Birchcliff Energy earns $138.36-million in Q3
2021-11-10 13:29 ET - News Release
Mr. Jeff Tonken reports
BIRCHCLIFF ENERGY LTD. ANNOUNCES Q3 2021 FINANCIAL AND OPERATIONAL RESULTS, INCREASED 2021 ADJUSTED FUNDS FLOW AND FREE FUNDS FLOW GUIDANCE AND PRELIMINARY OUTLOOK FOR 2022
Birchcliff Energy Ltd. has released its financial and operational results for the three and nine months ended Sept. 30, 2021, its updated 2021 guidance, and its preliminary outlook for 2022.
"Birchcliff delivered exceptional third quarter results, highlighted by record quarterly adjusted funds flow( 1 ) of $168.1 million and free funds flow( 1 ) of $150.1 million, with quarterly average production of 84,924 boe/d," commented Jeff Tonken, President and Chief Executive Officer of Birchcliff. "As a result of this excellent performance, we are swiftly reducing our debt." "For the remainder of 2021, we will continue to focus on maintaining our low-cost structure, free funds flow generation and strengthening our already strong balance sheet. We do not have any fixed price commodity hedges in place, which will allow us to take full advantage of robust oil and natural gas prices. We are increasing our 2021 guidance for adjusted funds flow to $575 million( 2 ) (up from $500 million) and free funds flow to $345 million to $350 million (up from $270 million to $290 million)," said Mr. Tonken. "We are tightening our guidance for 2021 annual average production to 79,000 to 80,000 boe/d and our 2021 F&D capital expenditures to $225 million to $230 million. We will continue to prioritize debt repayment and expect that our total debt(1) at year-end 2021 will now be $450 million to $455 million, down from our previous guidance of $500 million to $520 million, a decrease of as much as 42% ($327.4 million) from our peak 2021 quarter-end total debt of $777.4 million at March 31, 2021. Based on our updated guidance, this would result in a year-end 2021 total debt to full-year 2021 adjusted funds flow ratio of 0.8x( 1)( 3 )." "Although we have not yet finalized our 2022 plans, we remain committed to maintaining a flat annual average production profile, free funds flow generation and further debt reduction in 2022. We are targeting F&D capital spending to be in the range of $240 million to $260 million, with annual average production expected to be 78,000 to 80,000 boe/d. Based on this targeted F&D capital spending and production, we expect to generate adjusted funds flow of approximately $650 million and free funds flow of approximately $400 million using current strip pricing( 4 )."
Birchcliff's unaudited interim condensed financial statements for the three and nine months ended September 30, 2021 and related management's discussion and analysis will be available on its website at www.birchcliffenergy.com and on SEDAR at www.sedar.com.
Q3 2021 Highlights
Achieved quarterly average production of 84,924 boe/d, an 8% increase from Q3 2020. Liquids accounted for approximately 19% of Birchcliff's total production in Q3 2021 as compared to approximately 24% in Q3 2020.
Generated a record $168.1 million of adjusted funds flow, or $0.63 per basic common share, a 183% increase and a 186% increase, respectively, from Q3 2020. Cash flow from operating activities was $155.6 million, a 194% increase from Q3 2020.
Delivered $150.1 million of free funds flow, a 426% increase from Q3 2020.
Earned record net income to common shareholders of $138.4 million, or $0.52 per basic common share, as compared to a net loss to common shareholders of $17.7 million and $0.07 per basic common share in Q3 2020.
Reduced total debt at September 30, 2021 to $637.9 million, a reduction of $139.5 million from peak 2021 quarter-end total debt of $777.4 million at March 31, 2021, which will result in corresponding decreases in interest expense.
Achieved operating expense of $2.96/boe, an 8% increase from Q3 2020.
Realized an operating netback(1) of $23.52/boe, a 96% increase from Q3 2020.
F&D capital expenditures were $18.0 million in Q3 2021. During the quarter, Birchcliff continued with the safe and efficient execution of its 2021 capital program (the "2021 Capital Program"), bringing 12 (12.0 net) wells on production.
Birchcliff has been active under its normal course issuer bid (the "NCIB") in order to offset the dilution from the exercise of stock options ("Options") under the Corporation's stock option plan. During Q3 2021, Birchcliff purchased 3,200,000 common shares pursuant to the NCIB at an average price of $5.42 per common share for an aggregate cost of $17.4 million. Year-to-date, Birchcliff has purchased 3,867,800 common shares pursuant to the NCIB at an average price of $5.63 per common share for an aggregate cost of $21.8 million. A total of 3,276,165 Options, with an average exercise price of $3.11 per common share, have been exercised since January 1, 2021 for aggregate proceeds to Birchcliff of $10.2 million, resulting in a net cost to Birchcliff of $11.6 million.
This press release contains forward-looking statements within the meaning of applicable securities laws. For further information regarding the forward-looking statements contained herein, see "Advisories {ᩝ –} Forward-Looking Statements". In addition, this press release uses the terms "adjusted funds flow", "adjusted funds flow per basic common share", "free funds flow", "transportation and other expense", "operating netback", "adjusted funds flow netback", "total cash costs", "adjusted working capital deficit (surplus)", "total debt" and "total debt to adjusted funds flow ratio", which do not have standardized meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. For further information regarding these non-GAAP measures, see "Non-GAAP Measures". With respect to the disclosure of Birchcliff's production contained in this press release, see "Advisories {ᵔ –} Production".