Storm Resources Ltd. ("Storm" or the "Company") is Pleased to Announce Its Financial and Operating Results for the Three and Nine Months Ended September 30, 2021
Canada NewsWire
CALGARY, AB, Nov. 10, 2021
CALGARY, AB, Nov. 10, 2021 /CNW/ - Storm Resources Ltd. (TSX: SRX)
Storm has also filed its unaudited condensed interim consolidated financial statements as at September 30, 2021 and for the three and nine months then ended along with Management's Discussion and Analysis ("MD&A") for the same period. This information appears on SEDAR at www.sedar.com and on Storm's website at www.stormresourcesltd.com.
Selected financial and operating information for the three and nine months ended September 30, 2021 appears below and should be read in conjunction with the related financial statements and MD&A.
Highlights
Thousands of Cdn$, Three Months Three Months Nine Months Nine Months
except volumetric and to to to to
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2021 2020 2021 2020
per-share amounts
FINANCIAL
Revenue from product
sales(1) 85,273 30,010 224,501 102,124
Funds flow 33,377 6,681 97,811 34,474
Per share -- basic
and diluted ($) 0.27 0.05 0.80 0.28
Net income (loss) (8,859) (16,934) (9,553) (18,087)
Per share -- basic
and diluted ($) (0.07) (0.14) (0.08) (0.15)
Cash return on
capital employed
("CROCE")(2) 24% 11% 24% 11%
Return on capital
employed
("ROCE")(2)(4) 4% (2%) 4% (2%)
Capital expenditures 36,843 14,219 71,712 43,088
Debt including
working capital
deficiency(2)(3) 104,180 137,983 104,180 137,983
Common shares (000s)
Weighted average -
basic 122,171 121,557 121,928 121,557
Weighted average -
diluted 122,171 121,557 121,928 121,557
Outstanding end of
period - basic 122,444 121,557 122,444 121,557
OPERATIONS
(Cdn$ per Boe)
Revenue from product
sales(1) 33.71 17.14 30.73 16.72
Transportation costs (4.63) (6.43) (4.81) (5.58)
Revenue net of
transportation 29.08 10.71 25.92 11.14
Royalties (3.86) (0.77) (2.47) (0.72)
Production costs (4.58) (4.84) (4.50) (4.83)
Field operating
netback(2) 20.64 5.10 18.95 5.59
Realized gain (loss)
on risk management
contracts (6.57) 0.51 (4.24) 1.66
General and
administrative (0.29) (0.72) (0.52) (0.77)
Interest and finance
costs (0.57) (1.08) (0.70) (0.81)
Decommissioning
expenditures (0.02) - (0.11) (0.02)
Funds flow per Boe 13.19 3.81 13.38 5.65
Barrels of oil
equivalent per day
(6:1) 27,499 19,027 26,763 22,291
Natural gas
production
Thousand cubic feet
per day 134,431 91,526 129,745 107,361
Price (Cdn$ per
Mcf)(1) 4.71 2.47 4.30 2.41
Condensate production
Barrels per day 2,430 1,637 2,423 2,186
Price (Cdn$ per
barrel)(1) 83.98 46.79 77.76 45.01
NGL production
Barrels per day 2,664 2,136 2,715 2,211
Price (Cdn$ per
barrel)(1) 33.48 10.95 27.83 6.87
Wells drilled (net) 6.5 4.0 8.0 5.0
Wells completed (net) 1.5 - 4.5 3.5
Wells started
production (net) - - 3.0 3.0
(1) Excludes gains and losses on risk management contracts.
(2) Certain financial amounts shown above are non-GAAP
measurements. See discussion of Non-GAAP Measurements
on page 23 of the MD&A. CROCE and ROCE are presented
on a 12-month trailing basis.
(3) Excludes the fair value of risk management contracts,
decommissioning liability and lease liability.
(4) Includes a non-cash unrealized loss on risk management
contracts of $31.1 million for the three months ended
September 30, 2021 (three months ended September 30,
2020 - unrealized loss of $18.0 million) and an unrealized
loss of $70.1 million for the nine months ended September
30, 2021 (nine months ended September 30, 2020 - unrealized
loss of $21.4 million).
PRESIDENT'S MESSAGE
2021 THIRD QUARTER HIGHLIGHTS
Stronger than expected well performance along with continued improvement in commodity prices resulted in funds flow increasing to $33 million in the quarter while capital investment at $37 million was less than guidance for $43 to $48 million due to weather related delays in July. Production and funds flow are both forecast to increase in the fourth quarter and into 2022 with 12.5 net new wells expected to start production at Nig Creek, Umbach and Fireweed in the fourth quarter and early 2022 (first production was achieved from the Fireweed area on November 4).
Subsequent to the end of the quarter, on November 9, 2021, Storm entered into a definitive arrangement agreement with Canadian Natural Resources Limited ("Purchaser") pursuant to which the Purchaser has agreed to acquire all of the issued and outstanding common shares of Storm ("Storm Shares") for cash consideration of $6.28 per Storm Share (the "Purchase Price"). The proposed transaction is expected to close in December 2021 and offers attractive value for Storm shareholders with the Purchase Price implying an enterprise value for Storm of approximately $965 million using financial results from the third quarter of 2021 and including transaction related expenses plus the decommissioning liability. This represents 4.8 times annualized funds flow in the third quarter of 2021 excluding the loss on risk management contracts (hedging losses). The Purchase Price also represents an all-time high share price for Storm as well as a premium of 10% to Storm's 10-day volume weighted average trading price on the Toronto Stock Exchange as of the close of markets on November 9, 2021.
-- Production was 27,499 Boe per day, a 45% increase year over year and a 2%
increase from the previous quarter. This was at the higher end of
guidance for an average of 25,000 to 28,000 Boe per day and was achieved
with the Nig Creek Gas Plant shut in for nine days in July to install
inlet compression and to conduct a maintenance turnaround. Comparisons to
the previous year are less meaningful given the effect of planned
maintenance turnarounds at third party gas plants which reduced
production in the third quarter of 2020.
-- Liquids production (condensate plus NGL) totaled 5,094 barrels per day
which was 19% of total production and provided 32% of total revenue.
Liquids production increased 35% from last year.
-- Well performance continues to be strong with third quarter corporate
production increasing by 6% from the first quarter of 2021 which was
accomplished with only three new wells starting production at Umbach.
-- Recent well performance continues to exceed expectations with the
calendar day IP365 for the last four wells starting production at Nig
Creek averaging 1,940 Boe per day sales (22% liquids) and the calendar
day IP180 for the last three wells starting production at Umbach
averaging 1,080 Boe per day sales (21% liquids).
-- Revenue net of transportation was $29.08 per Boe, a 172% increase from
last year as a result of higher commodity prices and a 28% decrease in
the per-Boe transportation cost as incremental sales volumes are directed
to BC Station 2 which has the lowest pipeline tariff.
-- Production, general and administrative, and interest and finance costs
totaled $5.44 per Boe, a year-over-year reduction of 18%. Production
costs are expected to decline as volumes directed to the Nig Creek Gas
Plant are increased.
-- Realized hedging loss was $16.6 million, or $6.57 per Boe, a result of
the continued improvement in commodity prices.
-- Funds flow was $33.4 million, or $0.27 per share, an increase of 400%
from last year. This was largely from both higher production and higher
commodity prices, partially offset by a $16.6 million hedging loss.
-- Net loss was $8.9 million, or $0.07 per share, and was largely due to the
unrealized loss on risk management contracts totaling $31.1 million
(non-cash hedging loss) which reflects the change in the mark-to-market
valuation of future contracts.
-- Cash return on capital employed (CROCE) was 24% and return on capital
employed (ROCE) was 4% with both calculated on a 12-month trailing basis.
ROCE was reduced by non-cash hedging losses of $31.1 million in the
quarter and $70.1 million for the year to date.
-- Capital investment was $36.8 million and included $23.1 million to drill
6.5 net and complete 1.5 net horizontal wells, $6.9 million to advance
construction of the new facility at Fireweed, and $2.0 million to
complete installation of inlet compression at the Nig Creek Gas Plant.
