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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Topaz Energy Corp | TSX:TPZ | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.20 | -0.88% | 22.59 | 22.57 | 22.70 | 22.73 | 22.33 | 22.33 | 280,122 | 21:12:31 |
CALGARY, AB, March 1, 2022 /CNW/ - Topaz Energy Corp. (TSX: TPZ) ("Topaz" or the "Company") is pleased to provide fourth quarter and annual 2021 financial results, announce an 8% increase to its quarterly dividend and affirm the Company's 2022 guidance estimates. Select financial information is outlined below and should be read in conjunction with Topaz's consolidated financial statements and related management's discussion and analysis ("MD&A") as at and for the year ended December 31, 2021, which are available on SEDAR at www.sedar.com and on Topaz's website at www.topazenergy.ca.
Fourth Quarter 2021 Highlights
2021 Annual Highlights
Fourth Quarter 2021 Update
Royalty Production, Revenue & Activity Growth
Infrastructure Revenue Stability
Significant Reserves Growth
Reliable & Sustainable Dividend Increase
2021 EBITDA and Guidance Lookback
2022 Guidance Estimates
2022 Guidance Estimates(3)(13) C$4.00/mcf AECO / US$75.00/bbl WTI / 0.785 US/CAD FX $mm except boe/d | |
Annual average royalty production (boe/d)(4) | 16,100 – 16,300 |
Royalty production natural gas weighting(4) | ~78% |
EBITDA(1) | $269 – $271 |
Capital expenditures (excluding acquisitions) | $2 – $3 |
Excess FCF(1) (after dividend) | $114 – $116 |
Dividend ($1.04 per share)(8) | $145 |
Dividend payout ratio(1) | 55% |
Year end 2022 net debt(1) | $110 – $115 |
Year end 2022 net debt to cash flow(1) | 0.4x |
2022 EBITDA Guidance Sensitivity(3)(13) | |
5% annual average royalty production change | +/- $10 million |
C$0.50/mcf change in natural gas price | +/- $11 million |
US$5.00/bbl change in crude oil price | +/- $7 million |
1% change in C$/US$ foreign exchange | +/- $1 million |
Capital Allocation Strategy & Financial Flexibility
Sustainability Targets & Commitments
Additional information
Additional information about Topaz, including the consolidated financial statements and management's discussion and analysis as at and for the year ended December 31, 2021 as well as the Company's 2021 Annual Information Form are available on SEDAR at www.sedar.com under the Company's profile, and on Topaz's website, www.topazenergy.ca.
Q4 2021 CONFERENCE CALL
Topaz will host a conference call tomorrow, Wednesday, March 2, 2022 starting at 9:00 a.m. MST (11:00 a.m. EST). To participate in the conference call, please dial 1-888-664-6392 (North American toll free) a few minutes prior to the call. Conference ID is 40291211.
ABOUT THE COMPANY
Topaz is a unique royalty and infrastructure energy company focused on generating FCF(1) growth and paying reliable and sustainable dividends to its shareholders, through its strategic relationship with Canada's largest and most active natural gas producer, Tourmaline, an investment grade senior Canadian E&P company, and leveraging industry relationships to execute complementary acquisitions from other high-quality energy companies, while maintaining its commitment to environmental, social and governance best practices. Topaz focuses on top quartile energy resources and assets best positioned to attract capital in order to generate sustainable long-term growth and profitability.
The Topaz royalty and energy infrastructure revenue streams are generated primarily from assets operated by natural gas producers with some of the lowest greenhouse gas emissions intensity in the Canadian senior upstream sector, including Tourmaline, which has received awards for environmental sustainability and conservation efforts. Certain of these producers have set long-term emissions reduction targets and continue to invest in technology to improve environmental sustainability.
Topaz's common shares are listed and posted for trading on the TSX under the trading symbol "TPZ" and it is included in the S&P/TSX Composite Index. This is the headline index for Canada and is the principal benchmark measure for the Canadian equity markets, represented by the largest companies on the TSX.
For further information, please visit the Company's website www.topazenergy.ca. Topaz's SEDAR filings are available at www.sedar.com.
Selected Financial Information | |||||||
For the periods ended | 2021 | 2020 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 |
Royalty production revenue | 151,894 | 58,886 | 59,709 | 40,558 | 27,448 | 24,179 | 17,611 |
Processing revenue | 46,720 | 30,757 | 12,906 | 12,781 | 10,562 | 10,471 | 10,305 |
Other income(4) | 12,925 | 10,233 | 3,061 | 3,804 | 2,943 | 3,117 | 2,783 |
Total | 211,539 | 99,876 | 75,676 | 57,143 | 40,953 | 37,767 | 30,699 |
Cash expenses: | |||||||
Operating | (4,245) | (4,205) | (946) | (1,238) | (1,089) | (972) | (1,643) |
Marketing | (1,311) | (589) | (463) | (355) | (256) | (237) | (176) |
General and administrative | (5,051) | (3,946) | (1,281) | (1,478) | (1,026) | (1,266) | (673) |
Realized loss on financial instruments | (6,990) | (1,438) | (3,004) | (2,258) | (1,147) | (581) | (744) |
Interest expense | (3,001) | (620) | (1,648) | (973) | (220) | (160) | (484) |
Cash flow | 190,941 | 89,078 | 68,334 | 50,841 | 37,215 | 34,551 | 26,979 |
Per basic share(1)(2) | $1.54 | $0.99 | $0.50 | $0.39 | $0.32 | $0.31 | $0.25 |
Per diluted share(1)(2) | $1.54 | $0.98 | $0.50 | $0.39 | $0.32 | $0.31 | $0.25 |
Cash from operating activities | 165,017 | 83,642 | 56,562 | 41,990 | 36,903 | 29,563 | 32,887 |
Per basic share(1)(2) | $1.33 | $0.93 | $0.41 | $0.33 | $0.32 | $0.26 | $0.31 |
Per diluted share(1)(2) | $1.33 | $0.92 | $0.41 | $0.32 | $0.31 | $0.26 | $0.31 |
Net income | 27,564 | 3,089 | 16,276 | 5,014 | 918 | 5,356 | 8,382 |
Per basic and diluted share(2) | $0.22 | $0.03 | $0.12 | $0.04 | $0.01 | $0.05 | $0.08 |
EBITDA(7) | 193,647 | 89,313 | 69,978 | 51,795 | 37,308 | 34,566 | 27,126 |
Per basic share(1)(2) | $1.57 | $0.99 | $0.51 | $0.40 | $0.32 | $0.31 | $0.25 |
Per diluted share(1)(2) | $1.56 | $0.99 | $0.51 | $0.40 | $0.32 | $0.31 | $0.25 |
FCF(1) | 188,164 | 87,822 | 67,147 | 49,795 | 37,232 | 33,990 | 26,507 |
Per basic share(1)(2) | $1.52 | $0.97 | $0.49 | $0.39 | $0.32 | $0.30 | $0.25 |
Per diluted share(1)(2) | $1.51 | $0.97 | $0.49 | $0.38 | $0.32 | $0.30 | $0.25 |
FCF Margin(1) | 89% | 88% | 89% | 87% | 91% | 90% | 86% |
Dividends paid | 108,739 | 73,131 | 33,422 | 27,048 | 25,748 | 22,521 | 22,489 |
Per share(6) | $0.85 | $0.80 | $0.24 | $0.21 | $0.20 | $0.20 | $0.20 |
Payout ratio(1) | 57% | 82% | 49% | 53% | 69% | 65% | 83% |
Excess FCF(1) | 79,425 | 14,691 | 33,725 | 22,747 | 11,484 | 11,469 | 4,018 |
Capital expenditures | 2,777 | 1,256 | 1,187 | 1,046 | (17) | 561 | 472 |
Adjusted acquisitions(1) | 945,321 | 171,463 | 218,834 | 409,961 | 160,492 | 156,034 | 17,963 |
Weighted average shares – basic(3) | 123,703 | 90,110 | 136,391 | 128,749 | 116,842 | 112,512 | 106,839 |
Weighted average shares – diluted(3) | 124,361 | 90,547 | 137,167 | 129,421 | 117,426 | 113,019 | 107,276 |
Average Royalty Production(5) | |||||||
Natural gas (mcf/d) | 73,269 | 56,438 | 84,415 | 77,941 | 65,725 | 64,729 | 57,621 |
Light and medium crude oil (bbl/d) | 565 | 208 | 1,086 | 538 | 340 | 285 | 192 |
Heavy crude oil (bbl/d) | 538 | ─ | 1,091 | 693 | 303 | 50 | ─ |
Natural gas liquids (bbl/d) | 789 | 529 | 966 | 897 | 668 | 620 | 540 |
Total (boe/d) | 14,103 | 10,144 | 17,213 | 15,119 | 12,265 | 11,743 | 10,335 |
Realized Commodity Prices(5) | |||||||
Natural gas ($/mcf) | $3.65 | $2.25 | $4.52 | $3.58 | $3.11 | $3.13 | $2.65 |
Light and medium crude oil ($/bbl) | $81.29 | $41.91 | $87.51 | $80.07 | $76.94 | $64.66 | $48.90 |
Heavy crude oil ($/bbl) | $69.39 | ─ | $73.23 | $67.76 | $61.61 | $54.34 | ─ |
Natural gas liquids ($/bbl) | $83.07 | $48.09 | $95.37 | $80.31 | $78.91 | $72.11 | $54.09 |
Total ($/boe) | $29.51 | $15.86 | $37.70 | $29.16 | $24.59 | $22.88 | $18.52 |
Benchmark Pricing | |||||||
Natural Gas | |||||||
AECO 5A (CAD$/mcf) | $3.62 | $2.24 | $4.66 | $3.60 | $3.11 | $3.17 | $2.65 |
Crude oil | |||||||
NYMEX WTI (USD$/bbl) | $67.92 | $39.34 | $77.19 | $70.52 | $66.10 | $58.14 | $42.70 |
Edmonton Par (CAD$/bbl) | $80.46 | $45.06 | $93.45 | $83.80 | $76.39 | $68.98 | $49.21 |
WCS differential (USD$/bbl) | $13.04 | $15.81 | $14.80 | $13.52 | $11.51 | $12.42 | $9.10 |
Natural gas liquids | |||||||
Edmonton Condensate (CAD$/bbl) | $84.55 | $49.71 | $98.68 | $86.47 | $79.67 | $74.98 | $55.95 |
CAD$/USD$ | $0.7979 | $0.7465 | $0.7937 | $0.7935 | $0.8142 | $0.7899 | $0.7678 |
Selected statement of financial position results | At Dec. 31, | At Sept. 30, | At June 30, | At Mar. 31, 2021 | At Dec. 31, | ||
Total assets | 1,611,752 | 1,455,509 | 1,305,741 | 997,715 | 1,008,546 | ||
Working capital | 43,750 | 51,053 | 266,272 | 94,221 | 237,675 | ||
Adjusted working capital(1) | 43,204 | 54,446 | 270,611 | 94,607 | 238,268 | ||
Net debt (cash)(1) | 233,658 | 219,476 | (167,540) | (94,607) | (238,268) | ||
Common shares outstanding(3) | 139,333 | 128,803 | 128,736 | 112,607 | 112,449 | ||
(1) Refer to "Non-GAAP and Other Financial Measures". (2) As noted, calculated using the basic or diluted weighted average number of shares outstanding during the period. (3) Shown in thousand shares outstanding. (4) Other income of $12.9 million for 2021 includes interest income of $0.3 million (Q4 2021 - nil, Q3 2021 - $0.02 million, Q2 2021 - $0.1, Q1 2021 - $0.1 million, Q4 2020 - $0.3 million). (5) Refer to "Supplemental Information Regarding Product Types". (6) Represents the cumulative per share dividends paid to shareholders of record during the respective periods. (7) Defined term under the Company's Syndicated Credit Facility. |
NOTE REFERENCES
This news release refers to financial reporting periods in abbreviated form as follows: "Q4 2021" refers to the three months ended December 31, 2021; "prior quarter" refers to the three months ended September 30, 2021; "Q4 2020" refers to the three months ended December 31, 2020; "2021" refers to the year ended December 31, 2021; and "2020" refers to the year ended December 31, 2020.
1. | See "Non-GAAP and Other Financial Measures". | |
2. | Calculated using the weighted average number of basic common shares outstanding during the respective period. During the three months and year ended December 31, 2021, Topaz's FCF per share, calculated using the weighted average number of diluted common shares outstanding during the periods was $0.49 and $1.51, respectively. | |
3. | See "Forward-Looking Statements". | |
4. | See "Supplemental Information Regarding Product Types". | |
5. | Topaz's $700 million credit facility includes a $200 million accordion feature which may be advanced by Topaz but remains subject to agent consent. | |
6. | Based on Topaz's December 31, 2021 external independent reserve report. Refer to Topaz's 2021 Annual Information Form available on SEDAR for additional information. | |
7. | May include non-producing injection wells. | |
8. | Includes wells drilled during the current and previous periods on Topaz royalty acreage. | |
9. | Topaz's dividends remain subject to board of director approval. | |
10. | Refer to Topaz's most recently filed MD&A for a summary of all outstanding financial derivative contracts. | |
11. | The Company's 2022 FCF estimate attributed to Topaz's Weyburn Unit gross overriding royalty interest acquisition completed during the fourth quarter of 2021 is based on the following assumptions: estimated 2022 average royalty production of 700 bbl/d comprised of 696 bbl/d of crude oil and 5 bbl/d NGLs; 2022 average commodity prices based on a February 7, 2022 strip price forecast as follows: US$84.82/bbl (NYMEX WTI), US$2.77/bbl (MSW oil differential) and US$/CAD$ foreign exchange 0.786; and estimated transportation and quality deductions based on historic realizations. | |
12. | The Company's 2022 FCF estimate attributed to adjusted acquisitions completed during 2021 is based on the following assumptions: estimated average annual royalty production (midpoint) of 7,800 boe/d comprised of 30 MMcf/d conventional natural gas, 1,020 bbl/d crude oil, 1,280 bbl/d heavy oil and 500 bbl/d NGLs; 2022 average commodity prices based on a February 7, 2022 strip price forecast as follows: $4.49/mcf (AECO 5A), US$84.82/bbl (NYMEX WTI), US$13.23/bbl (WCS oil differential), US$2.77/bbl (MSW oil differential) and US$/CAD$ foreign exchange 0.786; variable marketing fees payable for royalty production marketed by the respective operator; estimated transportation and quality deductions based on historic realizations; infrastructure contractual agreements providing for fixed processing revenue of $11.6 million in 2022; estimated capital maintenance expenditures of $0.3 million; and estimated 2022 interest expense of $3.0 million attributed to the portion of total 2021 acquisition consideration which was financed with debt. | |
13. | Management's assumptions underlying the Company's 2022 guidance estimates include: | |
i. | Contractually scheduled changes in certain natural gas gross overriding royalty rates as follows: increase from 2% to 3% attributed to the January 2021 Deep Basin GORR acquisition from Tourmaline and reduction from 4% to 3% attributed to the November 2019 GORR acquisition from Tourmaline; | |
ii. | Topaz's internal estimates regarding development pace and production performance including estimates for capital allocated to waterflood and other long-term value enhancing projects; | |
iii. | Infrastructure utilization and cost estimates in-line with 2021 realizations; | |
iv. | No incorporation of potential acquisitions; and | |
v. | Topaz's outstanding financial derivative contracts included in its most recently filed MD&A. |
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and forward-looking information (collectively, "forward-looking statements") that relate to the Company's current expectations and views of future events. These forward-looking statements relate to future events or the Company's future performance. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as "will likely result", "are expected to", "expects", "will continue", "is anticipated", "anticipates", "believes", "estimated", "intends", "plans", "forecast", "projection", "strategy", "objective" and "outlook") are not historical facts and may be forward-looking statements and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In particular and without limitation, this news release contains forward-looking statements pertaining to the following: Topaz's future growth outlook and strategic plans; the anticipated capital expenditure plans; environment, social and governance initiatives; expected production increases and capital commitments on the royalty lands; estimated levels of 2022 dividend payments, EBITDA, FCF, Excess FCF, dividend payout ratio, return on invested capital and year-end net debt; the number of drilling rigs to be active on Topaz's royalty acreage during 2022 and beyond; the future declaration and payment of dividends and the timing and amount thereof; the forecasts described under the heading "Fourth Quarter 2021 Update" above including under the sub-headings "2022 Guidance Estimates", "Capital Allocation Strategy & Financial Flexibility" and "Sustainability Targets & Commitments", including annual average royalty production, processing revenue and other income, EBITDA, FCF, Excess FCF, annual dividends, exit net debt, and capital expenditures (excluding acquisitions) for 2022; other expected benefits from acquisitions including enhancing Topaz's future growth outlook and plans to allocate capital toward accretive growth acquisitions and sustainable dividend increases; and the Company's business as described under the heading "About the Company" above.
Forward–looking statements are based on a number of assumptions including those highlighted in this news release and is subject to a number of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results and events to differ materially from those that are disclosed in or implied by such forward–looking statements.
Such risks and uncertainties include, but are not limited to, the failure to complete acquisitions on the terms or on the timing announced or at all and the failure to realize some or all of the anticipated benefits of acquisitions including estimated royalty production, royalty production revenue and FCF per share growth, and the factors discussed in the Company's recently filed Management's Discussion and Analysis (See "Forward-Looking Statements" therein), 2021 Annual Information Form (See "Risk Factors" and "Forward-Looking Statements" therein) and other reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Topaz's website (www.topazenergy.ca).
Statements relating to "reserves" are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future.
Without limitation of the foregoing, future dividend payments, if any, and the level thereof is uncertain, as the Company's dividend policy and the funds available for the payment of dividends from time to time is dependent upon, among other things, FCF, financial requirements for the Company's operations and the execution of its growth strategy, fluctuations in working capital and the timing and amount of capital expenditures, debt service requirements and other factors beyond the Company's control. Further, the ability of Topaz to pay dividends will be subject to applicable laws (including the satisfaction of the solvency test contained in applicable corporate legislation) and contractual restrictions contained in the instruments governing its indebtedness, including its credit facility.
Topaz does not undertake any obligation to update such forward–looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.
FINANCIAL OUTLOOK
Also included in this news release are estimates of the Company's EBITDA range and average royalty production range for the year ending December 31, 2022 and range of year-end exit net debt and net debt to cash flow for 2022, which are based on, among other things, the various assumptions as to production levels and capital expenditures and other assumptions disclosed in this news release including under the heading "Fourth Quarter 2021 Update - 2022 Guidance Estimates" above and are based on the following key assumptions: Topaz's estimated capital expenditures (excluding acquisitions) of $2 to $3 million in 2022; the working interest owners' anticipated 2022 capital plans attributable to Topaz's undeveloped royalty lands; estimated average annual royalty production range of 16,100 to 16,300 boe/d in 2022; 2022 average infrastructure ownership capacity utilization of 95%; December 31, 2022 exit net debt range between $110 and $115 million, 2022 average commodity prices of: $4.00/mcf (AECO 5A), US$75.00/bbl (NYMEX WTI), US$13.00/bbl (WCS oil differential), US$3.50/bbl (MSW oil differential) and US$/CAD$ foreign exchange 0.785.
To the extent such estimates constitute financial outlooks, they were approved by management and the board of directors of Topaz on March 1, 2022 and are included to provide readers with an understanding of the estimated EBITDA and net debt for the year ending December 31, 2022 based on the assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.
NON-GAAP AND OTHER FINANCIAL MEASURES
Certain financial terms and measures contained in this news release are "specified financial measures" (as such term is defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure ("NI 52-112")). The specified financial measures referred to in this news release are comprised of "non-GAAP financial measures", "non-GAAP ratios", "capital management measures" and "supplementary financial measures" (as such terms are defined in NI 52-112). These measures are defined, qualified, and where required, reconciled with the nearest GAAP measure below.
Non-GAAP Measures and Ratios
The non-GAAP financial measures and non-GAAP ratio used herein do not have a standardized meaning prescribed by GAAP. Accordingly, the Company's use of these terms may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that the non-GAAP financial measures and ratio should not be considered in isolation nor as an alternative to net income (loss) or other financial information determined in accordance with GAAP, as an indication of the Company's performance.
Non-GAAP Financial Measures
This news release makes reference to the terms "Excess FCF" and "acquisitions, excluding decommissioning obligations", which are considered non-GAAP financial measures under NI 52-112; defined as financial measures disclosed by an issuer that depict the historical or expected future financial performance, financial position, or cash flow of an entity, and are not disclosed in the financial statements of the issuer.
Non-GAAP Ratios
This news release makes reference to the term "return on invested capital" which is considered a non-GAAP ratio under NI 52-112; defined as a financial measure disclosed by an issuer that is in the form of a ratio, fraction, percentage or similar presentation, has a non-GAAP financial measure as one or more of its components, and is not disclosed in the primary financial statements of the entity.
Other Financial Measures
Capital management measures
Capital management measures are defined as financial measures disclosed by an issuer that are intended to enable an individual to evaluate the entity's objectives, policies and processes for managing the entity's capital, are not a component of a line item or a line item on the primary financial statements, and which are disclosed in the notes to the financial statements. The Company's capital management measures disclosed in the notes to the Company's Consolidated Financial Statements as at and for the year ended December 31, 2021 include adjusted working capital, net debt (cash) and FCF.
Supplementary financial measures
This news release makes reference to the terms "cash flow per basic or diluted share", "FCF per basic or diluted share", "EBITDA per basic or diluted share", "FCF margin" and "payout ratio" which are all considered supplementary financial measures under NI 52-112; defined as a financial measure disclosed by an issuer that is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity, is not disclosed in the financial statements of the issuer, and is not a non-GAAP financial measure or non-GAAP ratio.
The following terms are financial measures as defined under the Company's Syndicated Credit Facility, presented in note 9 to the Company's Consolidated Financial Statements as at and for the year ended December 31, 2021: (i) consolidated senior debt, (ii) total debt, (iii) EBITDA and (iv) capitalization.
Cash flow, FCF, FCF margin, and Excess FCF
Management uses cash flow, FCF, FCF margin and Excess FCF for its own performance measures and to provide investors with a measurement of the Company's efficiency and its ability to generate the cash necessary to fund or increase dividends, fund future growth opportunities and/or to repay debt; and furthermore, uses per share metrics to provide investors with a measure of the proportion attributable to the basic or diluted weighted average common shares outstanding.
Cash flow is a GAAP measure which is derived of cash from operating activities excluding the change in non-cash working capital and is presented in the consolidated statements of cash flows. FCF is a capital management measure presented in the notes to the consolidated financial statements and is defined as cash flow, less capital expenditures. The supplementary financial measure "FCF margin", is defined as FCF divided by total revenue and other income (expressed as a percentage of total revenue and other income). The non-GAAP financial measure "Excess FCF", is defined as FCF less dividends paid. The supplementary financial measures "cash flow per basic or diluted share" and "FCF per basic or diluted share" are calculated by dividing cash flow and FCF, respectively, by the basic or diluted weighted average common shares outstanding during the period.
A summary of the reconciliation from cash from operating activities (per the consolidated statements of cash flows) to cash flow (per the consolidated statements of cash flows), cash flow per basic or diluted share, FCF, Excess FCF, FCF per basic or diluted share and FCF margin is set forth below:
Three months ended | Year ended | |||||
For the periods ended ($000s) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Cash from operating activities | 56,562 | 32,887 | 165,017 | 83,642 | ||
Exclude change in non-cash working capital | 11,772 | (5,908) | 25,924 | 5,436 | ||
Cash flow | 68,334 | 26,979 | 190,941 | 89,078 | ||
Less: Capital expenditures | 1,187 | 472 | 2,777 | 1,256 | ||
FCF | 67,147 | 26,507 | 188,164 | 87,822 | ||
Less: dividends paid | 33,422 | 22,489 | 108,739 | 73,131 | ||
Excess FCF | 33,725 | 4,018 | 79,425 | 14,691 | ||
Cash flow per basic share(1) | $0.50 | $0.25 | $1.54 | $0.99 | ||
Cash flow per diluted share(1) | $0.50 | $0.25 | $1.54 | $0.98 | ||
FCF per basic share(1) | $0.49 | $0.25 | $1.52 | $0.97 | ||
FCF per diluted share(1) | $0.49 | $0.25 | $1.51 | $0.97 | ||
FCF | 67,147 | 26,507 | 188,164 | 87,822 | ||
Total Revenue and other income | 75,676 | 30,699 | 211,539 | 99,876 | ||
FCF margin | 89% | 86% | 89% | 88% | ||
(1) | As noted, calculated using the basic or diluted weighted average number of shares outstanding during the respective periods. |
Adjusted working capital and net debt (cash)
Management uses the terms "adjusted working capital" and "net debt (cash)" to measure the Company's liquidity position and capital flexibility, as such these terms are considered capital management measures. "Adjusted working capital" is calculated as current assets less current liabilities, adjusted for financial instruments. "Net debt (cash)" is calculated as total debt outstanding less adjusted working capital.
A summary of the reconciliation from working capital, to adjusted working capital and net debt (cash) is set forth below:
($000s) | As at | As at |
Working capital | 43,750 | 237,675 |
Exclude financial instruments | (546) | 593 |
Adjusted working capital | 43,204 | 238,268 |
Less: bank debt | (276,862) | ─ |
Net Debt (cash) | 233,658 | (238,268) |
EBITDA and EBITDA per basic or diluted share
EBITDA, as defined under the Company's Syndicated Credit Facility and disclosed in note 9 of the Company's Consolidated Financial Statements as at and for the year ended December 31, 2021, is considered by the Company as a capital management measure which is used to evaluate the Company's operating performance, and provides investors with a measurement of the Company's cash generated from its operations, before consideration of interest income or expense. "EBITDA" is calculated as consolidated net income or loss from continuing operations, excluding extraordinary items, plus interest expense, income taxes, and adjusted for non-cash items and gains or losses on dispositions.
EBITDA per basic or diluted share is a supplementary financial measure that is calculated by dividing EBITDA by the basic or diluted weighted average common shares outstanding during the period and provides investors with a measure of the proportion of EBITDA attributed to the basic or diluted weighted average common shares outstanding.
A summary of the reconciliation of net income (per the consolidated statements of net income and comprehensive income), to EBITDA, is set forth below:
Three months ended | Year ended | |||
For the periods ended ($000s) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Net income | 16,276 | 8,382 | 27,564 | 3,089 |
Unrealized (gain) loss on financial instruments | (3,939) | (1,847) | (1,139) | 593 |
Share-based compensation | 961 | 247 | 1,977 | 887 |
Finance expense | 1,774 | 490 | 3,465 | 632 |
Depletion and depreciation | 50,217 | 22,656 | 155,422 | 85,489 |
Deferred income tax expense | 4,693 | (2,465) | 6,653 | (992) |
Less: interest income | (4) | (337) | (295) | (385) |
EBITDA | 69,978 | 27,126 | 193,647 | 89,313 |
EBITDA per basic share(1) | $0.51 | $0.25 | $1.57 | $0.99 |
EBITDA per diluted share(1) | $0.51 | $0.25 | $1.56 | $0.99 |
(1) | As noted, calculated using the basic or diluted weighted average number of shares outstanding during the respective periods. |
Payout ratio
"Payout ratio", a supplementary financial measure, represents dividends paid, expressed as a percentage of cash flow and provides investors with a measure of the percentage of cash flow that was used during the period to fund dividend payments. Payout ratio is calculated as cash flow divided by dividends paid.
A summary of the reconciliation from cash flow to payout ratio is set forth below:
Three months ended | Year ended | |||
For the periods ended | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Cash flow (000s) | 68,334 | 26,979 | 190,941 | 89,078 |
Dividends paid (000s) | 33,422 | 22,489 | 108,739 | 73,131 |
Payout ratio (%) | 49% | 83% | 57% | 82% |
Acquisitions, excluding decommissioning obligations
"Acquisitions, excluding decommissioning obligations", is considered a non-GAAP financial measure, and is calculated as: acquisitions (per the consolidated statements of cash flows) plus non-cash acquisitions but excluding non-cash decommissioning obligations.
A summary of the reconciliation from acquisitions (per the consolidated statements of cash flow) to acquisitions, excluding decommissioning obligations is set forth below:
Three months ended | Year ended | |||
For the periods ended ($000s) | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 |
Acquisitions (consolidated statements of cash flows) | 218,834 | 17,963 | 919,321 | 171,463 |
Non-cash acquisitions (excluding non-cash decommissioning obligations) | ─ | ─ | 26,000 | ─ |
Acquisitions, excluding decommissioning obligations | 218,834 | 17,963 | 945,321 | 171,463 |
Return on invested capital
"Return on invested capital", a non-GAAP ratio, represents estimated FCF, expressed as a percentage of acquisitions, excluding decommissioning obligations. This non-GAAP ratio provides investors with a measure of the return on investment attributed to consideration paid for acquisitions.
Management's estimate of the FCF expected to be generated from the Weyburn Unit gross overriding royalty acquisition completed during the fourth quarter of 2021 (as described above in "Note Reference 11") of $26 million, divided by the cash consideration paid of $188 million, results in a 2022 return on invested capital of 14%.
Management's estimate of the FCF expected to be generated from the acquisitions completed during 2021 (as described above in "Note Reference 12") of $149 million, divided by 2021 acquisitions, excluding decommissioning obligations presented in the table above of $945 million, results in a 2022 return on invested capital of 16%.
BOE EQUIVALENCY
Per barrel of oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). Barrel of oil equivalents (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, as the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
OIL AND GAS METRICS
This news release contains certain oil and gas metrics which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this document to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the Company's future performance and future performance may not compare to the Company's performance in previous periods and therefore such metrics should not be unduly relied upon.
General
See also "Forward-Looking Statements", "Reserves and Other Oil and Gas Information" and "Non-GAAP and Other Financial Measures" in the most recently filed Management's Discussion and Analysis.
SUPPLEMENTAL INFORMATION REGARDING PRODUCT TYPES
This news release includes references to actual and 2022 estimated average royalty production. The following table is intended to provide supplemental information about the product type composition for each of the production figures that are provided in this news release:
For the three months ended | Dec. 31, 2021 (Actual) | Sept. 30, 2021 (Actual) | Dec. 31, 2020 (Actual) |
Average daily production | |||
Light and Medium crude oil (bbl/d) | 1,086 | 538 | 192 |
Heavy crude oil (bbl/d) | 1,091 | 693 | ─ |
Conventional natural gas (Mcf/d) | 45,280 | 44,422 | 35,159 |
Shale Gas (Mcf/d) | 39,135 | 33,519 | 22,462 |
Natural Gas Liquids (bbl/d) | 966 | 897 | 540 |
Total (boe/d) | 17,213 | 15,119 | 10,335 |
Natural gas weighting | 82% | 86% | 93% |
Total liquids weighting | 18% | 14% | 7% |
For the year ended | Dec. 31, 2022 (Estimate)(1,2) | Dec. 31, 2021 (Actual) | Dec. 31, 2020 (Actual) |
Average daily production | |||
Light and Medium crude oil (bbl/d) | 1,153 | 565 | 208 |
Heavy crude oil (bbl/d) | 1,278 | 538 | ─ |
Conventional natural gas (Mcf/d) | 36,586 | 43,282 | 33,976 |
Shale Gas (Mcf/d) | 39,198 | 29,987 | 22,462 |
Natural Gas Liquids (bbl/d) | 1,138 | 789 | 529 |
Total (boe/d) | 16,200 | 14,103 | 10,144 |
Natural gas weighting | 78% | 86% | 93% |
Total liquids weighting | 22% | 14% | 7% |
(1) | Represents the midpoint of the estimated range of 2022 average annual royalty production. |
(2) | Topaz's estimated royalty production is based on estimated commodity mix; drilling location and corresponding royalty rate; and capital development activity on Topaz's royalty acreage by the working interest owners, all of which are outside of Topaz's control. |
SOURCE Topaz Energy Corp
Copyright 2022 Canada NewsWire
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