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Clearview Reports Second Quarter Results and Operations Update


  • Adjusted funds flow of $1.3 million$5.98 per barrel of oil equivalent (“boe”), in the second quarter, up 89% from the comparative quarter of 2018 and $3.3 million of adjusted funds flow for the six months ended June 30, 2019, up 228%, versus the comparative six months of 2018
  • Reduced net debt by $1.9 million to $16.3 million at June 30, 2019 resulting in a net debt to annualized six-month adjusted funds flow ratio of 2.4:1
  • Increased oil production 56% and 55%, in the three and six months ended June 30, 2019, respectively, versus the comparative periods of 2018

Clearview Resources Ltd. (“Clearview” or the “Company”) is pleased to announce its financial and operational results for the three and six months ended June 30, 2019.

Clearview Resources Ltd. (CNW Group/Clearview Resources Ltd.)

HIGHLIGHTS

  • On February 22, 2019, the Company closed the acquisition of light oil and natural gas assets in its west-central Alberta core area adding operated production;
  • Increased Clearview’s existing, light oil prone, undeveloped land base by 50% through the acquisition of assets;
  • Incurred minimal capital expenditures of $0.8 million in the second quarter of 2019 to deploy excess adjusted funds flow of $0.5 million towards the reduction of net debt;
  • Consistent with the strategy of the Company, increased oil production 56% in the three months ended June 30, 2019 to 709 barrels per day (“bbl/d”), up from 455 bbl/d in the comparative period of the prior year;
  • Increased total production by 15% to 2,353 boe/d for the three months ended June 30, 2019 as a result of the continued strong production performance from the new wells brought on-stream in the prior year and the acquisition completed in the first quarter;
  • Realized a sales price per boe for production for the three months ended June 30, 2019 which was 2% greater than the comparative quarter, primarily due to a greater oil sales mix;
  • Reduced operating costs per boe by $0.34 to $14.46, a decrease of 2%, in the three months ended June 30, 2019 versus the comparative quarter;
  • Increased the corporate netback in the three months ended June 30, 2019 to $5.98 per boe, an 89% improvement over the comparative quarter as a result of a $0.52 increase in revenue per boe and a $3.49per boe reduction in realized hedging losses offset by an increase in all cash costs, net of processing income, of $1.20 per boe in the second quarter of 2019 versus the comparative period of 2018;
  • Generated adjusted funds flow of $1.3 million in the first quarter, up 116% from the comparative quarter, as a result of a 15% increase in production and an 89% increase in the corporate netback per boe. Cash flow from operations was $0.8 million in the current quarter versus $0.3 million in the comparative quarter; and
  • Reduced net debt by $1.9 million in the first six months of 2019, applying the excess of adjusted funds flow over capital expenditures of $1.5 million against working capital. At June 30, 2019, the Company’s net debt to annualized six-month adjusted funds flow ratio was 2.4:1.

FINANCIAL and OPERATIONAL RESULTS

For the three months ended June 30, 2019Clearview’s results included the assets, acquired earlier in the year, for the full quarter. The production from the assets averaged approximately 230 boe/d, including oil production averaging approximately 90 bbl/d.  Production for the second quarter of 2019 was up 15% versus the comparative quarter despite several unscheduled turnarounds by operators of midstream facilities utilized by Clearview.  Production of oil increased 56% in the second quarter to 709 bbl/d versus the comparative quarter of 2018.

With the growth in production, the realized sales price per boe increased by 2% in the second quarter of 2019 as greater oil production offset lower realized prices and production efficiencies reduced operating costs by 2% in the second quarter of 2019.  Other components of Clearview’s operating netback negatively offset these gains resulting in the Company’s operating netback being relatively unchanged from the comparative quarter of 2018. A significant positive change in realized gains on commodity contracts resulted in the Company’s corporate netback increasing by 89% to $5.98 per boe in the second quarter of 2019 from $3.17 per boe in the comparative period of 2018.

Adjusted funds flow for the second quarter of 2019 was $1.3 million.  Capital expenditures were $0.8 millionwhich enabled the Company to reduce its net debt by $0.5 million in the second quarter.  At June 30, 2019, the Company had net debt of $16.3 million with a net debt to annualized six-month adjusted funds flow ratio of 2.4:1.

Subsequent to the end of the quarter, the Company’s lender completed its annual credit facility review and established a limit of $18.5 million.  Documentation of this revised facility is expected to be completed over the next several weeks.

Financial and Operating Highlights

Financial

Three months ended June 30

Six months ended June 30

($ 000’s except per share amounts)

2019

2018

% Change

2019

2018

% Change

Oil and natural gas sales

6,318

5,391

17

13,818

11,185

29

Net earnings (loss)

(658)

(1,749)

(62)

(1,112)

(5,628)

(80)

Per share–basic and diluted

(0.06)

(0.18)

(67)

(0.10)

(0.62)

(84)

Adjusted funds flow (1)

1,280

592

116

3,344

1,021

228

Per share–basic and diluted

0.11

0.06

83

0.30

0.11

173

Cash flow from operations

847

277

206

2,438

2,209

10

Per share–basic and diluted

0.07

0.03

133

0.22

0.24

(8)

Capital expenditures – net

772

(2,992)

1,485

928

60

Weighted average shares

Basic and diluted (000’s)

11,667

9,724

20

11,269

9,084

24

(1)

See non-GAAP measures

Production

Three months ended June 30

      Six months ended June 30

2019

2018

% Change

2019

2018

% Change

Oil – bbl/d

709

455

56

738

476

55

Natural gas liquids – bbl/d

452

462

(2)

462

456

1

Total liquids – bbl/d

1,161

917

27

1,200

932

29

Natural gas – mcf/d

7,153

6,764

6

7,398

6,969

6

Total – boe/d

2,353

2,044

15

2,434

2,094

16

Realized sales prices

Three months ended June 30

      Six months ended June 30

2019

2018

% Change

2019

2018

% Change

Oil – $/bbl

69.12

73.71

(6)

65.69

68.50

(4)

NGLs – $/bbl

26.19

37.12

(29)

29.58

37.86

(22)

Natural gas – $/mcf

1.20

1.27

(6)

1.92

1.71

12

Total – $/boe

29.51

28.99

2

31.37

29.52

6

Netback analysis

Three months ended June 30

       Six months ended June 30

Barrel of oil equivalent ($/boe)

2019

2018

% Positive
(Negative)

2019

2018

% Positive
(Negative)

Realized sales price

29.51

28.99

2

31.37

29.52

6

Royalties

(3.76)

(3.47)

(8)

(3.63)

(3.79)

4

Processing income

0.74

0.87

(15)

0.73

1.06

(31)

Transportation

(1.83)

(1.43)

(28)

(1.74)

(1.52)

(14)

Operating

(14.46)

(14.80)

2

(14.52)

(15.06)

4

Operating netback

10.20

10.16

12.21

10.21

20

Realized gain (loss) on
commodity contracts

0.52

(2.97)

118

(0.16)

(2.27)

93

General & administrative

(3.26)

(2.76)

(18)

(2.81)

(3.73)

25

Transaction costs

(0.12)

(0.09)

(33)

(0.25)

(0.30)

17

Cash finance costs

(1.36)

(1.17)

(16)

(1.40)

(1.22)

(15)

Corporate netback

5.98

3.17

89

7.59

2.69

182

(1)

% Positive (Negative) is expressed as being positive (better performance in the category) or negative (reduced
performance in the category) in relation to operating netback, corporate netback and net earnings.

(2)

See non-GAAP measures.

OPERATIONS UPDATE

Clearview’s production operations were restricted for the three months ended June 30, 2019 by unusually wet weather in west central Alberta resulting in poor surface access conditions. Regular repairs and maintenance of some of the Company’s wells and facilities were deferred to the third quarter when dryer surface conditions are anticipated.

Clearview did conduct a significant facility turnaround at its 100% working interest Windfall oil battery. The Company’s production was also impacted by unscheduled and scheduled third party facility turnarounds at its Garrington, Wilson Creek and Niton properties.

Clearview fulfilled its annual Area Based Closure (“ABC”) obligation with the Alberta Energy Regulator (“AER”) for 2019 by fully abandoning certain suspended pipelines. The total cost of these abandonments was approximately $150 thousand.

OUTLOOK

The Company has a risk management program in place to mitigate volatility of commodity prices received for its production.  The Company will continue to monitor further opportunities to hedge the prices received for its production.

The light oil differential, which negatively impacted the Company’s realized price for oil and NGLs significantly in the fourth quarter of 2018, has narrowed to more historic levels since then and continues to be supportive of reasonable Canadian light oil prices.  Realized propane and butane prices continue to be under significant pressure in 2019 due to an over supply in the Canadian market.

Clearview’s June 30, 2019 unaudited condensed interim financial statements and management’s discussion and analysis are available on the Company’s website at www.clearviewres.com and SEDAR at www.SEDAR.com.

On behalf of the Board of Directors and all the employees of Clearview, we would like to thank our shareholders for their continued support.



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