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.