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Petrus Resources First Quarter 2021 Results

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   |    Thursday,May 13,2021

Petrus Resources Ltd. reported its Q1 2021 results.


  • Commodity price improvements – Realized price per boe increased by 27% in the first quarter of 2021 compared to the fourth quarter of 2020; from $24.05/boe to $30.55/boe. The increase was largely associated with the improvement in the realized pricing of oil and NGLs, which increased by 33% and 59%, respectively, quarter over quarter.
  • Funds flow – Generated funds flow of $7.0 million ($0.14 per share) for the first three months of 2021, 9% higher than the previous quarter.
  • Capital activity – During the quarter, Petrus drilled 4 gross (2.2 net) wells with capital expenditures of $7.9 million.
  • Low operating costs – Corporate operating expense for the three months ended March 31, 2021 was $6.12/boe. The Company continues to focus on optimizing its cost structure through facility ownership and control, particularly in the Ferrier area where first quarter 2021 operating expense was $3.00/boe.

Following extreme market volatility throughout 2020, the first quarter of 2021 brought encouraging signs of rebalancing. Global economies continue to recover, bolstering demand and improving market conditions, which has translated to higher oil and natural gas prices. Petrus generated funds flow of $7.0 million during the first quarter of 2021. This was 9% higher than the previous quarter despite the Company’s first quarter production of 5,912 boe/d (65% natural gas) being 7% lower than production in the fourth quarter of 2020. This increase in funds flow is entirely due to commodity price improvement. The decrease in production quarter over quarter is a result of the natural declines of previously drilled wells coupled with an intentionally restrained approach to capital spending.

In light of the continued uncertainty associated with the COVID-19 pandemic and the Company’s sustained commitment to debt repayment, Petrus executed a disciplined capital strategy throughout the first quarter. Petrus’ Board of Directors approved a first quarter capital budget of $9.0 million, of which $7.9 million was deployed with the majority being directed toward the drilling of four (2.2 net) Cardium wells in the Company’s core area in Ferrier. Petrus continues to focus capital investment in Ferrier where ownership of critical infrastructure supports low operating costs and high rates of return.

Balance sheet strength remains Petrus’ top priority. Between the first quarter of 2020 and 2021, Petrus reduced net debt(1) by $9.3 million; a 7% decrease. Since December 31, 2015 the Company has repaid 49% or $110 million of net debt. Petrus’ revolving credit facility (“RCF”) matures May 31, 2021, and the second lien loan matures July 31, 2021. Management is currently working with the lenders on extension terms and continues to focus on its disciplined debt reduction strategy.29dk2902l

2021 Outlook

Consistent with the company’s strategy of financial flexibility and balance sheet strength, Petrus will determine and provide guidance around quarterly capital spending as the year progresses. Petrus’ second quarter 2021 capital budget is forecasted to be $1.3 million and consists of mostly maintenance capital with no drilling planned for the quarter. Management continues to review pricing regularly and the Company has the financial and operational flexibility to adjust capital spending plans quickly in response to changing market conditions. Throughout 2021, Petrus plans on continuing to take a controlled approach to capital investments while reducing the amount drawn on the RCF.

Ops Summary

First quarter average production was 5,912 boe/d in 2021 compared to 7,323 boe/d in 2020. The decrease in production can be attributed to natural declines and reduced capital activity as the Company continues to strategically restrain capital spending and focus on debt reduction.

In the first quarter of 2021, the Company invested capital of $7.9 million, which was largely directed to the drilling of one (1.0 net) Petrus operated well and three (1.2 net) non-operated wells in Ferrier. As all four of these wells began producing late in the quarter, production increases will not be fully realized until the second quarter.

Credit Facility Update

Petrus’ revolving credit facility (“RCF”) matures May 31, 2021, and the second lien loan matures July 31, 2021. Management is currently working with the lenders on extension terms and continues to focus on its disciplined debt reduction strategy.

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