Sign Up for FREE Daily Energy News
 
BREAKING NEWS:
WEC - Western Engineered Containment
Hazloc Heaters
Copper Tip Energy Services
Hazloc Heaters
WEC - Western Engineered Containment
Copper Tip Energy

Seven Generations Energy Reduces 2020 Capital Investment Plan in Response to Challenging Global Energy Prices


Revised fully funded budget proactively maintains the company’s balance sheet strength and corporate resilience at current futures pricing

CALGARY, Alberta–(BUSINESS WIRE)–In response to the significant decline in global energy prices, Seven Generations has reduced its previously announced 2020 capital investment budget by 18%, or $200 million, to $900 million. Effective immediately, the company will meaningfully reduce its activity levels to align investments to expected cash flow.

DETAILS

  • 2020 capital investment budget is reduced to $900 million from the previously announced $1.1 billion program and remains fully funded at current futures pricing. This reduction reflects a temporary deferral of planned activity in the present commodity price environment that will afford the company the opportunity to high-grade drilling locations and improve efficiencies.
  • As a result of this deferred capital investment, 7G expects annual 2020 production to average between 185,000 and 190,000 boe/d. This updated guidance anticipates a similar condensate and total liquids mix to the prior budget.
  • The company will continue to refine its production, capital allocation and cost structure throughout the year in the context of prevailing market conditions. These efforts, alongside reduced production levels and moderating decline rates are anticipated to improve sustaining capital requirements.
  • 7G’s disciplined hedging program continues to effectively mitigate risks associated with the current low-price environment. Condensate production remains approximately 50% hedged for the balance of 2020 with a WTI floor price above US$50/bbl. Natural gas production is approximately 35% hedged at an equivalent price of US$2.60/MMBtu Henry Hub for the balance of the year.
  • The reduced capital program for 2020 maintains the company’s strong financial position and liquidity. 7G’s $1.4 billion credit facility was renewed for 5 years at year-end 2019, with a 2024 maturity. The company’s fixed-coupon, senior unsecured notes mature in 2023 and 2025.

“During this time of unprecedented volatility, we have several options available to us to maintain our profitability and financial strength,” said Marty Proctor, 7G’s President and Chief Executive Officer. “Strong local condensate pricing, infrastructure ownership, flexible service contracts and our low cost structure gives us the ability to prioritize financial strength over production volumes. Today’s reduced capital and production guidance does not reflect additional cost savings and other optimizations that we are actively pursuing. The company will demonstrate its resilience and emerge from this downturn stronger and better-positioned than ever before.”

REVISED 2020 BUDGET

7G’s revised 2020 capital budget and production estimates are provided below. The company anticipates providing a detailed update of additional guidance metrics with its first quarter 2020 release.

2020 Capital Budget & Production Estimates

March 2020 Revision

Original Budget

Total Capital Investment

$900 million

$1.1 billion

Average Production(1)

185 -190 Mboe/d

200 – 205 Mboe/d

H1 Production(1)

180 – 190 Mboe/d

190 – 200 Mboe/d

H2 Production(1)

185 – 195 Mboe/d

205 – 215 Mboe/d

Percent Liquids(1)

56 – 60%

56 – 60%

Percent Condensate(1)

34 – 38%

34 – 38%

1) See “Note Regarding Product Types” and “Forward-Looking Information Advisory” in the Reader Advisory in this news release.

Seven Generations Energy

Seven Generations is a low supply cost energy producer dedicated to stakeholder service, responsible development and generating strong returns from its liquids-rich Kakwa River Project in northwest Alberta. 7G’s corporate office is in Calgary, its operations headquarters is in Grande Prairie and its shares trade on the TSX under the symbol VII.

Further information on Seven Generations is available on the company’s website, www.7genergy.com.



Share This:



More News Articles


New SHOWCASE Directory Companies

 

Hy-Lok Distribution Inc
DTN
GLJ Petroleum Consultants Ltd.
Catch Engineering
Fusion Production Systems Inc
Pacbrake Company
Enverus
Clear Glycol Inc.