Petrus Resources Ltd. is pleased to report financial and operating results as at and for the three and twelve months ended December 31, 2022 and to provide 2022 year end reserves information as evaluated by Insite Petroleum Consultants Ltd. ("Insite"). The Company's Management's Discussion and Analysis ("MD&A") and audited consolidated financial statements are available on SEDAR (the System for Electronic Document Analysis and Retrieval) at www.sedar.com.
Q4 2022 HIGHLIGHTS
Increased production – Total production increased by 55% to 9,113 boe/d in the fourth quarter of 2022, compared to 5,880 boe/d in the fourth quarter of 2021. Petrus achieved its exit production rate averaging 10,635 boe/d(1) during the last week of December 2022.
Total funds flow up 228% – Petrus generated funds flow(2) and corporate netback(2) of $34.1 million and $40.70/boe in the fourth quarter of 2022, 228% and 111% higher, respectively, than the fourth quarter of the prior year.
Increased capital activity – Petrus incurred capital expenditures of $37.8 million in the fourth quarter of 2022 compared to $12.2 million in the fourth quarter of 2021. The Company drilled and completed 6 gross (5.3 net) wells and spent $4.9 million on pipeline, equipment and facilities.
Operating netback per boe up 20% – Operating netback(2) increased by 20% to $39.84/boe in the fourth quarter of 2022 up from $33.12/boe in the fourth quarter of 2021, due to significantly higher realized prices.
Commodity price improvement – Petrus' total realized price of $57.81/boe increased by 25% in the fourth quarter of 2022 compared to the fourth quarter of 2021 ($46.29/boe) as a result of higher commodity prices across all products.
2022 ANNUAL HIGHLIGHTS
Total funds flow up 163% – Petrus generated funds flow and corporate netback of $87.7 million and $31.60/boe in 2022, 163% and 108% higher, respectively, than funds flow of $33.4 million and $15.19/boe in 2021. The Company achieved its target funds flow guidance for 2022.
Successfully executed 2022 capital program – Petrus incurred $96.7 million of capital expenditures in 2022 (excluding acquisitions and dispositions), compared to $26.9 million in 2021. 85% of total capital went to drilling and completion costs related to 21 gross (15.6 net) wells in Ferrier and North Ferrier, 12% of capital went to pipeline, equipment and facilities costs, and the remaining capital went to land and corporate costs. 2022 capital spending was in line with budget guidance.
Increased production – Petrus increased average annual production by 27% from 6,009 boe/d in 2021 to 7,604 boe/d in 2022.
Debt restructuring complete – The Company entered into agreements with new lenders providing two new credit facilities ("New Facilities") totaling $55 million; at December 31, 2022, $28.9 million was drawn on the New Facilities. The refinancing completed the Company’s debt restructuring.
Net debt reduction – Net debt(2) was $50.8 million at December 31, 2022, an 18% decrease from $61.8 million at December 31, 2021. The Company continues to manage its balance sheet with the goal of maintaining a net debt to funds flow ratio(2) of under 1x.
Rights offering – Petrus closed a $20 million rights offering that was oversubscribed by 84%.
2023 OUTLOOK(3)
In early January, the Petrus team returned to drilling in Ferrier to kick off the 2023 capital program. We have successfully drilled and completed all of the wells on the first pad site and production associated with these new wells came on in early March. The rig has moved to the second pad site where drilling operations are well underway. We expect to complete drilling by the end of March and we will suspend drilling and completion operations over spring break-up.
Given the inherent volatility of our commodity-based business, Petrus has always been committed to being disciplined and flexible. The Company is continuously evaluating its 2023 capital program to ensure it meets the investment threshold to optimize shareholder return. By investing capital wisely and generating strong cash flow, Petrus aims to ensure the value of this cash flow is realized by its shareholders. The Company is now in a position to analyze options available to maximize shareholder value and is in the process of determining the optimum way forward.
RESERVES
Petrus’ 2022 year end reserves were evaluated by independent reserves evaluator, InSite Petroleum Consultants Ltd. ("Insite"), in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) as of December 31, 2022 ("2022 Insite Report"). Additional reserve information as required under NI 51-101 will be included in our Annual Information Form for the year ended December 31, 2022, which will be available under the Company's profile on SEDAR (the System for Electronic Document Analysis and Retrieval) at www.sedar.com.
Petrus has a reserves committee, comprised of a majority of independent board members, that reviews the qualifications and appointment of the independent reserves evaluator. The committee also reviews the procedures for providing information to the evaluators. All booked reserves are based upon annual evaluations by the independent qualified reserve evaluator conducted in accordance with the COGE Handbook and NI 51-101. The evaluations are conducted using all available geological and engineering data. The reserves committee has reviewed the reserves information and approved the 2022 Insite Report.
In 2022, Petrus’ development program generated proved developed producing ("PDP") reserve volume additions of 7.5 mmboe. The Company also produced 2.8 mmboe and acquired 1.4 mmboe of PDP reserves. The Company ended the year with 17.8 mmboe of PDP reserves (31% crude oil and liquids).
Petrus ended 2022 with $266.3 million, $407.4 million and $589.4 million of Proved Developed ("PD"), Total Proved ("TP"), and Proved plus Probable (“P+P”), respectively, reserve value before-tax, discounted at 10%, based on the 2022 Insite Report. In 2022, the Company realized Finding, Development and Acquisition (“FD&A”) costs of $12.50/boe for PDP reserves.
Based on the 2022 Insite Report, the Company’s PDP reserve value before-tax, discounted at 10% is $2.16 per share (123,238,528 basic common shares outstanding at December 31, 2022). On the same basis, the P+P reserve value before tax, discounted at 10%, is $4.78 per share.
