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Pine Cliff Energy Ltd. Announces Annual 2019 Results and Filing of 2019 Disclosure Documents


Calgary, Alberta – Pine Cliff Energy Ltd. (TSX: PNE) (“Pine Cliff” or the “Company“) is pleased to announce its year-end financial and operating results and the filing of its 2019 disclosure documents. Included in the filings were Pine Cliff’s annual information form (“AIF“), which includes disclosure and reports related to reserves data and other oil and gas information pursuant to National Instrument 51‐101 Standards of Disclosure for Oil and Gas Activities and its consolidated financial statements and related management’s discussion and analysis for the year ended December 31, 2019 (the “Annual Report“). Selected highlights are shown below and should be read in conjunction with the Annual Report and the AIF.

2019 Highlights

Pine Cliff’s natural gas market diversification strategy was successful in generating positive adjusted funds flow in 2019, despite enduring one of the lowest AECO gas prices in 20 years. Pine Cliff was also able to use its extensive seismic database to expand the Company’s prospect inventory by identifying a number of drilling locations on its existing land base and during the fourth quarter, drilled two 100% Pekisko oils wells. Significant Pine Cliff highlights from the fourth quarter and 2019 include:

  • generated $5.0 million of adjusted funds flow ($0.02 per basic share) for the three months ended December 31, 2019 and $5.9 million of adjusted funds flow ($0.02 per basic share) for the year ended December 31, 2019;
  • realized a $2.15 per Mcf gas price for the year ended December 31, 2019, 23% higher than the AECO 5A benchmark of $1.75 per Mcf;
  • closed an acquisition of oil and natural gas assets in the Ghost Pine area of Central Alberta for cash consideration of $8.8 million (after closing adjustments) on May 31, 2019, which added over 1,600 Boe/d (79% natural gas, 12% natural gas liquids and 9% oil) as of the closing date and increased the Company’s undeveloped Pekisko oil locations as at December 31, 2019 by eight gross (8.0 net) booked locations;
  • exchanged its $49.0 million subordinated promissory notes for Term Debt, and extended $42.0 million of debt originally expiring in 2020 to December 31, 2024; and
  • drilled and completed two 100% working interest Pekisko oil wells that came on production in December 2019 and January 2020, respectively.

Debt Transformation on Pine Cliff’s Balance Sheet

On October 1, 2019, Pine Cliff entered into a credit facility with Alberta Investment Management Corporation (“AIMCo“), acting on behalf of its clients, to repay its $30 million promissory notes maturing September 30, 2020 and its $19 million promissory notes maturing July 31, 2022 and replace them with a non-revolving term credit facility (“Term Debt“). The Term Debt consists of a first tranche with a principal amount of $30 million that matures on December 31, 2024 and a second tranche with a principal amount of $19 million that matures on July 31, 2022, (collectively the “Refinancing“). The Refinancing with AIMCo, one of the Company’s major shareholders, as well as the extension of $12 million of debt held by Pine Cliff’s Chairman of the Board and a third party holding more than 10% of Pine Cliff’s shares, out to December 31, 2024, allows the Company flexibility to focus on its business and any opportunities that are expected to arise during these turbulent times. The Company’s focus continues to be to maximize shareholder value and to capitalize on opportunities during this cycle of low natural gas prices.

Outlook

With the recent collapse in global crude oil prices arising from both demand destruction due to COVID-19 and OPEC’s inability to manage supply amongst its members, Pine Cliff remains committed to managing its financial flexibility and controlling capital expenditures. The Company’s 2020 capital budget includes the drilling of one (1.0 net) Pekisko oil well in the fourth quarter and this timing provides Pine Cliff the flexibility to amend its capital spending during the year to stay within adjusted funds flow. With natural gas representing over 90% of Pine Cliff’s production, the Company believes it is well positioned to manage the volatility of crude oil prices while protecting asset and shareholder value.

Financial and Operating Results

Three months ended December 31, Year ended December 31,
2019 2018 2019 2018
($000s, unless otherwise indicated)
Commodity sales (before royalty expense) 31,339 30,110 105,006 107,385
Cash flow from operating activities 4,039 1,415 15,536 8,616
Adjusted funds flow1 5,025 4,433 5,879 10,513
Per share – Basic and Diluted ($/share)1 0.02 0.01 0.02 0.03
Loss (7,987) (28,520) (56,430) (72,719)
Per share – Basic and Diluted ($/share) (0.02) (0.09) (0.18) (0.24)
Capital expenditures 5,446 4,302 8,379 10,665
Acquisitions 202 (61) 8,801 307
Capital dispositions (1,443) (51) (1,542) (285)
Net Debt1 64,038 56,819 64,038 56,819
Production (Boe/d) 19,661 19,576 19,142 19,684
Weighted-average common shares outstanding (000s) 92% 94% 92% 94%
    Basic and diluted 327,784 307,076 319,274 307,076
Combined sales price ($/Boe) 17.33 16.72 15.03 14.95
Operating netback ($/Boe)1 4.16 3.56 2.25 2.68
Corporate netback ($/Boe)1 2.79 2.46 0.84 1.47
Operating netback ($ per Mcfe)1 0.69 0.59 0.38 0.45
Corporate netback ($ per Mcfe)1 0.47 0.41 0.14 0.25

1 This is a non-GAAP measure, see “NON-GAAP Measures” for additional information.



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