Clearview Resources Second Quarter 2021 Results

Clearview Resources Ltd. reported its Q2 2021 results.

Tony Angelidis, President and CEO of Clearview, said: “The sustained strength in commodity prices combined with production growth resulted in the Company’s financial position continuing to improve. This ongoing progress in the Company’s balance sheet has freed up capital and allowed Clearview to engage in a second optimization program, similar to the first program completed earlier this year."

Highlights:

• Natural gas prices remained strong in the second quarter of 2021, averaging over $3.00 per mcf, with oil and pentane prices also continuing to increase during the second quarter of 2021, with Canadian light oil prices averaging over $77.00 per barrel;
• Clearview’s realized sales price was $35.07 and $34.63 per boe for the three and six months ended June 30, 2021, respectively, an increase of 133% and 84% versus the comparative periods of 2020;
• Production averaged 2,258 boe/d, an increase of 160 boe/d from the first quarter of 2021, as the production gains from the optimization and repair and maintenance program undertaken in the first quarter of 2021 were more fully realized in the second quarter of 2021;
• The increase in realized sales prices per boe and growth in production resulted in the Company’s operating netback of $13.82 and $13.97 per boe in the three and six months ended June 30, 2021, respectively, representing an increase of 3,835% and 613% versus the comparative periods in 2020;
• In the quarter ended June 30, 2021, Clearview generated adjusted funds flow of $1.0 million ($0.09 per share) and cash flow from operations of $0.3 million as compared to $0.1 million ($0.01 per share) and negative $0.3 million, respectively, in the second quarter of 2020; and
• With minimal capital expenditures of $0.2 million, the Company reduced net debt by $0.8 million in the second quarter of 2021, down to $11.6 million, resulting in a net debt to annualized adjusted funds flow ratio of 2.97:1.

Financial & Operational Results

In the second quarter of 2021, benchmark prices for crude oil, natural gas and natural gas liquids continued to improve or remain consistent with the first quarter of 2021.  This resulted in the continued improvement in the Company’s realized sales prices for all of its production.  Clearview had a 133% increase in its realized sales price to $35.07 per boe, up from $15.05 per boe in the second quarter of 2020 which was impacted by the collapse of commodity prices due to the COVID-19 pandemic.

Production for the three months ended June 30, 2021 was up 32% to 2,258 boe/d versus the comparative period of 2020 and up 8% from the first quarter of 2021.  The increase from the first quarter of 2021 resulted from increased production volumes brought on-stream late in the first quarter upon completion of a successful and very capital efficient optimization and repairs and maintenance program.

Clearview has been able to maintain average quarterly production of approximately 2,100 boe/d over the past six quarters on minimal net capital expenditures of $1.1 million.

Operating costs per boe were higher by 6% in the first six 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 operating 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 realized sales price per boe.  Clearview generated an operating netback of $2.8 million in the three months ended June 30, 2021 and $5.5 million in the first six months of the current year.

Adjusted funds flow for the six months ended June 30, 2021 was $2.6 million or $0.22 per basic and fully diluted share, compared to $0.6 million or $0.05 per basic and fully diluted share in the comparative six months of 2020.  Capital expenditures and decommissioning expenditures were only $1.0 million in the first six months of 2021 which enabled the Company to further reduce its net debt.  Adjusted funds flow in excess of expenditures in the first six months of 2021 was directed to the further reduction of net debt by $1.6 million.  At June 30, 2021, the Company had net debt of $11.6 million and a net debt to annualized adjusted funds flow ratio of 2.97:1.

The Company incurred a net loss of $2.5 million in the second quarter of 2021 versus a net loss of $2.8 million in the comparative quarter.

Operations

Following a very successful phase one optimization program in the first quarter of 2021, Clearview initiated a phase two, well optimization program in June, 2021. As of this date, the Company has completed operations on eight gross (8.0 net) wells. Total spending on this capital program is approximately $0.4 million. Six of the eight wells are currently on production and two wells are being equipped for production. Early production results appear to be very encouraging and in line with the earlier, phase one results. Clearview has an additional six gross (4.0 net) wells that have been identified for optimization spending, after the completion of phase two, representing approximately $0.2 million.

Clearview continues to invest in the abandonment and reclamation of its non-producing wells and surface leases. Field operations have resumed after the second quarter as road access conditions have permitted. The Company anticipates spending approximately $0.2 million of capital in the second half of 2021 in addition to approximately $0.5 million of spending funded through government Site Rehabilitation Program (“SRP”) grants.

Outlook

Over the first six months of 2021, Clearview has continued to strengthen its financial position by reducing its net debt to $11.6 million with a total corporate credit capacity from its lender of $21.25 million. With the price of oil recovering to between US $65.00 and $75.00 per barrel for West Texas Intermediate, the Company has resumed capital spending with a second optimization program to further 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.

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 light oil weighted development opportunities to increase its value per share and ultimately provide liquidity to all its stakeholders.