Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pieridae Energy Ltd (PTOAF, Financial) posted a net operating income of just under $8 million for Q2 2024, bolstered by a $20 million commodity hedging gain.
- Approximately three-quarters of the company's forecasted natural gas production for the remainder of 2024 and 2025 is hedged at $3.32 per gigajoule, providing a buffer against low AECO natural gas prices.
- Third-party processing volumes at the Caroline Gas Plant increased by 40% in the quarter, driven by new multi-well pads drilled by an area operator.
- The company successfully closed the sale of its Goldboro Nova Scotia property and assets, simplifying its corporate structure and focusing on its core upstream and midstream business.
- Pieridae Energy Ltd (PTOAF) repaid a high-interest bridge loan in full, reducing net debt by approximately $17 million and significantly lowering debt servicing costs.
Negative Points
- Historically low AECO natural gas prices negatively impacted the company's revenue, with the benchmark languishing below $1.50 per gigajoule for most of the quarter.
- Production was negatively impacted by an unscheduled Jumping Pound gas plant outage and the shut-in of production in Northern British Columbia and Northern Alberta.
- The company has approximately 9,400 BOE per day of production shut-in, representing more than 25% of its corporate production capability, due to uneconomic dry gas production.
- Operating costs experienced upward pressure on a per BOE basis due to lower production volumes, given that the majority of costs are not significantly rate-dependent.
- Pieridae Energy Ltd (PTOAF) withdrew its production guidance for 2024 due to the uncertain duration of low AECO gas prices and the shut-in of significant production volumes.
Q & A Highlights
Q: Please comment on the pending property sale currently in the market?
A: We have gone through a process to market the assets, and we have identified an appropriate purchaser. We are in the process of negotiating a sale agreement with them and hope to complete it sometime in the third quarter. - Paul Kunkel, Chief Commercial Officer
Q: Have the license transfers from the Shell purchase been resolved?
A: There has been no material change to the status of the Shell license transfers. There will be no attempt to transfer those licenses until there's a very high chance of a successful application with the ADR. - Darcy Reding, President, Chief Executive Officer, Director
Q: Great job getting your debt levels to below $190 million. Can you provide us with how high your debt levels once were at the peak to where we sit today?
A: In late 2021 and early 2022, our net debt levels were between $270 million and $280 million. We continue to prioritize repaying debt and look forward to commodity prices supportive of doing so. - Adam Gray, Chief Financial Officer
Q: For the first half of 2024, how much revenue was forgone due to the sulphur sales agreement?
A: The sulphur prices were relatively depressed compared to historical levels, so we probably didn't forego much revenue because of the sulphur contract in the first half of the year. Prices have since perked up, so we hope to see increased sulphur revenue in the latter half of the year. - Darcy Reding, President, Chief Executive Officer, Director
Q: Can you provide a range of what the incremental third-party processing revenue opportunity is once the Caroline debottlenecking is done?
A: We are looking to unlock approximately 3,000 E3 M3 a day, which could bring in the order of $10 million in revenue per year. - Paul Kunkel, Chief Commercial Officer
Q: Can you please walk us through your debt maturity schedule?
A: We have two components of debt remaining, maturing in 2027. We have a term loan with an associated revolver with a syndicate of lenders maturing in Q1 2027 and a subordinated component with Prudential maturing in Q2 2027. We have ample time to repay or refinance this debt. - Adam Gray, Chief Financial Officer
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
