ANNUAL MEETING The Annual General Meeting of shareholders will be held at 3:30 p.m. on Wednesday, May 13, 2020 at Calgary City Centre, +15 Level Conference Centre, 215 2nd Street S.W., Calgary, Alberta, Canada. All shareholders and…
Highlights Three Months to Three Months to Year Ended Year Ended Thousands of Cdn, except volumetric and per-share amounts Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018 FINANCIAL Revenue from product sales(1) 48,671 74,799…
PRESIDENTS MESSAGE 2019 FOURTH QUARTER HIGHLIGHTS The start-up of a four well pad at Nig in late November increased production while funds flow benefitted from the increase in production and from an improvement in natural gas prices…
2019 YEAR-END HIGHLIGHTS Production and funds flow were below initial guidance provided in November 2018 mainly as a result of unplanned outages, lower NGL pricing for the contract year starting April 2019, and from production…
RESERVE EVALUATION HIGHLIGHTS Reserves increased modestly in 2019 as a result of positive technical revisions and additional future drilling locations being recognized in the Nig area. Reserves (Mboe) YOY Increase 2019 2018 2017…
OPERATIONS REVIEW Umbach, Nig and Fireweed Areas of Northeast British Columbia Storm's land position is prospective for liquids-rich natural gas from the Montney formation and totals 121,000 net acres (172 net sections) with 79…
Frac Completed Year of Completion Stages Length IP90 Cal Day IP180 Cal Day IP365 Cal Day Umbach 2017 - 2018 34 1895 m 4.6 Mmcf/d(1) 4.4 Mmcf/d(1) 4.0 Mmcf/d(1) 19 hzs 24 Bbls/Mmcf(2) 20 Bbls/Mmcf(2) 15 Bbls/Mmcf(2) 19 hzs 19 hzs 17 hzs…
OUTLOOK Production in the first quarter of 2020 is forecast to average 24,000 to 25,000 Boe per day with capital investment estimated to be 30 million (approximately 40% allocated to the Nig Gas Plant project). Updated guidance for 2020…
28 to 38 million at Nig includes 14 million to complete the gas plant (100% working interest), drilling two to four horizontal wells (2.0 to 4.0 net) and completing and pipeline connecting two to four wells (2.0 to 4.0 net); and 11…
I appreciate the considerable and relentless efforts of Storms employees and the advice, guidance and support of the Board of Directors which have both been invaluable to Storms success to date. Respectfully, Brian Lavergne,…
RESERVES AT DECEMBER 31, 2019 Storms year-end reserve evaluation effective December 31, 2019 was prepared by InSite Petroleum Consultants Ltd. (InSite) in a report dated February 20, 2020. InSite has evaluated all of Storms natural gas…
Bcf gross raw gas per section in the upper Montney (total net DPIIP 2.24 Tcf on 44 net sections). Forecast recovery of DPIIP totals 54% for 2P reserves. The full corporate decommissioning liability for all wells and facilities was…
Gross Company Reserve Reconciliation for 2019 (Gross company interest reserves before deduction of royalties payable) 6:1 Oil Equivalent (Mboe) Proved Developed Total Proved plus Producing Proved Probable Probable December 31, 2018…
All-in Finding, Development and Acquisition Costs (FD&A) (including acquisitions, dispositions and revisions) Proved Developed Producing FD&A Cost (All-in) 2019 2018 2017 3 Year Total Net capital investment (000s) 96,843 84,763 81,685…
Net Present Value Summary (before tax) as at December 31, 2019 Benchmark oil and NGL prices used are adjusted for quality of oil or NGL produced and for transportation costs. The calculated NPV include a deduction for estimated future…
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MANAGEMENTS DISCUSSION & ANALYSIS INTRODUCTION Set out below is managements discussion and analysis (MD&A) of financial and operating results for Storm Resources Ltd. (Storm or the Company) for the three months and year ended December…
When comparing to 2018, condensate and NGL prices were down 13% and 70%, respectively. Benchmark crude oil pricing decreased in 2019 compared to 2018 as a result of a lower oil demand forecast due to trade tensions between China and the…
Storms 2019 capital program was focused on the Nig property, with construction of the Nig Gas Plant along with drilling and completing an acid gas injection well and drilling and completing a four well pad that is evaluating different…
outages reduced production by approximately 2,000 Boe per day for the year ended December 31, 2019. In addition to the unplanned outages, production was voluntarily curtailed at times in response to weak natural gas pricing at Station…
A reconciliation of year-over-year revenue changes for the three month period ending December 31, 2019 is as follows: Natural Gas Condensate NGL Total Revenue from product sales Q4 2018 55,973 13,256 5,570 74,799 Effect of changes in…
In October 2018, a pipeline rupture occurred on the Enbridge T-south line which reduced pipeline capacity. This had increased volatility in pricing for both Station 2 (lower) and Sumas (higher). During the fourth quarter of 2018, the…
As a result of the Companys diversified marketing strategy, Storms realized natural gas price was approximately 120% higher than Station 2 pricing in the fourth quarter of 2019 and approximately 220% higher for the year ended December 31,…
Storms realized price for NGL, excluding condensate, in the fourth quarter of 2019 decreased by 83% relative to the same period of 2018. For the year ended December 31, 2019, the realized price for NGL, excluding condensate, decreased by…
Royalties, as a percentage of revenue from product sales, increased in 2019 compared to 2018 primarily due to receipt of infrastructure royalty credits of 3.7 million in 2019 compared to credits of 5.3 million received in 2018 and a…
Field Netbacks Details of field netbacks, measured per commodity unit sold, are as follows: Three Months Ended December 31, 2019 Natural Gas(1) Condensate(2) NGL Total (/Mcf) (/Bbl) (/Bbl) (/Boe) Revenue from product sales 3.28…
The field operating netback for the fourth quarter of 2019 decreased by 55% (35% decrease after hedging) compared to the fourth quarter of 2018. The 2019 field operating netback decreased by 39% (34% decrease after hedging) compared…
General and Administrative Costs Three Months to Three Months to Year Ended Year Ended Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018 Charge for period before recoveries 2,039 2,061 8,870 8,155 Overhead recoveries (594)…
(1) Excludes lease interest. Lower realized prices was the predominant factor in the 40% decrease in funds flow in the fourth quarter of 2019 versus the fourth quarter of 2018. The cash return on capital employed (CROCE) over the last…
Share-Based Compensation Three Months to Three Months to Year Ended Year Ended Dec. 31, 2019 Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2018 Charge for period 656 838 2,464 3,127 Per Boe 0.32 0.41 0.33 0.42 Share-based compensation is a…
Excluding unrealized gains and losses on risk management contracts, the decrease in net income in the three months and year ended December 31, 2019 compared to the same periods of 2018 is primarily attributable to the weakened commodity…
At December 31, 2019, debt including working capital deficiency amounted to 128.9 million, representing approximately 63% of the available credit facility. As at December 31, 2019, the Company had issued letters of credit in the amount…
Share Capital Details of share issuances from inception to December 31, 2019 are as follows: Number of Price Gross Proceeds(1) Shares (000s) per Share (000s) June 8, 2010 Issued upon incorporation 1.00 - August 17, 2010 Issued under…
All such contractual obligations reflect market conditions at the time of contract and do not involve related parties. In the first quarter of 2018, the Company entered into an office lease agreement commencing on October 1, 2018. The…
SELECTED ANNUAL FINANCIAL INFORMATION Year Ended Year Ended Year Ended (000s unless otherwise stated) December 31, 2019 December 31, 2018 December 31, 2017 Revenue from product sales 173,422 226,258 152,880 Funds flow 59,549 100,092…
CRITICAL ACCOUNTING ESTIMATES Financial amounts included in this MD&A and in the audited consolidated financial statements for the years ended December 31, 2019 and 2018 are based on accounting policies, estimates and judgments which…
Property and Equipment, and Depletion and Depreciation Amounts transferred from exploration and evaluation assets to property and equipment represent the accumulated net costs associated with the property transferred. The timing and the…
LIMITATIONS Forward-Looking Statements Certain information set forth in this document, including managements assessment of Storms future plans and operations, as outlined in Storms February 27, 2020 press release, contains…
future finding and development costs; estimates of the future life of depreciable assets; future transportation, general and administrative and interest costs in total and by commodity unit as outlined in 2020 guidance; effect of…
law. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements contained therein are expressly qualified by this cautionary statement. Boe Presentation - Natural gas is converted to a…
ROCE is non-GAAP financial measure and does not have a standardized meaning under IFRS. ROCE is determined by taking net income plus interest and finance costs and deferred income tax expense on a 12-month trailing basis, and dividing it…
protection this provides has limited effect against medium and long term pricing trends. The Company may shut in production rather than sell it at prices considered by management to be unacceptably low. The Companys production base is…
sulfide, which is potentially lethal and has to be removed from the natural gas stream. This requires access to specialized processing facilities. Although the Company considers that access to such facilities is adequate for current and…
market, and potential changes to the Companys operations or to reserve measurement protocols arising from regulatory or fiscal changes. All of these estimates may vary from actual circumstances, with the result that estimates of…
new or termination of existing supply arrangements, as well as downtime due to maintenance or damage, either to owned or third-party facilities and pipelines. The Company will attempt to mitigate these risks as follows: Properties are…
effect on the protection of intellectual property and confidential and proprietary information, and on the Companys business, financial condition, results of operations and fund flow. Extraordinary Circumstances Storms operations and…
Companys leases are operating leases, which are not recognized on the consolidated statement of financial position. Rather, these payments in respect of operating leases are recognized in the consolidated statement of income. Policy…
FINANCIALS MANAGEMENTS REPORT To the Shareholders of Storm Resources Ltd. The financial statements of Storm Resources Ltd. were prepared by management in accordance with International Financial Reporting Standards (IFRS) as issued by…
INDEPENDENT AUDITORS REPORT To the Shareholders of Storm Resources Ltd. Opinion We have audited the consolidated financial statements of Storm Resources Ltd. and its subsidiaries (Storm), which comprise the consolidated statements of…
Those charged with governance are responsible for overseeing Storms financial reporting process. Auditors Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about…
Consolidated Statements of Financial Position (Canadian 000s) Notes December 31, 2019 December 31, 2018 ASSETS Current Accounts receivable 16 21,961 29,262 Prepaids and deposits 764 853 Risk management contracts 16 1,113 2,341…
Consolidated Statements of Income and Comprehensive Income Year Ended Year Ended (Canadian 000s except per-share amounts) Notes December 31, 2019 December 31, 2018 Revenue Revenue from product sales 9 173,422 226,258 Royalties…
Consolidated Statements of Changes in Shareholders Equity (Canadian 000s) Year Ended December 31, 2019 Contributed Retained Notes Share Capital Surplus Earnings Total Equity Balance, beginning of year 391,444 15,141 1,346 407,931…
Consolidated Statements of Cash Flows Year Ended Year Ended (Canadian 000s) Notes December 31, 2019 December 31, 2018 Operating activities Net income for the year 11,313 40,063 Non-cash items: Unrealized (gain) loss on risk…
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As at and for years ended December 31, 2019 and 2018 Tabular amounts in thousands of Canadian dollars, except per share amounts 1. REPORTING ENTITY Storm Resources Ltd. (the Company or…
Depletion and Depreciation The net carrying amount of intangible crude oil and natural gas assets, categorized as P&E, is depleted using the unit- of-production method based on estimated proved plus probable reserves, taking into account…
twelve months or less, or leases for low-value assets. Payments are applied against the lease liability and interest expense is recognized on the lease liability using the effective interest rate method. Depreciation is recognized on the…
reduction to the carrying amount of the related asset and amortized into income on a systematic basis over the expected useful life of the underlying asset through reduced depletion and depreciation expense. Financial Instruments…
Current tax expense is the expected cash tax payable on the taxable income for the year, using tax rates enacted, or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. In general,…
The following table provides a reconciliation of the commitments as at December 31, 2018 to the Companys lease liability as at January 1, 2019: Total Transportation and processing commitments 384,707 Office lease 5,773 Commitments as at…
Decommissioning Liability Measurement of the Companys decommissioning liability involves estimates as to the cost and timing of incurrence of future decommissioning programs. It also involves assessment of appropriate discount rates,…
7. PROPERTY AND EQUIPMENT Year Ended Year Ended December 31, 2019 December 31, 2018 Cost Balance, beginning of year 646,983 559,524 Additions 95,757 80,729 Future decommissioning costs 1,111 973 Transfer from exploration and…
As at December 31, 2019, the Company determined that there was no impairment to P&E. 8. BANK INDEBTEDNESS As at December 31, 2019, the Company had an extendible revolving credit facility in the amount of 205 million (December 31, 2018…
As at December 31, 2019, the net book value of the right-of-use asset for the Companys corporate office lease in Calgary is 2.7 million with a remaining lease term to the year 2026. Lease Liability The following table provides a…
The provision for deferred income taxes is different from the amount computed by applying the combined statutory Canadian federal and provincial tax rates to pre-tax income for the year. The differences are as follows: Year Ended Year…
At February 27, 2020, the date of this report, options in respect of 10,212,100 common shares are issued and outstanding and options in respect of 1,943,581 common shares are available for future issue. Details of the options outstanding…
15. NET INCOME PER SHARE Basic and diluted net income per share were calculated as follows: Year Ended Year Ended December 31, 2019 December 31, 2018 Net income for the year 11,313 40,063 Weighted average number of common shares…
The following is a summary of the Companys financial assets and financial liabilities that are subject to offset as at December 31, 2018: Gross Amounts Gross Amounts Net Amounts Recognized as Financial of Financial Assets Recognized as…
Market Risk Market risk is the risk that changes in market prices will affect the Companys income or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within…
Period Hedged Daily Volume Average Price Crude Oil Swaps Jan Jun 2020 750 Bbls 71.92 Cdn/Bbl Jul Dec 2020 400 Bbls 71.16 Cdn/Bbl Crude Oil Differential Swaps Jan Jun 2020 400 Bbls WTI minus Cdn4.25/Bbl Jan Dec 2020 600 Bbls WTI minus…
Foreign Currency Exchange Rate Risk Prices for crude oil are determined in global markets and generally denominated in US dollars. Natural gas prices are largely influenced by both US and Canadian supply and demand structures. Changes in…
Funds flow, bank financing and potential proceeds from the issue of equity and the sale of assets will be invested in exploration and development operations with the intent of growing short and medium term operating funds flow. Growing…
CORPORATE INFORMATION Officers Brian Lavergne Jamie P. Conboy President & Chief Executive Officer Vice President, Geology Robert S. Tiberio H. Darren Evans Chief Operating Officer Vice President, Exploitation Michael J. Hearn Bret A.…
Abbreviations ATP Alliance Transfer Point kPa Kilopascal Bbls Barrels of oil or natural gas liquids Mbbl Thousands of barrels Bbls/d Barrels per day Mboe Thousands of barrels of oil equivalent Bcf Billions of cubic feet Mcf Thousands of…
Storm Resources Ltd. Suite 600, 215 2nd Street S.W., Calgary, Alberta T2P 1M4 Phone: (403)817-6145 Fax: (403)817-6146 www.stormresourcesltd.com
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