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Clearview Resources Third Quarter 2021 Results

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   |    Monday,November 22,2021

Tony Angelidis, President and CEO of Clearview, said: “During the third quarter Clearview continued to focus on debt reduction while undertaking a second phase optimization program to take advantage of strong oil and natural gas prices. Over the year, we have reduced our net debt by $2.1 million while spending $2.0 million maintaining production, approximately 2,100 barrels of oil equivalent per day, and abandoning 8.4 net wells."

Highlights:

• The Company reduced net debt by $0.5 million in the third quarter of 2021, down to $11.1 million, with a net debt to annualized adjusted funds flow ratio of 1.85:1;
• Production averaged 2,074 barrels of oil equivalent per day (“boe/d”), a decrease of 3%, versus the third quarter of 2020. Oil and natural gas production was reduced in the Windfall area for most of July due to a third party natural gas processing facility upgrade being completed by the operator;
• During the third quarter, Clearview acquired Crown land in the Jarvie area of Alberta focused on the developing Clearwater oil play in the region;
• Commodity prices continued to rise in the third quarter of 2021, with natural gas increasing 61% to average $3.60 per million cubic feet (“mcf”), and Canadian light oil increasing 68% to average $83.81 per barrel versus the third quarter of 2020;
• Clearview’s realized sales price was $40.82 and $36.65 per barrel of oil equivalent (“boe”) for the three and nine months ended September 30, 2021, respectively, an increase of 83% for both periods versus the third quarter of 2020;
• The increase in realized sales prices per boe and growth in production resulted in the Company’s operating netback being $18.89 and $15.57 per boe in the three and nine months ended September 30, 2021, respectively, representing an increase of 148% and 296% versus in 2020;
• In the quarter ended September 30, 2021, Clearview generated adjusted funds flow of $1.5 million ($0.13 per share) and cash flow from operations of $2.1 million as compared to $0.9 million ($0.08 per share) and $0.9 million, respectively, in the third quarter of 2020;
• In the nine months ended September 30, 2021, Clearview has completed abandonment operations on 9 gross (8.4 net) wells incurring $0.2 million of cash expenditures and utilizing $0.3 million of Site Rehabilitation Program grants from the Alberta Government; and
• Subsequent to the third quarter of 2021, the Company’s lender completed its annual credit review and established the credit facilities for the Company at a total of $15.0 million, consisting of an operating facility of $8.75 million and a $6.25 million facility with Export Development Canada.

Financial Results

In the third quarter of 2021, benchmark prices for crude oil, natural gas and natural gas liquids continued to increase from the previous quarter.  This resulted in higher prices for all of the Company’s production.  Clearview had an 83% increase in its realized sales price to $40.82 per boe, up from $22.29 per boe, in the third quarter of 2020 which was still being impacted by the collapse of commodity prices in the second quarter of the prior year due to the COVID-19 pandemic.

Production for the quarter ended September 30, 2021 decreased by 3% versus the comparative period.  The decrease in production was primarily due to the Company’s Windfall property being shut-in for the month of July due to turnaround operations undertaken at the third-party natural gas processing facility.  Natural gas liquids, generally associated with natural gas production, increased 14% for the quarter ended September 30, 2021, versus the comparative period, due to a change in natural gas processing facility for a portion of the Company’s natural gas production, effective in September 2020, which extracts greater ethane volumes.

Operating costs and transportation costs per boe were higher by 12% in the first nine months of 2021, versus the comparative period of 2020, primarily due to higher power and fuel costs, higher repairs and maintenance costs associated with the optimization program and higher processing fees to process natural gas production through third-party facilities.  The higher production costs per boe and higher royalties per boe, due to reduced gas cost allowance and higher sales prices on which Crown royalties are calculated, were more than offset by the increase in the Company’s realized sales price per boe.  Clearview generated an operating netback of $3.6 million in the three months ended September 30, 2021 and $9.1 million in the first nine months of the current year.

Adjusted funds flow for the nine months ended September 30, 2021 was $4.1 million or $0.35 per basic and fully diluted share, compared to $1.5 million or $0.13 per basic and fully diluted share in the comparative nine months of 2020.  Capital expenditures and decommissioning expenditures were only $2.0 million in the first nine months of 2021 which enabled the Company to further reduce its net debt.  Adjusted funds flow in excess of expenditures in the first nine months of 2021 was directed to the further reduction of net debt by $2.1 million.  At September 30, 2021, the Company had net debt of $11.1 million and a net debt to annualized adjusted funds flow of 1.85:1.

The Company incurred a net loss of $1.1 million in the third quarter of 2021 versus a net loss of $1.8 million in the comparative quarter of 2020.

Operations

Clearview completed its phase 2 optimization and reactivation program in the third quarter following a very successful phase 1 program in the first half of 2021. These two programs consisted of 25 gross wells and delivered production efficiencies of approximately $4,000 per flowing boe contributing approximately 280 boe/d to corporate production, currently. This program was consistent with Clearview’s plan to strengthen its financial position and was able to significantly offset corporate declines. Based on the success of these programs, the Company has started planning phase 3 which is anticipated to commence prior to year end.

The Company has continued abandonment and reclamation activities through voluntary participation in the Alberta Area Based Closure (“ABC”) program and with grants from the Alberta Site Rehabilitation Program (“SRP”). Total spending on these activities was approximately $0.2 million in the third quarter and $0.5 million as of September 30, 2021. Abandonment and reclamation activities are ongoing, complimenting the 9 gross (8.4 net) wells abandoned so far in 2021.

Outlook

Over the first nine months of 2021, Clearview has continued to strengthen its financial position by reducing its net debt to $11.1 million ($9.9 million of bank debt plus working capital deficit) with a total corporate credit capacity from its lender of $15.0 million. With the price of oil recovering to between US $65.00 and $85.00 per barrel for West Texas Intermediate, the Company has completed capital spending on its second optimization program and is planning to further optimize its production with a third program commencing in the fourth quarter of 2021 and continuing into 2022. Clearview has a large inventory of low risk capital projects to be exploited to increase production, revenues and ultimately further strengthen the Company’s financial position.

Clearview continues to direct efforts toward strategic acquisitions and potential mergers/business combinations to significantly increase the size of the Company for greater efficiencies and cash generating capabilities. The objective of this effort would be to achieve enough adjusted funds flow to allow Clearview to access its deep inventory of oil weighted development opportunities to increase its value per share and ultimately provide liquidity to all its stakeholders.