Acquisition to expand company's cardiac ablation portfolio, including first-time entry into mapping and navigation, within one of the fastest growing medtech markets
- Medtronic plc (NYSE:MDT), a global leader in healthcare technology, today announced that it has entered into a definitive agreement to acquire Affera, Inc., a Boston area-based, privately held medical technology company. Affera designs and manufactures cardiac mapping and navigation systems and catheter-based cardiac ablation technologies, including a differentiated, focal pulsed field ablation solution, for the treatment of patients with cardiac arrhythmias (irregular heartbeats) such as atrial fibrillation (AF). Medtronic, through its minority investment portfolio, has been a strategic investor in Affera and currently holds a 3% ownership stake in the company.
The acquisition expands the Medtronic portfolio of advanced cardiac ablation products and accessories to meet physician needs within a growing patient population. Affera's technologies include the Affera Prism-1™ cardiac mapping and navigation platform and Sphere-9™ cardiac ablation catheter, investigational technologies designed to enable the rapid creation of detailed maps used by electrophysiologists (EP) to diagnose arrhythmias and deliver cardiac ablation therapy, respectively. The Affera full-suite of solutions and technologies will complement the existing Medtronic atrial and ventricular arrhythmia disease management portfolio and support the company's efforts to offer simple, safe, and effective cardiac ablation solutions to improve patient outcomes.
"The EP ablation market is an exciting and fast-moving segment of cardiology," said Rebecca Seidel , president of the Cardiac Ablation Solutions (CAS) business, which is part of the Cardiovascular Portfolio at Medtronic. "Bringing Affera into our organization, with our established footprint in the cardiac ablation space, will strengthen our ability to provide innovative therapies and enable Medtronic entry into additional EP technology segments, such as mapping and navigation, for the first time."
"Affera offers technologies that support physician customers as they work to improve clinical workflows, procedural efficiencies, and ultimately optimize patient care," said Stacy Beske , Ph.D., vice president of strategy, CAS.
Within the $8 billion worldwide EP ablation market, the prevalence of cardiac arrhythmias is growing rapidly, and the need to provide treatment to the increasing patient population, which encompasses AF, supraventricular tachycardia (SVT), and ventricular tachycardia (VT), is increasing. AF represents the largest disease segment, with nearly 60 million people affected worldwide 1 . AF is a progressive disease, meaning over time patients can experience more frequent, and longer episodes, and medication as well as catheter ablation can become less effective. Additionally, AF is associated with serious complications including heart failure, stroke, and increased risk of death. 2-345
"This is an exciting day for patients who suffer from the burden of AF and other arrhythmias. This acquisition directly aligns with our vision of delivering novel solutions to address the rapidly growing demands for cardiac arrhythmia treatment," said Doron Harlev , founder and chief executive officer of Affera. "We are excited to focus on the integration of our technology with Medtronic and are confident that together we can increase patient access to ablation therapies."
In December 2021 , Affera announced the commencement of the recently approved SPHERE PerAF Trial, a U.S. Food and Drug Administration (FDA) Investigational Device Exemption (IDE) pivotal randomized trial, to evaluate the safety and effectiveness of the Affera system for the treatment of persistent AF. Affera's product portfolio is not currently approved or available for sale or commercial use.
Financial Highlights
The acquisition is expected to close the first half of Medtronic fiscal year 2023, subject to the satisfaction to certain customary closing conditions. Following close, the transaction is expected to be less than 1% dilutive to Medtronic's adjusted earnings per share in each of the first three years, and neutral to accretive thereafter. The company expects dilution of approximately 5 cents in both year 1 and year 2 and approximately 3 cents in year 3.
In collaboration with leading clinicians, researchers, and scientists worldwide, Medtronic offers the broadest range of innovative medical technology for the interventional and surgical treatment of cardiovascular disease and cardiac arrhythmias. The company strives to offer products and services of the highest quality that deliver clinical and economic value to healthcare consumers and providers around the world.
About Affera
Affera is a medical technology company dedicated to delivering unrivaled innovative solutions to address the rapidly growing demands for cardiac arrhythmia treatment. Affera is developing a comprehensive integrated platform to efficiently deliver durable therapy for a broad set of cardiac arrhythmia patients. For more information, visit www.affera.com .
About Medtronic
Bold thinking. Bolder actions. We are Medtronic. Medtronic plc, headquartered in Dublin, Ireland , is the leading global healthcare technology company that boldly attacks the most challenging health problems facing humanity by searching out and finding solutions. Our Mission — to alleviate pain, restore health, and extend life — unites a global team of 90,000+ passionate people across 150 countries. Our technologies and therapies treat 70 health conditions and include cardiac devices, surgical robotics, insulin pumps, surgical tools, patient monitoring systems, and more. Powered by our diverse knowledge, insatiable curiosity, and desire to help all those who need it, we deliver innovative technologies that transform the lives of two people every second, every hour, every day. Expect more from us as we empower insight-driven care, experiences that put people first, and better outcomes for our world. In everything we do, we are engineering the extraordinary. For more information on Medtronic (NYSE:MDT), visit www.Medtronic.com and follow @Medtronic on Twitter and LinkedIn .
Any forward-looking statements, including, but not limited to, statements regarding the proposed transaction between Medtronic and Affera, the expected timetable for completing the transaction, strategic and other potential benefits of the transaction, including meeting Medtronic's long-term financial metrics for acquisitions, Affera products and product candidates, and other statements about Medtronic managements' future expectations, beliefs, goals, plans or prospects, are subject to risks and uncertainties including, but not limited to, the ability and timing to satisfy conditions to closing including regulatory approvals, the impact of the announcement of the transaction on the business, and other risks and uncertainties such as those described in Medtronic's reports and other filings with the Securities and Exchange Commission. Actual results may differ materially from anticipated results. Medtronic cautions investors not to place considerable reliance on the forward-looking statements contained in this press release. These forward-looking statements speak only as of the date of this document, and Medtronic undertakes no obligation to update or revise any of these statements except to the extent required by law.
1 Roth GA, Mensah GA, Johnson CO et al. Global Burden of Cardiovascular Diseases and Risk Factors, 1990-2019: Update From the GBD 2019 Study. J Am Coll Cardiol 2020;76:2982-3021.
2 Miyasaka Y, Barnes ME, Bailey KR, et al. Mortality trends in patients diagnosed with first atrial fibrillation: a 21-year community-based study. J Am Coll Cardiol 2007;49:986-92.
3 Hindricks G, Potpara T, Dagres N, et al. 2020 ESC Guidelines for the diagnosis and management of atrial fibrillation developed in collaboration with the European Association of Cardio-Thoracic Surgery (EACTS). Eur Heart J 2020.
4 Wolf PA, Abbott RD, Kannel WB. Atrial fibrillation as an independent risk factor for stroke: the Framingham Study. Stroke 1991;22:983-8.
5 Lubitz SA, Moser C, Sullivan L, et al. Atrial fibrillation patterns and risks of subsequent stroke, heart failure, or death in the community. J Am Heart Assoc 2013;2:e000126
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Pine Cliff Energy Ltd. (TSX: PNE) ("Pine Cliff" or the "Company") announces its first quarter 2024 financial and operating results, an operational update and information regarding the annual meeting of shareholders.
First Quarter 2024 Results
Results for the three months ended March 31, 2024 are as follows:
Pine Cliff will host a webcast at 1:30 PM MDT (3:30 PM EDT) on Wednesday, May 8th, 2024. Participants can access the live webcast via this Link or through the links provided on the Company's website. A recorded archive will be available on the Company's website following the live webcast.
Operational update
Capital expenditures of $0.6 million in the first quarter were limited to facilities and maintenance capital. The 2024 capital budget of $17.5 million, including $7.0 million of abandonment and reclamation spending, is unchanged. Pine Cliff continues to expect production to average 24,000 - 25,000 Boe/d4 in 2024. The integration of Certus Oil & Gas has been completed, increasing the Company's total liquids production to 21%4 of total volumes in 2024.
In an ongoing response to weak natural gas prices, Pine Cliff has increased its AECO hedge position to approximately 37% of gross natural gas production5 at an average price of $2.94/Mcf for the next three quarters of 2024. Approximately 52% of gross crude oil production5 has been hedged at $100.43/Bbl for the same period.
Annual Meeting of Shareholders
Pine Cliff's Annual Meeting of Shareholders (the "Meeting") will be held on Thursday, May 16, 2024 at 11:00 A.M. (Calgary Time) at the offices of Bennett Jones LLP, 4500 Bankers Hall East, 855 2nd Street SW, Calgary, Alberta. A corporate presentation will be provided following the Meeting, which can be found on the Company's website at www.pinecliffenergy.com.
Financial and Operating Results
| Three months ended March 31, | ||||||||
| ($000s, unless otherwise indicated) | 2024 | 2023 | ||||||
| Commodity sales (before royalty expense) | 51,299 | 52,939 | ||||||
| Cash provided by operating activities | 9,527 | 22,326 | ||||||
| Adjusted funds flow1 | 10,498 | 19,824 | ||||||
| Per share - Basic ($/share)1 | 0.03 | 0.06 | ||||||
| Per share - Diluted ($/share)1 | 0.03 | 0.06 | ||||||
| Net earnings (loss) | (4,858 | ) | 4,985 | |||||
| Per share - Basic ($/share) | (0.01 | ) | 0.01 | |||||
| Per share - Diluted ($/share) | (0.01 | ) | 0.01 | |||||
| Capital expenditures | 559 | 4,442 | ||||||
| Dividends | 9,499 | 11,413 | ||||||
| Per share - Basic ($/share) | 0.03 | 0.03 | ||||||
| Per share - Diluted ($/share) | 0.03 | 0.03 | ||||||
| Positive net cash (net debt)1 | (72,687 | ) | 58,139 | |||||
| Production (Boe/d) | 23,865 | 20,076 | ||||||
| Percent Natural Gas (%) | 79% | 87% | ||||||
| Weighted-average common shares outstanding (000s) | ||||||||
| Basic | 354,525 | 351,263 | ||||||
| Diluted | 354,525 | 359,675 | ||||||
| Combined sales price ($/Boe) | 23.62 | 29.30 | ||||||
| Operating netback ($/Boe)1 | 7.30 | 11.72 | ||||||
| Corporate netback ($/Boe)1 | 4.84 | 10.99 | ||||||
| Operating netback ($ per Mcfe)1 | 1.22 | 1.95 | ||||||
| Corporate netback ($ per Mcfe)1 | 0.81 | 1.83 | ||||||
| 1 This is a non-GAAP measure, see "NON-GAAP Measures" for additional information. | ||||||||
About Pine Cliff
Pine Cliff is a natural gas and oil company with a long-term view of creating shareholder value. Pine Cliff's current focus is on acquiring, developing, and operating long life assets that generate significant free funds flow that allows for capital to be returned to shareholders in the form of a dividend. Further information relating to Pine Cliff may be found on www.sedarplus.ca as well as on Pine Cliff's website at www.pinecliffenergy.com.
For further information, please contact:
Philip B. Hodge - President and CEO
Kristopher B. Zack - CFO and Corporate Secretary
Telephone: (403) 269-2289
Fax: (403) 265-7488
Email: info@pinecliffenergy.com
Reader Advisories
Notes to Press Release
Cautionary Statements
Certain statements contained in this news release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this news release includes, but is not limited to: future capital expenditures, including the amount and nature thereof; future acquisition opportunities including Pine Cliff's ability to execute on those opportunities; future drilling opportunities and Pine Cliff's ability to generate reserves and production from the undrilled locations; oil and natural gas prices and demand; expansion and other development trends of the oil and natural gas industry; business strategy and guidance; expansion and growth of our business and operations; maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; risks; Pine Cliff's ability to generate adjusted funds flow; Pine Cliff's ability to generate free funds flow; Pine Cliff's ability to pay a dividend; and other such matters.
All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash provided by operating activities to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive.
Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur including the reduction in municipal taxes and surface land rentals, or if any of them do, what benefits will be derived there from. Except as required by law, Pine Cliff disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
Natural gas liquids and oil volumes are recorded in barrels of oil ("Bbl") and are converted to a thousand cubic feet equivalent ("Mcfe") using a ratio of one (1) Bbl to six (6) thousand cubic feet. Natural gas volumes recorded in thousand cubic feet ("Mcf") are converted to barrels of oil equivalent ("Boe") using the ratio of six (6) thousand cubic feet to one (1) Bbl. This conversion ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at the wellhead. The terms Boe or Mcfe may be misleading, particularly if used in isolation.
Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of oil, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
The forward-looking information contained in this news release is expressly qualified by this cautionary statement.
NON-GAAP Measures
This press release uses the terms "adjusted funds flow", "free funds flow", "operating netbacks", "corporate netbacks" and "positive net cash/net debt" which are not recognized under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other companies. These measures should not be considered as an alternative to, or more meaningful than, IFRS measures including net earnings (loss), cash provided by operating activities, or total liabilities. The Company uses these measures to evaluate its performance, leverage and liquidity. Adjusted funds flow is a non-Generally Accepted Accounting Principles ("non-GAAP") measure that represents the total of funds provided by operating activities, before adjusting for changes in non-cash working capital, and decommissioning obligations settled. Free funds flow is a non-GAAP measure calculated as adjusted funds flow less the Company's capital expenditures. Positive net cash/net debt is a non-GAAP measure calculated as the sum of trade and other receivables, cash, investments and prepaid expenses and deposits, less trade and other payables and debt. Operating netback is a non-GAAP measure calculated as the Company's total revenue, less royalties, operating expenses and transportation expenses, divided by the Boe production of the Company. Corporate netback is a non-GAAP measure calculated as the Company's operating netback, plus interest income, less G&A and interest expense, divided by the Boe production of the Company. Please refer to the Annual Report for additional details regarding non-GAAP measures and their calculation.
The TSX does not accept responsibility for the accuracy of this release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/208332
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Canadian Natural's (TSX: CNQ) (NYSE: CNQ) President, Scott Stauth, commented on the Company's first quarter results, "Canadian Natural is a world class company and during our 35 years of operations, we've delivered significant value, including recently reaching a position where, commencing in 2024, we are returning 100% of our free cash flow to our shareholders. Crude oil price forecasts have strengthened for the remainder of 2024, including improvements in West Texas Intermediate ("WTI"), Western Canadian Select ("WCS") and Synthetic Crude Oil ("SCO") pricing over those prices experienced in the first quarter of 2024, driving significant targeted free cash flow generation going forward.
Canadian Natural's large, unique and diversified asset base provides a key competitive advantage enabling us to effectively allocate capital across our asset base and manage the pace and timing of development activities, maximizing value for our shareholders. We are executing on our 2024 plan which is strategically weighted to longer cycle thermal development projects in the first half of the year and shorter cycle growth projects in the second half of the year, which aligns with increased market egress and improved forward strip crude oil pricing. As a result, we target to finish the year with strong exit rates as conventional activity ramps up in the second half of the year.
In Oil Sands Mining and Upgrading, at the Horizon site, we are well prepared for 2024 turnaround activity and final tie ins of the reliability enhancement project in the second quarter of the year which will be followed by targeted strong production in the second half of the year with high upgrader utilization. Through optimization efforts and early turnaround work done in early 2024, we have reduced the Horizon turnaround to 28 days from 30 days and improved the commissioning schedule for the reliability enhancement project. These optimizations will advance and shorten commissioning timing after the turnaround to support high targeted utilization and production rates in the second half of the year.
We have a defined path to reduce our environmental footprint and continue delivering sustainable, responsibly produced energy that the world needs. We are committed to supporting Canada's and Alberta's climate goals and have robust environmental targets, including net zero greenhouse gas ("GHG") emissions for the oil sands by 2050. We are uniquely positioned with diverse, long life low decline assets, which are ideal for applying GHG reduction technologies and providing industry leading environmental performance. It is important to continue working together with the Canadian and Alberta governments to make the Pathways Alliance a transformative industry collaboration and achieve meaningful GHG reductions in Canada. We believe Canadian energy is one of the most responsibly produced sources of energy in the world and should be the preferred energy choice."
Canadian Natural's Chief Financial Officer, Mark Stainthorpe, also added, "In Q1/24, we delivered strong financial results, including adjusted net earnings of approximately $1.5 billion and adjusted funds flow of $3.1 billion, which drove significant returns to shareholders totaling $1.7 billion in the quarter. Commencing in 2024, we are returning 100% of free cash flow to shareholders, as per our free cash flow allocation policy, and continue to manage the allocation on a forward looking annual basis.
At Canadian Natural, our culture of continuous improvement and employee ownership alignment with shareholders drives our teams to create significant value across all areas of the Company. Our effective and efficient operations combined with our flexible capital allocation maximizes value for our shareholders."
HIGHLIGHTS
| Three Months Ended | ||||||||||
| ($ millions, except per common share amounts) | Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
| Net earnings | $ | 987 | $ | 2,627 | $ | 1,799 | ||||
| Per common share | - basic | $ | 0.92 | $ | 2.43 | $ | 1.63 | |||
| - diluted | $ | 0.91 | $ | 2.41 | $ | 1.62 | ||||
| Adjusted net earnings from operations (1) | $ | 1,474 | $ | 2,546 | $ | 1,881 | ||||
| Per common share | - basic (2) | $ | 1.38 | $ | 2.36 | $ | 1.71 | |||
| - diluted (2) | $ | 1.37 | $ | 2.34 | $ | 1.69 | ||||
| Cash flows from operating activities | $ | 2,868 | $ | 4,815 | $ | 1,295 | ||||
| Adjusted funds flow (1) | $ | 3,138 | $ | 4,419 | $ | 3,429 | ||||
| Per common share | - basic (2) | $ | 2.93 | $ | 4.09 | $ | 3.12 | |||
| - diluted (2) | $ | 2.91 | $ | 4.05 | $ | 3.08 | ||||
| Cash flows used in investing activities | $ | 1,392 | $ | 946 | $ | 1,153 | ||||
| Net capital expenditures (3) | $ | 1,113 | $ | 975 | $ | 1,257 | ||||
| Abandonment expenditures | $ | 162 | $ | 149 | $ | 137 | ||||
| Daily production, before royalties | ||||||||||
| Natural gas (MMcf/d) | 2,147 | 2,231 | 2,139 | |||||||
| Crude oil and NGLs (bbl/d) | 975,668 | 1,047,541 | 962,908 | |||||||
| Equivalent production (BOE/d) (4) | 1,333,502 | 1,419,313 | 1,319,391 | |||||||
| (1) Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. (2) Non-GAAP Ratio. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. (3) Non-GAAP Financial Measure. The composition of this measure was updated in the fourth quarter of 2023 and has been updated for all periods presented. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. (4) A barrel of oil equivalent ("BOE") is derived by converting six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, or to compare the value ratio using current crude oil and natural gas prices since the 6 Mcf:1 bbl ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. | ||||||||||
The strength of Canadian Natural's long life low decline asset base, supported by safe, effective and efficient operations, makes our business unique, robust and sustainable. In Q1/24, the Company generated strong financial results, including:
Net earnings of approximately $1.0 billion and adjusted net earnings from operations of approximately $1.5 billion.
Cash flows from operating activities of approximately $2.9 billion.
Adjusted funds flow of approximately $3.1 billion.
Canadian Natural continues to maintain a strong balance sheet and financial flexibility, with approximately $6.8 billion in liquidity(1) as at March 31, 2024.
Subsequent to quarter end, the Company repaid US$0.5 billion of 3.8% debt securities due April 15, 2024.
Canadian Natural achieved its $10 billion net debt level at year end 2023 and is returning 100% of free cash flow(1) in 2024 to shareholders, per the Company's free cash flow allocation policy. The Company will manage the allocation of free cash flow on a forward looking annual basis, while managing working capital and cash management as required.
(1) Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of this press release and the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024.
Canadian Natural continues to focus on safe, effective and efficient operations, and delivered quarterly average production in Q1/24 of 1,333,502 BOE/d, consisting of total liquids production of 975,668 bbl/d and natural gas production of 2,147 MMcf/d.
The Company is targeting strong production from its Oil Sands Mining and Upgrading assets in the second half of the year, as we optimize turnaround activity, complete final tie ins and advance commissioning of the reliability enhancement project in Q2/24.
Canadian Natural has significant growth opportunities across its asset base, including sustainable production enhancements at its Oil Sands Mining and Upgrading operations.
Near-term projects include the reliability enhancement project at Horizon, which targets to increase the two-year average SCO capacity by approximately 14,000 bbl/d by extending the turnaround schedule to once every two years. Additionally, the debottlenecking project at the Scotford Upgrader targets to add incremental capacity at the Athabasca Oil Sands Project ("AOSP") of approximately 5,600 bbl/d net to Canadian Natural.
Medium-term projects include the Naphtha Recovery Unit Tailings Treatment ("NRUTT") project at Horizon, which targets to add incremental production of approximately 6,300 bbl/d of SCO, reduce GHG emissions and lower reclamation costs.
Long-term projects at our Oil Sands operations include combining In-Pit Extraction Process ("IPEP") and Paraffinic Froth Treatment ("PFT") that have the potential to add approximately 195,000 bbl/d of additional annual bitumen production, reduce GHG emissions and lower reclamation costs.
The Company's 2024 development plan has conventional activity strategically weighted to the second half of 2024 to better align with increased market egress and improved crude oil pricing, maximizing value for our shareholders. Following completion of the Trans Mountain Expansion ("TMX") pipeline, there will be ample egress and optionality for our crude oil products.
Strong free cash flow generation is targeted in the last nine months of the 2024, given improved crude oil forward strip pricing as of April 30, 2024:
WTI of US$79.95/bbl, an improvement of approximately US$3/bbl from US$76.97/bbl experienced in Q1/24.
SCO at a US$2.47/bbl price premium to WTI, an improvement of approximately US$10/bbl from a US$7.54/bbl discount experienced in Q1/24.
WCS differential strengthening to a discount to WTI of US$13.17/bbl, an improvement of approximately US$6/bbl from the US$19.34/bbl discount experienced in Q1/24.
The Company continues to evaluate and implement opportunities to maximize netbacks through the diversification of sales and optimized blending and transportation options through diverse market access. Canadian Natural has optionality for crude oil exports, including the following pipeline commitments:
In Q1/24, the Company increased its commitment on Flanagan South by 55,000 bbl/d to 77,500 bbl/d, further expanding the Company's heavy oil diversification and market access to the United States Gulf Coast ("USGC").
94,000 bbl/d on Trans Mountain Expansion ("TMX") pipeline that creates additional crude oil market diversification opportunities on the west coast, both by land and by water.
10,000 bbl/d on the Base Keystone Pipeline, with direct access to the USGC.
RETURNS TO SHAREHOLDERS
Canadian Natural has a strong history of growing its sustainable dividend for 24 consecutive years and commencing in 2024, we are now returning 100% of free cash flow to shareholders.
Returns to shareholders in Q1/24 were strong, totaling approximately $1.7 billion, comprised of $1.1 billion of dividends and $0.6 billion through the repurchase and cancellation of approximately 6.7 million common shares at a weighted average price of $90.78 per share.
Year to date in 2024, up to and including May 1, 2024, the Company has returned a total of approximately $3.1 billion directly to shareholders through $2.2 billion in dividends and $0.9 billion through the repurchase and cancellation of approximately 9.6 million common shares.
Subsequent to quarter end, the Company declared a quarterly cash dividend on its common shares of $1.05 (one dollar and five cents) per common share on a pre-stock split basis or $0.525 (fifty-two and one half cents) per common share after the two for one share split of the common shares, subject to shareholder approval at the Company's Annual and Special Meeting of Shareholders on May 2, 2024. The quarterly dividend will be payable on July 5, 2024 to shareholders of record at the close of business on June 17, 2024.
As previously announced on February 29, 2024, the Board of Directors increased the quarterly dividend by 5% to $1.05 per common share. This demonstrates the confidence that the Board of Directors has in the sustainability of our business model, our strong balance sheet and the strength of our diverse, long life low decline reserves and asset base. The Company's leading track record of dividend increases continues, with 2024 being the 24th consecutive year of dividend increases with a compound annual growth rate ("CAGR") of 21% over that time.
On February 28, 2024, Canadian Natural's Board of Directors approved a resolution to subdivide the Company's common shares on a two for one basis, subject to shareholder approval at the Company's Annual and Special Meeting of Shareholders on May 2, 2024. The Company will also be required to obtain all regulatory approvals, including TSX approval.
OPERATIONS REVIEW AND CAPITAL ALLOCATION
Canadian Natural has a balanced and diverse portfolio of assets, primarily Canadian-based, with international exposure in the UK section of the North Sea and Offshore Africa. Canadian Natural's production is well balanced between light crude oil, medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil) and SCO (herein collectively referred to as "crude oil") and natural gas and NGLs. This balance provides optionality for capital investments, maximizing value for the Company's shareholders.
Underpinning this asset base is the Company's long life low decline production, representing approximately 79% of total budgeted liquids production in 2024, the majority of which is zero decline high value SCO production from the Company's world class Oil Sands Mining and Upgrading assets. The remaining balance of the Company's long life low decline production comes from its top tier thermal in situ oil sands operations and Pelican Lake heavy crude oil assets. The combination of these long life low decline assets, low reserves replacement costs, and effective and efficient operations results in substantial and sustainable adjusted funds flow throughout the commodity price cycle.
In addition, Canadian Natural maintains a substantial inventory of low capital exposure projects within the Company's conventional asset base. These projects can be executed quickly and, in the right economic conditions, provide excellent returns and maximize value for our shareholders. Supporting these projects is the Company's undeveloped land base which enables large, repeatable drilling programs that can be optimized over time. Additionally, Canadian Natural maximizes long-term value by maintaining high ownership and operatorship of its assets and has an extensive infrastructure network, allowing the Company to control the nature, timing and extent of development. Low capital exposure projects can be stopped or started relatively quickly depending upon success, market conditions or corporate needs.
Canadian Natural's balanced portfolio, built with both long life low decline assets and low capital exposure assets, enables effective capital allocation, production growth and value creation.
| Drilling Activity | Three Months Ended | |||||||||||
| Mar 31, 2024 | Mar 31, 2023 | |||||||||||
| (number of wells) | Gross | Net | Gross | Net | ||||||||
| Crude oil (1) | 62 | 61 | 88 | 83 | ||||||||
| Natural gas | 23 | 16 | 26 | 21 | ||||||||
| Dry | - | - | 2 | 2 | ||||||||
| Subtotal | 85 | 77 | 116 | 106 | ||||||||
| Stratigraphic test / service wells | 452 | 386 | 455 | 394 | ||||||||
| Total | 537 | 463 | 571 | 500 | ||||||||
| Success rate (excluding stratigraphic test / service wells) | 100 % | 98 % | ||||||||||
| (1) Includes bitumen wells. | ||||||||||||
North America Exploration and Production
| Crude oil and NGLs - excluding Thermal In Situ Oil Sands | |||||||||
| Three Months Ended | |||||||||
| Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
| Crude oil and NGLs production (bbl/d) | 237,481 | 243,157 | 234,465 | ||||||
| Net wells targeting crude oil | 38 | 42 | 60 | ||||||
| Net successful wells drilled | 38 | 42 | 58 | ||||||
| Success rate | 100 % | 100 % | 97 % | ||||||
North America E&P liquids production, excluding thermal in situ, averaged 237,481 bbl/d in Q1/24, comparable to Q1/23 levels. As previously outlined in the 2024 budget, the Company has strategically allocated capital for its conventional assets to the latter part of 2024 to better align with incremental market egress, driving strong targeted 2024 exit rates.
Primary heavy crude oil production averaged 78,431 bbl/d in Q1/24, comparable to Q1/23 levels, reflecting strong results from the Company's multilateral wells in the Mannville and Clearwater fairways which offset natural field declines.
The Company is targeting to drill 148 net multilateral wells in 2024, 12 more than budgeted, as we are shifting certain dry natural gas activity to these higher returning multilateral heavy oil wells. The majority of this activity is strategically planned for the second half of 2024.
Operating costs(1) in the Company's primary heavy crude oil operations averaged $19.16/bbl (US$14.21/bbl) in Q1/24, a decrease of 11% from Q1/23 levels, primarily reflecting lower energy costs.
Pelican Lake production averaged 45,145 bbl/d in Q1/24, a decrease of 6% from Q1/23 levels, reflecting low natural field declines from this long life low decline asset.
Operating costs at Pelican Lake averaged $9.75/bbl (US$7.23/bbl) in Q1/24, comparable to Q1/23 levels.
North America light crude oil and NGLs production averaged 113,905 bbl/d in Q1/24, an increase of 5% from Q1/23 production which was impacted by a third party pipeline outage. Production in Q1/24 reflects strong drilling results from the Company's liquids-rich Montney and Deep Basin assets partially offset by natural field declines.
Operating costs in the Company's North America light crude oil and NGLs operations averaged $15.25/bbl (US$11.31/bbl) in Q1/24, a decrease of 18% from Q1/23 levels, reflecting increased production and lower energy costs.
| North America Natural Gas | |||||||||
| Three Months Ended | |||||||||
| Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
| Natural gas production (MMcf/d) | 2,135 | 2,218 | 2,127 | ||||||
| Net wells targeting natural gas | 16 | 9 | 21 | ||||||
| Net successful wells drilled | 16 | 9 | 21 | ||||||
| Success rate | 100 % | 100 % | 100 % | ||||||
Canadian Natural's North America natural gas production averaged 2,135 MMcf/d in Q1/24, comparable to Q1/23 production which was impacted by a third party pipeline outage. Production in Q1/24 reflects strong results from the Company's capital efficient drill to fill development plan, offset by natural field declines.
North America natural gas operating costs averaged $1.27/Mcf in Q1/24, a decrease of 11% from Q1/23 levels, primarily reflecting lower energy costs.
(1) Calculated as production expense divided by respective sales volumes. Natural gas and NGLs production volumes approximate sales volumes.
| Thermal In Situ Oil Sands | |||||||||
| Three Months Ended | |||||||||
| Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
| Bitumen production (bbl/d) | 268,155 | 278,422 | 242,884 | ||||||
| Net wells targeting bitumen | 23 | - | 25 | ||||||
| Net successful wells drilled | 23 | - | 25 | ||||||
| Success rate | 100 % | - % | 100 % | ||||||
Thermal in situ long life low decline production averaged 268,155 bbl/d in Q1/24, an increase of 10% from Q1/23 levels, driven by strong execution on Cyclic Steam Stimulation ("CSS") and Steam Assisted Gravity Drainage ("SAGD") pad developments in 2023.
Thermal in situ operating costs averaged $14.05/bbl (US$10.42/bbl) in Q1/24, a decrease of 12% from Q1/23 levels, primarily reflecting higher production volumes and lower energy costs.
The Company successfully completed the planned turnaround at Jackfish ahead of schedule in April 2024, and has an upcoming turnaround at Kirby North in May 2024. As a result of completing the turnaround at Jackfish ahead of schedule, the total impact to Q2/24 average production is now targeted to be approximately 15,300 bbl/d, an improvement from the previous target of 17,100 bbl/d.
Canadian Natural has decades of strong capital efficient growth opportunities on its long life low decline thermal in situ assets. As outlined in our 2024 budget, we continue to develop these assets in a disciplined manner to deliver safe and reliable thermal in situ production with the following opportunities:
At Primrose, the Company is currently drilling two CSS pads which are targeted to come on production in Q2/25. At Wolf Lake, the Company recently drilled one SAGD pad which is targeted to come on production in Q1/25.
At Jackfish, the first of two SAGD pads that were drilled in 2023 has ramped up to its targeted full production capacity in April 2024, ahead of budget. The second pad is targeted to ramp up to its full production capacity in Q4/24, supporting continued high utilization rates at the Jackfish facilities. Additionally, the Company is targeting to drill one SAGD pad at Jackfish in the second half of 2024, with production from this pad targeted to come on in Q3/25.
Canadian Natural has been piloting solvent enhanced oil recovery technology on certain thermal in situ assets with an objective to increase bitumen production while reducing the Steam to Oil Ratio ("SOR") and GHG intensities by 40% to 50% and optimizing solvent recovery. This technology has the potential for application throughout the Company's extensive thermal in situ asset base.
At Kirby North, the commercial scale solvent SAGD pad development is approximately 90% complete and the Company is targeting to begin solvent injection in July 2024.
At Primrose, the Company is continuing to use its solvent enhanced oil recovery pilot in the steam flood area to optimize solvent efficiency and to further evaluate the commercial development opportunity.
North America Oil Sands Mining and Upgrading
| Three Months Ended | |||||||||
| Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
| Synthetic crude oil production (bbl/d) (1)(2) | 445,209 | 500,133 | 458,228 | ||||||
| (1) SCO production before royalties and excludes production volumes consumed internally as diesel. (2) Consists of heavy and light synthetic crude oil products. | |||||||||
Canadian Natural remains focused on safe, reliable, effective and efficient operations of its world class Oil Sands Mining and Upgrading assets. In Q1/24, the Company delivered average production of 445,209 bbl/d of high value SCO, a decrease of 3% from Q1/23 levels. Production in Q1/24 reflected planned and unplanned maintenance activities, including the advancement of the Scotford Upgrader planned turnaround to March 2024 from April 2024. These activities in Q1/24 reduced Oil Sands Mining and Upgrading production by approximately 45,000 bbl/d of SCO from what would have been achieved otherwise. Through the actions discussed below and other optimization efforts, the Company is targeting to recover these daily production volumes in the last three quarters of 2024.
Oil Sands Mining and Upgrading operating costs are top tier, averaging $24.85/bbl (US$18.43/bbl) in Q1/24, comparable to Q1/23 levels.
Canadian Natural has the following upcoming turnarounds, including schedule optimizations, planned at our Oil Sands Mining and Upgrading operations:
At Horizon, a planned turnaround is targeted to begin on May 15, 2024. Through continuous improvement, optimization efforts and early turnaround work done in Q1/24 during unplanned maintenance activities, the Company has reduced the targeted duration of the turnaround to 28 days from 30 days.
Additionally, following the turnaround, the Company is optimizing the commissioning schedule of the reliability enhancement project, which is targeted to increase Q3/24 SCO production.
At AOSP, a 49 day turnaround is targeted to begin in September 2024, when the Scotford Upgrader will run at reduced rates, impacting annual production by approximately 11,000 bbl/d.
The Company continues to progress sustainable production enhancements at both Horizon and AOSP.
At Horizon, the Company targets to complete the remaining components and tie-ins related to the reliability enhancement project during the planned turnaround in Q2/24.
This project targets to increase capacity of the zero decline, high value SCO production over a two year timeframe by shifting the planned turnarounds to once every two years from the current annual cycle, reducing downtime and increasing overall reliability. In 2025, annual production is targeted to increase by approximately 28,000 bbl/d, with the two year average annual SCO capacity targeted to increase by approximately 14,000 bbl/d.
At the Scotford Upgrader, a debottlenecking project, which targets to add incremental capacity at AOSP of approximately 5,600 bbl/d net to Canadian Natural, is targeted to be completed during the planned Fall 2024 turnaround.
At Horizon, the Company is progressing the Naphtha Recovery Unit Tailings Treatment ("NRUTT") project that targets incremental production of approximately 6,300 bbl/d of SCO following mechanical completion in Q3/27. This project is targeted to reduce GHG emissions, equivalent to 6% of Horizon's total Scope 1 emissions, and will result in lower reclamation costs.
International Exploration and Production
| Three Months Ended | |||||||||
| Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | |||||||
| Crude oil production (bbl/d) | 24,823 | 25,829 | 27,331 | ||||||
| Natural gas production (MMcf/d) | 12 | 13 | 12 | ||||||
MARKETING
| Three Months Ended | ||||||||||
| Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | ||||||||
| Benchmark Commodity Prices | ||||||||||
| WTI benchmark price (US$/bbl) (1) | $ | 76.97 | $ | 78.33 | $ | 76.11 | ||||
| WCS heavy differential (discount) to WTI (US$/bbl) (1) | $ | (19.34 | ) | $ | (21.90 | ) | $ | (24.74 | ) | |
| WCS heavy differential as a percentage of WTI (%) (1) | 25 % | 28 % | 33 % | |||||||
| Condensate benchmark price (US$/bbl) | $ | 72.79 | $ | 76.22 | $ | 79.83 | ||||
| SCO price (US$/bbl) (1) | $ | 69.43 | $ | 78.64 | $ | 78.18 | ||||
| SCO premium (discount) to WTI (US$/bbl) (1) | $ | (7.54 | ) | $ | 0.31 | $ | 2.07 | |||
| AECO benchmark price (C$/GJ) | $ | 1.94 | $ | 2.52 | $ | 4.12 | ||||
| Realized Prices | ||||||||||
| Exploration & Production liquids realized price (C$/bbl) (2)(3)(4)(5) | $ | 70.01 | $ | 69.39 | $ | 58.85 | ||||
| SCO realized price (C$/bbl) (1)(3)(4)(5) | $ | 88.84 | $ | 98.73 | $ | 96.07 | ||||
| Natural gas realized price (C$/Mcf) (4) | $ | 2.55 | $ | 2.80 | $ | 4.27 | ||||
| (1) West Texas Intermediate ("WTI"); Western Canadian Select ("WCS"); Synthetic Crude Oil ("SCO"). (2) Exploration & Production crude oil and NGLs average realized price excludes SCO. (3) Pricing is net of blending costs. (4) Excludes risk management activities. (5) Non-GAAP ratio. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024 dated May 1, 2024. | ||||||||||
Canadian Natural has a balanced and diverse product mix of natural gas, NGLs, heavy crude oil, light crude oil, bitumen and SCO.
WTI prices averaged US$76.97/bbl in Q1/24, comparable to both Q4/23 and Q1/23, although the global crude oil market continues to be impacted by heightened geopolitical tensions.
WTI forward strip pricing(1) has strengthened for the last nine months of 2024, averaging US$79.95/bbl, an improvement of approximately US$3/bbl from Q1/24.
SCO pricing averaged US$69.43/bbl in Q1/24, representing a US$7.54/bbl price discount to WTI, compared to a US$2.07/bbl price premium to WTI in Q1/23. The lower SCO price in Q1/24 was primarily driven by egress constraints in the Western Canadian Sedimentary Basin ("WCSB").
SCO forward strip pricing(1) has strengthened for the last nine months of 2024, averaging a price premium to WTI of US$2.47/bbl, an improvement of approximately US$10/bbl from Q1/24.
The average WCS differential to WTI of US$19.34/bbl in Q1/24 has strengthened from both comparable periods, primarily reflecting the anticipated startup of TMX and stronger US Gulf Coast heavy oil pricing due to lower Mexican imports.
WCS forward strip pricing(1) has strengthened for the last nine months of 2024, averaging US$13.17/bbl, an improvement of approximately US$6/bbl from Q1/24.
The Company continues to evaluate and implement opportunities to maximize netbacks through the diversification of sales and optimized blending and transportation options through diverse market access. Canadian Natural has optionality for crude oil exports, including the following pipeline commitments:
In Q1/24, the Company increased its commitment on Flanagan South by 55,000 bbl/d to 77,500 bbl/d, further expanding the Company's heavy oil diversification and market access to the USGC.
94,000 bbl/d on TMX pipeline that creates additional crude oil market diversification opportunities on the west coast, both by land and by water.
10,000 bbl/d on the Base Keystone Pipeline, with direct access to the USGC.
(1) Forward strip pricing as of April 30, 2024.
The North West Redwater ("NWR") refinery primarily utilizes bitumen as feedstock, with production of ultra-low sulphur diesel and other refined products averaging 78,569 bbl/d in Q1/24.
AECO natural gas prices in Q1/24 compared to Q1/23 and Q4/23 reflect lower NYMEX benchmark pricing, increased production in the WCSB and higher storage inventories resulting from mild winter weather.
In 2024, the Company is targeting to use the equivalent of approximately 38% of its budgeted natural gas production in its operations, with approximately 25% targeted to be sold at AECO/Station 2 pricing, and approximately 37% targeted to be exported to other North American and international markets capturing higher natural gas prices, maximizing value from its diversified natural gas marketing portfolio.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS
Canada and Canadian Natural are well positioned to deliver affordable, reliable, safe and responsibly produced energy that the world needs, through leading ESG performance. Canadian Natural's diverse portfolio is supported by a significant amount of long life low decline assets which have low risk, high value reserves that require low maintenance capital. This allows the Company to remain flexible with our capital allocation and creates an ideal opportunity to pilot and apply technologies for GHG emissions reductions. Canadian Natural continues to invest in a range of technologies to reduce emissions, such as solvents for enhanced recovery and Carbon Capture, Utilization and Storage ("CCUS") projects. Our culture of continuous improvement provides a significant advantage to delivering on our strategy of investing in GHG technologies across our assets, including opportunities for methane emissions reduction.
Environmental Targets
Canadian Natural is committed to reducing our environmental footprint and as previously announced, has committed to the following environmental targets:
40% reduction in corporate Scope 1 and Scope 2 absolute GHG emissions by 2035, from a 2020 baseline
50% reduction in North America E&P (including thermal in situ) methane emissions by 2030, from a 2016 baseline
40% reduction in thermal in situ fresh water usage intensity by 2026, from a 2017 baseline
40% reduction in mining fresh river water usage intensity by 2026, from a 2017 baseline
Canadian Natural has a defined pathway to achieve long-term emissions reductions with an integrated GHG emissions management strategy that includes ongoing investments in technology and innovation while transferring technology across the Company. The areas of focus include, but are not limited to: carbon capture, sequestration/storage and utilization, the use of solvents, energy/steam efficiencies, methane reduction, and tailings and water management.
Pathways Alliance
The six major oil sands companies in the Pathways Alliance ("Pathways"), including Canadian Natural, operate approximately 95% of Canada's oil sands production. The goal of this unique alliance is to work together with governments to achieve net zero emissions from oil sands operations by 2050, support Canada in meeting its climate commitments and be the preferred source of crude oil globally. Pathways has a defined plan, including its foundational carbon capture and storage ("CCS") project involving a CO2 transportation line connecting Fort McMurray and Cold Lake to a carbon sequestration hub.
Pathways continues to work together with governments on the necessary co-investment and regulatory certainty needed to proceed. As a step in moving the project forward, Canadian Natural, on behalf of the Pathways Alliance, commenced regulatory applications in March 2024 to the Alberta Energy Regulator for the proposed CO2 Transportation Network and Storage Hub. Project engineering and environmental field programs are on track to meet timelines. Multiple feasibility studies on phase-one capture facilities, with engineering and design work continue to progress. Stakeholder engagement and consultation is ongoing with Indigenous and local communities in northern Alberta related to the Pathways CCS project.
Government Support for Emissions Reductions and Carbon Capture, Utilization and Storage
The Government of Canada announced a Regulatory Framework for an Oil and Gas Sector Greenhouse Gas Emissions Cap on December 7, 2023 with plans to publish draft regulations by mid-2024. The framework proposes to cap and cut emissions from the oil and natural gas sector through implementation of a national cap-and-trade system. The oil and natural gas sector has made significant progress in GHG emissions reductions along with investments in technology and innovation that have been enabled under existing carbon pricing systems. As such, the proposed oil and natural gas sector emissions cap is unnecessary, exceedingly complex and undermines the investor confidence required for large-scale, long-term emission reduction initiatives.
Canadian Natural is a leader in CCUS and GHG reduction projects and sees many opportunities to work collaboratively with industry peers and governments to advance investments in CCUS and to achieve meaningful GHG emissions reductions in support of Canada's climate goals. The Government of Canada has proposed an investment tax credit ("ITC") for CCUS projects for all sectors across Canada that would offer a refundable ITC of up to 50% on capture equipment and 37.5% on qualified carbon transportation, storage or usage equipment from 2022 to 2030. Additionally, the Government of Alberta announced it would provide a 12% tax credit on eligible capital costs associated with building new CCUS projects. It remains important for governments to work together with industry to ensure that policy and regulatory frameworks deliver the required support to enable CCUS project development.
Canadian Natural will continue to provide input to government on the importance of balancing environmental and economic objectives along with being able to support Canada's allies with energy security. By working together, industry and governments have the opportunity to help achieve climate goals, meet economic objectives and support Canada's role in energy security.
ADVISORY
Special Note Regarding Forward-Looking Statements
Certain statements relating to Canadian Natural Resources Limited (the "Company") in this document or documents incorporated herein by reference constitute forward-looking statements or information (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements can be identified by the words "believe", "anticipate", "expect", "plan", "estimate", "target", "continue", "could", "intend", "may", "potential", "predict", "should", "will", "objective", "project", "forecast", "goal", "guidance", "outlook", "effort", "seeks", "schedule", "proposed", "aspiration" or expressions of a similar nature suggesting future outcome or statements regarding an outlook. Disclosure related to the Company's capital budget, expected future commodity pricing, forecast or anticipated production volumes, royalties, production expenses, capital expenditures, abandonment expenditures, income tax expenses, and other targets provided throughout this document and the Management's Discussion and Analysis ("MD&A") of the financial condition and results of operations of the Company, constitute forward-looking statements. Disclosure of plans relating to and expected results of existing and future developments, including, without limitation, those in relation to: the Company's assets at Horizon Oil Sands ("Horizon"), the Athabasca Oil Sands Project ("AOSP"), the Primrose thermal oil projects, the Pelican Lake water and polymer flood projects, the Kirby thermal oil sands project, the Jackfish thermal oil sands project and the North West Redwater bitumen upgrader and refinery; construction by third parties of new, or expansion of existing, pipeline capacity or other means of transportation of bitumen, crude oil, natural gas, natural gas liquids ("NGLs") or synthetic crude oil ("SCO") that the Company may be reliant upon to transport its products to market; the abandonment and decommissioning of certain assets and the timing thereof; the development and deployment of technology and technological innovations; the financial capacity of the Company to complete its growth projects and responsibly and sustainably grow in the long-term; and the impact of the Pathways Alliance ("Pathways") initiative and activities, government support for Pathways and the ability to achieve net zero emissions from oil sands production, also constitute forward-looking statements. These forward-looking statements are based on annual budgets and multi-year forecasts, and are reviewed and revised throughout the year as necessary in the context of targeted financial ratios, project returns, product pricing expectations and balance in project risk and time horizons. These statements are not guarantees of future performance and are subject to certain risks. The reader should not place undue reliance on these forward-looking statements as there can be no assurances that the plans, initiatives or expectations upon which they are based will occur. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment based on certain estimates and assumptions that the reserves described can be profitably produced in the future. There are numerous uncertainties inherent in estimating quantities of proved and proved plus probable crude oil, natural gas and NGLs reserves and in projecting future rates of production and the timing of development expenditures. The total amount or timing of actual future production may vary significantly from reserves and production estimates.
The forward-looking statements are based on current expectations, estimates and projections about the Company and the industry in which the Company operates, which speak only as of the earlier of the date such statements were made or as of the date of the report or document in which they are contained, and are subject to known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and uncertainties include, among others: general economic and business conditions (including as a result of the actions of the Organization of the Petroleum Exporting Countries Plus ("OPEC+"), the impact of armed conflicts in the Middle East, the impact of the Russian invasion of Ukraine, increased inflation, and the risk of decreased economic activity resulting from a global recession) which may impact, among other things, demand and supply for and market prices of the Company's products, and the availability and cost of resources required by the Company's operations; volatility of and assumptions regarding crude oil, natural gas and NGLs prices; fluctuations in currency and interest rates; assumptions on which the Company's current targets are based; economic conditions in the countries and regions in which the Company conducts business; political uncertainty, including actions of or against terrorists, insurgent groups or other conflict including conflict between states; the ability of the Company to prevent and recover from a cyberattack, other cyber-related crime and other cyber-related incidents; industry capacity; ability of the Company to implement its business strategy, including exploration and development activities; the Company's ability to implement strategies and leverage technologies to meet climate change initiatives and emissions targets on the expected timelines; the impact of competition; the Company's defense of lawsuits; availability and cost of seismic, drilling and other equipment; ability of the Company to complete capital programs; the Company's ability to secure adequate transportation for its products; unexpected disruptions or delays in the mining, extracting or upgrading of the Company's bitumen products; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; ability of the Company to attract the necessary labour required to build, maintain, and operate its thermal and oil sands mining projects; operating hazards and other difficulties inherent in the exploration for and production and sale of crude oil and natural gas and in the mining, extracting or upgrading the Company's bitumen products; availability and cost of financing; the Company's success of exploration and development activities and its ability to replace and expand crude oil and natural gas reserves; the Company's ability to meet its targeted production levels; timing and success of integrating the business and operations of acquired companies and assets; production levels; imprecision of reserves estimates and estimates of recoverable quantities of crude oil, natural gas and NGLs not currently classified as proved; actions by governmental authorities; government regulations and the expenditures required to comply with them (especially safety and environmental laws and regulations and the impact of climate change initiatives on capital expenditures and production expenses); interpretations of applicable tax laws and regulations; asset retirement obligations; the sufficiency of the Company's liquidity to support its growth strategy and to sustain its operations in the short, medium, and long-term; the strength of the Company's balance sheet; the flexibility of the Company's capital structure; the adequacy of the Company's provision for taxes; the impact of legal proceedings to which the Company is party; and other circumstances affecting revenues and expenses.
The Company's operations have been, and in the future may be, affected by political developments and by national, federal, provincial, state and local laws and regulations such as restrictions on production, changes in taxes, royalties and other amounts payable to governments or governmental agencies, price or gathering rate controls and environmental protection regulations. Should one or more of these risks or uncertainties materialize, or should any of the Company's assumptions prove incorrect, actual results may vary in material respects from those projected in the forward-looking statements. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are dependent upon other factors, and the Company's course of action would depend upon its assessment of the future considering all information then available.
Readers are cautioned that the foregoing list of factors is not exhaustive. Unpredictable or unknown factors not discussed in this document or the Company's MD&A could also have adverse effects on forward-looking statements. Although the Company believes that the expectations conveyed by the forward-looking statements are reasonable based on information available to it on the date such forward-looking statements are made, no assurances can be given as to future results, levels of activity and achievements. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Except as required by applicable law, the Company assumes no obligation to update forward-looking statements in this document or the Company's MD&A, whether as a result of new information, future events or other factors, or the foregoing factors affecting this information, should circumstances or the Company's estimates or opinions change.
Special Note Regarding Currency, Financial Information and Production
This document should be read in conjunction with the Company's unaudited interim consolidated financial statements (the "financial statements") and the Company's MD&A for the three months ended March 31, 2024, and audited consolidated financial statements for the year ended December 31, 2023. All dollar amounts are referenced in millions of Canadian dollars, except where noted otherwise. The Company's financial statements and MD&A for the three months ended March 31, 2024 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").
Production volumes and per unit statistics are presented throughout this document on a "before royalties" or "company gross" basis, and realized prices are net of blending and feedstock costs and exclude the effect of risk management activities. In addition, reference is made to crude oil and natural gas in common units called barrel of oil equivalent ("BOE"). A BOE is derived by converting six thousand cubic feet ("Mcf") of natural gas to one barrel ("bbl") of crude oil (6 Mcf:1 bbl). This conversion may be misleading, particularly if used in isolation, since the 6 Mcf:1 bbl ratio is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In comparing the value ratio using current crude oil prices relative to natural gas prices, the 6 Mcf:1 bbl conversion ratio may be misleading as an indication of value. In addition, for the purposes of this document, crude oil is defined to include the following commodities: light and medium crude oil, primary heavy crude oil, Pelican Lake heavy crude oil, bitumen (thermal oil), and SCO. Production on an "after royalties" or "company net" basis is also presented for information purposes only.
Additional information relating to the Company, including its Annual Information Form for the year ended December 31, 2023, is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. Information on the Company's website does not form part of and is not incorporated by reference in the Company's MD&A.
Special Note Regarding Non-GAAP and Other Financial Measures
This document includes references to non-GAAP measures, which include non-GAAP and other financial measures as defined in National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure. These financial measures are used by the Company to evaluate its financial performance, financial position or cash flow and include non-GAAP financial measures, non-GAAP ratios, total of segments measures, capital management measures, and supplementary financial measures. These financial measures are not defined by IFRS and therefore are referred to as non-GAAP and other financial measures. The non-GAAP and other financial measures used by the Company may not be comparable to similar measures presented by other companies, and should not be considered an alternative to or more meaningful than the most directly comparable financial measure presented in the Company's financial statements, as applicable, as an indication of the Company's performance. Descriptions of the Company's non-GAAP and other financial measures included in this document, and reconciliations to the most directly comparable GAAP measure, as applicable, are provided below as well as in the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024, dated May 1, 2024.
Break-even WTI Price
The break-even WTI price is a supplementary financial measure that represents the equivalent US dollar WTI price per barrel where the Company's adjusted funds flow is equal to the sum of maintenance capital and dividends. The Company considers the break-even WTI price a key measure in evaluating its performance, as it demonstrates the efficiency and profitability of the Company's activities. The break-even WTI price incorporates the non-GAAP financial measure adjusted funds flow as reconciled in the "Non-GAAP and Other Financial Measures" section of the Company's MD&A. Maintenance capital is a supplementary financial measure that represents the capital required to maintain annual production at prior period levels.
Capital Budget
Capital budget is a forward looking non-GAAP financial measure. The capital budget is based on net capital expenditures (Non-GAAP Financial Measure) and excludes net acquisition costs. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for more details on net capital expenditures.
Capital Efficiency
Capital efficiency is a supplementary financial measure that represents the capital spent to add new or incremental production divided by the current rate of the new or incremental production. It is expressed as a dollar amount per flowing volume of a product ($/bbl/d or $/BOE/d). The Company considers capital efficiency a key measure in evaluating its performance, as it demonstrates the efficiency of the Company's capital investments.
Free Cash Flow Policy in 2023 and 2024
Free cash flow is a non-GAAP financial measure. The Company considers free cash flow a key measure in demonstrating the Company's ability to generate cash flow to fund future growth through capital investment, pay returns to shareholders and to repay or maintain net debt levels, pursuant to the free cash flow allocation policy.
The Company's free cash flow is used to determine the target amount of shareholder returns after dividends. The calculation in determining free cash flow varies depending on the Company's net debt position, and as a result of achieving $10 billion in net debt at the end of 2023, the Company's free cash flow calculation has changed in 2024, when compared to 2023 as follows:
As net debt of $10 billion was achieved at the end of 2023, commencing in 2024, the Company will target to return 100% of free cash flow to shareholders. Free cash flow is calculated as adjusted funds flow less dividends on common shares, net capital expenditures and abandonment expenditures. The Company targets to manage the allocation of free cash flow on a forward looking annual basis, while managing working capital and cash management as required.
The Company's free cash flow for the three months ended March 31, 2024 is shown below:
| Three Months Ended | |||
| ($ millions) | Mar 31 2024 | ||
| Adjusted funds flow (1) | $ | 3,138 | |
| Less: Dividends on common shares | 1,076 | ||
| Net capital expenditures (2) | 1,113 | ||
| Abandonment expenditures | 162 | ||
| Free cash flow | $ | 787 | |
| (1) Refer to the descriptions and reconciliations to the most directly comparable GAAP measure, which are provided in the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024, dated May 1, 2024. (2) Non-GAAP Financial Measure. Refer to the "Non-GAAP and Other Financial Measures" section of the Company's MD&A for the three months ended March 31, 2024, dated May 1, 2024. | |||
When net debt was between $10 billion and $15 billion, as was the case in 2023, approximately 50% of free cash flow was allocated to shareholder returns and 50% was allocated to the balance sheet, less strategic growth/acquisition opportunities. In 2023, free cash flow of $6.9 billion was calculated as adjusted funds flow of $15.3 billion less dividends on common shares of $3.9 billion, base capital expenditures of $4.0 million and abandonment expenditures of $0.5 billion.
Long-term Debt, net
Long-term debt, net (also referred to as net debt) is a capital management measure that is calculated as current and long-term debt less cash and cash equivalents.
| ($ millions) | Mar 31 2024 | Dec 31 2023 | Mar 31 2023 | ||||||
| Long-term debt | $ | 11,040 | $ | 10,799 | $ | 12,024 | |||
| Less: cash and cash equivalents | 767 | 877 | 92 | | |||||
| Long-term debt, net | $ | 10,273 | $ | 9,922 | $ | 11,932 |
CONFERENCE CALL
Canadian Natural Resources Limited (TSX: CNQ) (NYSE: CNQ) will be issuing its 2024 First Quarter Earnings Results on Thursday, May 2, 2024 before market open.
A conference call will be held at 7:00 a.m. MDT / 9:00 a.m. EDT on Thursday, May 2, 2024.
Dial-in to the live event:
North America 1-800-717-1738 / International 001-289-514-5100.
Listen to the audio webcast:
Access the audio webcast on the home page of our website, www.cnrl.com.
Conference call playback:
North America 1-888-660-6264 / International 001-289-819-1325 (Passcode: 56079#)
Canadian Natural is a senior crude oil and natural gas production company, with continuing operations in its core areas located in Western Canada, the U.K. portion of the North Sea and Offshore Africa.
Canadian Natural Resources LIMITED
T (403) 517-6700 F (403) 517-7350 E ir@cnrl.com
2100, 855 - 2 Street S.W. Calgary, Alberta, T2P 4J8
www.cnrl.com
SCOTT G. STAUTH
President
MARK A. STAINTHORPE
Chief Financial Officer
LANCE J. CASSON
Manager, Investor Relations
Trading Symbol - CNQ
Toronto Stock Exchange
New York Stock Exchange
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/207678
News Provided by Newsfile via QuoteMedia
Pine Cliff Energy Ltd. (TSX: PNE) (OTCQX: PIFYF) ("Pine Cliff" or the "Company") is pleased to announce the appointments of Mr. Daniel Keenan P. Eng to the position of Vice President Exploitation and Mr. Austin Nieuwdorp CA, CPA to the position of Vice President Finance and Controller both effective May 1, 2024.
Mr. Keenan became part of Pine Cliff in 2016. He holds a Bachelor of Mechanical Engineering Degree from the University of Victoria obtained in 2001. Throughout his 20-year career, he has taken on increasingly challenging roles in exploitation, production operations and facilities engineering, culminating in his most recent position as Pine Cliff's Manager of Exploitation. Notably, Mr. Keenan has played a pivotal role in identifying and expanding Pine Cliff's asset portfolio and drilling opportunities, showcasing his leadership and strategic vision.
Mr. Nieuwdorp originally joined Pine Cliff in May 2015 and later returned to the company in June 2022. He earned his Bachelor of Management and Organizational Studies from the University of Western Ontario in 2010, and Chartered Accountant designation in 2014. Throughout his tenure, Mr. Nieuwdorp has played a vital role in Pine Cliff's financial reporting team, serving as Corporate Controller in his most recent capacity.
Declares Monthly Dividend
Pine Cliff has declared a regular monthly dividend of $0.005 per common share to be paid May 31, 2024, to shareholders of record on May 15, 2024. This dividend and future dividends are expected to be designated as non-eligible dividends for Canadian income tax purposes, until further notice. Please consult a tax advisor with any questions regarding the dividend designation.
First Quarter 2024 Results Webcast
Pine Cliff will host a webcast at 1:30 PM MDT (3:30 PM EDT) on Wednesday, May 8, 2024. Participants can access the live webcast via this Link or through the link provided on the Company's website. A recorded archive will be available on the Company's website following the live webcast.
About Pine Cliff
Pine Cliff is a natural gas and crude oil company with a long-term view of creating shareholder value. Further information relating to Pine Cliff may be found on sedarplus.ca as well as on Pine Cliff's website at www.pinecliffenergy.com.
For further information, please contact:
Philip B. Hodge - President and CEO
Kristopher B. Zack - CFO and Corporate Secretary
Telephone: (403) 269-2289
Fax: (403) 265-7488
Email: info@pinecliffenergy.com
The TSX does not accept responsibility for the accuracy of this release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/207672
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ATCO Ltd. (TSX: ACO.X) (TSX: ACO.Y)
ATCO Ltd. (ATCO) will hold its 57th Annual General Meeting of share owners at 10 a.m. MDT on Wednesday , May 15, 2024. In addition to the formal business of the meeting, attendees will hear management's view of ATCO's full year 2023 and first quarter 2024 operational and financial performance.
At this year's meeting, members of the ATCO executive leadership team will also outline growth strategies and goals for ATCO Structures, ATCO EnPower and ATCO Energy Systems.
Attendees will hear from:
Share owners and interested parties can view the meeting virtually using Microsoft Teams via this link using a web browser (Chrome, Safari, Edge or Firefox) on a smartphone, tablet or computer. Using Internet Explorer is not recommended as it is no longer supported and may not function properly.
Attendees who are share owners or proxyholders wishing to vote their shares should review the information contained in the ATCO Management Proxy Circular dated March 11, 2024 , beginning on page one.
As a global enterprise ATCO Ltd. and its subsidiary and affiliate companies have approximately 20,000 employees and assets of $25 billion . ATCO is committed to future prosperity by working to meet the world's essential energy, housing, security and transportation challenges. ATCO Structures designs, builds and delivers products to service the essential need for housing and shelter around the globe. ATCO Frontec provides operational support services to government, defence and commercial clients. ATCO Energy Systems delivers essential energy for an evolving world through its electricity and natural gas transmission and distribution, and international operations. ATCO EnPower creates sustainable energy solutions in the areas of renewables, energy storage, industrial water and clean fuels. ATCO Australia develops, builds, owns and operates energy and infrastructure assets. ATCOenergy and Rümi provide retail electricity and natural gas services, home maintenance services and professional home advice that bring exceptional comfort, peace of mind and freedom to homeowners and customers. ATCO also has investments in ports and transportation logistics, the processing and marketing of fly ash, retail food services and commercial real estate. More information can be found at www.ATCO.com .
Investor & Analyst Inquiries:
Colin Jackson
Senior Vice President, Finance, Treasury & Sustainability
Colin.Jackson@atco.com
(403) 808 2636
Media Inquiries:
Kurt Kadatz
Director, Corporate Communications
Kurt.Kadatz@atco.com
(587) 228 4571
SOURCE ATCO Ltd.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/April2024/29/c6613.html
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-
PrairieSky Royalty Ltd. ("PrairieSky" or the "Company") (TSX: PSK) is pleased to announce its first quarter ("Q1 2024") operating and financial results for the three-month period ended March 31, 2024.
First Quarter Highlights:
President's Message
PrairieSky's positive oil royalty production momentum continued into Q1 2024 delivering a record 13,142 barrels per day. Oil royalty production increased 8% above Q1 2023 and 2% over Q4 2023 with growth primarily generated from the Mannville Stack and Clearwater heavy oil plays which have highly competitive full-cycle economics and have been the focus area of many well-capitalized private and public company operators on our royalty lands. We have positioned ourselves in the most economic conventional oil plays in Western Canada and are pleased with the level of oil royalty production growth we have seen on our lands, adding almost 2,000 barrels of oil per day since Q1 2022, the first quarter following the Heritage Royalty acquisition. Oil royalty production generated $92.3 million in royalty revenue in the quarter, 82% of total royalty revenue. NGL royalty volumes added an incremental $10.2 million of royalty revenue and natural gas royalty volumes added $10.7 million as AECO benchmark pricing remained weak in the quarter. Royalty revenue totaled $113.2 million in the quarter generated from total average royalty production volumes of 26,027 BOE per day (60% liquids). Other revenues added $7.5 million, including lease rentals, bonus consideration, water disposal fees and potash royalty revenues.
Leasing activity remained strong in Q1 2024. PrairieSky entered into 50 new leases with 42 different counterparties earning an aggregate of $4.2 million in bonus consideration. Leasing was primarily focused on Mannville medium and heavy oil targets with 40 wells spud as well as the Duvernay where drilling activity more than doubled from Q1 2023 with 14 wells spud. Activity was slower in the Viking and the Clearwater year over year with Clearwater activity focused on secondary recovery schemes. We are seeing early-stage success in waterflood and polymer floods on our Clearwater assets which we expect to lead to increased recoveries and lower declines on our royalty properties. Based on third-party producer budgets and current commodity pricing, we anticipate strong Clearwater activity throughout 2024. There were also 14 Montney and 6 Mannville liquids-rich natural gas wells spud in Northwest Alberta and British Columbia in the quarter.
PrairieSky generated quarterly funds from operations of $83.0 million or $0.35 per share (basic and diluted). Funds from operations were in line with Q1 2023 as increased oil royalty production and a narrower heavy oil differential offset the negative impacts of lower natural gas benchmark pricing and a wider light oil differential on royalty revenues. Funds from operations were lower than Q4 2023 primarily as a result of weaker benchmark pricing for oil, lower bonus consideration following a strong Q4 2023 and the annual payment of employee and officer long-term incentive compensation. PrairieSky declared a dividend of $0.25 per share or $59.7 million in the quarter. Excess funds from operations were used to reduce net debt, with $8.8 million used to acquire gross overriding royalty interests that are complementary to PrairieSky's existing asset base and are primarily targeting Mannville heavy and light oil. PrairieSky exited Q1 2024 with net debt of $208.3 million, down $13.8 million from December 31, 2023.
We would like to thank our dedicated staff for their efforts and our shareholders for the continued support.
Andrew Phillips, President & CEO
ACTIVITY ON PRAIRIESKY'S ROYALTY PROPERTIES
Third-party operators spud 174 wells (84% oil) on PrairieSky's royalty acreage in Q1 2024, down from 214 wells (87% oil) in Q1 2023. Spuds included 83 wells on our Fee Lands, 83 wells on our GORR acreage, and 8 unit wells. There were 147 oil wells spud which included 40 Mannville light and heavy oil wells, 40 Viking wells, 21 Mississippian wells, 12 Clearwater wells, 12 Bakken wells, 8 Duvernay wells, 5 Cardium wells, and 9 additional oil wells spud in the Belly River, Dunvegan, Jurassic, Montney and Triassic formations. There were 26 natural gas wells spud in Q1 2024, including 14 Montney gas wells, 6 Mannville gas wells and 6 Duvernay gas wells. There was also 1 helium well spud in the quarter. PrairieSky's average royalty rate for wells spud in Q1 2024 was 6.0% (Q1 2023 - 8.2%).
FINANCIAL AND OPERATIONAL INFORMATION
The following table summarizes select operational and financial information of the Company for the periods noted. All dollar amounts are stated in Canadian dollars unless otherwise noted.
A full version of PrairieSky's management's discussion and analysis ("MD&A") and unaudited interim condensed consolidated financial statements and notes thereto for the fiscal period ended March 31, 2024 is available on SEDAR+ at www.sedarplus.ca and PrairieSky's website at www.prairiesky.com .
Three Months Ended | ||||||||||||
| (millions, except per share or as otherwise noted) | March 31 2024 | December 31 2023 | March 31 2023 | |||||||||
| FINANCIAL | ||||||||||||
| Revenues | $ | 120.7 | $ | 136.6 | $ | 126.1 | ||||||
| Funds from Operations | 83.0 | 111.1 | 86.3 | |||||||||
| Per Share - basic and diluted (1) | 0.35 | 0.46 | 0.36 | |||||||||
| Net Earnings | 47.5 | 67.4 | 56.8 | |||||||||
| Per Share - basic and diluted (1) | 0.20 | 0.28 | 0.24 | |||||||||
| Dividends declared (2) | 59.7 | 57.3 | 57.3 | |||||||||
| Per Share | 0.25 | 0.24 | 0.24 | |||||||||
| Dividend payout ratio (3) | 72 % | 52% | 66% | |||||||||
| Acquisitions - including non-cash consideration (4) | 8.8 | 22.2 | 5.4 | |||||||||
| Net debt at period end (5) | 208.3 | 222.1 | 292.4 | |||||||||
| Shares Outstanding | ||||||||||||
| Shares outstanding at period end | 239.0 | 239.0 | 238.9 | |||||||||
| Weighted average - basic | 239.0 | 239.0 | 238.9 | |||||||||
| Weighted average - diluted | 239.0 | 239.0 | 238.9 | |||||||||
| OPERATIONAL Royalty Production Volumes | ||||||||||||
| Crude Oil (bbls/d) | 13,142 | 12,844 | 12,212 | |||||||||
| NGL (bbls/d) | 2,535 | 2,697 | 2,664 | |||||||||
| Natural Gas (MMcf/d) | 62.1 | 60.4 | 59.6 | |||||||||
| Royalty Production (BOE/d) (6) | 26,027 | 25,608 | 24,809 | |||||||||
| Realized Pricing | ||||||||||||
| Crude Oil ($/bbl) | 77.18 | 83.27 | 76.25 | |||||||||
| NGL ($/bbl) | 44.18 | 46.07 | 46.71 | |||||||||
| Natural Gas ($/Mcf) | 1.89 | 2.19 | 4.05 | |||||||||
| Total ($/BOE) (6) | 47.79 | 51.78 | 52.31 | |||||||||
| Operating Netback per BOE (7) | 39.60 | 48.68 | 43.80 | |||||||||
| Funds from Operations per BOE | 35.04 | 47.16 | 38.65 | |||||||||
| Oil Price Benchmarks | ||||||||||||
| Western Texas Intermediate (WTI) (US$/bbl) | 76.95 | 78.32 | 76.13 | |||||||||
| Edmonton Light Sweet ($/bbl) | 92.18 | 99.72 | 99.04 | |||||||||
| Western Canadian Select (WCS) crude oil differential to WTI (US$/bbl) | (19.33 | ) | (21.89 | ) | (24.78 | ) | ||||||
| Natural Gas Price Benchmarks | ||||||||||||
| AECO monthly index ($/Mcf) | 2.05 | 2.66 | 4.34 | |||||||||
| AECO daily index ($/Mcf) | 2.50 | 2.30 | 3.22 | |||||||||
| Foreign Exchange Rate (US$/CAD$) | 0.7411 | 0.7343 | 0.7397 | |||||||||
| (1) | Funds from operations and net earnings per share are calculated using the weighted average number of basic and diluted common shares outstanding. |
| (2) | A dividend of $0.25 per share was declared on March 11, 2024. The dividend was paid on April 15, 2024 to shareholders of record as at March 28, 2024. |
| (3) | Dividend payout ratio is defined under the "Non-GAAP Measures and Ratios" section of this press release. |
| (4) | Excluding right-of-use asset additions. |
| (5) | See Note 14 "Capital Management" in the interim condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 and Note 15 "Capital Management" in the audited annual consolidated financial statements for the years ended December 31, 2023 and 2022. |
| (6) | See "Conversions of Natural Gas to BOE". |
| (7) | Operating netback per BOE is defined under the "Non-GAAP Measures and Ratios" section of this press release. |
NORMAL COURSE ISSUER BID
PrairieSky will apply to the Toronto Stock Exchange ("TSX") to extend its normal course issuer bid ("NCIB") for an additional one-year period. The renewal of the NCIB has been approved by the Company's board of directors; however, the NCIB, including the limit of purchases thereunder, will be subject to acceptance by the TSX and, if accepted, will be made in accordance with the applicable rules and policies of the TSX and applicable securities laws. Under the NCIB, common shares may be repurchased in open market transactions on the TSX, and/or other Canadian exchanges or alternative trading systems. The price that PrairieSky will pay for common shares in open market transactions will be the market price at the time of purchase. Common shares acquired under the NCIB will be cancelled.
If approved, the NCIB is expected to commence shortly after regulatory approvals are obtained and upon expiry of the current program on May 31, 2024.
PrairieSky believes renewing the NCIB as part of its capital management strategy is in the best interests of the Company and represents an attractive opportunity to use cash resources to reduce PrairieSky's share count over time and thereby enhance the value of the common shares held by remaining shareholders. The Board currently intends to evaluate the NCIB, and the level of purchases thereunder, on an annual basis in conjunction with PrairieSky's annual financial results. The next regularly scheduled review will be in February 2025.
Decisions regarding increases to the NCIB will be based on market conditions, share price, best use of funds from operations, and other factors including debt repayment and options to expand our portfolio of royalty assets.
CONFERENCE CALL DETAILS
A conference call to discuss the results will be held for the investment community on Tuesday, April 23, 2024, beginning at 6:30 a.m. MDT (8:30 a.m. EDT). To participate in the conference call, you are asked to register at the link provided below. Details regarding the call will be provided to you upon registration.
Live call participants registration URL:
https://register.vevent.com/register/BIb55aaa0a3c164cf8a77c5f7441f199f7
FORWARD-LOOKING STATEMENTS
This press release includes certain statements regarding PrairieSky's future plans and operations and contains forward-looking statements that we believe allow readers to better understand our business and prospects. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "strategy" and similar expressions are intended to identify forward-looking information or statements. Forward-looking statements contained in this press release include estimates regarding our expectations with respect to PrairieSky's business and growth strategy; early-stage success in waterflood and polymer floods on PrairieSky's Clearwater assets and expectations of increased recoveries and lower declines on PrairieSky's royalty properties; expectations of strong Clearwater activity throughout 2024 based on third-party producer budgets and current commodity pricing; expectations that our royalty lands will continue to attract third-party activity; and the application of PrairieSky to renew the NCIB, the timing of when the NCIB will commence, the limit thereunder, PrairieSky's belief that repurchasing such common shares under the NCIB is a good allocation of PrairieSky's capital resources and will enhance the value of the common shares held by remaining shareholders.
With respect to forward-looking statements contained in this press release, we have made several assumptions including those described in detail in our MD&A and the Annual Information Form for the year ended December 31, 2023. Readers and investors are cautioned that the assumptions used in the preparation of such forward-looking information and statements, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. Our actual results, performance, or achievements could differ materially from those expressed in, or implied by, these forward-looking statements. We can give no assurance that any of the events anticipated will transpire or occur, or if any of them do, what benefits we will derive from them.
By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond our control, including the impact of general economic conditions including inflation, industry conditions, volatility of commodity prices, lack of pipeline capacity, currency fluctuations, increasing interest rates, imprecision of reserve estimates, competitive factors impacting royalty rates, environmental risks, taxation, regulation, changes in tax or other legislation, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, political and geopolitical instability and our ability to access sufficient capital from internal and external sources. In addition, PrairieSky is subject to numerous risks and uncertainties in relation to acquisitions. These risks and uncertainties include risks relating to the potential for disputes to arise with counterparties, and limited ability to recover indemnification under certain agreements. The foregoing and other risks are described in more detail in PrairieSky's MD&A, and the Annual Information Form for the year ended December 31, 2023 under the headings "Risk Management" and "Risk Factors", respectively, each of which is available on SEDAR+ at www.sedarplus.ca and PrairieSky's website at www.prairiesky.com .
Further, any forward-looking statement is made only as of the date of this press release, and PrairieSky undertakes no obligation to update or revise any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by applicable securities laws. New factors emerge from time to time, and it is not possible for PrairieSky to predict all of these factors or to assess, in advance, the impact of each such factor on PrairieSky's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The forward-looking information contained in this document is expressly qualified by this cautionary statement.
CONVERSIONS OF NATURAL GAS TO BOE
To provide a single unit of production for analytical purposes, natural gas production and reserves volumes are converted mathematically to equivalent barrels of oil (BOE). PrairieSky uses the industry-accepted standard conversion of six thousand cubic feet of natural gas to one barrel of oil (6 Mcf = 1 bbl). The 6:1 BOE ratio is based on an energy equivalency conversion method primarily applicable at the burner tip. It does not represent a value equivalency at the wellhead and is not based on either energy content or current prices. While the BOE ratio is useful for comparative measures and observing trends, it does not accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an indication of value.
NON-GAAP MEASURES AND RATIOS
Certain measures and ratios in this document do not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS") and, therefore, are considered non-GAAP measures and ratios. These measures and ratios may not be comparable to similar measures and ratios presented by other issuers. These measures and ratios are commonly used in the crude oil and natural gas industry and by PrairieSky to provide potential investors with additional information regarding the Company's liquidity and its ability to generate funds to conduct its business. Non-GAAP measures and ratios include operating netback per BOE and dividend payout ratio. Management's use of these measures and ratios is discussed further below. Further information can be found in the Non-GAAP Measures and Ratios section of PrairieSky's MD&A for the three months ended March 31, 2024.
"Operating Netback per BOE" represents the cash margin for products sold on a BOE basis. Operating netback per BOE is calculated by dividing the operating netback (royalty production revenues less production and mineral taxes and cash administrative expenses) by the average daily production volumes for the period. Operating netback per BOE is used to assess the cash generating and operating performance per unit of product sold and the comparability of the underlying performance between years. Operating netback per BOE measures are commonly used in the crude oil and natural gas industry to assess performance comparability. Refer to the Operating Results table on page 6 of PrairieSky's MD&A for the three months ended March 31, 2024 and 2023 and page 7 of PrairieSky's MD&A for the year ended December 31, 2023.
Three Months Ended | |||||||||||
| ($ millions) | March 31 2024 | December 31 2023 | March 31 2023 | ||||||||
| Cash from Operating Activities | $ | 79.7 | $ | 128.0 | $ | 17.2 | |||||
| Other Revenue | (7.5 | ) | (14.6 | ) | (9.3 | ) | |||||
| Amortization of Debt Issuance Costs | (0.1 | ) | (0.1 | ) | (0.2 | ) | |||||
| Finance Expense | 3.7 | 3.9 | 4.5 | ||||||||
| Current Tax Expense | 14.7 | 14.4 | 16.5 | ||||||||
| Net Change in Non-cash Working Capital | 3.3 | (16.9 | ) | 69.1 | |||||||
| Operating Netback | $ | 93.8 | $ | 114.7 | $ | 97.8 | |||||
"Dividend Payout Ratio" is calculated as dividends declared as a percentage of funds from operations. Payout ratio is used by dividend paying companies to assess dividend levels in relation to the funds generated and used in operating activities.
Three Months Ended | |||||||||||
| ($ millions) | March 31 2024 | December 31 2023 | March 31 2023 | ||||||||
| Funds from Operations | $ | 83.0 | $ | 111.1 | $ | 86.3 | |||||
| Dividends Declared | 59.7 | 57.3 | 57.3 | ||||||||
| Dividend Payout Ratio | 72 % | 52% | 66% | ||||||||
ABOUT PrairieSky Royalty Ltd.
PrairieSky is a royalty company, generating royalty production revenues as petroleum and natural gas are produced from its properties. PrairieSky has a diverse portfolio of properties that have a long history of generating funds from operations and that represent the largest and most consolidated independently-owned fee simple mineral title position in Canada. PrairieSky's common shares trade on the Toronto Stock Exchange under the symbol PSK.
FOR FURTHER INFORMATION PLEASE CONTACT:
| Andrew Phillips President & Chief Executive Officer PrairieSky Royalty Ltd. (587) 293-4005 Michael Murphy Vice-President, Geosciences & Capital Markets PrairieSky Royalty Ltd. (587) 293-4056 Investor Relations (587) 293-4000 www.prairiesky.com | Pamela Kazeil Vice-President, Finance & Chief Financial Officer PrairieSky Royalty Ltd. (587) 293-4089 |
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Driven by Garmin Health, a leading provider of digital health solutions that leverage the data and insights of the Garmin product ecosystem, the collaboration will focus on data integration, joint marketing initiatives and exploration of women’s health research. Using the Garmin Health API, pregnant women who consent to sharing their health and fitness activity data through the Garmin Health API can wear Garmin smartwatches and have their health data collected and integrated into the HeraCARE platform, including:
The collaboration will allow HeraCARE users to seamlessly connect their Garmin devices, providing a more comprehensive view of maternal health. This integration is expected to significantly augment the platform's existing capabilities, which include fetal and maternal heart rate monitoring, blood pressure tracking, and mood assessment. This collaboration will have an initial 3-year term with either group having the ability to withdraw by providing 3 months notice.
HeraMED Managing Director and CEO, Anoushka Gungadin, commented: “This is an incredibly exciting collaboration for HeraMED. Garmin is a globally recognised brand that has developed a specific smartwatch technology strategy for women. It is a significant step forward in our mission to revolutionise maternity care. By incorporating Garmin's high-quality sensor data into HeraCARE, we're expanding and enhancing our ability to provide continuous, real-time health insights to expectant mothers and their healthcare providers.
We are delighted to bring health and wellness data into our clinical grade platform for the purpose of transforming the model of care for maternity. The additional data points will contribute to HeraMED’s ‘data- as-an-asset’ approach with the possibility to monitor activities such as steps for pregnant mothers with hypertensive or diabetic conditions or sleep quality for our mental health care plans will only enrich the capability of HeraCARE.”
Garmin Health Senior Director of Global B2B Sales Joern Watzke said: “We are excited to collaborate with HeraMED to leverage Garmin smartwatch technology in support of women’s healthcare. This strategic relationship will highlight how Garmin wearable data can extend beyond informing daily healthy habits to supporting pregnancy monitoring by providing healthcare providers with valuable patient insights. By making smartwatch technology and advanced health data available for a variety of applications in the fields of healthcare, insurance and research, we believe Garmin is truly helping change the future of women’s healthcare for the better.”
In addition to the HeraCARE platform integration, HeraMED and Garmin will explore potential research collaborations and data integrations through the Garmin Health API focused on women’s health, including maternity care. This collaboration is dedicated to research and data rather than commercial and it is intended will develop specific research projects to be supported by targeted granting bodies in key target markets.
This collaboration agreement does not involve any direct financial consideration between the companies. However, HMD anticipates the collaboration is beneficial as it will enhance the HeraCARE platform by providing a more holistic view of maternal health by bringing health and wellness data together, and the additional data points will contribute to HMD's ‘data-as-an-asset’ strategy.
Click here for the full ASX Release
This article includes content from HeraMED Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
