Quarterly / Earnings Reports | First Quarter (1Q) Update | Financial Results | Capital Markets | Capital Expenditure | Drilling Activity

Clearview Resources First Quarter 2021 Results

Share Print Bookmark    |    Thursday,May 27,2021

Clearview Resources Ltd. reported its Q1 2021 results.

Tony Angelidis, President and CEO of Clearview, said: “The significant efforts and accomplishments of fiscal 2020 continued to bear fruit in the first quarter of 2021 as a rising price environment compounded the Company’s production optimization program. This resulted in meaningful and positive development in Clearview’s debt to adjusted funds flow metric placing the Company on a much more solid financial footing,” Mr Angelidis added.

Highlights:

• Clearview’s realized sales price was $34.16 per boe for the three months ended March 31, 2021, an increase of 57%, compared to $21.70 per boe in the comparative quarter;
• Natural gas prices in the first quarter of 2021 continued to remain strong with the Company’s realized price per thousand cubic feet (“mcf”) increasing 70% to $3.54 per mcf over the comparative quarter of 2020;
• The increase in realized sales prices increased the Company’s operating netback by 284%, to $14.13 per boe, in the first quarter of 2021 versus the comparative period in 2020 of $3.68 per boe;
• The Company completed an optimization and repair and maintenance program on thirteen wells at a cost of $0.7 million with a capital efficiency ratio of $2,600 per flowing barrel of oil equivalent (“boe”);
• Price increases and the repairs and maintenance and optimization program generated adjusted funds flow of $1.6 million ($0.14 per share) in the quarter ended March 31, 2021 and cash flow from operations of $1.4 million as compared to $0.5 million ($0.04 per share) and $1.2 million, respectively, in the comparative quarter;
• The net result of these activities was to reduce net debt by $0.8 million in the first quarter of 2021, down to $12.4 million with a net debt to annualized adjusted funds flow of 1.9:1; and 
• Clearview completed a successful abandonment program on 7 gross (6.8 net) wells, reducing decommissioning obligations by $0.4 million utilizing Site Rehabilitation Program (“SRP”) grants of $0.2 million and cash expenditures to Clearview of only $0.1 million.

Financial & Ops Summary

In the first quarter of 2021, benchmark prices for crude oil, natural gas and natural gas liquids continued to improve significantly from the fourth quarter of 2020. This translated to a significant improvement in the Company’s realized sales prices for all its production. Clearview had a 57% increase in its realized sales price to $34.16 per boe, up from $21.70 per boe in the first quarter of 2020.

Production for the three months ended March 31, 2021 was down 9% to 2,098 boe/d versus the comparative period of 2020 due to minimal capital spending on optimization projects and repairs and maintenance throughout 2020 due to the lower commodity prices stemming from the COVID-19 pandemic. Clearview undertook an optimization program in the first quarter of 2021 with increased production volumes brought on-stream late in the quarter.

Operating costs per boe were higher by 11% in the first quarter of 2021 primarily due to a 9% decrease in production per day compared to the same quarter in 2020. The higher operating costs per boe and higher royalties per boe were more than offset by the increase in realized sales price per boe resulting in a 284% increase in the field netback per boe. Clearview generated a field netback of $2.7 million in the three months ended March 31, 2021.

Adjusted funds flow for the three months ended March 31, 2021 was $1.6 million or $0.14 per basic and fully diluted share, compared to $0.5 million or $0.04 per basic and fully diluted share in the comparative quarter of 2020. Capital expenditures and decommissioning expenditures were only $0.8 million in the first quarter of 2021 which enabled the Company to further reduce its net debt. Adjusted funds flow in excess of capital spending in the first quarter of 2021 was directed to the further reduction of net debt by $0.8 million. At March 31, 2021, the Company had net debt of $12.4 million and a net debt to annualized adjusted funds flow of 1.9:1. This reduced net debt to annualized adjusted funds flow will reduce the credit spread paid on the Company’s bank debt, resulting in lower interest costs in the future.

The Company incurred a net loss of $1.7 million versus a net loss of $23.2 million in the comparative quarter, which included an impairment expense of $22.3 million.

Operational Update

Clearview is off to a strong start in the first quarter of 2021. The Company completed an optimization and repair and maintenance program on thirteen wells at a cost of approximately $0.7 million bringing Clearview’s production to 2,220 boe/d in the month of March. The thirteen wells have been on production since March 2021 and have produced an average of 270 boe/d in April generating approximately $0.6 million of revenue to date with a capital efficiency ratio of $2,600 per flowing boe. Clearview is pleased with the execution of this spending program and is reaching into its optimization inventory of future, organic growth in the form of a second program.

Through the first quarter of 2021, Clearview abandoned seven gross (6.8 net) wells, retiring $0.4 million of downhole liability at a cash cost to Clearview of only $0.1 million and SRP grants of $0.2 million. Clearview will continue to prioritize its abandonment program in the second half of 2021 once road bans are lifted in its areas of operations and a closer examination of non-operated partner decommissioning spending is known. The Company anticipates spending a total of approximately $0.4 million on abandonment activities in 2021 in addition to any additional funds provided by the SRP grants.

Outlook

Over the first quarter of 2021, Clearview has continued to strengthen its financial position by reducing its net debt to $12.4 million with a total corporate credit capacity from its lender of $21.25 million. With the price of oil recovering to over US $60.00 per barrel for West Texas Intermediate, the Company has resumed capital spending to optimize the production from its existing asset base. Clearview continues to have a large inventory of low risk capital projects which could be exploited to increase production, revenues and ultimately further strengthen the Company’s financial position.

Having successfully completed the well optimization program in the first quarter, Clearview is planning an additional capital program in the third and fourth quarters of 2021.