CDN NEWS | 
US NEWS 
Operational and Financial Summary
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Three Months Ended |
Six months ended |
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June 30, 2020 |
March 31, 2020 |
June 30, 2019 |
June 30, 2020 |
June 30, 2019 |
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OPERATING |
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Average daily production |
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Heavy oil (bbls/d) |
213 |
667 |
1,016 |
440 |
1,210 |
|
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Light & medium oil (bbls/d) |
– |
8 |
– |
4 |
34 |
|
|
Natural gas (Mcf/d) |
1,154 |
2,926 |
2,914 |
2,040 |
2,713 |
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NGLs (bbls/d) |
30 |
87 |
88 |
59 |
68 |
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Total (boe/d) |
435 |
1,250 |
1,591 |
843 |
1,764 |
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Total boe/d per million shares – diluted |
4.0 |
11.5 |
14.4 |
7.7 |
16.0 |
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Average realized prices |
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Heavy oil ($/bbl) |
21.39 |
33.06 |
62.83 |
30.24 |
56.36 |
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Light & medium oil ($/bbl) |
– |
20.85 |
– |
20.85 |
48.97 |
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Natural gas ($/Mcf) |
2.06 |
2.20 |
1.30 |
2.16 |
1.65 |
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NGLs ($/bbl) |
6.46 |
22.02 |
24.23 |
18.03 |
28.70 |
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Total ($/boe) |
16.36 |
24.46 |
43.89 |
22.37 |
43.24 |
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($/boe) |
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Petroleum and natural gas sales |
16.36 |
24.46 |
43.89 |
22.37 |
43.24 |
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Realized gain on financial instruments |
16.60 |
5.53 |
1.23 |
8.39 |
0.56 |
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Royalties |
0.28 |
(1.96) |
(4.08) |
(1.38) |
(4.03) |
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Operating |
(16.27) |
(12.19) |
(9.56) |
(13.24) |
(8.81) |
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|
Transportation |
(2.46) |
(2.49) |
(4.92) |
(2.48) |
(4.25) |
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Operating netback(1) |
14.51 |
13.35 |
26.56 |
13.66 |
26.71 |
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General and administrative |
(7.98) |
(3.50) |
(2.94) |
(4.66) |
(2.78) |
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Exploration expense |
– |
– |
– |
– |
(0.07) |
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Interest and financing expense (cash) |
(1.42) |
(0.17) |
(0.50) |
(0.49) |
(0.39) |
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Adjusted funds flow per boe(1) |
5.11 |
9.68 |
23.12 |
8.51 |
23.47 |
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FINANCIAL ($000, except per share amounts) |
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Petroleum and natural gas sales |
647 |
2,783 |
6,353 |
3,430 |
13,806 |
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Cash flow from operating activities |
512 |
1,183 |
3,568 |
1,695 |
5,858 |
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Per share – diluted |
– |
0.01 |
0.03 |
0.02 |
0.05 |
|
|
Adjusted funds flow(1) |
204 |
1,102 |
3,346 |
1,306 |
7,499 |
|
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Per share – diluted(1) |
– |
0.01 |
0.03 |
0.01 |
0.07 |
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Net income (loss) |
(1,247) |
(31,529) |
1,044 |
(32,776) |
1,973 |
|
|
Per share – basic |
(0.01) |
(0.29) |
0.01 |
(0.30) |
0.02 |
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Per share – diluted(2) |
(0.01) |
(0.29) |
0.01 |
(0.30) |
0.02 |
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Capital expenditures |
218 |
7,082 |
6,350 |
7,300 |
7,803 |
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Property disposition |
(871) |
– |
– |
(871) |
– |
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Total capital expenditures, net |
(653) |
7,082 |
6,350 |
6,429 |
7,803 |
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Net debt(1) |
5,335 |
6,183 |
5,109 |
5,335 |
5,109 |
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Common shares outstanding (000) |
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End of period – basic |
108,921 |
108,921 |
108,921 |
108,921 |
108,921 |
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Weighted average for the period – basic(2) |
108,921 |
108,921 |
108,921 |
108,921 |
108,921 |
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Weighted average for the period – diluted(2) |
108,921 |
108,936 |
110,503 |
108,921 |
110,947 |
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1. |
Adjusted funds flow, net debt and operating netback are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled “Non-GAAP Measures” contained within the “Advisories” section of Altura’s MD&A. |
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2. |
Basic weighted average shares are used to calculate diluted per share amounts when the Corporation is in a loss position. |
SECOND QUARTER 2020 REVIEW
Production volumes averaged 435 boe per day in the second quarter, a 65% decrease from the first quarter of 2020. Production in the quarter was impacted by Altura’s voluntary production curtailment of approximately 700 boe per day in response to the severe decline in crude oil prices caused by the COVID-19 pandemic and OPEC production quota concerns. Altura curtailed approximately 525 boe per day in April and as crude oil prices continued to rapidly decline in April, Altura made the decision to shut in all corporate production for the month of May. The Corporation began restoring curtailed volumes in June as oil prices improved, and production volumes increased to approximately 1,050 boe per day in July. Wet weather and third-party restrictions delayed approximately 300 boe per day of production from three wells that are expected to be back online in mid-September.
Altura’s realized heavy oil price decreased 35% to $21.39 per barrel in the second quarter compared to $33.06 per barrel in the first quarter of 2020 and decreased 66% compared to $62.83 per barrel in the second quarter of 2019.
The Corporation realized a gain on financial instruments of $658,000 ($16.60 per boe) which reflected cash settlements received on Western Canadian Select (“WCS”) contracts.
Operating expenses in the second quarter were $16.27 per boe, compared to $12.19 per boe in the first quarter of 2020. The increase was mainly due to lower volumes from the voluntary production curtailment. Transportation expenses were $2.46 per boe, consistent with $2.49 per boe in the first quarter of 2020.
The Corporation’s operating netback1 averaged $14.51 per boe, up 9% from the first quarter of 2020 due to an increased gain on financial instruments and lower royalty expenses, partially offset by lower crude oil prices and higher operating expenses.
Adjusted funds flow1 was $0.2 million in the quarter, down 81% from the first quarter of 2020 due to lower production volumes, lower crude oil prices and higher per unit operating expenses.
Altura received $88,000 under the Canada Emergency Wage Subsidy in the second quarter, which was applied against G&A expenses.
Altura recorded a net loss of $1.2 million in the quarter due mainly to an unrealized loss on financial instruments of $1.5 million, partially offset by a gain on property disposition of $0.6 million.
On June 30, 2020, Altura divested of a 1.375% working interest in the Corporation’s production, wells, lands and facilities for cash of $871,000 after transaction costs as outlined in the Corporation’s June 30, 2020 news release.
Altura’s net debt1 was $5.3 million as at June 30, 2020, a decrease of $0.9 million from March 31, 2020.
CREDIT FACILITY RENEWAL
In August, Altura and its lender completed the redetermination of its revolving operating demand loan (the “Operating Loan”) and the borrowing base was confirmed at $6.0 million. Additionally, Altura secured a $3.0 million term loan from its lender through the Business Credit Availability Program (“BCAP”) from the Export Development Bank of Canada (“EDC”) (the “Term Loan”). The Operating Loan and the Term Loan (collectively the “Credit Facilities”) will provide Altura with $9.0 million of total Credit Facilities. Considering Altura’s net debt of $5.3 million as at June 30, 2020, the Corporation has sufficient liquidity to execute its business plan in the current volatile commodity market. The next review date for the Credit Facilities has been scheduled for May 31, 2021 but may be set at an earlier or later date at the sole discretion of the lender.
The Term Loan is a non-revolving term facility to be used exclusively to provide additional liquidity to finance Altura’s business operations. It has a five-year maturity with no less than 50% of amounts outstanding due on August 27, 2024 and the remaining balance due on August 27, 2025.
The interest rate on the Credit Facilities is the Lender’s prime rate plus 4.5 percent per annum. Please refer to Altura’s second quarter of 2020 MD&A and financial statements for additional information on the Credit Facilities.
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1 |
Adjusted funds flow, net debt and operating netback are non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other companies. Refer to the heading entitled “Non-GAAP Measures” contained within the “Advisories” section of Altura’s MD&A. |
HEDGING
Altura had the following crude oil contracts as at June 30, 2020 hedged to June 30, 2021:
|
Period |
Commodity |
Type of |
Quantity |
Pricing Point |
Contract |
|
Jul 1/20ꟷSep 30/20 |
Crude Oil |
Fixed |
300 bbls/d |
WCS |
CAD $43.75 |
|
Oct 1/20ꟷDec 31/20 |
Crude Oil |
Fixed |
300 bbls/d |
WTI |
CAD $71.35 |
|
Oct 1/20ꟷDec 31/20 |
Crude Oil |
Fixed |
300 bbls/d |
WCS-WTI Differential |
CAD ($24.00) |
|
Jan 1/21ꟷJun 30/21 |
Crude Oil |
Fixed |
100 bbls/d |
WCS |
CAD $32.25 |
Subsequent to June 30, 2020, Altura entered into the following commodity contracts:
|
Period |
Commodity |
Type of |
Quantity |
Pricing Point |
Contract |
|
Jan 1/21ꟷJun 30/21 |
Crude Oil |
Fixed |
100 bbls/d |
WCS |
CAD $39.20 |
|
Sep 1/20ꟷOct 31/20 |
Natural Gas |
Fixed |
1,000 GJ/d |
AECO 5A |
CAD $2.380 |
|
Nov 1/20ꟷMar/21 |
Natural Gas |
Fixed |
1,000 GJ/d |
AECO 5A |
CAD $2.825 |
|
Apr 1/21ꟷJun 30/21 |
Natural Gas |
Fixed |
1,000 GJ/d |
AECO 5A |
CAD $2.455 |
ENTICE UPDATE
The Entice exploration horizontal well was shut-in on March 18, 2020 due to the severe decline in oil prices and was placed back on production on June 11, 2020 to continue the production test. During this test, the well operated for 58 days and produced 1,500 barrels of 20° API oil, 33 MMcf of natural gas, which was flared, and 6,850 barrels of water with 104% cumulative completion load water recovered.
During the last 7 days of the production test, the water cut dropped significantly from an average of 82% to a current average of under 50%. This drop in water cut and the high gas to oil ratio has created challenges with the current form of high-volume artificial lift. The Corporation has shut-in the well and is evaluating alternative forms of artificial lift before deciding to continue the evaluation or suspend the well indefinitely.
Altura has acquired 89 gross (83 net) sections of land on this exploratory play at Entice where vertical well data, combined with extensive 3D seismic coverage, provided a means to identify and map the hydrocarbon accumulation. Altura believes that the crude oil gravity varies across the play and that a higher oil quality than demonstrated by the initial exploration well could be achievable. Altura will continue assessing the technical and commercial potential of this play over these lands to determine the next steps.
OUTLOOK
July 2020 production is estimated at approximately 1,050 boe per day based on field estimates. Altura continues to have three Leduc-Woodbend wells shut-in that are expected to be brought on production by mid-September. The Corporation forecasts production volumes to range between 1,000 and 1,100 boe per day for the second half of 2020.
There has been some optimism in respect to the global crude oil supply/demand balance and oil prices have improved significantly since the beginning of May. The Corporation, however, is focused on protecting balance sheet strength during the current volatile commodity price environment and no new wells are currently planned to be drilled or completed in the second half of 2020.
Further to the June 30, 2020 amending agreement as disclosed in the June 30, 2020 news release, Altura expects to close three additional dispositions of a 1.375% working interest for $875,000 each on September 30, 2020, January 31, 2021 and June 30, 2021 (total remaining disposition of 4.125% working interest for $2,625,000).
Through cash flow and the September 30, 2020 disposition, Altura is forecasting to reduce its net debt to approximately $3.5 million by the end of the year1.
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