Clearview Resources Ltd. reports second quarter 2020 results

FINANCIAL and OPERATIONAL RESULTS

During the second quarter of 2020, Clearview’s realized price per barrel of oil equivalent (“boe”) was lower by 49% than the comparative period of 2019, due to lower prices being realized for all of the Company’s products, except natural gas.  Crude oil and natural gas liquids prices were lower due to a significant drop in benchmark oil pricing as a result of the COVID-19 pandemic which affected selling prices significantly in the second quarter.  Natural gas prices were higher by 60% as a result of the shut-in of associated natural gas production and low natural gas storage levels in Canada.

Production for the three months ended June 30, 2020 was down 27% to 1,716 barrels of oil equivalent per day (“boe/d”) versus the comparative period of 2019.  The decrease in production was primarily due to lower oil production of 55% as the Company chose to shut-in its operated oil production and the associated gas volumes to preserve the value of the reserves.  Low oil prices and low prices for natural gas liquids, benchmarked from oil prices, resulted in negative field netbacks for these products for much of the quarter due to the economic crisis caused by the COVID-19 pandemic.  Natural gas liquids, generally associated with natural gas production, decreased 14% for the quarter ended June 30, 2020 versus the comparative period.  Natural gas production decreased by 15% in the three months ended June 30, 2020 versus the comparative period.

Revenue, net of royalties, decreased by $3.3 million in the second quarter, a 60% decrease from the comparative period.  This decrease was largely due to lower realized prices and lower production volumes.  The Company’s cost structure was reduced in the three months ended June 30, 2020 with total costs for transportation, operating costs and general and administrative expenses down $1.4 million versus the comparative period.   Also offsetting the decrease in revenue was a $0.7 million increase in realized gains on commodity contracts versus the comparative period.  As a result of a reduced cost structure and the realized gains on commodity contracts, adjusted funds flow was reduced by $1.2 million versus the $3.3 million drop in net revenue.  The Company’s corporate netback decreased by 91% to $0.53 per boe for the current quarter versus $5.98 per boe in the comparative period of 2019.

Adjusted funds flow for the current quarter ended March 31, 2020 was $0.1 million.  Capital expenditures and abandonment capital were $6 thousand in net proceeds which enabled the Company to reduce its net debt by $0.1 million during the quarter.  As of June 30, 2020, the Company had net debt of $15.0 million.

The Company’s credit facility was set for its normal course review to be completed by no later than June 30, 2020.  The Company’s lender, ATB Financial (“ATB”), has informed Clearview that the completion of the review will likely be extended to no later than September 15, 2020.  In the meantime, the Company remains in compliance in all aspects of the current credit facility.

Financial and Operating Highlights

OPERATIONS UPDATE

With the unparalleled collapse in oil prices in early March of 2020, Clearview immediately began the implementation of cost reducing operating practices and minimized capital spending. With the continued decline in oil prices as a result of the spread of COVID-19 and significant reduction in global activity, austere operating practices were implemented.  Once storage tanks were filled, operated oil production and associated natural gas production were shut-in for a period of time to preserve reserve value. By the end of the second quarter of 2020, as oil prices improved, Clearview had begun selling oil and the associated natural gas production from several fields brought back on-stream and selling oil which was produced to storage tanks before shut-in operations were undertaken.

Net capital spending in the second quarter was net proceeds of $6 thousand.

OUTLOOK

In March 2020, the World Health Organization declared a global pandemic following the rapid spread of the coronavirus (“COVID-19”).  The subsequent responses and measures intended to limit the spread of the pandemic resulted in a sudden decline in economic activity and a significant increase in economic uncertainty.

Although the global economies have recently begun to reopen and government authorities are easing restrictions, the situation remains dynamic and the ultimate duration and magnitude of the COVID-19 impact on the global economy is unknown at this time.

Clearview has made significant reductions in its capital and operations to preserve cash flow from operations in these challenging times while at the same time not compromising on the core principles of environmental protection, health and safety and regulatory compliance.

Canadian light oil prices have recovered from their lows of $19.22 per barrel for the month of April to average $50.65 per barrel in June 2020.  The forward price curves for Canadian oil are looking stronger than $50.00 per barrel for the rest of this year with further increases forecasted for 2021.  Canadian natural gas prices were very steady during the second quarter, despite it being shoulder season, at around $2.00 per million cubic feet.  Forward price curves for Canadian natural gas are looking even stronger for the rest of the year and into future years.

Clearview’s June 30, 2020 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.