CALGARY, Alberta, April 29, 2020 (GLOBE NEWSWIRE) — Razor Energy Corp. (“Razor” or the “Company”) (TSXV: RZE) (www.razor-energy.com) is pleased to announce its fourth quarter and year end 2019 financial and operating results. Selected financial, operational and reserves information is outlined below and should be read in conjunction with Razor’s audited consolidated financial statements, management’s discussion and analysis and annual information form (“AIF”) for the year ended December 31, 2019, which are available on SEDAR at www.sedar.com and the Company’s website.
2019 HIGHLIGHTS
Operating
- Production during the year averaged 4,387 boe/d, representing a decrease of 10% in comparison to 2018 when production averaged 4,888 boe/d. The decrease was due to the Company’s reduced reactivation program in 2019, reduced workover activity, issues with third party fuel gas supply and composition, as well as non-operated pipeline outages, partially offset by production from the properties of Little Rock Resources Ltd. (“Little Rock”) properties acquired during Q3 2019 (the “Little Rock Acquisition”);
- Achieved 2019 operating netback of $6.92/boe, down 39% from 2018;
- Achieved adjusted funds flow of $8.0 million in 2019 a 58% decrease from 2018, mainly driven by a 18% decrease in total revenues from 2018.
Capital
- Invested a total of $13.6 million in 2019, comprised mainly of the continuation of the well reactivation program and the South Swan Hills co-produced geothermal power generation project; and
- Reactivated 24 gross (23.3 net) wells during 2019, resulting in 422 boe/d of additional initial production.
Acquisitions
- Completed the Little Rock Acquisition, providing Razor with a second core region in southern Alberta, comprised of the Jumpbush, Majorville, Badger, Enchant and Chin Coulee areas. The acquisition added approximately 800 boe/d of production.
2020 OUTLOOK
Production in Q1 2020 is anticipated to average 4,200 boe/d due to impacts from the significant decrease in realized oil prices, leading to a reduction of reactivation and workover spending in Q1 2020. These wells will be brought back online when economics justify, with spending being focused on the highest capital efficiency projects. As well, Q1 production has been adversely affected by non-operated pipeline outages. These outages were rectified by the end of Q1 2020.
In response to the aforementioned decrease in oil prices, the Company has shut in all of its operated heavy oil production, along with certain light oil wells which are sub-economic at current prices. As of the date of this announcement, the Company is forecasting Q2 2020 production to be approximately 3,600 boe/d. The Company actively monitors the economics for all of its operated production and may shut in additional wells. The timing to restart shut in oil wells is dependent on improvements in both WTI prices and local price differentials. The Company currently forecasts WTI pricing and local price differentials will improve starting in Q3 2020. However, the timing of an improvement depends on successful progress with the COVID-19 virus and an increase in the global demand for oil.
The preparation of financial forecasts is challenging at this time; however, the Company anticipates negative cash flow from operations during Q2 2020 and into the second half of 2020 if oil prices remain depressed. The Company is working to mitigate losses by limiting field spending and applying for government assistance programs where available, including the Canada Emergency Wage Subsidy.
SELECT QUARTERLY AND ANNUAL HIGHLIGHTS
The following tables summarize key financial and operating highlights associated with the Company’s financial performance.
| Three Months Ended December 31, | Twelve months ended December 31, | |||||||
| ($000’s, except for per share amounts and volumes) | 2019 | 2018 | 2019 | 2018 | ||||
| Production volumes2 | ||||||||
| Oil (bbl/d) | 2,839 | 2,995 | 2,712 | 3,143 | ||||
| Gas (mcf/d)1 | 4,962 | 3,225 | 4,635 | 3,770 | ||||
| NGL (bbl/d) | 1,011 | 1,374 | 903 | 1,117 | ||||
| Total (boe/d) | 4,677 | 4,907 | 4,387 | 4,888 | ||||
| Sales volumes 3 | ||||||||
| Oil (bbl/d) | 2,862 | 2,611 | 2,783 | 3,046 | ||||
| Gas (mcf/d)1 | 4,962 | 3,225 | 4,635 | 3,770 | ||||
| NGL (bbl/d) | 1,011 | 1,374 | 903 | 1,117 | ||||
| Total (boe/d) | 4,700 | 4,523 | 4,458 | 4,792 | ||||
| Oil inventory volumes (bbls) | 9,251 | 35,267 | 9,251 | 35,267 | ||||
| Oil and natural gas revenue | ||||||||
| Oil and NGLs sales | 20,013 | 14,712 | 78,365 | 91,901 | ||||
| Natural gas sales | 774 | 565 | 2,438 | 2,481 | ||||
| Sales of commodities purchased from third parties 7 | (25) | 4,352 | 8,551 | 15,639 | ||||
| Blending and processing | 1,874 | 1,912 | 8,842 | 10,472 | ||||
| Other revenues | 119 | 342 | 1,976 | 2,406 | ||||
| Total revenue | 22,755 | 21,883 | 100,172 | 122,899 | ||||
| Cash flows from operating activities | 3,922 | 6,696 | 16,238 | 22,360 | ||||
| Per share -basic and diluted | 0.19 | 0.06 | 0.96 | 1.10 | ||||
| Funds flow 4 | 37 | 903 | 7,719 | 17,200 | ||||
| Per share -basic and diluted | — | 0.06 | 0.46 | 1.10 | ||||
| Adjusted funds flow 4 | 305 | 1,974 | 7,959 | 20,435 | ||||
| Per share -basic and diluted | 0.01 | 0.13 | 0.47 | 1.31 | ||||
| Net income (loss) | (11,853) | 3,773 | (29,573) | 4,239 | ||||
| Per share – basic and diluted | (0.56) | 0.25 | (1.75) | 0.27 | ||||
| Dividends paid | 790 | 3,126 | 2,564 | 3,126 | ||||
| Dividends paid per share | 0.04 | 0.20 | 0.15 | 0.20 | ||||
| Weighted average number of shares outstanding (basic and diluted) | 21,056,770 | 15,360,729 | 16,926,491 | 15,622,374 | ||||
| Capital expenditures | 2,378 | 3,315 | 13,590 | 33,758 | ||||
| Net assets acquired 5 | — | 43 | 256 | 3,921 | ||||
| Netback ($/boe) | ||||||||
| Oil and gas sales 6 | 48.07 | 36.71 | 49.66 | 53.97 | ||||
| Royalty | (10.80) | (9.34) | (8.72) | (11.18) | ||||
| Operating expenses | (29.90) | (24.53) | (31.80) | (29.26) | ||||
| Transportation and treating | (2.37) | (2.17) | (2.22) | (2.17) | ||||
| Operating netback 4 | 5.00 | 0.67 | 6.92 | 11.36 | ||||
| Gain/(Loss) on sale of commodities purchased from third parties 7 | (0.06) | 1.07 | (0.01) | 0.47 | ||||
| Net blending and processing income 4 | 2.74 | 1.74 | 3.34 | 3.01 | ||||
| Realized gain/(loss) on commodity contracts settlement 6 | 0.46 | 2.38 | (1.61) | (1.51) | ||||
| Other revenue | 0.28 | 0.82 | 1.21 | 1.38 | ||||
| General and administrative | (4.52) | (2.91) | (3.89) | (3.24) | ||||
| Other expenses | (3.13) | — | (0.83) | — | ||||
| Impairment | (9.25) | — | (2.46) | — | ||||
| Acquisition and transaction costs | — | — | (0.13) | (0.01) | ||||
| Interest | (2.87) | (2.87) | (3.02) | (2.62) | ||||
| Corporate netback 4 | (11.35) | 0.90 | (0.48) | 8.84 | ||||
1) Gas production and sales volumes include internally consumed gas used in power generation.
2) Production volumes for the twelve months ended December 31, 2019 includes Little Rock’s daily average production from September 11 to December 31, 2019.
3) Sales volumes for the twelve months ended December 31, 2019 includes Little Rock’s daily average sales from September 11 to December 31, 2019. Sales volumes include change in inventory volumes.
4) Refer to “Non-IFRS measures”.
5) Net acquisitions exclude non-cash items and is net of post-closing adjustments.
6) Excludes the effects of financial risk management contracts but includes the effects of fixed price physical delivery contracts.
7) Since 2018, Razor started to purchase commodity products from third parties to fulfill sales commitments, and subsequently sell these products to its customers.
| December 31, | ||||
| ($000’s unless otherwise stated) | 2019 | 2018 | ||
| Total assets | 189,158 | 157,937 | ||
| Cash | 1,905 | 2,239 | ||
| Long-term debt (principal) | 45,876 | 46,155 | ||
| Net debt 1 | 66,911 | 54,244 | ||
| Number of shares outstanding | 21,064,466 | 15,188,834 | ||
1) Refer to “Non-IFRS measures”.
ABOUT RAZOR
Razor is a publicly-traded junior oil and gas development and production company headquartered in Calgary, Alberta, concentrated on acquiring, and subsequently enhancing, producing oil and gas properties primarily in Alberta. The Company is led by experienced management and a strong, committed Board of Directors, with a long-term vision of growth, focused on efficiency and cost control in all areas of the business. Razor currently trades on TSX Venture Exchange under the ticker “RZE”.
For additional information please contact:
| Doug Bailey President and Chief Executive Officer |
OR | Kevin Braun Chief Financial Officer |
|
| Razor Energy Corp. 800, 500-5th Ave SW Calgary, Alberta T2P 3L5 Telephone: (403) 262-0242 www.razor-energy.com |
