Prairie Provident Resources Inc. ("Prairie Provident" or the
"Company") is pleased to announce strong production results from
its three-well Basal Quartz (“BQ”) horizontal drilling program in
the Michichi area of Central Alberta during the first quarter of
2025. The Company also announces financial and operating results
for the first quarter ended March 31, 2025.
SUCCESSFUL RESULTS FROM BASAL QUARTZ
DRILLING PROGRAM
The Company successfully drilled and completed
three BQ horizontal wells that are now all on production. The wells
were executed within budget and continue to demonstrate the
high-quality geological and reservoir characteristics of the
Michichi BQ play.
The following table summarizes the initial
production (“IP”) rates and key operational details for the three
BQ wells drilled during the first quarter of 2025, which were
brought on production in April 2025:
Well Identifier |
Days from Spud to Rig Release |
Lateral Length(metres) |
Fracture Stages |
IP Period |
Medium Crude Oil (bbl/d)(1) |
Conventional Natural Gas
(Mcf/d)(1) |
Total (boe/d)(1) |
Peak Oil Rate (bbl/d)(1) |
100/14-32-029-18W4 |
7 |
1,340 |
49 |
IP30 |
275 |
953 |
434 |
357 |
102/13-32-029-18W4 |
7 |
1,319 |
48 |
IP21 |
328 |
1,052 |
503 |
367 |
100/07-19-030-18W4 |
8 |
2,154 |
78 |
IP21 |
389 |
1,080 |
569 |
585 |
(1) |
|
Initial production rates are based on field estimates at wellhead.
See “Advisories – Initial Production Rates” below. |
|
|
|
Total Company sales production for the first week of May 2025
averaged 3,467 boe/d (62.9% liquids)1, of which 1,567 boe/d (69.0%
liquids)2 was from the three BQ wells drilled during the first
quarter of 2025.
These recent three wells validate Prairie
Provident’s excitement with the emerging BQ/Ellerslie play on its
Michichi lands. Direct offsetting operational activity continues to
be strong. Legacy vertical well control, available 3D/2D seismic
data, and offset drilling activity are important factors in
de-risking the Michichi BQ play. Prairie Provident has identified
more than 40 potential drilling opportunities targeting medium
crude oil on its Michichi lands. The Company owns and controls key
Michichi infrastructure, which provides a competitive advantage for
the future development of this play, and has sizeable tax pools,
including approximately $330 million of non-capital losses.
_________
- Comprised of
approximately 2,052 bbl/d of medium crude oil, 7,705 Mcf/d of
conventional natural gas and 131 bbl/d of NGLs.
- Comprised of
approximately 1,013 bbl/d of medium crude oil, 2,909 Mcf/d of
conventional natural gas and 69 bbl/d of NGLs.
FIRST QUARTER 2025 FINANCIAL AND
OPERATING HIGHLIGHTS
Prairie Provident’s interim financial statements
for the first quarter ended March 31, 2025 and related Management’s
Discussion and Analysis (MD&A) are available on our website at
www.ppr.ca and filed on SEDAR+ at www.sedarplus.ca. Financial and
operating highlights for the period include:
- In February and
March of 2025, the Company completed a brokered equity financing
raising aggregate gross proceeds of $8.67 million to facilitate
further development in the BQ formation at Michichi.
- In Q1 2025, the
Company drilled three gross (3.0 net) new wells in the BQ
formation. These wells were completed and brought on production in
April 2025.
- Production
averaged 2,221 boe/d (58% liquids)1 for Q1 2025, which was 16% or
415 boe/d lower than Q1 2024, primarily due to the sale of the
Company’s former Evi CGU in Q1 2024 and natural production
declines.
- Q1 2025
operating expenses were $29.64 boe/d, a decrease of 17% or $6.15
per boe/d from Q1 2024, principally due to the sale of the Evi CGU
and certain Provost properties in Q1 2024 which experienced higher
operational costs and partially offset by increases in workover
costs.
- Q1 2025
operating netback2 before the impact of derivatives was $3.7
million ($18.38/boe), and $3.7 million ($18.38/boe) after realized
losses on derivatives, a 74% and a 115% increase, respectively,
relative to Q1 2024. The increase was a result of slightly higher
realized pricing, lower royalties and operating costs and no
realized losses on derivatives.
- Net loss totaled
$6.1 million in Q1 2025, a $1.2 million increase compared to Q1
2024. The increase was due to lower petroleum and natural gas
sales, higher G&A expenses, impairment expense and finance
costs offset by lower operating expenses.
_________
- Comprised of
approximately 1,201 bbl/d of medium crude oil, 5,574 Mcf/d of
conventional natural gas and 91 bbl/d of NGLs.
- Operating
netback is a Non-GAAP financial measure and is defined below under
"Advisories - Non-GAAP and Other Financial Measures".
FINANCIAL AND OPERATING SUMMARY
($000s,
except per unit amounts or as indicated) |
|
|
Q1 2025 |
Q4 2024 |
Q1 2024 |
|
|
|
|
|
(Restated)(1) |
FINANCIAL |
|
|
|
|
|
Revenue |
|
|
|
|
|
Petroleum and natural gas sales |
|
|
11,073 |
|
11,111 |
|
12,996 |
|
Royalties |
|
|
(1,472 |
) |
(567 |
) |
(1,871 |
) |
Revenue |
|
|
9,601 |
|
10,544 |
|
11,125 |
|
Realized gain (loss) on
derivatives |
|
|
- |
|
- |
|
(485 |
) |
Unrealized gain (loss) on derivatives |
|
|
- |
|
- |
|
416 |
|
Revenue, net of gains (losses) on derivatives |
|
|
9,601 |
|
10,544 |
|
11,056 |
|
Net loss(1) |
|
|
(6,137 |
) |
(10,123 |
) |
(4,945 |
) |
$ per share – Basic |
|
|
- |
|
(0.01 |
) |
(0.01 |
) |
$ per
share – Diluted |
|
|
- |
|
(0.01 |
) |
(0.01 |
) |
Adjusted Funds Flow(2) |
|
|
1,782 |
|
(192 |
) |
27 |
|
$ per share – Basic |
|
|
- |
|
- |
|
- |
|
$ per share – Diluted |
|
|
- |
|
- |
|
- |
|
Capital expenditures(2) |
|
|
8,023 |
|
9,083 |
|
578 |
|
Net capital expenditures(2) |
|
|
8,099 |
|
9,023 |
|
(23,600 |
) |
Common Shares outstanding (000s) |
|
|
|
|
|
End of period |
|
|
1,401,335 |
|
1,197,401 |
|
716,087 |
|
Weighted average – Basic |
|
|
1,273,892 |
|
1,170,310 |
|
715,861 |
|
Weighted average – Diluted |
|
|
1,273,892 |
|
1,170,310 |
|
715,861 |
|
OPERATING |
|
|
|
|
|
Production
Volumes |
|
|
|
|
|
Crude oil and condensate
(bbl/d) |
|
|
1,201 |
|
1,298 |
|
1,495 |
|
Natural gas (Mcf/d) |
|
|
5,574 |
|
6,107 |
|
6,498 |
|
Natural
gas liquids (bbl/d) |
|
|
91 |
|
69 |
|
58 |
|
Total (boe/d)(3) |
|
|
2,221 |
|
2,385 |
|
2,636 |
|
% Liquids |
|
|
58 |
% |
57 |
% |
59 |
% |
Realized Prices |
|
|
|
|
|
Crude oil and condensate
($/bbl) |
|
|
86.88 |
|
83.16 |
|
80.75 |
|
Natural gas ($/Mcf) |
|
|
2.43 |
|
1.49 |
|
2.64 |
|
Natural
gas liquids ($/bbl) |
|
|
56.53 |
|
53.93 |
|
85.21 |
|
Total ($/boe)(3) |
|
|
55.39 |
|
50.65 |
|
54.17 |
|
Operating Netback ($/boe) |
|
|
|
|
|
Realized price |
|
|
55.39 |
|
50.65 |
|
54.17 |
|
Royalties |
|
|
(7.37 |
) |
(2.58 |
) |
(7.80 |
) |
Operating costs(1) |
|
|
(29.64 |
) |
(30.02 |
) |
(35.79 |
) |
Operating netback(2) |
|
|
18.38 |
|
18.05 |
|
10.58 |
|
Realized gains (losses) on derivatives |
|
|
- |
|
- |
|
(2.02 |
) |
Operating netback, after realized gains (losses) on
derivatives(1)(2) |
|
|
18.38 |
|
18.05 |
|
8.56 |
|
(1) |
|
Restated. For further information, refer to the “Restatements”
section in the MD&A. |
(2) |
|
This is a Non-GAAP financial
measure. For further information, refer to “Advisories - Non-GAAP
and Other Financial Measures” below. |
(3) |
|
The term barrels of oil
equivalent (“boe”) may be misleading, particularly if used in
isolation. Per boe amounts have been calculated by using the
conversion ratio of six thousand cubic feet (6 Mcf) of natural gas
to one barrel (1 bbl) of crude oil. Refer to “Advisories - Barrels
of Oil Equivalent” below. |
|
|
|
ABOUT PRAIRIE PROVIDENT
Prairie Provident is a Calgary-based company
engaged in the development of oil and natural gas properties in
Alberta. The Company’s strategy is to optimize cash flow from its
existing assets to fund low-risk development and maintain stable
cash flow while limiting its production decline.
For further information, please contact:
Dale Miller, Executive ChairmanPhone: (403)
292-8150Email: investor@ppr.ca
ADVISORIES
Forward-Looking Statements
This news release contains certain statements
(“forward-looking statements”) that constitute forward- looking
information within the meaning of applicable Canadian securities
laws. Forward-looking statements relate to future performance,
events or circumstances, are based upon internal assumptions,
plans, intentions, expectations and beliefs, and are subject to
risks and uncertainties that may cause actual results or events to
differ materially from those indicated or suggested therein. All
statements other than statements of current or historical fact
constitute forward-looking statements. Forward- looking statements
are typically, but not always, identified by words such as
“anticipate”, “believe”, “expect”, “intend”, “plan”, “budget”,
“forecast”, “target”, “estimate”, “propose”, “potential”,
“project”, “continue”, “may”, “will”, “should” or similar words
suggesting future outcomes or events or statements regarding an
outlook.
Without limiting the foregoing, this news
release contains forward-looking statements pertaining to Basal
Quartz drilling opportunities.
Forward-looking statements are based on a number
of material factors, expectations or assumptions of Prairie
Provident which have been used to develop such statements, but
which may prove to be incorrect. Although the Company believes that
the expectations and assumptions reflected in such forward-looking
statements are reasonable, undue reliance should not be placed on
forward-looking statements, which are inherently uncertain and
depend upon the accuracy of such expectations and assumptions.
Prairie Provident can give no assurance that the forward-looking
statements contained herein will prove to be correct or that the
expectations and assumptions upon which they are based will occur
or be realized. Actual results or events will differ, and the
differences may be material and adverse to the Company. In addition
to other factors and assumptions which may be identified herein,
assumptions have been made regarding, among other things: results
from drilling and development activities; consistency with past
operations; the quality of the reservoirs in which Prairie
Provident operates and continued performance from existing wells
(including with respect to production profile, decline rate and
product type mix); the continued and timely development of
infrastructure in areas of new production; the accuracy of the
estimates of Prairie Provident's reserves volumes; future commodity
prices; future operating and other costs; future USD/CAD exchange
rates; future interest rates; continued availability of external
financing and internally generated cash flow to fund Prairie
Provident's current and future plans and expenditures, with
external financing on acceptable terms; the impact of competition;
the general stability of the economic and political environment in
which Prairie Provident operates; the general continuance of
current industry conditions; the timely receipt of any required
regulatory approvals; the ability of Prairie Provident to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the ability of the operator of
the projects in which Prairie Provident has an interest in to
operate the field in a safe, efficient and effective manner; field
production rates and decline rates; the ability to replace and
expand oil and natural gas reserves through acquisition,
development and exploration; the timing and cost of pipeline,
storage and facility construction and expansion and the ability of
Prairie Provident to secure adequate product transportation; the
regulatory framework regarding royalties, taxes and environmental
matters in the jurisdictions in which Prairie Provident operates;
and the ability of Prairie Provident to successfully market its oil
and natural gas production.
The forward-looking statements included in this
news release are not guarantees of future performance or promises
of future outcomes and should not be relied upon. Such statements,
including the assumptions made in respect thereof, 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 including, without
limitation: reduced access to external debt financing; higher
interest costs or other restrictive terms of debt financing;
changes in realized commodity prices; changes in the demand for or
supply of Prairie Provident's products; the early stage of
development of some of the evaluated areas and zones; the potential
for variation in the quality of the geologic formations targeted by
Prairie Provident's operations; unanticipated operating results or
production declines; changes in tax or environmental laws, royalty
rates or other regulatory matters; the imposition of new or
additional tariffs or other restrictive trade measures or
countermeasures affecting trade between Canada and the United
States; changes in development plans of Prairie Provident or by
third party operators; increased debt levels or debt service
requirements; inaccurate estimation of Prairie Provident's oil and
reserves volumes; limited, unfavourable or a lack of access to
capital markets; increased costs; a lack of adequate insurance
coverage; the impact of competitors; and such other risks as may be
detailed from time-to-time in Prairie Provident's public disclosure
documents (including, without limitation, those risks identified in
this news release and Prairie Provident's current Annual
Information Form dated March 31, 2025 as filed with Canadian
securities regulators and available from the SEDAR+ website
(www.sedarplus.ca) under Prairie Provident's issuer profile).
The forward-looking statements contained in this
news release speak only as of the date of this news release, and
Prairie Provident assumes no obligation to publicly update or
revise them to reflect new events or circumstances, or otherwise,
except as may be required pursuant to applicable laws. All
forward-looking statements contained in this news release are
expressly qualified by this cautionary statement.
Oil and Gas Reader
Advisories
Barrels of Oil Equivalent
The oil and 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 analysis of results and comparisons with other
industry participants. A boe conversion ratio of six thousand cubic
feet to one barrel of oil is based on an energy equivalency
conversion method primarily applicable at the burner tip. It does
not represent a value equivalency at the wellhead nor at the plant
gate, which is where Prairie Provident sells its production
volumes. Boes may therefore be a misleading measure, particularly
if used in isolation. 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 ratio of 6:1,
utilizing a 6:1 conversion ratio may be misleading as an indication
of value.
Potential Drilling Opportunities vs Booked
Locations
This news release refers to potential drilling
opportunities and booked locations. Unless otherwise indicated,
references to booked locations in this news release are references
to proved drilling locations or probable drilling locations, being
locations to which Trimble Engineering Associates Ltd. (Trimble),
the Company's independent qualified reserves evaluator, attributed
proved or probable reserves in its most recent year-end evaluation
of Prairie Provident’s reserves data, effective December 31, 2024.
Trimble’s year-end evaluation was in accordance with National
Instrument 51-101 Standards of Disclosure for Oil and Gas
Activities and, pursuant thereto, the Canadian Oil and Gas
Evaluation (COGE) Handbook. References in this news release to
potential drilling opportunities are references to locations for
which there are no attributed reserves or resources, but which the
Company internally estimates can be drilled based on current land
holdings, industry practice regarding well density, and internal
review of geologic, geophysical, seismic, engineering, production
and resource information. There is no certainty that the Company
will drill any particular locations, or that drilling activity on
any locations will result in additional reserves, resources or
production. Locations on which Prairie Provident in fact drills
wells will ultimately depend upon the availability of capital,
regulatory approvals, seasonal restrictions, commodity prices,
costs, actual drilling results, additional reservoir information
and other factors. There is a higher level of risk associated with
locations that are potential drilling opportunities and not booked
locations. Prairie Provident generally has less information about
reservoir characteristics associated with locations that are
potential drilling opportunities and, accordingly, there is greater
uncertainty whether wells will ultimately be drilled in such
locations and, if drilled, whether they will result in additional
reserves, resources or production.
Initial Production Rates
This news release discloses initial production
(IP) rates for certain wells as indicated. Initial production rates
are not necessarily indicative of long-term well or reservoir
performance or of ultimate recovery. Actual results will differ
from those realized during an initial short-term production period,
and the difference may be material.
Non-GAAP and Other Financial
Measures
This news release discloses certain financial
measures that are 'non-GAAP financial measures', 'non-GAAP ratios'
or 'supplementary financial measures' within the meaning of
applicable Canadian securities laws. Such measures do not have a
standardized or prescribed meaning under International Financial
Reporting Standards (IFRS) and, accordingly, may not be comparable
to similar financial measures disclosed by other issuers. Non-GAAP
and other financial measures are provided as supplementary
information by which readers may wish to consider the Company's
performance but should not be relied upon for comparative or
investment purposes. Readers must not consider Non-GAAP and other
financial measures in isolation or as a substitute for analysis of
the Company’s financial results as reported under IFRS. For a
reconciliation of each non-GAAP measure to its nearest IFRS
measure, please refer to the “Non-GAAP and Other Financial
Measures” section of the MD&A.
This news release also includes reference to
certain metrics commonly used in the oil and gas industry but which
do not have a standardized or prescribed meanings under the
Canadian Oil and Gas Evaluation (COGE) Handbook or applicable law.
Such metrics are similarly provided as supplementary information by
which readers may wish to consider the Company's performance but
should not be relied upon for comparative or investment
purposes.
Following is additional information on non-GAAP
and other financial measures and oil and gas metrics used in this
news release.
Adjusted Funds Flow (“AFF”) - AFF is a Non-GAAP
financial measure calculated based on net cash from operating
activities before changes in non-cash working capital, transaction
costs, restructuring costs and other non-recurring items. The
Company believes that AFF provides a useful measure of the
Company’s operational performance on a continuing basis by
eliminating certain non-cash charges and charges that are
non-recurring or discretionary. Management utilizes the measure to
assess the Company’s ability to finance capital expenditures and
debt repayments. AFF as presented is not intended to represent cash
flow from operating activities, net earnings or other measures of
financial performance calculated in accordance with IFRS. AFF per
share is calculated based on the weighted average number of common
shares outstanding consistent with the calculation of earnings per
share. AFF per share is a Non-GAAP ratio.
Operating Netback - Operating netback is a
Non-GAAP financial measure commonly used in the oil and gas
industry, which the Company believes is a useful measure to assist
management and investors to evaluate operating performance.
Operating netback included in this report were determined by taking
oil and gas revenues less royalties and operating costs. Operating
netback, after realized gains (losses) on derivatives, adjusts the
operating netback for only the realized portion of gains and losses
on derivatives. Operating netback may be expressed in absolute
dollar terms or on a per boe basis. Per boe amounts are determined
by dividing the absolute value by working interest production.
Operating netback per boe and operating netback, after realized
gains (losses) on derivatives per boe are Non-GAAP financial
ratios.
Capital Expenditures and Net Capital
Expenditures - Capital expenditures and net capital expenditures
are Non-GAAP financial measures commonly used in the petroleum and
natural gas industry, which the Company believes are useful
measures to assist management and investors to assess Prairie
Provident’s investment in its existing asset base. Capital
expenditures is calculated as the sum of property and equipment
expenditures and exploration and evaluation expenditures from the
consolidated statements of cash flows that is most directly
comparable to cash flows used in investing activities. Net capital
expenditures is calculated as capital expenditures, plus
acquisitions from business combinations, which is the outflow cash
consideration paid to acquire oil and gas properties, less asset
dispositions (net of acquisitions), which is the cash proceeds from
the disposition of producing properties and undeveloped lands.
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