Prairie Provident Resources Inc. (“Prairie Provident” or the “Company”) announces its operating and financial results for the fourth quarter and year ended 2023. Prairie Provident’s audited annual consolidated financial statements and related Management’s Discussion and Analysis (MD&A) for the year ended December 31, 2023 and Annual Information Form dated April 2, 2024 for the same period are available on the Company’s website at www.ppr.ca and filed on SEDAR+ at www.sedarplus.ca.
2023 ANNUAL FINANCIAL AND OPERATIONAL HIGHLIGHTS
The Company’s financial flexibility was enhanced during the year with the completion of its recapitalization and debt-for-equity settlement, under which US$53.4 million (approximately CAD$72.0 million) of indebtedness under its previously-outstanding subordinated notes was repaid through the issue of approximately 514.4 million common shares.
In conjunction with the reorganization, the Company completed the issue of US$3.64 million (approximately CAD$4.93 million) of second lien notes. Interest on these notes is paid-in-kind while the Company’s senior secured note facility is outstanding.
The Company also raised gross proceeds of CAD$4.0 million through a private placement offering of 44.4 million common shares and warrants during the year to assist in the reduction of net debt. 1
A significant decrease in the price of crude oil and natural gas combined with a decrease in production resulted in a 34% decrease in revenue to $79.8 million for 2023 from $120.6 million in 2022.
For the year ended December 31, 2023, production averaged 3,558 boe/d (64% liquids), down 13% from 4,072 boe/d average production for 2022.
Operating netback1 for the year was $24.8 million ($19.07/boe) before the impact of derivatives in 2023, or $23.8 million ($18.35/boe) after realized losses on derivatives. This compares to an operating netback of $54.3 million ($36.54/boe) before the impact of derivatives, or $28.8 million ($19.38/boe) after realized losses on derivatives, for 2022.
Operating expenses per boe rose by 8%, increasing from $30.88 in 2022 to $33.25 in 2023. Despite facing higher fixed costs per boe due to decreased production, total operating expenses decreased by $2.7 million compared to the previous year.
As at December 31, 2023, net debt1 totaled CAD$80.6 million, a CAD$67.2 million decrease from December 31, 2022 due to completion of the reorganization, comprised of CAD$66.2 million under its senior secured note facility, CAD$6.4 million under its second lien notes (including deferred interest paid-in-kind) and a CAD$8.0 million working capital deficit.
In the first quarter of 2024, the Company further reduced its indebtedness through the sale of its Evi assets in Northern Alberta and certain non-core assets located in the Provost area of Central Alberta. Net proceeds of approximately CAD$24.2 million were received from these dispositions, with CAD$20.0 million used to further reduce indebtedness under the Company’s senior secured note facility.
FOURTH QUARTER 2023 FINANCIAL AND OPERATIONAL HIGHLIGHTS
Production averaged 3,413 boe/d (64% liquids) for the fourth quarter of 2023, a 9% decrease from the same period in 2022.
Fourth quarter 2023 operating netback1 before the impact of derivatives was $3.2 million ($10.03/boe), and $2.9 million($9.07/boe) after realized losses on derivatives, a $3.4 million decrease and $0.6 million increase, respectively, from the fourth quarter of 2022.
Net capital expenditures1 for the fourth quarter of 2023 of $0.7 million were primarily for the retention of mineral and surface leases.