(0.69) |
(0.39) |
(0.64) |
(0.28) |
|
Dividends on preferred shares |
- |
(0.24) |
- |
(0.25) |
|
Deferred income tax expense |
(0.81) |
(10.36) |
(0.40) |
(8.59) |
|
Net income to common shareholders |
2.21 |
34.05 |
0.74 |
28.17 |
|
|
|
|
|
|
|
FINANCIAL |
|
|
|
|
|
Petroleum and natural gas revenue ($000s)(1) |
177,126 |
339,531 |
557,064 |
1,019,822 |
|
Cash flow from operating activities ($000s) |
67,840 |
272,965 |
241,523 |
700,828 |
| Adjusted funds flow
($000s)(4) |
72,225 |
267,350 |
230,612 |
736,584 |
|
Per basic common share ($)(2) |
0.27 |
1.01 |
0.87 |
2.78 |
| Free funds flow
($000s)(4) |
5,548 |
182,020 |
(15,859) |
478,725 |
|
Per basic common share ($)(2) |
0.02 |
0.69 |
(0.06) |
1.80 |
| Net income to common
shareholders ($000s) |
15,108 |
244,582 |
15,313 |
584,229 |
| Per
basic common share ($) |
0.06 |
0.92 |
0.06 |
2.20 |
|
End of period basic common shares (000s) |
266,640 |
265,877 |
266,640 |
265,877 |
| Weighted average basic common
shares (000s) |
266,390 |
265,298 |
266,397 |
265,422 |
|
Dividends on common shares ($000s) |
53,321 |
5,317 |
159,954 |
13,285 |
|
Dividends on preferred shares ($000s) |
- |
1,730 |
- |
5,126 |
|
F&D capital expenditures ($000s)(5) |
66,677 |
85,330 |
246,471 |
257,859 |
| Total capital expenditures
($000s)(4) |
67,475 |
86,485 |
248,375 |
260,759 |
| Revolving term credit
facilities ($000s) |
318,711 |
196,989 |
318,711 |
196,989 |
| Total
debt ($000s)(6) |
327,655 |
186,064 |
327,655 |
186,064 |
(1) Excludes the effects of financial
instruments but includes the effects of physical delivery
contracts. (2) Non-GAAP ratio. See “Non-GAAP and Other Financial
Measures”.(3) Includes non-cash items such as compensation,
accretion, amortization of deferred financing fees and other gains
and losses.(4) Non-GAAP financial measure. See “Non-GAAP and Other
Financial Measures”.(5) See “Advisories – F&D Capital
Expenditures”.(6) Capital management measure. See “Non-GAAP and
Other Financial Measures”.
OUTLOOK AND GUIDANCE
Updated 2023 Guidance
The Corporation is re-affirming its annual
average production guidance at approximately 77,000 boe/d for 2023.
As previously disclosed, Birchcliff expected to be on the low end
of its 2023 production guidance range of 77,000 to 80,000 boe/d,
largely as a result of an unplanned system outage on Pembina
Pipeline’s Northern Pipeline system that negatively affected the
Corporation’s production in the first half of the year, as well as
the deferral of the drilling of nine wells from Q2 2023 to Q3
2023.
Birchcliff is updating its 2023 F&D capital
expenditures guidance from $270 million to $280 million to $300
million to reflect the acceleration of approximately $20 million of
capital expenditures from 2024 into Q4 2023. Birchcliff will
commence the drilling of 5 (5.0 net) wells in Pouce Coupe in Q4
2023, which wells are planned to be brought on production in late
January 2024, as well as drill several surface holes and procure
various long-lead items required for the execution of the
Corporation’s 2024 capital program.
By accelerating these capital projects, the
Corporation will be able to maximize production during the winter
months to capture the anticipated strength in natural gas pricing
that is typically seen in the winter months. In addition,
accelerating this capital into Q4 2023 will allow Birchcliff to
continue its two-drilling rig program throughout the remainder of
2023, help to ensure the efficient execution of the Corporation’s
2024 capital program and allow Birchcliff to significantly decrease
the risks related to the price and availability of drilling and
other oilfield services during a period of tight supply.
The Corporation is also updating certain other
items of its 2023 guidance to reflect the acceleration of capital
and an updated commodity price forecast for 2023.
The following tables set forth Birchcliff’s
updated and previous guidance and commodity price assumptions for
2023, as well as its free funds flow sensitivity:
|
|
Updated 2023 guidance and assumptions – November 14,
2023(1) |
Previous 2023 guidance and assumptions – August 10,
2023 |
|
Production |
|
|
|
Annual average production (boe/d) |
77,000 |
77,000 – 80,000 |
|
% Light oil |
3% |
3% |
|
% Condensate |
7% |
7% |
|
% NGLs |
8% |
8% |
|
% Natural gas |
82% |
82% |
|
|
|
|
|
Average Expenses ($/boe) |
|
|
|
Royalty |
2.55 – 2.75 |
3.60 – 3.80 |
|
Operating |
3.75 – 3.95 |
3.60 – 3.80 |
|
Transportation and other(2) |
5.60 – 5.80 |
5.30 – 5.50 |
|
|
|
|
|
Adjusted Funds Flow (millions)(3) |
$350 |
$360 |
|
|
|
|
|
F&D Capital Expenditures (millions) |
$300 |
$270 – $280 |
|
|
|
|
|
Free Funds Flow (millions)(3) |
$50 |
$80 – $90 |
|
|
|
|
|
Annual Base Dividend (millions)(4) |
$213 |
$213 |
|
|
|
|
|
Excess Free Funds Flow (millions)(3)(4) |
($163) |
($123) – ($133) |
|
|
|
|
|
Total Debt at Year End (millions)(5) |
$330(6) |
$280 – $290 |
|
|
|
|
|
Natural Gas Market Exposure(7) |
|
|
|
AECO exposure as a % of total natural gas production |
15% |
15% |
|
Dawn exposure as a % of total natural gas production |
42% |
42% |
|
NYMEX HH exposure as a % of total natural gas production |
37% |
37% |
|
Alliance exposure as a % of total natural gas production |
6% |
6% |
|
|
|
|
|
Commodity Prices |
|
|
|
Average WTI price (US$/bbl) |
78.90(8) |
78.00 |
|
Average WTI-MSW differential (CDN$/bbl) |
4.10(8) |
4.20 |
|
Average AECO price (CDN$/GJ) |
2.60(8) |
2.45 |
|
Average Dawn price (US$/MMBtu) |
2.45(8) |
2.50 |
|
Average NYMEX HH price (US$/MMBtu) |
2.80(8) |
2.85 |
|
Exchange rate (CDN$ to US$1) |
1.35(8) |
1.35 |
|
Forward two months’ free funds flow
sensitivity(8)(9) |
Estimated change to 2023 free funds flow
(millions) |
|
Change in WTI US$1.00/bbl |
$0.7 |
| Change in NYMEX HH
US$0.10/MMBtu |
$0.7 |
| Change in Dawn US$0.10/MMBtu |
$1.3 |
| Change in AECO CDN$0.10/GJ |
$0.4 |
|
Change in CDN/US exchange rate CDN$0.01 |
$0.9 |
(1) For further information regarding the risks
and assumptions relating to the Corporation’s guidance, see
“Advisories – Forward-Looking Statements”.
(2) Non-GAAP ratio. See “Non-GAAP and Other
Financial Measures”.
(3) Non-GAAP financial measure. See “Non-GAAP
and Other Financial Measures”.
(4) Assumes that an annual base dividend of
$0.80 per common share is paid, there are 266 million common shares
outstanding and no special dividends are paid.
(5) Capital management measure. See “Non-GAAP
and Other Financial Measures”.
(6) Birchcliff’s updated guidance for total debt
at year end includes $10.8 million of executive retirement benefit
payments, which were not previously included.
(7) Birchcliff’s natural gas market exposure for
2023 takes into account its outstanding physical and financial
basis swap contracts.
(8) Birchcliff’s updated commodity price and
exchange rate assumptions and free funds flow sensitivity for 2023
are based on anticipated full-year commodity price and exchange
rate averages, which include settled benchmark commodity prices and
the CDN/US exchange rate for the period from January 1, 2023 to
October 31, 2023.
(9) Illustrates the expected impact of changes
in commodity prices and the CDN/US exchange rate on the
Corporation’s updated forecast of free funds flow for 2023, holding
all other variables constant. The sensitivity is based on the
updated commodity price and exchange rate assumptions set forth in
the table above. The calculated impact on free funds flow is only
applicable within the limited range of change indicated.
Calculations are performed independently and may not be indicative
of actual results. Actual results may vary materially when multiple
variables change at the same time and/or when the magnitude of the
change increases.
Preliminary 2024 Guidance
For 2024, Birchcliff remains focused on
maintaining capital discipline, generating free funds flow and
delivering significant returns to shareholders, while maintaining a
strong balance sheet. Based on its preliminary budgeting process
and current commodity price outlook for 2024, Birchcliff is
targeting F&D capital expenditures of $240 million to $260
million in 2024. When combined with the accelerated capital of $20
million in Q4 2023 as discussed above, this would equate to
approximately $260 million to $280 million of F&D capital
expenditures in respect of 2024. This level of capital spending
will allow the Corporation to bring approximately 28 to 30 wells on
production in 2024 and increase its annual average production
year-over-year. With the addition of the five wells that will be
drilled in Q4 2023 and brought on production in late January 2024,
the Corporation currently expects to deliver annual average
production of 77,000 to 79,000 boe/d in 2024.
Birchcliff is currently forecasting that it will
generate approximately $500 million of adjusted funds flow and $240
million to $260 million of free funds flow in 2024 based on its
targeted levels of F&D capital expenditures and annual average
production. Based on the Corporation’s preliminary budgeting
process and current commodity price outlook for 2024, Birchcliff
anticipates that its adjusted funds flow will be sufficient to
fully fund its F&D capital expenditures and common share
dividend payments in 2024.
Excess free funds flow generated in 2024, above
current dividend levels, is currently anticipated to be used to
invest in the Corporation’s business, including filling its
existing infrastructure to grow adjusted funds flow and lower per
unit costs. Depending on commodity prices and available cash flow,
the Corporation may also use a portion of excess free funds flow to
reduce indebtedness and/or increase its base dividend.
Birchcliff continues to evolve its plans for
2024 and expects to announce the details of its formal 2024 capital
budget and updated five-year outlook for 2024 to 2028 on January
17, 2024.
The following tables set forth Birchcliff’s
preliminary guidance and commodity price assumptions for 2024, as
well as its free funds flow sensitivity:
|
|
Preliminary 2024 guidance and assumptions(1) |
|
Annual Average Production (boe/d) |
77,000 – 79,000 |
|
|
|
|
Adjusted Funds Flow (millions)(2) |
$500 |
|
|
|
|
F&D Capital Expenditures (millions) |
$240 – $260 |
|
|
|
|
Free Funds Flow (millions)(2) |
$240 – $260 |
|
|
|
|
Annual Base Dividend (millions)(3) |
$213 |
|
|
|
|
Commodity Prices |
|
|
Average WTI price (US$/bbl) |
80.00 |
|
Average WTI-MSW differential (CDN$/bbl) |
4.50 |
|
Average AECO price (CDN$/GJ) |
3.15 |
|
Average Dawn price (US$/MMBtu) |
3.40 |
|
Average NYMEX HH price (US$/MMBtu) |
3.60 |
|
Exchange rate (CDN$ to US$1) |
1.35 |
|
Forward twelve months’ free funds flow
sensitivity(4) |
Estimated change to 2024 free funds flow
(millions) |
|
Change in WTI US$1.00/bbl |
$3.9 |
| Change in NYMEX HH
US$0.10/MMBtu |
$7.7 |
| Change in Dawn US$0.10/MMBtu |
$7.9 |
| Change in AECO CDN$0.10/GJ |
$3.0 |
|
Change in CDN/US exchange rate CDN$0.01 |
$5.6 |
(1) Birchcliff’s preliminary 2024 guidance for
its adjusted funds flow and free funds flow is based on an annual
average production rate of 78,000 boe/d, which is the mid-point of
Birchcliff’s preliminary annual average production guidance range
for 2024. For further information regarding the risks and
assumptions relating to the Corporation’s guidance, see “Advisories
– Forward-Looking Statements”.
(2) Non-GAAP financial measure. See “Non-GAAP
and Other Financial Measures”.
(3) Assumes that an annual base dividend of
$0.80 per common share is paid, there are 266 million common shares
outstanding, there are no changes to the base dividend rate and no
special dividends are paid. The declaration of future dividends is
subject to the approval of the Board and is subject to change.
(4) Illustrates the expected impact of changes
in commodity prices and the CDN/US exchange rate on the
Corporation’s forecast of free funds flow for 2024, holding all
other variables constant. The sensitivity is based on the commodity
price and exchange rate assumptions set forth in the table above.
The calculated impact on free funds flow is only applicable within
the limited range of change indicated. Calculations are performed
independently and may not be indicative of actual results. Actual
results may vary materially when multiple variables change at the
same time and/or when the magnitude of the change increases.
Elmworth Outlook
As previously disclosed in the Corporation’s
press release dated May 10, 2023, Birchcliff has amassed a
significant Montney land position in the Elmworth area of Alberta,
which positions the Corporation to continue to drive long-term
shareholder value and provides it with a large potential future
development area that can supply clean natural gas for many years
to come.
Birchcliff has initiated the formal planning for
the construction of a proposed 100% owned and operated natural gas
processing plant in the area, including determining processing
capacity, takeaway capacity and specific timelines for consultation
and construction. Birchcliff currently has a successful acid gas
disposal well and an AER approved Acid Gas Disposal Scheme in the
Elmworth area, which is a key component for a natural gas
processing plant. Birchcliff may consider allocating some capital
in 2024 to continue to build, protect and optimize its Elmworth
Montney land position, including through drilling and completions
activity, strategic A&D transactions and Crown land sales.
Q3 2023 FINANCIAL AND OPERATIONAL
RESULTS
Production
Birchcliff’s production averaged 74,143 boe/d in
Q3 2023, a 5% decrease from Q3 2022. The decrease was primarily due
to the timing of new wells brought on production in the period as
compared to Q3 2022, which resulted from the strategic decision to
defer the drilling of 9 wells from Q2 2023 to Q3 2023. Birchcliff
did not bring any wells on production in Q3 2023 as compared to 19
wells brought on production in Q3 2022. Production in Q3 2023 was
also negatively impacted by natural production declines and
positively impacted by incremental production volumes from the new
Montney/Doig wells brought on production since Q3 2022.
Liquids accounted for 19% of Birchcliff’s total
production in Q3 2023, which is consistent with Birchcliff’s
liquids production weighting in Q3 2022.
Adjusted Funds Flow and Cash Flow From
Operating Activities
Birchcliff’s adjusted funds flow was $72.2
million in Q3 2023, or $0.27 per basic common share, both of which
decreased by 73% from Q3 2022. Birchcliff’s cash flow from
operating activities was $67.8 million in Q3 2023, a 75% decrease
from Q3 2022. The decreases were primarily due to lower natural gas
revenue, which was largely impacted by: (i) a 58% decrease in the
average realized sales price Birchcliff received for its natural
gas production in Q3 2023 as compared to Q3 2022; and (ii) lower
natural gas production in Q3 2023 as compared to Q3 2022.
Birchcliff’s adjusted funds flow and cash flow from operating
activities were also negatively impacted by a realized loss on
financial instruments in Q3 2023 as compared to a realized gain on
financial instruments in Q3 2022 and positively impacted by lower
royalty expense in Q3 2023.
Free Funds Flow
Birchcliff generated free funds flow of $5.5
million, or $0.02 per basic common share, in Q3 2023 as compared to
$182.0 million and $0.69 per basic common share in Q3 2022. The
decreases were primarily due to lower adjusted funds flow,
partially offset by lower F&D capital expenditures in Q3 2023
as compared to Q3 2022.
Net Income to Common
Shareholders
Birchcliff reported net income to common
shareholders of $15.1 million in Q3 2023, or $0.06 per basic common
share, which decreased by 94% and 93%, respectively, from Q3 2022.
The decreases were primarily due to lower adjusted funds flow,
partially offset by lower income tax expense in Q3 2023 as compared
to Q3 2022. Net income to common shareholders was also negatively
impacted by a lower unrealized mark-to-market gain on financial
instruments in Q3 2023 as compared to Q3 2022.
Debt and Credit Facilities
Total debt at September 30, 2023 was $327.7
million, a 76% increase from September 30, 2022. At September 30,
2023, Birchcliff had a balance outstanding under its extendible
revolving credit facilities (the “Credit
Facilities”) of $318.7 million (September 30, 2022: $197.0
million) from available Credit Facilities of $850.0 million
(September 30, 2022: $850.0 million), leaving the Corporation with
$528.8 million (62%) of unutilized credit capacity after adjusting
for outstanding letters of credit and unamortized deferred
financing fees. This unutilized credit capacity provides Birchcliff
with significant financial flexibility and available capital
resources. The Credit Facilities have a maturity date of May 11,
2025 and do not contain any financial maintenance covenants.
Commodity Prices
The Corporation’s average realized sales price
in Q3 2023 was $25.96/boe, a 45% decrease from Q3 2022. The
decrease was primarily due to lower benchmark oil and natural gas
prices, which negatively impacted the sales prices Birchcliff
received for its production in Q3 2023. Birchcliff is fully exposed
to increases and decreases in commodity prices as it has no fixed
price commodity hedges in place.
The following table sets forth the average
benchmark commodity prices for the periods indicated:
|
|
Three months ended September
30, |
|
|
2023 |
2022 |
% Change |
| Light oil – WTI Cushing
(US$/bbl) |
82.26 |
91.55 |
(10) |
| Light oil – MSW (Mixed Sweet)
(CDN$/bbl) |
107.71 |
116.82 |
(8) |
| Natural gas – NYMEX HH
(US$/MMBtu) |
2.55 |
8.20 |
(69) |
| Natural gas – AECO 5A Daily
(CDN$/GJ) |
2.46 |
3.95 |
(38) |
| Natural gas – AECO 7A Month
Ahead (US$/MMBtu) |
1.78 |
4.46 |
(60) |
| Natural gas – Dawn Day Ahead
(US$/MMBtu) |
2.27 |
7.37 |
(69) |
| Natural
gas – ATP 5A Day Ahead (CDN$/GJ) |
2.32 |
3.96 |
(41) |
Natural Gas Market
Diversification
Birchcliff’s physical natural gas sales exposure
primarily consists of the AECO, Dawn and Alliance markets. In
addition, the Corporation has various financial instruments
outstanding that provide it with exposure to NYMEX HH pricing. The
following table details Birchcliff’s effective sales, production
and average realized sales price for natural gas and liquids for Q3
2023, after taking into account the Corporation’s financial
instruments:
|
Three months ended September 30, 2023 |
|
|
Effective sales(1)
(CDN$000s) |
Percentage of total sales (%) |
Effectiveproduction(per day) |
Percentage of total natural gas
production(%) |
Percentage of total corporate
production(%) |
Effective average realizedsales
price(1)(CDN$) |
|
Market |
|
|
|
|
|
|
| AECO(2)(3) |
14,285 |
7 |
57,246 Mcf |
16 |
13 |
2.71/Mcf |
| Dawn(4) |
48,234 |
25 |
164,023 Mcf |
45 |
37 |
3.20/Mcf |
| NYMEX
HH(1)(2)(5) |
47,243 |
25 |
139,655 Mcf |
39 |
31 |
3.68/Mcf |
|
Total natural gas(1) |
109,762 |
57 |
360,924 Mcf |
100 |
81 |
3.31/Mcf |
| Light oil |
15,969 |
8 |
1,728 bbls |
|
2 |
100.46/bbl |
| Condensate |
48,037 |
25 |
4,850 bbls |
|
7 |
107.67/bbl |
|
NGLs |
17,967 |
10 |
7,412 bbls |
|
10 |
26.35/bbl |
|
Total liquids |
81,973 |
43 |
13,990 bbls |
|
19 |
63.69/bbl |
|
Total corporate(1) |
191,735 |
100 |
74,143 boe |
|
100 |
28.11/boe |
(1) Effective sales and effective average
realized sales price on a total natural gas and total corporate
basis and for the AECO and NYMEX HH markets are non-GAAP financial
measures and non-GAAP ratios, respectively. See “Non-GAAP and Other
Financial Measures”.
(2) AECO sales and production that effectively
received NYMEX HH pricing under Birchcliff’s long-term physical
NYMEX HH/AECO 7A basis swap contracts have been included as
effective sales and production in the NYMEX HH market. Birchcliff
sold physical NYMEX HH/AECO 7A basis swap contracts for 5,000
MMBtu/d at an average contract price of NYMEX HH less
US$1.205/MMBtu during Q3 2023.
(3) Birchcliff has short-term physical sales
agreements with third-party marketers to sell and deliver into the
Alliance pipeline system. All of Birchcliff’s short-term physical
Alliance sales and production during Q3 2023 received AECO premium
pricing and have therefore been included as effective sales and
production in the AECO market.
(4) Birchcliff has agreements for the firm
service transportation of an aggregate of 175,000 GJ/d of natural
gas on TransCanada PipeLines’ Canadian Mainline, whereby natural
gas is transported to the Dawn trading hub in Southern Ontario.
(5) NYMEX HH sales and production include
financial and physical NYMEX HH/AECO 7A basis swap contracts for an
aggregate of 152,500 MMBtu/d at an average contract price of NYMEX
HH less US$1.23/MMBtu during Q3 2023. Birchcliff’s effective
average realized sales price for NYMEX HH of CDN$3.68/Mcf
(US$2.52/MMBtu) was determined on a gross basis before giving
effect to the average NYMEX HH/AECO 7A fixed contract basis
differential price of CDN$1.79/Mcf (US$1.23/MMBtu) and includes any
realized gains and losses on financial NYMEX HH/AECO 7A basis swap
contracts during Q3 2023.
After giving effect to the NYMEX HH/AECO 7A
fixed contract basis differential price and including any realized
gains and losses on financial NYMEX HH/AECO 7A basis swap contracts
during Q3 2023, Birchcliff’s effective average realized net sales
price for NYMEX HH was CDN$1.89/Mcf (US$1.29/MMBtu) in Q3 2023.
The following table sets forth Birchcliff’s
physical sales, production, average realized sales price,
transportation costs and sales netback by natural gas market for
the periods indicated, before taking into account the Corporation’s
financial instruments:
|
Three months ended September 30, 2023 |
|
Natural gas market |
Natural gas
sales(1)(CDN$000s) |
Percentage of natural gas sales (%) |
Natural gas production(Mcf/d) |
Percentage of natural gas production(%) |
Average realized natural gas
sales price(1)(CDN$/Mcf) |
Natural gas transportation costs(2)
(CDN$/Mcf) |
Natural gas sales netback(3)(CDN$/Mcf) |
|
AECO |
42,271 |
44 |
179,845 |
50 |
2.60 |
0.47 |
2.13 |
| Dawn |
48,234 |
51 |
164,023 |
45 |
3.20 |
1.50 |
1.70 |
| Alliance(4) |
4,604 |
5 |
17,056 |
5 |
2.93 |
- |
2.93 |
|
Total |
95,109 |
100 |
360,924 |
100 |
2.86 |
0.92 |
1.96 |
|
Three months ended September 30, 2022 |
|
Natural gas market |
Natural gas
sales(1)(CDN$000s) |
Percentage of natural gas sales (%) |
Natural gas production(Mcf/d) |
Percentage of natural gas production(%) |
Average realized natural gas
sales price(1)(CDN$/Mcf) |
Natural gas transportation costs(2)
(CDN$/Mcf) |
Natural gas sales netback(3)(CDN$/Mcf) |
|
AECO |
83,550 |
35 |
203,296 |
53 |
4.50 |
0.39 |
4.11 |
| Dawn |
148,258 |
62 |
160,526 |
42 |
10.04 |
1.42 |
8.61 |
|
Alliance(4) |
7,965 |
3 |
17,966 |
5 |
4.82 |
- |
4.82 |
|
Total |
239,773 |
100 |
381,788 |
100 |
6.83 |
0.81 |
6.02 |
(1) Excludes the effects of financial
instruments but includes the effects of physical delivery
contracts.
(2) Reflects costs to transport natural gas from
the field receipt point to the delivery sales trading hub.
(3) Natural gas sales netback denotes the
average realized natural gas sales price less natural gas
transportation costs.
(4) Birchcliff has short-term physical sales
agreements with third-party marketers to sell and deliver into the
Alliance pipeline system. Alliance sales are recorded net of
transportation tolls.
Capital Activities and
Investment
In Q3 2023, Birchcliff drilled 10 (10.0 net)
wells, as set forth in further detail in the table below, with
F&D capital expenditures of $66.7 million.
|
|
Number of wells drilled in Q3 2023 |
|
Pouce Coupe |
|
|
09-04 |
7 |
|
Gordondale |
|
|
02-27 |
2 |
|
Elmworth |
|
|
02-08 |
1 |
|
TOTAL |
10 |
The Corporation did not bring any wells on
production in Q3 2023.
OPERATIONAL UPDATE
In Pouce Coupe, Birchcliff has successfully
completed its 7-well 09-04 pad, which was drilled in Q3 2023.
Flowback operations are complete and Birchcliff recently brought
the pad on production, with production flowing through Birchcliff’s
existing owned and operated infrastructure. The Corporation is
encouraged by the initial flowback performance of this pad, which
used Birchcliff’s latest well spacing and stacking designs, as well
as increased proppant loading. The pad was drilled and completed in
2 different Lower Montney intervals (4 in the Montney D1 and 3 in
the Montney C).
In Gordondale, Birchcliff has successfully
completed its 2-well 02-27 pad, which was drilled in Q3 2023.
Flowback operations are complete and Birchcliff recently brought
the pad on production, with production flowing through Birchcliff’s
existing owned and operated infrastructure. The pad was drilled in
2 different Lower Montney intervals (1 in the Montney D2 and 1 in
the Montney D1) targeting condensate-rich natural gas. Similar to
the 09-04 pad, the initial flowback performance on the 02-27 pad is
encouraging.
The Corporation’s updated 2023 capital program
now includes the drilling of 30 (30.0 net) wells and the bringing
on production of 32 (32.0 net) wells in 2023. The 30 wells to be
drilled in 2023 include 5 (5.0 net) wells that are anticipated to
be drilled in Q4 2023 and brought on production in late January
2024. See “Outlook and Guidance – Updated 2023 Guidance”.
The following table sets forth the number and
types of wells that Birchcliff expects to drill and bring on
production in 2023:
|
|
|
|
Total number of wells to be brought on
production in 2023(1) |
|
Total number of wells to be drilled in
2023 |
|
Pouce Coupe |
|
|
|
|
|
|
|
|
|
|
|
|
|
03-06 pad(2) |
Montney D1 |
Total |
1 |
|
0 |
|
|
|
|
|
|
|
|
14-06 pad(3) |
Montney D2 |
|
2 |
|
0 |
|
|
Montney D1 |
|
3 |
|
0 |
|
|
Montney C |
|
1 |
|
0 |
|
|
|
Total |
6 |
|
0 |
|
|
|
|
|
|
|
|
15-27 pad(4) |
Montney D2 |
|
1 |
|
1 |
|
|
Montney D1 |
|
2 |
|
1 |
|
|
Montney C |
|
1 |
|
1 |
|
|
|
Total |
4 |
|
3 |
|
|
|
|
|
|
|
|
04-23 pad(4) |
Montney D2 |
|
2 |
|
2 |
|
|
Montney D1 |
|
2 |
|
1 |
|
|
|
Total |
4 |
|
3 |
|
|
|
|
|
|
|
|
04-16 pad |
Basal Doig/Upper Montney |
|
4 |
|
4 |
|
|
Montney D1 |
|
4 |
|
4 |
|
|
|
Total |
8 |
|
8 |
|
|
|
|
|
|
|
|
09-04 pad |
Montney D1 |
|
4 |
|
4 |
|
|
Montney C |
|
3 |
|
3 |
|
|
|
Total |
7 |
|
7 |
|
|
|
|
|
|
|
|
04-30 pad(5) |
Montney D1 |
Total |
N/A |
|
5 |
|
|
|
|
|
|
|
|
Gordondale |
|
|
|
|
|
|
|
|
|
|
|
|
|
02-27 pad |
Montney D2 |
|
1 |
|
1 |
|
|
Montney D1 |
|
1 |
|
1 |
|
|
|
Total |
2 |
|
2 |
|
|
|
|
|
|
|
| Elmworth |
|
|
|
|
|
|
|
|
|
|
|
|
|
01-28 pad |
Montney |
Total |
N/A |
|
1 |
|
|
|
|
|
|
|
|
02-08 pad |
Montney |
Total |
N/A |
|
1 |
|
|
|
|
|
|
TOTAL |
32 |
|
30 |
(1) Does not include 2 (0.375 net) Charlie Lake
horizontal oil wells that the Corporation participated in during
2022, which were brought on production in Q1 2023.
(2) The 03-06 pad included 4 wells that were
brought on production in December 2022.
(3) The 6 wells on the 14-06 pad were drilled in
Q4 2022.
(4) The 15-27 pad and the 04-23 pad each
included 1 well that was drilled in Q4 2022.
(5) It is expected that these wells will be
brought on production in late January 2024.
ABBREVIATIONS
|
AECO |
benchmark price for natural gas determined at the AECO ‘C’ hub in
southeast Alberta |
|
AER |
Alberta Energy Regulator |
|
ATP |
Alliance Trading Pool |
|
bbl |
barrel |
|
bbls |
barrels |
|
bbls/d |
barrels per day |
|
boe |
barrel of oil equivalent |
|
boe/d |
barrel of oil equivalent per day |
|
condensate |
pentanes plus (C5+) |
|
F&D |
finding and development |
|
G&A |
general and administrative |
|
GAAP |
generally accepted accounting principles for Canadian public
companies, which are currently International Financial Reporting
Standards as issued by the International Accounting Standards
Board |
|
GJ |
gigajoule |
|
GJ/d |
gigajoules per day |
|
HH |
Henry Hub |
|
Mcf |
thousand cubic feet |
|
Mcf/d |
thousand cubic feet per day |
|
MMBtu |
million British thermal units |
|
MMBtu/d |
million British thermal units per day |
|
MSW |
price for mixed sweet crude oil at Edmonton, Alberta |
|
NGLs |
natural gas liquids consisting of ethane (C2), propane (C3) and
butane (C4) and specifically excluding condensate |
|
NYMEX |
New York Mercantile Exchange |
|
OPEC |
Organization of the Petroleum Exporting Countries |
|
WTI |
West Texas Intermediate, the reference price paid in U.S. dollars
at Cushing, Oklahoma, for crude oil of standard grade |
|
000s |
thousands |
|
$000s |
thousands of dollars |
NON-GAAP AND OTHER FINANCIAL
MEASURES
This press release uses various “non-GAAP
financial measures”, “non-GAAP ratios” and “capital management
measures” (as such terms are defined in NI 52-112), which are
described in further detail below.
Non-GAAP Financial Measures
NI 52-112 defines a non-GAAP financial measure
as a financial measure that: (i) depicts the historical or expected
future financial performance, financial position or cash flow of an
entity; (ii) with respect to its composition, excludes an amount
that is included in, or includes an amount that is excluded from,
the composition of the most directly comparable financial measure
disclosed in the primary financial statements of the entity; (iii)
is not disclosed in the financial statements of the entity; and
(iv) is not a ratio, fraction, percentage or similar
representation. The non-GAAP financial measures used in this press
release are not standardized financial measures under GAAP and
might not be comparable to similar measures presented by other
companies. Investors are cautioned that non-GAAP financial measures
should not be construed as alternatives to or more meaningful than
the most directly comparable GAAP financial measures as indicators
of Birchcliff’s performance. Set forth below is a description of
the non-GAAP financial measures used in this press release.
Adjusted Funds Flow, Free Funds Flow and
Excess Free Funds Flow
Birchcliff defines “adjusted funds flow” as cash
flow from operating activities before the effects of
decommissioning expenditures and changes in non-cash operating
working capital. Birchcliff eliminates settlements of
decommissioning expenditures from cash flow from operating
activities as the amounts can be discretionary and may vary from
period to period depending on its capital programs and the maturity
of its operating areas. The settlement of decommissioning
expenditures is managed with Birchcliff’s capital budgeting process
which considers available adjusted funds flow. Changes in non-cash
operating working capital are eliminated in the determination of
adjusted funds flow as the timing of collection and payment are
variable and by excluding them from the calculation, the
Corporation believes that it is able to provide a more meaningful
measure of its operations and ability to generate cash on a
continuing basis. Management believes that adjusted funds flow
assists management and investors in assessing Birchcliff’s
financial performance after deducting all operating and corporate
cash costs, as well as its ability to generate the cash necessary
to fund sustaining and/or growth capital expenditures, repay debt,
settle decommissioning obligations, buy back common shares and pay
dividends.
Birchcliff defines “free funds flow” as adjusted
funds flow less F&D capital expenditures. Management believes
that free funds flow assists management and investors in assessing
Birchcliff’s ability to generate shareholder returns through a
number of initiatives, including but not limited to, debt
repayment, common share buybacks, the payment of common share
dividends, acquisitions and other opportunities that would
complement or otherwise improve the Corporation’s business and
enhance long-term shareholder value.
Birchcliff defines “excess free funds flow” as
free funds flow less common share dividends paid. Management
believes that excess free funds flow assists management and
investors in assessing Birchcliff’s ability to further enhance
shareholder returns after the payment of common share dividends,
which may include debt repayment, special dividends, increases to
the Corporation’s base common share dividend, common share
buybacks, acquisitions and other opportunities that would
complement or otherwise improve the Corporation’s business and
enhance long-term shareholder value.
The most directly comparable GAAP financial
measure to adjusted funds flow, free funds flow and excess free
funds flow is cash flow from operating activities. The following
table provides a reconciliation of cash flow from operating
activities to adjusted funds flow, free funds flow and excess free
funds flow for the periods indicated:
|
|
Three months endedSeptember
30, |
Nine months endedSeptember
30, |
Twelve months endedDecember
31, |
|
|
|
($000s) |
2023 |
2022 |
2023 |
2022 |
2022 |
|
Cash flow from operating activities |
67,840 |
272,965 |
241,523 |
700,828 |
925,275 |
|
Change in non-cash operating working capital |
3,601 |
(6,448) |
(13,229) |
33,581 |
25,662 |
|
Decommissioning expenditures |
784 |
833 |
2,318 |
2,175 |
2,746 |
|
Adjusted funds flow |
72,225 |
267,350 |
230,612 |
736,584 |
953,683 |
|
F&D capital expenditures |
(66,677) |
(85,330) |
(246,471) |
(257,859) |
(364,621) |
|
Free funds flow |
5,548 |
182,020 |
(15,859) |
478,725 |
589,062 |
|
Dividends on common shares |
(53,321) |
(5,317) |
(159,954) |
(13,285) |
(71,788) |
|
Excess free funds flow |
(47,773) |
176,703 |
(175,813) |
465,440 |
517,274 |
Birchcliff has disclosed in this press release
forecasts of adjusted funds flow, free funds flow and excess free
funds flow for 2023 and adjusted funds flow and free funds flow for
2024, which are forward-looking non-GAAP financial measures. The
equivalent historical non-GAAP financial measures are adjusted
funds flow, free funds flow and excess free funds flow for the
twelve months ended December 31, 2022. Birchcliff anticipates the
forward-looking non-GAAP financial measures for adjusted funds
flow, free funds flow and excess free funds flow disclosed herein
will be lower than their respective historical amounts primarily
due to lower anticipated benchmark oil and natural gas prices,
which are expected to decrease the average realized sales prices
the Corporation receives for its production. The forward-looking
non-GAAP financial measure for 2023 excess free funds flow
disclosed herein is also expected to be lower as a result of a
higher targeted annual base common share dividend payment forecast
during 2023. The commodity price assumptions on which the
Corporation’s guidance is based are set forth under the heading
“Outlook and Guidance”.
Transportation and Other
Expense
Birchcliff defines “transportation and other
expense” as transportation expense plus marketing purchases less
marketing revenue. Birchcliff may enter into certain marketing
purchase and sales arrangements with the objective of reducing any
unused transportation or fractionation fees associated with its
take-or-pay commitments and/or increasing the value of its
production through value-added downstream initiatives. Management
believes that transportation and other expense assists management
and investors in assessing Birchcliff’s total cost structure
related to transportation and marketing activities. The most
directly comparable GAAP financial measure to transportation and
other expense is transportation expense. The following table
provides a reconciliation of transportation expense to
transportation and other expense for the periods indicated:
|
|
Three months ended |
Nine months ended |
|
|
September 30, |
September 30, |
|
($000s) |
2023 |
2022 |
2023 |
2022 |
|
Transportation expense |
40,455 |
39,379 |
114,319 |
117,071 |
|
Marketing purchases |
8,618 |
2,124 |
25,844 |
8,337 |
|
Marketing revenue |
(5,637) |
(2,613) |
(21,989) |
(9,890) |
|
Transportation and other expense |
43,436 |
38,890 |
118,174 |
115,518 |
Operating Netback
Birchcliff defines “operating netback” as
petroleum and natural gas revenue less royalty expense, operating
expense and transportation and other expense. Operating netback is
a key industry performance indicator and one that provides
investors with information that is commonly presented by other oil
and natural gas producers. Management believes that operating
netback assists management and investors in assessing Birchcliff’s
operating profits after deducting the cash costs that are directly
associated with the sale of its production, which can then be used
to pay other corporate cash costs or satisfy other obligations. The
following table provides a breakdown of Birchcliff’s operating
netback for the periods indicated:
|
|
Three months ended |
Nine months ended |
|
|
September 30, |
September 30, |
|
($000s) |
2023 |
2022 |
2023 |
2022 |
|
Petroleum and natural gas revenue |
177,126 |
339,531 |
557,064 |
1,019,822 |
|
Royalty expense |
(13,892) |
(43,379) |
(50,857) |
(125,547) |
|
Operating expense |
(26,792) |
(25,155) |
(79,001) |
(71,798) |
|
Transportation and other expense |
(43,436) |
(38,890) |
(118,174) |
(115,518) |
|
Operating netback – Corporate |
93,006 |
232,107 |
309,032 |
706,959 |
Total Capital Expenditures
Birchcliff defines “total capital expenditures”
as exploration and development expenditures less dispositions plus
acquisitions (if any) and plus administrative assets. Management
believes that total capital expenditures assists management and
investors in assessing Birchcliff’s overall capital cost structure
associated with its petroleum and natural gas activities. The most
directly comparable GAAP financial measure for total capital
expenditures is exploration and development expenditures. The
following table provides a reconciliation of exploration and
development expenditures to total capital expenditures for the
periods indicated:
|
|
Three months ended |
Nine months ended |
|
|
September 30, |
September 30, |
|
($000s) |
2023 |
2022 |
2023 |
2022 |
|
Exploration and development expenditures(1) |
66,677 |
85,330 |
246,471 |
257,859 |
|
Acquisitions |
188 |
848 |
188 |
2,348 |
|
Dispositions |
- |
- |
(77) |
(315) |
|
Administrative assets |
610 |
307 |
1,793 |
867 |
|
Total capital expenditures |
67,475 |
86,485 |
248,375 |
260,759 |
(1) Disclosed as F&D capital expenditures
elsewhere in this press release. See “Advisories – F&D Capital
Expenditures”.
Effective Sales – Total Corporate, Total
Natural Gas, AECO Market and NYMEX HH Market
Birchcliff defines “effective sales” in the AECO
market and NYMEX HH market as the sales amount received from the
production of natural gas that is effectively attributed to the
AECO and NYMEX HH market pricing, respectively, and does not
consider the physical sales delivery point in each case. Effective
sales in the NYMEX HH market includes realized gains and losses on
financial instruments and excludes the notional fixed basis costs
associated with the underlying financial contract in the period.
Birchcliff defines “effective total natural gas sales” as the
aggregate of the effective sales amount received in each natural
gas market. Birchcliff defines “effective total corporate sales” as
the aggregate of the effective total natural gas sales and the
sales amount received from the production of light oil, condensate
and NGLs. Management believes that disclosing effective sales for
each natural gas market assists management and investors in
assessing Birchcliff’s natural gas diversification and commodity
price exposure to each market. The most directly comparable GAAP
financial measure for effective total natural gas sales and
effective total corporate sales is natural gas sales. The following
table provides a reconciliation of natural gas sales to effective
total natural gas sales and effective total corporate sales for the
periods indicated:
|
|
Three months ended |
|
|
September 30, |
|
($000s) |
2023 |
2022 |
|
Natural gas sales |
95,109 |
239,773 |
|
Realized gain (loss) on financial instruments |
(5,652) |
45,490 |
|
Notional fixed basis costs(1) |
20,305 |
21,864 |
|
Effective total natural gas sales |
109,762 |
307,127 |
|
Light oil sales |
15,969 |
24,037 |
|
Condensate sales |
48,037 |
49,031 |
|
NGLs sales |
17,967 |
26,673 |
|
Effective total corporate sales |
191,735 |
406,868 |
(1) Reflects the aggregate notional fixed basis
cost associated with Birchcliff’s financial and physical NYMEX
HH/AECO 7A basis swap contracts in the period.
Non-GAAP Ratios
NI 52-112 defines a non-GAAP ratio as a
financial measure that: (i) is in the form of a ratio, fraction,
percentage or similar representation; (ii) has a non-GAAP financial
measure as one or more of its components; and (iii) is not
disclosed in the financial statements of the entity. The non-GAAP
ratios used in this press release are not standardized financial
measures under GAAP and might not be comparable to similar measures
presented by other companies. Set forth below is a description of
the non-GAAP ratios used in this press release.
Adjusted Funds Flow Per Boe and Adjusted
Funds Flow Per Basic Common Share
Birchcliff calculates “adjusted funds flow per
boe” as aggregate adjusted funds flow in the period divided by the
production (boe) in the period. Management believes that adjusted
funds flow per boe assists management and investors in assessing
Birchcliff’s financial profitability and sustainability on a cash
basis by isolating the impact of production volumes to better
analyze its performance against prior periods on a comparable
basis.
Birchcliff calculates “adjusted funds flow per
basic common share” as aggregate adjusted funds flow in the period
divided by the weighted average basic common shares outstanding at
the end of the period. Management believes that adjusted funds flow
per basic common share assists management and investors in
assessing Birchcliff’s financial strength on a per common share
basis.
Free Funds Flow Per Basic Common
Share
Birchcliff calculates “free funds flow per basic
common share” as aggregate free funds flow in the period divided by
the weighted average basic common shares outstanding at the end of
the period. Management believes that free funds flow per basic
common share assists management and investors in assessing
Birchcliff’s financial strength and its ability to deliver
shareholder returns on a per common share basis.
Transportation and Other Expense Per
Boe
Birchcliff calculates “transportation and other
expense per boe” as aggregate transportation and other expense in
the period divided by the production (boe) in the period.
Management believes that transportation and other expense per boe
assists management and investors in assessing Birchcliff’s cost
structure as it relates to its transportation and marketing
activities by isolating the impact of production volumes to better
analyze its performance against prior periods on a comparable
basis.
Operating Netback Per Boe
Birchcliff calculates “operating netback per
boe” as aggregate operating netback in the period divided by the
production (boe) in the period. Operating netback per boe is a key
industry performance indicator and one that provides investors with
information that is commonly presented by other oil and natural gas
producers. Management believes that operating netback per boe
assists management and investors in assessing Birchcliff’s
operating profitability and sustainability by isolating the impact
of production volumes to better analyze its performance against
prior periods on a comparable basis.
Effective Average Realized Sales Price –
Total Corporate, Total Natural Gas, AECO Market and NYMEX HH
Market
Birchcliff calculates “effective average
realized sales price” as effective sales, in each of total
corporate, total natural gas, AECO market and NYMEX HH market, as
the case may be, divided by the effective production in each of the
markets during the period. Management believes that disclosing the
effective average realized sales price for each natural gas market
assists management and investors in comparing Birchcliff’s
commodity price realizations in each natural gas market on a per
unit basis.
Capital Management Measures
NI 52-112 defines a capital management measure
as a financial measure that: (i) is intended to enable an
individual to evaluate an entity’s objectives, policies and
processes for managing the entity’s capital; (ii) is not a
component of a line item disclosed in the primary financial
statements of the entity; (iii) is disclosed in the notes to the
financial statements of the entity; and (iv) is not disclosed in
the primary financial statements of the entity. Set forth below is
a description of the capital management measure used in this press
release.
Total Debt
Birchcliff calculates “total debt” as the amount
outstanding under the Corporation’s revolving term credit
facilities (if any) plus working capital deficit (less working
capital surplus) plus the fair value of the current asset portion
of financial instruments less the fair value of the current
liability portion of financial instruments and less the current
portion of other liabilities at the end of the period. Management
believes that total debt assists management and investors in
assessing Birchcliff’s overall liquidity and financial position at
the end of the period. The following table provides a
reconciliation of the amount outstanding under the revolving term
credit facilities, as determined in accordance with GAAP, to total
debt for the periods indicated:
|
As at, ($000s) |
September 30, 2023 |
December 31, 2022 |
September 30, 2022 |
|
Revolving term credit facilities |
318,711 |
131,981 |
196,989 |
|
Working capital deficit (surplus)(1) |
8,257 |
(7,902) |
(80,650) |
|
Fair value of financial instruments – asset(2) |
7,971 |
17,729 |
69,725 |
|
Fair value of financial instruments – liability(2) |
(4,777) |
(1,345) |
- |
|
Other liabilities(2) |
(2,507) |
(1,914) |
- |
|
Total debt |
327,655 |
138,549 |
186,064 |
(1) Current liabilities less current assets.
(2) Reflects the current portion only.
ADVISORIES
Unaudited Information
All financial and operational information
contained in this press release for the three and nine months ended
September 30, 2023 and 2022 is unaudited.
Currency
Unless otherwise indicated, all dollar amounts
are expressed in Canadian dollars and all references to “$” and
“CDN$” are to Canadian dollars and all references to “US$” are to
United States dollars.
Boe Conversions
Boe amounts have been calculated by using the
conversion ratio of 6 Mcf of natural gas to 1 bbl of oil. Boe
amounts may be misleading, particularly if used in isolation. A boe
conversion ratio of 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. 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 on a 6:1 basis may be misleading as
an indication of value.
MMBtu Pricing Conversions
$1.00 per MMBtu equals $1.00 per Mcf based on a
standard heat value Mcf.
Oil and Gas Metrics
This press release contains metrics commonly
used in the oil and natural gas industry, including operating
netback. These oil and gas metrics do not have any standardized
meanings or standard methods of calculation and therefore may not
be comparable to similar measures presented by other companies. As
such, they should not be used to make comparisons. Management uses
these oil and gas metrics for its own performance measurements and
to provide investors with measures to compare Birchcliff’s
performance over time; however, such measures are not reliable
indicators of Birchcliff’s future performance, which may not
compare to Birchcliff’s performance in previous periods, and
therefore should not be unduly relied upon. For additional
information regarding operating netback and how such metric is
calculated, see “Non-GAAP and Other Financial Measures”.
Production
With respect to the disclosure of Birchcliff’s
production contained in this press release: (i) references to
“light oil” mean “light crude oil and medium crude oil” as such
term is defined in National Instrument 51-101 – Standards of
Disclosure for Oil and Gas Activities (“NI
51-101”); (ii) references to “liquids” mean “light crude
oil and medium crude oil” and “natural gas liquids” (including
condensate) as such terms are defined in NI 51-101; and (iii)
references to “natural gas” mean “shale gas”, which also includes
an immaterial amount of “conventional natural gas”, as such terms
are defined in NI 51-101. In addition, NI 51-101 includes
condensate within the product type of natural gas liquids.
Birchcliff has disclosed condensate separately from other natural
gas liquids as the price of condensate as compared to other natural
gas liquids is currently significantly higher and Birchcliff
believes presenting the two commodities separately provides a more
accurate description of its operations and results therefrom.
F&D Capital
Expenditures
Unless otherwise stated, references in this
press release to “F&D capital expenditures” denotes exploration
and development expenditures as disclosed in the Corporation’s
financial statements in accordance with GAAP, and is primarily
comprised of capital for land, seismic, workovers, drilling and
completions, well equipment and facilities and capitalized G&A
costs and excludes any acquisitions, dispositions, administrative
assets and the capitalized portion of cash incentive payments that
have not been approved by the Board. Management believes that
F&D capital expenditures assists management and investors in
assessing Birchcliff’s capital cost outlay associated with its
exploration and development activities for the purposes of finding
and developing its reserves.
Forward-Looking Statements
Certain statements contained in this press
release constitute forward‐looking statements and forward-looking
information (collectively referred to as “forward‐looking
statements”) within the meaning of applicable Canadian
securities laws. The forward-looking statements contained in this
press release relate to future events or Birchcliff’s future plans,
strategy, operations, performance or financial position and are
based on Birchcliff’s current expectations, estimates, projections,
beliefs and assumptions. Such forward-looking statements have been
made by Birchcliff in light of the information available to it at
the time the statements were made and reflect its experience and
perception of historical trends. All statements and information
other than historical fact may be forward‐looking statements. Such
forward‐looking statements are often, but not always, identified by
the use of words such as “seek”, “plan”, “focus”, “future”,
“outlook”, “position”, “expect”, “project”, “intend”, “believe”,
“anticipate”, “estimate”, “forecast”, “guidance”, “potential”,
“proposed”, “predict”, “budget”, “continue”, “targeting”, “may”,
“will”, “could”, “might”, “should”, “would”, “on track”,
“maintain”, “deliver” and other similar words and expressions.
By their nature, forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward‐looking statements. Accordingly,
readers are cautioned not to place undue reliance on such
forward-looking statements. Although Birchcliff believes that the
expectations reflected in the forward-looking statements are
reasonable, there can be no assurance that such expectations will
prove to be correct and Birchcliff makes no representation that
actual results achieved will be the same in whole or in part as
those set out in the forward-looking statements.
In particular, this press release contains
forward‐looking statements relating to:
-
Birchcliff’s plans and other aspects of its anticipated future
financial performance, results, operations, focus, objectives,
strategies, opportunities, priorities and goals, including that the
unutilized credit capacity under the Credit Facilities provides
Birchcliff with significant financial flexibility and available
capital resources;
-
the information set forth under the heading “Outlook and Guidance –
Updated 2023 Guidance” and elsewhere in this press release as it
relates to Birchcliff’s outlook and guidance for 2023, including:
forecasts of annual average production, production commodity mix,
average expenses, adjusted funds flow, F&D capital
expenditures, free funds flow, annual base dividend, excess free
funds flow, total debt at year end and natural gas market exposure;
and the expected impact of changes in commodity prices and the
CDN/US exchange rate on Birchcliff’s forecast of free funds flow
for 2023;
-
the information set forth under the heading “Outlook and Guidance –
Preliminary 2024 Guidance” and elsewhere in this press release as
it relates to Birchcliff’s preliminary outlook and guidance for
2024, including: that Birchcliff anticipates that its adjusted
funds flow will be sufficient to fully fund its F&D capital
expenditures and common share dividend payments in 2024 based on
its preliminary budgeting process and current commodity price
outlook; that it is targeting F&D capital expenditures of $260
million to $280 million in respect of 2024 and annual average
production of 77,000 to 79,000 boe/d; that as part of Birchcliff’s
$260 million to $280 million capital program for 2024, it expects
to spend approximately $20 million in Q4 2023 to commence the
drilling of five wells in Pouce Coupe, which will allow it to
maximize production during the winter months, and $240 million to
$260 million in 2024; that Birchcliff is continuing to evolve its
plans for 2024 and expects to announce the details of its formal
2024 capital budget and updated five-year outlook for 2024 to 2028
on January 17, 2024; that Birchcliff remains focused on maintaining
capital discipline, generating free funds flow and delivering
significant returns to shareholders in 2024, while maintaining a
strong balance sheet; that based on its preliminary budgeting
process and current commodity price outlook for 2024, Birchcliff is
targeting F&D capital expenditures of $240 million to $260
million in 2024; that when combined with the accelerated capital of
$20 million in Q4 2023, this would equate to approximately $260
million to $280 million of F&D capital expenditures in respect
of 2024; that this level of capital spending in 2024 will allow the
Corporation to bring approximately 28 to 30 wells on production in
2024 and increase its annual average production year-over-year;
that with the addition of the five wells that will be drilled in Q4
2023 and brought on production in late January 2024, the
Corporation currently expects to deliver annual average production
of 77,000 to 79,000 boe/d in 2024; that excess free funds flow
generated in 2024, above current dividend levels, is currently
anticipated to be used to invest in the Corporation’s business,
including filling its existing infrastructure to grow adjusted
funds flow and lower per unit costs; that depending on commodity
prices and available cash flow, the Corporation may also use a
portion of excess free funds flow to reduce indebtedness and/or
increase its base dividend; forecasts of annual average production,
adjusted funds flow, F&D capital expenditures, free funds flow
and annual base dividend; and the expected impact of changes in
commodity prices and the CDN/US exchange rate on Birchcliff’s
forecast of free funds flow for 2024;
-
the information set forth under the heading “Outlook and Guidance –
Elmworth Outlook” as it relates to Birchcliff’s outlook and plans
for Elmworth, including: that Birchcliff’s significant Montney land
position in the Elmworth area of Alberta positions the Corporation
to continue to drive long-term shareholder value and provides it
with a large potential future development area that can supply
clean natural gas for many years to come; that Birchcliff has
initiated the formal planning for the construction of a proposed
100% owned and operated natural gas processing plant in the area;
and that Birchcliff may consider allocating some capital in 2024 to
continue to build, protect and optimize its Elmworth Montney land
position, including through drilling and completions activity,
strategic A&D transactions and Crown land sales;
-
the information set forth under the headings “Outlook and Guidance”
and “Operational Update” and elsewhere in this press release as it
relates to Birchcliff’s 2023 and 2024 exploration, production and
development activities and the timing thereof, including: that the
nine wells that were recently brought on production allows
Birchcliff to capture the anticipated strength in natural gas
pricing that is typically seen in winter months, as well as setting
it up for stronger average production in Q4 2023 and Q1 2024; that
it is accelerating approximately $20 million of capital
expenditures from 2024 into Q4 2023 to commence the drilling of 5
(5.0 net) wells in Pouce Coupe in Q4 2023, which wells are planned
to be brought on production in late January 2024, as well as drill
several surface holes and procure various long-lead items required
for the execution of the Corporation’s 2024 capital program; that
by accelerating these capital projects into Q4 2023, the
Corporation will be able to maximize production during the winter
months to capture the anticipated strength in natural gas pricing
that is typically seen in the winter months, allow Birchcliff to
continue its two-drilling rig program throughout the remainder of
2023, help to ensure the efficient execution of the Corporation’s
2024 capital program and allow Birchcliff to significantly decrease
the risks related to the price and availability of drilling and
other oilfield services during a period of tight supply; and the
anticipated number and timing of wells to be drilled and brought on
production and targeted product types;
-
the performance and other characteristics of Birchcliff’s oil and
natural gas properties and expected results from its assets
(including statements regarding the potential or prospectivity of
Birchcliff’s properties); and
-
that Birchcliff anticipates the forward-looking non-GAAP financial
measures for adjusted funds flow, free funds flow and excess free
funds flow disclosed herein will be lower than their respective
historical amounts primarily due to lower anticipated benchmark oil
and natural gas prices, which are expected to decrease the average
realized sales prices the Corporation receives for its production;
and that the forward-looking non-GAAP financial measure for 2023
excess free funds flow disclosed herein is also expected to be
lower as a result of a higher targeted annual base common share
dividend payment forecast during 2023.
With respect to the forward‐looking statements
contained in this press release, assumptions have been made
regarding, among other things: prevailing and future commodity
prices and differentials, exchange rates, interest rates, inflation
rates, royalty rates and tax rates; the state of the economy,
financial markets and the exploration, development and production
business; the political environment in which Birchcliff operates;
the regulatory framework regarding royalties, taxes, environmental,
climate change and other laws; the Corporation’s ability to comply
with existing and future laws; future cash flow, debt and dividend
levels; future operating, transportation, G&A and other
expenses; Birchcliff’s ability to access capital and obtain
financing on acceptable terms; the timing and amount of capital
expenditures and the sources of funding for capital expenditures
and other activities; the sufficiency of budgeted capital
expenditures to carry out planned operations; the successful and
timely implementation of capital projects and the timing, location
and extent of future drilling and other operations; results of
operations; Birchcliff’s ability to continue to develop its assets
and obtain the anticipated benefits therefrom; the performance of
existing and future wells; reserves volumes and Birchcliff’s
ability to replace and expand reserves through acquisition,
development or exploration; the impact of competition on
Birchcliff; the availability of, demand for and cost of labour,
services and materials; the approval of the Board of future
dividends; the ability to obtain any necessary regulatory or other
approvals in a timely manner; the satisfaction by third parties of
their obligations to Birchcliff; the ability of Birchcliff to
secure adequate processing and transportation for its products;
Birchcliff’s ability to successfully market natural gas and
liquids; the results of the Corporation’s risk management and
market diversification activities; and Birchcliff’s natural gas
market exposure. In addition to the foregoing assumptions,
Birchcliff has made the following assumptions with respect to
certain forward-looking statements contained in this press
release:
-
With respect to Birchcliff’s 2023 guidance, such guidance is based
on the commodity price, exchange rate and other assumptions set
forth under the heading “Outlook and Guidance – Updated 2023
Guidance”. In addition:
-
Birchcliff’s production guidance assumes that: the 2023 capital
program will be carried out as currently contemplated; no
unexpected outages occur in the infrastructure that Birchcliff
relies on to produce its wells and that any transportation service
curtailments or unplanned outages that occur will be short in
duration or otherwise insignificant; the construction of new
infrastructure meets timing and operational expectations; existing
wells continue to meet production expectations; and future wells
scheduled to come on production meet timing, production and capital
expenditure expectations.
-
Birchcliff’s forecast of F&D capital expenditures assumes that
the 2023 capital program will be carried out as currently
contemplated and excludes any potential acquisitions, dispositions
and the capitalized portion of cash incentive payments that have
not been approved by the Board. The amount and allocation of
capital expenditures for exploration and development activities by
area and the number and types of wells to be drilled and brought on
production is dependent upon results achieved and is subject to
review and modification by management on an ongoing basis
throughout the year. Actual spending may vary due to a variety of
factors, including commodity prices, economic conditions, results
of operations and costs of labour, services and materials.
-
Birchcliff’s forecasts of adjusted funds flow and free funds flow
assume that: the 2023 capital program will be carried out as
currently contemplated and the level of capital spending for 2023
set forth herein is met; and the forecasts of production,
production commodity mix, expenses and natural gas market exposure
and the commodity price and exchange rate assumptions set forth
herein are met. Birchcliff’s forecast of adjusted funds flow takes
into account its outstanding physical and financial basis swap
contracts and excludes cash incentive payments that have not been
approved by the Board.
-
Birchcliff’s forecast of excess free funds flow assumes that: the
forecasts of adjusted funds flow and free funds flow are achieved;
and an annual base dividend of $0.80 per common share is paid
during 2023, there are 266 million common shares outstanding, there
are no changes to the base dividend rate and no special dividends
are paid.
-
Birchcliff’s forecast of year end total debt assumes that: (i) the
forecasts of adjusted funds flow, free funds flow and excess free
funds flow are achieved, with the level of capital spending for
2023 met and the payment of an annual base dividend of $213
million; (ii) any free funds flow remaining after the payment of
dividends, asset retirement obligations and other amounts for
administrative assets, financing fees and capital lease obligations
is allocated towards debt reduction; (iii) there are no further
buybacks of common shares during 2023; (iv) there are no
significant acquisitions or dispositions completed by the
Corporation during 2023; (v) there are no equity issuances during
2023; and (vi) there are no further proceeds received from the
exercise of stock options or performance warrants during 2023. The
forecast of total debt excludes cash incentive payments that have
not been approved by the Board.
-
Birchcliff’s forecast of its natural gas market exposure assumes:
(i) 175,000 GJ/d being sold on a physical basis at the Dawn price;
(ii) 152,500 MMBtu/d being contracted on a financial and physical
basis at an average fixed basis differential price between AECO 7A
and NYMEX HH of approximately US$1.23/MMBtu; and (iii) 22,000 GJ/d
being sold at Alliance on a physical basis at the AECO 5A price
plus a premium. Birchcliff’s natural gas market exposure takes into
account its outstanding physical and financial basis swap
contracts.
-
With respect to Birchcliff’s preliminary 2024 guidance, such
guidance is based on the commodity price, exchange rate and other
assumptions set forth under the heading “Outlook and Guidance –
Preliminary 2024 Guidance”. In addition:
-
Birchcliff’s preliminary production guidance is subject to similar
assumptions set forth herein for Birchcliff’s 2023 production
guidance.
-
Birchcliff’s preliminary forecast of F&D capital expenditures
is subject to similar assumptions set forth herein for Birchcliff’s
2023 guidance for F&D capital expenditures.
-
Birchcliff’s preliminary forecasts of adjusted funds flow and free
funds flow are subject to similar assumptions set forth herein for
Birchcliff’s 2023 guidance for adjusted funds flow and free funds
flow.
-
Birchcliff’s anticipation that its adjusted funds flow will be
sufficient to fully fund its F&D capital expenditures and
common share dividend payments in 2024 assumes that: (i) the
forecasts of adjusted funds flow and F&D capital expenditures
are achieved; and (ii) an annual base dividend of $0.80 per common
share is paid during 2024, there are 266 million common shares
outstanding, there are no changes to the base dividend rate and no
special dividends are paid.
-
With respect to statements of future wells to be drilled and
brought on production, such statements assume: the continuing
validity of the geological and other technical interpretations
performed by Birchcliff’s technical staff, which indicate that
commercially economic volumes can be recovered from Birchcliff’s
lands as a result of drilling future wells; and that commodity
prices and general economic conditions will warrant proceeding with
the drilling of such wells.
Birchcliff’s actual results, performance or
achievements could differ materially from those anticipated in the
forward-looking statements as a result of both known and unknown
risks and uncertainties including, but not limited to: the risks
posed by pandemics (including COVID-19), epidemics and global
conflict (including the Russian invasion of Ukraine and the
Israel-Hamas conflict) and their impacts on supply and demand and
commodity prices; actions taken by OPEC and other major producers
of crude oil and the impact such actions may have on supply and
demand and commodity prices; the uncertainty of estimates and
projections relating to production, revenue, costs, expenses and
reserves; the risk that any of the Corporation’s material
assumptions prove to be materially inaccurate (including the
Corporation’s commodity price and exchange rate assumptions for
2023 and 2024); general economic, market and business conditions
which will, among other things, impact the demand for and market
prices of Birchcliff’s products and Birchcliff’s access to capital;
volatility of crude oil and natural gas prices; risks associated
with increasing costs, whether due to high inflation rates, supply
chain disruptions or other factors; fluctuations in exchange and
interest rates; stock market volatility; loss of market demand; an
inability to access sufficient capital from internal and external
sources on terms acceptable to the Corporation; risks associated
with Birchcliff’s Credit Facilities, including a failure to comply
with covenants under the agreement governing the Credit Facilities
and the risk that the borrowing base limit may be redetermined;
fluctuations in the costs of borrowing; operational risks and
liabilities inherent in oil and natural gas operations; the
occurrence of unexpected events such as fires, severe weather,
explosions, blow-outs, equipment failures, transportation incidents
and other similar events; an inability to access sufficient water
or other fluids needed for operations; uncertainty that development
activities in connection with Birchcliff’s assets will be economic;
an inability to access or implement some or all of the technology
necessary to operate its assets and achieve expected future
results; the accuracy of estimates of reserves, future net revenue
and production levels; geological, technical, drilling,
construction and processing problems; uncertainty of geological and
technical data; horizontal drilling and completions techniques and
the failure of drilling results to meet expectations for reserves
or production; uncertainties related to Birchcliff’s future
potential drilling locations; delays or changes in plans with
respect to exploration or development projects or capital
expenditures; the accuracy of cost estimates and variances in
Birchcliff’s actual costs and economic returns from those
anticipated; incorrect assessments of the value of acquisitions and
exploration and development programs; changes to the regulatory
framework in the locations where the Corporation operates,
including changes to tax laws, Crown royalty rates, environmental
laws, climate change laws, carbon tax regimes, incentive programs
and other regulations that affect the oil and natural gas industry;
political uncertainty and uncertainty associated with government
policy changes; actions by government authorities; an inability of
the Corporation to comply with existing and future laws and the
cost of compliance with such laws; dependence on facilities,
gathering lines and pipelines; uncertainties and risks associated
with pipeline restrictions and outages to third-party
infrastructure that could cause disruptions to production; the lack
of available pipeline capacity and an inability to secure adequate
and cost-effective processing and transportation for Birchcliff’s
products; an inability to satisfy obligations under Birchcliff’s
firm marketing and transportation arrangements; shortages in
equipment and skilled personnel; the absence or loss of key
employees; competition for, among other things, capital,
acquisitions of reserves, undeveloped lands, equipment and skilled
personnel; management of Birchcliff’s growth; environmental and
climate change risks, claims and liabilities; potential litigation;
default under or breach of agreements by counterparties and
potential enforceability issues in contracts; claims by Indigenous
peoples; the reassessment by taxing or regulatory authorities of
the Corporation’s prior transactions and filings; unforeseen title
defects; third-party claims regarding the Corporation’s right to
use technology and equipment; uncertainties associated with the
outcome of litigation or other proceedings involving Birchcliff;
uncertainties associated with counterparty credit risk; risks
associated with Birchcliff’s risk management and market
diversification activities; risks associated with the declaration
and payment of future dividends, including the discretion of the
Board to declare dividends and change the Corporation’s dividend
policy and the risk that the amount of dividends may be less than
currently forecast; the failure to obtain any required approvals in
a timely manner or at all; the failure to complete or realize the
anticipated benefits of acquisitions and dispositions and the risk
of unforeseen difficulties in integrating acquired assets into
Birchcliff’s operations; negative public perception of the oil and
natural gas industry and fossil fuels; the Corporation’s reliance
on hydraulic fracturing; market competition, including from
alternative energy sources; changing demand for petroleum products;
the availability of insurance and the risk that certain losses may
not be insured; breaches or failure of information systems and
security (including risks associated with cyber-attacks); risks
associated with the ownership of the Corporation’s securities; and
the accuracy of the Corporation’s accounting estimates and
judgments.
The declaration and payment of any future
dividends are subject to the discretion of the Board and may not be
approved or may vary depending on a variety of factors and
conditions existing from time to time, including commodity prices,
free funds flow, current and forecast commodity prices,
fluctuations in working capital, financial requirements of
Birchcliff, applicable laws (including solvency tests under the
Business Corporations Act (Alberta) for the declaration and payment
of dividends) and other factors beyond Birchcliff’s control. The
payment of dividends to shareholders is not assured or guaranteed
and dividends may be reduced or suspended entirely. In addition to
the foregoing, the Corporation’s ability to pay dividends now or in
the future may be limited by covenants contained in the agreements
governing any indebtedness that the Corporation has incurred or may
incur in the future, including the terms of the Credit Facilities.
The agreement governing the Credit Facilities provides that
Birchcliff is not permitted to make any distribution (which
includes dividends) at any time when an event of default exists or
would reasonably be expected to exist upon making such
distribution, unless such event of default arose subsequent to the
ordinary course declaration of the applicable distribution.
Readers are cautioned that the foregoing lists
of factors are not exhaustive. Additional information on these and
other risk factors that could affect results of operations,
financial performance or financial results are included in
Birchcliff’s most recent annual information form under the heading
“Risk Factors” and in other reports filed with Canadian securities
regulatory authorities.
This press release contains information that may
constitute future-orientated financial information or financial
outlook information (collectively, “FOFI”) about
Birchcliff’s prospective financial performance, financial position
or cash flows, all of which is 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 or inaccurate and, as such,
undue reliance should not be placed on FOFI. Birchcliff’s actual
results, performance and achievements could differ materially from
those expressed in, or implied by, FOFI. Birchcliff has included
FOFI in order to provide readers with a more complete perspective
on Birchcliff’s future operations and management’s current
expectations relating to Birchcliff’s future performance. Readers
are cautioned that such information may not be appropriate for
other purposes.
Management has included the above summary of
assumptions and risks related to forward-looking statements
provided in this press release in order to provide readers with a
more complete perspective on Birchcliff’s future operations and
management’s current expectations relating to Birchcliff’s future
performance. Readers are cautioned that this information may not be
appropriate for other purposes.
The forward-looking statements and FOFI
contained in this press release are expressly qualified by the
foregoing cautionary statements. The forward-looking statements and
FOFI contained herein are made as of the date of this press
release. Unless required by applicable laws, Birchcliff does not
undertake any obligation to publicly update or revise any
forward-looking statements or FOFI, whether as a result of new
information, future events or otherwise.
ABOUT BIRCHCLIFF:
Birchcliff is a dividend-paying, intermediate
oil and natural gas company based in Calgary, Alberta with
operations focused on the Montney/Doig Resource Play in Alberta.
Birchcliff’s common shares are listed for trading on the Toronto
Stock Exchange under the symbol “BIR”.
| For further
information, please contact: |
|
Birchcliff Energy Ltd.Suite 1000, 600 – 3rd Avenue
S.W. Calgary, Alberta T2P 0G5Telephone: (403) 261-6401Email:
info@birchcliffenergy.comwww.birchcliffenergy.com |
|
Jeff Tonken –
Chief Executive OfficerChris Carlsen – President
and Chief Operating OfficerBruno Geremia –
Executive Vice President and Chief Financial Officer |
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