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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Gear Energy Ltd | TSX:GXE | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.01 | -1.47% | 0.67 | 0.66 | 0.68 | 0.67 | 0.66 | 0.67 | 529,858 | 21:00:01 |
CALGARY, AB, Nov. 4, 2020 /CNW/ - Gear Energy Ltd. ("Gear" or the "Company") (TSX: GXE) is pleased to provide the following third quarter operating update to shareholders. Gear's Interim Condensed Consolidated Financial Statements and related Management's Discussion and Analysis ("MD&A") for the period ended September 30, 2020 are available for review on Gear's website at www.gearenergy.com and on www.sedar.com.
Financial Summary
Three months ended | Nine months ended | ||||
(Cdn$ thousands, except per share, share and per | Sep 30, | Sep 30, | Jun 30, | Sep 30, | Sep 30, |
FINANCIAL | |||||
Funds from operations (1) | 10,848 | 15,968 | 8,068 | 25,176 | 48,104 |
Per boe | 20.09 | 25.07 | 32.26 | 17.94 | 25.22 |
Per weighted average basic share | 0.05 | 0.07 | 0.04 | 0.12 | 0.22 |
Cash flows from operating activities | 8,864 | 13,613 | 3,547 | 22,201 | 38,475 |
Net (loss) income | (1,157) | 3,493 | (5,300) | (116,673) | 2,365 |
Per weighted average basic share | (0.01) | 0.02 | (0.02) | (0.54) | 0.01 |
Capital expenditures | 715 | 11,800 | 239 | 12,055 | 24,386 |
Decommissioning liabilities settled | 87 | 1,170 | 22 | 779 | 2,043 |
Net acquisitions (dispositions) (2) | - | 115 | - | 3 | (1,085) |
Net debt (1)(3) | 60,544 | 69,837 | 70,177 | 60,544 | 69,837 |
Weighted average shares, basic (thousands) | 216,490 | 219,084 | 216,486 | 216,563 | 219,063 |
Shares outstanding, end of period (thousands) | 216,490 | 218,873 | 216,490 | 216,490 | 218,873 |
OPERATING | |||||
Production | |||||
Heavy oil (bbl/d) | 3,321 | 3,929 | 1,388 | 2,900 | 4,060 |
Light and medium oil (bbl/d) | 1,746 | 2,059 | 845 | 1,456 | 2,030 |
Natural gas liquids (bbl/d) | 174 | 218 | 103 | 165 | 227 |
Natural gas (mcf/d) | 3,761 | 4,295 | 2,474 | 3,606 | 4,021 |
Total (boe/d) | 5,868 | 6,922 | 2,749 | 5,122 | 6,987 |
Average prices | |||||
Heavy oil ($/bbl) | 40.27 | 52.93 | 20.46 | 31.32 | 55.45 |
Light and medium oil ($/bbl) | 47.61 | 65.88 | 24.91 | 44.38 | 67.24 |
Natural gas liquids ($/bbl) | 20.30 | 26.70 | 25.73 | 17.17 | 22.04 |
Natural gas ($/mcf) | 2.25 | 0.79 | 1.98 | 2.06 | 1.33 |
Netback ($/boe) | |||||
Commodity and other sales | 39.00 | 50.97 | 20.74 | 32.36 | 53.26 |
Royalties | (3.48) | (6.06) | (1.38) | (3.18) | (5.78) |
Operating costs | (13.60) | (15.10) | (14.51) | (14.78) | (15.78) |
Transportation costs | (2.71) | (2.10) | (1.92) | (2.29) | (2.22) |
Operating netback (1) | 19.21 | 27.71 | 2.93 | 12.11 | 29.48 |
Realized risk management gain (loss) | 5.35 | 0.80 | 35.85 | 10.45 | (0.35) |
General and administrative | (2.28) | (2.03) | (3.84) | (2.80) | (2.18) |
Interest | (2.19) | (1.52) | (2.71) | (1.91) | (1.76) |
Transaction costs | - | - | - | - | - |
Realized gain on foreign exchange | - | 0.11 | 0.03 | 0.07 | 0.03 |
TRADING STATISTICS ($ based on intra-day trading) | |||||
High | 0.25 | 0.60 | 0.28 | 0.50 | 0.88 |
Low | 0.14 | 0.41 | 0.09 | 0.08 | 0.41 |
Close | 0.16 | 0.47 | 0.21 | 0.16 | 0.47 |
Average daily volume (thousands) | 275 | 406 | 571 | 573 | 367 |
(1) | Funds from operations, net debt and operating netback are non-GAAP measures and are reconciled to the nearest GAAP measures under the heading "Non-GAAP Measures" in Gear's MD&A. |
(2) | Net acquisitions (dispositions) exclude non-cash items for decommissioning liability and deferred taxes and is net of post-closing adjustments. |
(3) | Net debt includes the risk management liability acquired through the Steppe Resources Inc. corporate acquisition. September 30, 2020 – nil, September 30, 2019 – $0.7 million, June 30, 2020 – nil. |
MESSAGE TO SHAREHOLDERS
Through the third quarter of 2020, Gear successfully restarted the majority of production that was shut in during the second quarter. With improving prices, and no challenges in restarting production, Gear was able to deliver its highest quarterly funds from operations so far this year. A total of $10.8 million of funds from operations was predominantly derived from organic operations with a much smaller impact from risk management gains as compared to the second quarter. These strong funds from operations in the third quarter enabled a 14 per cent reduction in outstanding net debt through the quarter, yielding a strong net debt to funds from operations ratio of 1.4 times.
Despite the volatile market that currently exists, the Gear team has continued to act quickly and to successfully focus on the business fundamentals, including the target of further strengthening the balance sheet.
QUARTERLY HIGHLIGHTS
The proposal will be subject to approval of the Toronto Stock Exchange ("TSX"), and Gear's lenders and shareholders. A special meeting of Gear's shareholders is expected to be held prior to December 31, 2020. In the event that approvals are not received, Gear will be required to repay the outstanding amounts on December 31, 2020 and intends to do so by issuing common shares at an issue price equal to 95 per cent of the volume weighted average trading price of the common shares on the TSX for the 20 trading days ending five trading days prior to December 31, 2020.
PROVOST DISCOVERY
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", "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 following: the expectation that a shareholder meeting will be held prior to December 31, 2020, the expected terms of the amendments to the convertible debentures; Gear's intent to issue common shares to repay the principal amount of the convertible debentures if shareholder approval is not received; future potential in Provost on both primary and secondary recovery schemes; the cost of future wells in Provost; the break-even price of Provost wells; and Provost development plans.
The forward-looking information and statements contained in this press release reflect several material factors and expectations and assumptions of Gear including, without limitation: that Gear will continue to conduct its operations in a manner consistent with past operations; the general continuance of current industry conditions; the continuance of existing (and in certain circumstances, the implementation of proposed) tax, royalty and regulatory regimes; the accuracy of the estimates of Gear's reserves and resource volumes; certain commodity price and other cost assumptions; and the continued availability of adequate debt and equity financing and funds from operations to fund its planned expenditures. Gear believes the material factors, expectations and assumptions reflected in the forward-looking information and statements are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct.
To the extent that any forward-looking information contained herein may be considered a financial outlook, such information has been included to provide readers with an understanding of management's assumptions used for budgeting 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 continuing impact of the COVID-19 pandemic; changes in commodity prices; changes in the demand for or supply of Gear's products; unanticipated operating results or production declines; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Gear or by third party operators of Gear's properties, increased debt levels or debt service requirements; any action taken by Gear's lenders to reduce borrowing capacity or require repayment under its credit facilities; any inability for Gear to repay any of its indebtedness when due; failure to receive shareholder, lender or TSX approval for the amendment to the convertible debentures; inaccurate estimation of Gear's oil and gas reserve and resource volumes; limited, unfavorable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time to time in Gear's public documents including in Gear's most current annual information form which is available on SEDAR at www.sedar.com.
The forward-looking information and statements contained in this press release speak only as of the date of this press release, and Gear 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.
NON-GAAP Measures
This press release contains the terms funds from operations, net debt and operating netback, which do not have standardized meanings under Canadian generally accepted accounting principles ("GAAP") and therefore may not be comparable with the calculation of similar measures by other companies. Management believes that these key performance indicators and benchmarks are key measures of financial performance for Gear and provide investors with information that is commonly used by other oil and gas companies. Funds from operations is calculated as cash flow from operating activities before changes in noncash operating working capital and decommissioning liabilities settled. Net debt is calculated as debt less current working capital items, excluding risk management contracts. Operating netbacks are presented both before and after taking into account the effects of hedging and are calculated based on the amount of revenues received on a per unit of production basis after royalties and operating costs. Additional information relating to certain of these non-GAAP measures, including the reconciliation between funds from operations and cash flow from operating activities, can be found in the MD&A.
Barrels of Oil Equivalent
Disclosure provided herein in respect of BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of six Mcf to one Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and do not represent a value equivalency at the wellhead. Additionally, given that the value ratio based on the current price of crude oil, as compared to natural gas, is significantly different from the energy equivalency of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an indication of value.
Initial Production Rates
Any references in this document to initial production (or IP) rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. Additionally, such rates may also include recovered "load oil" fluids used in well completion stimulation. Readers are cautioned not to place reliance on such rates in calculating the aggregate production for Gear.
SOURCE Gear Energy Ltd.
Copyright 2020 Canada NewsWire
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