Pipestone Energy Corp. Reports Second Quarter 2020

Pipestone Energy Corp. Reports Second Quarter 2020 Results
Wed August 12, 2020 7:00 AM|GlobeNewswire
CALGARY, Alberta, Aug. 12, 2020 (GLOBE NEWSWIRE) --  (PIPE – TSX-V) Pipestone Energy Corp. (BKBEF) (“Pipestone Energy” or the “Company”) is pleased to report its Q2 2020 financial and operational results.

Paul Wanklyn, President and CEO said, “Pipestone Energy nimbly managed its production during the second quarter in response to historic commodity price volatility. Our ability to generate positive cash flow before hedging gains during the quarter, despite record low condensate pricing, is a testament to our asset quality. With the recently announced financing and the capital cost improvements demonstrated during this quarter, our Company is on track to continue delivering efficient production and cash flow growth with top decile returns on capital over the next two years”.

SECOND QUARTER 2020 CORPORATE HIGHLIGHTS

During the quarter the Company actively managed its production to meet third-party gathering and processing commitments by primarily flowing its leaner, higher rate gas wells located at the 15-14 and 3-01 pad-sites, limiting production from the higher condensate wells on the 6-24 pad and deferring the on-stream date of the 6-30 pad until later this fall;
Production averaged 16,772 boe/d (comprised of 29% condensate and 43% total liquids) for the three months ended June 30, 2020.
With a robust hedging program in place the Company realized commodity hedge gains of $10.4 million during the three months ended June 30, 2020, which protected cash flows in the period;
The Company generated revenues and adjusted funds flow of $26.4 million and $11.2 million, respectively, during the three months ended June 30, 2020, despite the low commodity prices received; and
During the quarter the Company concluded its successful H1 2020 completions program as planned with 6 wells frac’d at the 6-30 pad-site in April 2020 under its original budget by 20%.
Pipestone Energy Corp. – Financial and Operating Highlights
Three months ended June 30, Six months ended June 30,
($ thousands, except per unit and per share amounts)
      2020§ 2019 2020 2019
 Financial§
Sales of liquids and natural gas $ 26,380 $ 5,457 $ 58,397 $ 5,917
Cash from (used in) operating activities (175 ) (777 ) 30,892 (13,562 )
Adjusted funds flow from (used in) operations (1) 11,231 (2,423 ) 23,051 (11,086 )
Per share, basic and diluted (2) 0.06 (0.01 ) 0.12 (0.06 )
Income (loss) (19,486 ) 4,869 (3,945 ) 567
Per share, basic and diluted (2) (0.10 ) 0.03 (0.02 ) 0.00
Capital expenditures 19,893 46,835 49,047 96,303
Acquisitions         $         -§ $ 91 - 116
Working capital (deficit) (end of period) (16,781 ) (8,026 )
Bank debt (end of period) 183,248 115,754
Shareholders’ equity (end of period) 367,298 383,843
Available funding (end of period) (3) $ 13,421 $ 46,033
Annualized cash return on invested capital (CROIC) (%) (3) 8.6 % NMN (6) 8.9 % NMN (6)
Annualized return on capital employed (ROCE) (%) (3) (0.5 %) NMN (6) 0.7 % NMN (6)
Shares outstanding (end of period) (2) 190,295 189,627
Weighted-average basic shares outstanding (2) 190,136 189,624 189,990 187,096
Weighted-average diluted shares outstanding (2) 190,253 189,625 190,229 187,116

Operations§
Production§
Crude oil (bbls/d) 104 29 95 55
Condensate (bbls/d) 4,781 566 4,368 285
Other natural gas liquids (NGL) (bbls/d) 2,306 88 1,786 53
Total NGL (bbls/d) 7,087 654 6,154 338
Natural gas (Mcf/d) 57,488 4,341 55,017 2,341
Total (boe/d) (4) 16,772 1,407 15,419 783
Condensate and crude oil (% of total production) 29 % 43 % 29 % 43 %
Total liquids (% of total production) 43 % 49 % 41 % 50 %

Benchmark prices
Crude oil – WTI (C$/bbl) $ 38.34 $ 79.98 $ 49.84 $ 76.47
Condensate – Edmonton Condensate (C$/bbl) 31.38 73.69 45.75 71.20
Natural gas – AECO 5A (C$/GJ) 1.90 1.04 1.91 1.75
Average realized prices (5)
Crude oil (per bbl) 19.88 66.91 29.49 49.08
Condensate (per bbl) 29.21 72.12 39.92 72.12
Other NGL (per bbl) 10.92 29.24 13.42 28.57
Total NGL (per bbl) 23.26 66.35 32.23 65.31
Natural gas (per Mcf) 2.14 3.37 2.18 3.39

  Netbacks§
Revenue (per boe) 17.28 42.62 20.81 41.75
Royalties (per boe) 0.28 (2.15 ) (0.37 ) (2.11 )
Operating expenses (per boe) (10.64 ) (13.83 ) (11.00 ) (15.26 )
Transportation (per boe) (3.32 ) (5.72 ) (3.47 ) (9.85 )
Operating netback (per boe) (3) 3.60 20.92 5.97 14.53
Adjusted funds flow netback (per boe) (3) $ 7.37 $ (18.93 ) $ 8.22 $ (78.22 )


       (1)§See “Additional subtotal – Adjusted funds flow from (used in) operations” under “Critical Accounting Judgments, Estimates and Policies” in the MD&A dated August 12, 2020 and see “Advisories Regarding Non-GAAP Measures” for further details.
       (2)§The number of common shares has been adjusted retrospectively to reflect the 10:1 share consolidation, as well as the 0.5996 exchange ratio, as part of the Corporate Acquisition that closed on January 4, 2019.
       (3)§See “Advisories Regarding Non-GAAP Measures” section of the MD&A dated August 12, 2020 and within this press release for further details.
       (4)§For a description of the boe conversion ratio, see “Basis of Barrel of Oil Equivalent”. References to crude oil in production amounts are to the product type “tight oil” and references to natural gas in production amounts are to the product type “shale gas”. References to liquids include oil and natural gas liquids (including condensate, butane, and propane).
       (5)§Figures calculated before hedging.
       (6)§NMN – not meaningful number at this time as Pipestone Energy had minimal production throughout the majority of 2019.
       (7)§Prior period production and average realized price figures have been adjusted to conform with current period presentation.


Q2 2020 Conference Call

A conference call has been scheduled for August 12th, 2020 at 9:00 a.m. Mountain Daylight Time (11:00 a.m. Eastern Daylight Time) for interested investors, analysts, brokers, and media representatives.

Conference Call Details:

Toll-Free: (866) 953-0776
International: (630) 652-5852
Conference ID: 3775111

An archived recording of the conference call will be available shortly after the event and will be available until August 19, 2020. To access the replay please dial toll free in North America (855) 859-2056 or International (404) 537-3406 and enter 3775111 when prompted.

Pipestone Energy Corp.

Pipestone Energy Corp. is an oil and gas exploration and production company with its head office located in Calgary, Alberta. The company is focused on developing its pure-play condensate-rich Montney asset in the Pipestone area near Grande Prairie. Pipestone Energy is committed to building long term value for our shareholders and values the partnerships that it is developing within its operating community. Pipestone Energy shares trade under the symbol PIPE on the TSX Venture Exchange. For more information, visit www.pipestonecorp.com.