CALGARY, AB, June 24, 2021 /CNW/ – Altura Energy Inc. (“Altura” or the “Corporation”) (TSXV: ATU) is pleased to announce the closing of the final stage of the asset disposition, an operational update and renewal of its credit facilities.
As disclosed in the Corporation’s January 29, 2021 news release, Altura amended the payment schedule of the second transaction in the December 4, 2019 definitive agreement with a private company. On June 15, 2021, Altura closed the fourth and final stage of the disposition with the sale of a 1.375% working interest in the Corporation’s production, wells, lands and facilities for cash of $875,000. The disposition schedule for all transactions net of transaction costs is as follows:
|Disposition Interest||Cash Proceeds|
|First Transaction||December 4, 2019||Closed||7.0000%||$3,508,000|
|Stage 1||June 30, 2020||Closed||1.3750%||$871,000|
|Stage 2||September 30, 2020||Closed||1.3750%||$875,000|
|Stage 3a||January 29, 2021||Closed||0.6875%||$437,500|
|Stage 3b||April 27, 2021||Closed||0.6875%||$437,500|
|Stage 4||June 15, 2021||Closed||1.3750%||$875,000|
The cash proceeds from the asset sales strengthen the Corporation’s financial position and flexibility to continue development of the Rex pool at Leduc-Woodbend.
The 102/16-14-049-26W4 Rex horizontal well (“16-14”) that was completed in February 2021 continues with strong production performance exceeding management’s expectations. The 16-14 well was completed with 74 fracs which is a 35% increase in fracs compared to earlier wells with 55 fracs. This innovative completion design is an exciting optimization that is proving to be a game changing advancement for future wells at Leduc-Woodbend. Altura’s updated corporate presentation available on its website (www.alturaenergy.ca) illustrates the significantly improved production performance and well economics resulting from this well design advancement.
Altura is planning to drill one well mid-July and a second well in September at Leduc-Woodbend. Altura will continue to improve upon its extended reach horizontal well design by increasing the lateral length in the first well from 2,000 to 2,300 meters (a 15% increase). This extension will again increase the total number of fracs for the well from 74 to 85. The wells are scheduled to commence production in August and October 2021, respectively.
Previous success with longer horizontal laterals and increased frac stages in the Rex pool illustrates improved production rates and reserve capture. The optimization of longer lateral length is expected to result in even greater well performance and reduce the number of required wells and capital required to develop the remainder of the Rex pool.
CREDIT FACILITIES RENEWAL
In June, Altura and its lender completed the redetermination of its revolving operating demand loan (the “Operating Loan”) and the term loan (the “Term Loan”) collectively the (“Credit Facilities”). The Operating Loan was redetermined to $4.0 million and no amendments were made to the $3.0 million Term Loan providing Altura with $7.0 million of total Credit Facilities. The next review date for the Credit Facilities has been scheduled for May 31, 2022.
The interest rate on the Credit Facilities was decreased by 1.0% to the Lender’s prime rate plus 3.5% per annum which is approximately 5.95%, down from 6.95%. In addition, the hedging covenant was amended from 30% of forecasted production based on the proved developed producing reserves to 350 bbl/d of WCS oil and 1,000 GJ/d of natural gas (AECO) for no less than the succeeding nine-month period, on a rolling basis.
With forecasted net debt of $1.9 million at June 30, 2021 and $7.0 million of total Credit Facilities, the Corporation has the balance sheet strength to resume drilling the newly designed high impact Leduc-Woodbend wells which are expected to grow production and cash flow in H2 2021.
ABOUT ALTURA ENERGY INC.
Altura is a junior oil and gas exploration, development and production company with operations in central Alberta. Altura predominantly produces from the Rex member in the Upper Mannville group and is focused on delivering per share growth and attractive shareholder returns through a combination of organic growth and strategic acquisitions.
Forward–looking Information and Statements
This press release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words “expect”, “anticipate”, “budget”, “forecast”, “continue”, “estimate”, “objective”, “ongoing”, “may”, “will”, “project”, “should”, “believe”, “plans”, “intends”, “strategy” and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this press release contains forward-looking information and statements pertaining to:
- the 2021 capital expenditure plans to drill and bring two (1.8 net) new wells on production in August and October 2021;
- forecasted net debt of $1.9 million at June 30, 2021;
- the Corporation’s ability to self-fund growth within cash flow and maintain a strong balance sheet with current commodity prices; and
- the scheduled Credit Facilities renewal date of May 31, 2022.
- The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of Altura including, without limitation:
- the continued performance of Altura’s oil and gas properties in a manner consistent with its past experiences;
- that Altura will continue to conduct its operations in a manner consistent with past operations;
- the return of industry conditions to pre-COVID-19 levels;
- the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes;
- the accuracy of the estimates of Altura’s reserves and resource volumes;
- certain commodity price and other cost assumptions;
- the continued availability of oilfield services; and
- the continued availability of adequate debt and equity financing and cash flow from operations to, among other things, fund its planned expenditures.
Altura believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable based on prior operating history but no assurance can be given that these factors, expectations and assumptions will prove to be correct particularly in the current operating environment which is unprecedented by any standard. To the extent that any forward-looking information contained herein may be considered future oriented financial information or a financial outlook, such information has been included to provide readers with an understanding of management’s assumptions used for budgeted and developing future plans and readers are cautioned that the information may not be appropriate for other purposes.
The forward-looking information and statements included in this press release are not guarantees of future performance and should not be unduly relied upon. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements including, without limitation:
- the COVID-19 pandemic and related disruptions in oil and gas markets, including the duration and impacts thereof;
- changes in commodity prices including, without limitation, as a result of COVID-19 pandemic;
- changes in commodity prices including, without limitation, as a result of the COVID-19 pandemic and related disruptions in oil and gas markets;
- unanticipated operating results or production declines;
- public health crises, such as the recent outbreak of COVID-19 and the related economic disruption that can result in volatility in financial markets, disruption to global supply chains, and the ability to directly and indirectly staff the Corporation’s day to day operations;
- changes in tax or environmental laws, royalty rates or other regulatory matters;
- changes in development plans of Altura or by third-party operators of Altura’s properties;
- increased debt levels or debt service requirements;
- inaccurate estimation of Altura’s oil and gas reserve and resource volumes;
- limited, unfavorable or a lack of access to capital or debt markets;
- increased costs;
- a lack of adequate insurance coverage;
- the impact of competitors; and
- certain other risks detailed from time to time in Altura’s public documents.
The forward-looking information and statements contained in this press release speak only as of the date of this press release, and Altura does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable laws.
This press release contains the term net debt, which does not have a standardized meaning under Canadian generally accepted accounting principles (“GAAP”) and therefore may not be comparable with the calculation of similar measures by other companies. Management views net debt as a key industry benchmark and measure to assess the Corporation’s financial position and liquidity. Net debt is calculated as current assets, excluding the Fair Value of Financial Instruments less current liabilities, excluding the Fair Value of Financial Instruments, less the current portion of lease liabilities and the current portion of the decommissioning liability.
For additional information on the use of these measures including reconciliations to the most directly comparable GAAP measures, please see Altura’s most recent Management’s Discussion and Analysis on Altura’s profile at www.sedar.com.
Oil and Gas Advisories
This news release discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) potential drilling opportunities. Proved locations and probable locations, which are sometimes collectively referred to as “booked locations”, are derived from the Corporation’s most recent independent reserves evaluation as of December 31, 2020 and account for drilling locations that have associated proved reserves. Potential drilling opportunities are internal estimates based on the Corporation’s prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and Altura’s internal review. Potential drilling opportunities do not have attributed reserves or resources. Potential drilling opportunities have specifically been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves data on prospective acreage and geologic formations. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, crude oil and natural gas prices, costs, actual drilling results and other factors. While certain of the potential drilling opportunities have been derisked by drilling existing wells in relative close proximity to such potential drilling opportunities, the majority of other potential drilling opportunities are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations, and if drilled there is more uncertainty that such wells will result in additional reserves, resources or production.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Altura Energy Inc.
For further information: Altura Energy Inc., 2500, 605 – 5th Avenue SW,Calgary, Alberta T2P 3H5, Telephone (403) 984-5197, www.alturaenergy.ca; David Burghardt, President and Chief Executive Officer, Direct (403) 984-5195; Tavis Carlson, Vice President, Finance and Chief Financial Officer, Direct (403) 984-5196