Quarterly / Earnings Reports | Third Quarter (3Q) Update | Financial Results | Capital Markets | Capital Expenditure

Tamarack Valley Energy Third Quarter 2020 Results

Share Print Bookmark    |    Tuesday,November 10,2020

Tamarack Valley Energy Ltd. reported its Q3 2020 results.

Considerable market volatility has dominated 2020 to date, although the third quarter saw an improvement in WTI benchmark prices. Given the persistent uncertainty, Tamarack continues to effectively manage the business through a disciplined capital program and unwavering focus on generating free adjusted funds flow¹ . This strategy is designed to protect our financial strength and enhance the long-term sustainability of the Company.

Outlook:

• A strong balance sheet, with year-end net debt to trailing annual adjusted funds flow¹ forecasted to be approximately 1.5 times exiting 2020;
• Free adjusted funds flow¹ generation in 2020;
• Prudent risk management including a robust hedge book for the remainder of 2020 and the first half of 2021;
• A diverse drilling inventory which allowed us to accelerate natural gas drilling opportunities into Q4/20 from Q1/21 to capture strength in winter gas prices and take advantage of lower service costs;
• Enhanced sustainability due to lower corporate declines associated with a disciplined capital program, the impact of a low decline asset acquisition and the ongoing success of our Veteran Waterflood program; and
• Continued dedication to upholding the health and safety of our skilled and valued employees, as well as the residents in all of the communities where we operate.

Brian Schmidt, CEO, said: "I am particularly proud to highlight our commitment to environmental, social and governance (“ESG”) principles with the publication of our inaugural Sustainability Report. This report, titled “Future Forward Energy”, highlights Tamarack’s approach to sustainability including our commitment to greenhouse gas emissions management as well as building on our Indigenous and community partnerships within the areas where we operate. In addition, the report highlights specific and measurable goals and targets related to key priorities established by the Company.

"On behalf of Tamarack’s management team and Board of Directors, we would like to thank our shareholders, employees and other stakeholders for their ongoing support during these turbulent times."

Q3 2020 Summary

The third quarter was characterized by continued uncertainty facing the oil and gas sector, largely related to range-bound WTI prices caused by the demand outlook due to the COVID-19 pandemic. Despite these challenges, Tamarack was able to manage our business effectively through this cycle, as we recorded the following:

• Free adjusted funds flow¹ of approximately $20.5 million, which represented a total payout ratio¹ of approximately 34%;
• Average production of 21,533 boe/d in Q3/20, representing an increase of approximately 3% over Q2/20;
• Investment of approximately $10.4 million in exploration and development capital expenditures, directed to the equipping of one (1.0 net) Banff oil well plus continued investment in our Veteran Viking waterflood program with the drilling, completion and tie-in of a six-well pad along with one water source well;
• Completion of an asset acquisition on July 9, 2020 for $4.0 million which included approximately 2,500 boe/d of production;
• Operating netback¹ of $17.93/boe which contributed to adjusted funds flow¹ of $30.8 million ($0.14 per share basic and diluted); and
• Reduction of net debt¹ to $199.6 million at quarter-end, a 6% decrease compared to $213.1 million at the end of Q2/20.

As at September 30, 2020, the Company had drawn $199.0 million against its $275 million bank syndicated credit facility, with redetermination of the facility currently ongoing. Tamarack expects to generate adjusted funds flow¹ over and above planned capital expenditures and the Company continues to be well positioned from a liquidity standpoint.