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Clearview Reports Third Quarter Results and Operations Update


  • Adjusted funds flow of $0.9 million in the third quarter, up 17% from the comparative quarter of 2018 and $4.2 million of adjusted funds flow for the nine months ended September 30, 2019, up 139%, versus the comparative nine months of 2018
  • Reduced net debt by $2.4 million, since the beginning of the year, to $15.8 million at September 30, 2019 resulting in a net debt to annualized nine-month adjusted funds flow ratio of 2.8:1
  • Increased production 13% and 15%, in the three and nine months ended September 30, 2019, respectively, versus the comparative periods of 2018

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

HIGHLIGHTS

  • Incurred minimal field capital and abandonment expenditures of $0.4 million in the third 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 11% in the three months ended September 30, 2019 to 641 barrels per day (“bbl/d”), up from 580 bbl/d in the comparative period of the prior year;
  • Increased total production by 13% to 2,389 barrels of oil equivalent per day (“boe/d”) for the three months ended September 30, 2019 as a result of the continued strong production performance from the new wells brought on-stream in the prior year, the acquisition completed in the first quarter of the current year and minimal production downtime;
  • Reduced operating costs per boe by $1.87 to $14.53, a decrease of 11%, in the three months ended September 30, 2019 versus the comparative quarter, primarily due to an increase in production of 13% versus the comparative quarter;
  • Generated adjusted funds flow of $0.9 million in the third quarter, up 17% from the comparative quarter, as a result of a 13% increase in production. Cash flow from operations was $1.4 million in the current quarter versus cash flow used in operations of $0.5 million in the comparative quarter; and
  • Reduced net debt by $2.4 million in the first nine months of 2019, applying the excess of adjusted funds flow over capital and abandonment expenditures of $1.6 million against working capital and bank debt. At September 30, 2019, the Company’s net debt to annualized nine-month adjusted funds flow ratio was 2.8:1.

FINANCIAL and OPERATIONAL RESULTS

Production for the third quarter of 2019 was up 13% to 2,389 boe/d versus the comparative quarter and has been relatively constant at approximately 2,400 boe/d in each of the first three quarters of the year.  Production of oil increased 11% in the third quarter to 641 bbl/d versus the comparative quarter of 2018.

During the third quarter, Clearview’s realized price per boe was lower by 25% than the comparative quarter of 2018, largely due to lower natural gas prices for the summer months and much lower propane and butane prices due to an oversupply of these products.   The Company reduced its operating costs per boe by 11%, royalties were lower by 49% and its general and administrative expenses per boe decreased by 10%.  These factors and a significant positive change in realized gains on commodity contracts, resulted in the Company’s corporate netback increasing by 4% to $4.01 per boe in the third quarter of 2019 from $3.87 per boe in the comparative period of 2018.  For the nine months ended September 30, 2019, the Company increased its corporate netback by 107% to $6.39 per boe versus $3.09 per boe in the comparative period.

Adjusted funds flow for the third quarter of 2019 was $0.9 million.  Capital expenditures and abandonment capital were $0.4 million which enabled the Company to reduce its net debt by $0.5 million in the third quarter.  At September 30, 2019, the Company had net debt of $15.8 million with a net debt to annualized nine-month adjusted funds flow ratio of 2.8:1.

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.

Financial and Operating Highlights

Financial

Three months ended Sept. 30

Nine months ended Sept. 30

($ 000’s except per share amounts)

2019

2018

% Change

2019

2018

% Change

Oil and natural gas sales

5,357

6,297

(15)

19,175

17,482

10

Net earnings (loss)

(2,129)

(1,000)

113

(3,241)

(6,628)

(51)

Per share–basic and diluted

(0.18)

(0.10)

80

(0.28)

(0.70)

(60)

Adjusted funds flow (1)

879

749

17

4,223

1,770

139

Per share–basic and diluted

0.08

0.07

14

0.37

0.19

95

Cash flow from operations

1,422

(501)

(384)

3,860

1,708

126

Per share–basic and diluted

0.12

(0.05)

240

0.34

0.18

89

Capital expenditures – net

116

5,800

(98)

1,601

6,728

(76)

Weighted average shares

Basic and diluted (000’s)

11,670

10,047

16

11,404

9,409

21

(1)

See non-GAAP measures

Production

Three months ended Sept. 30

 Nine months ended Sept. 30

2019

2018

% Change

2019

2018

% Change

Oil – bbl/d

641

580

11

705

512

38

Natural gas liquids – bbl/d

501

437

14

475

449

6

Total liquids – bbl/d

1,142

1,017

12

1,180

961

23

Natural gas – mcf/d

7,487

6,537

15

7,428

6,823

9

Total – boe/d

2,389

2,107

13

2,419

2,098

15

Realized sales prices

Three months ended Sept. 30

Nine months ended Sept. 30

2019

2018

% Change

2019

2018

% Change

Oil – $/bbl

63.04

73.44

(14)

64.88

70.38

(8)

NGLs – $/bbl

20.23

39.70

(49)

25.82

37.83

(32)

Natural gas – $/mcf

1.02

1.24

(18)

1.61

1.56

3

Total – $/boe

24.37

32.49

(25)

29.04

30.52

(5)

Netback analysis

Three months ended Sept. 30

Nine months ended Sept. 30

Barrel of oil equivalent ($/boe)

2019

2018

% Positive
(Negative)

2019

2018

% Positive
(Negative)

Realized sales price

24.37

32.49

(25)

29.04

30.52

(5)

Royalties

(2.59)

(5.09)

49

(3.29)

(4.23)

22

Processing income

0.80

1.04

(23)

0.76

1.05

(28)

Transportation

(1.44)

(1.09)

(32)

(1.64)

(1.37)

(20)

Operating

(14.53)

(16.40)

11

(14.53)

(15.51)

6

Operating netback

6.61

10.95

(40)

10.34

10.46

(1)

Realized gain (loss) on commodity contracts

0.89

(3.33)

127

0.19

(2.63)

107

General & administrative

(2.38)

(2.63)

10

(2.67)

(3.36)

21

Transaction costs

(0.17)

(0.20)

15

Cash finance costs

(1.11)

(1.12)

1

(1.30)

(1.18)

(10)

Corporate netback

4.01

3.87

4

6.39

3.09

107

(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 field capital was minimal in the three months ended September 30, 2019. Regular repairs and maintenance of some of the Company’s wells and facilities were undertaken in the third quarter once surface conditions were dry.

Clearview has fulfilled its annual Area Based Closure (“ABC”) obligation with the Alberta Energy Regulator (“AER”) for 2019 by fully abandoning certain suspended pipelines for $156 thousand, which has been included in operating costs, and incurring abandonment expenditures on 10 gross (3.75 net) wells for approximately $229 thousand.

OUTLOOK

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

Light oil prices have recently been in the US $55.00 to $58.00 range with the Canadian light oil differential remaining steady at a reasonable level.  Among other supply/demand factors, volatility in light oil prices has been influenced by the ongoing trade dispute between the United States and China and its impact on the global demand outlook for crude oil.  The natural gas price at the AECO hub has strengthened considerably over the past several months with the reinstatement of a minimum level of interruptible transportation service and the ability to deliver excess natural gas into storage.

AECO prices have increased from an average of Cdn $0.58 per gigajoule in September to over $2.60 per gigajoule at the end of November.  In light of this increase in natural gas prices, Clearview has brought on-stream additional natural gas production which is economic in this higher priced environment.

Realized propane and butane prices continue to be under significant pressure in 2019 due to annual contract terms which will not end until March 31, 2020.  Current market prices for both propane and butane have improved over the last six months, which could improve next year’s negotiated contract prices, if the market prices remain stable or continue to improve.

The Board of Directors and management continue to pursue strategic transactions in a very opportunity rich, capital starved environment towards building a more efficient company for its shareholders.

Clearview’s September 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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