CALGARY, AB, Aug. 21, 2024 /CNW/ - Logan Energy Corp. LGN ("Logan" or the "Company") announces its financial and operating results for the three and six months ended June 30, 2024, an increase to the borrowing base available under the Company's credit facility to $75.0 million, and enhancements to the executive management team.
SECOND QUARTER 2024 HIGHLIGHTS
Logan spent $46.1 million in the second quarter to advance development in its core operating areas. At Pouce Coupe , Logan completed and brought on production a three well pad in mid-May. At Simonette, Logan completed its first well at Lator and commenced completion operations on a three well pad located on its southern acreage.
in the second quarter to advance development in its core operating areas. Production averaged 7,277 BOE per day (36% liquids), an increase of 45% from 5,015 BOE per day (22% liquids) in the same quarter of the previous year. A major turnaround was completed at the Simonette 13-11 Gas Plant as planned in June. Budgeted downtime reduced average production for the second quarter by approximately 360 BOE per day. Certain debottlenecking projects were also completed during the outage. Logan is on track to deliver H2 2024 average production in excess of 10,000 BOE per day and to meet or exceed its annual production guidance of approximately 8,700 BOE per day 1 .
The Company's Operating Netback averaged $15.75 per BOE before hedging ( $15.38 per BOE after hedging) for the second quarter of 2024 and was impacted by weak natural gas prices and higher per unit operating expenses due to plant turnaround costs and other maintenance operations. Logan expects to realize a material reduction in its per unit operating costs as it scales production and is forecasting H2 2024 operating costs to average between $10.00 to $10.50 per BOE, and for calendar year average operating costs to be in-line with guidance 1 .
per BOE before hedging ( per BOE after hedging) for the second quarter of 2024 and was impacted by weak natural gas prices and higher per unit operating expenses due to plant turnaround costs and other maintenance operations. Driven by oil production growth and strong crude oil prices, Logan's Adjusted Funds Flow increased by 178% to $8.7 million for the three months ended June 30, 2024 , compared to $3.1 million in the same period of 2023.
for the three months ended , compared to in the same period of 2023. As of June 30, 2024 , Logan had Net Debt of $21.4 million or 0.6 times its annualized Adjusted Funds Flow for the second quarter. Subsequent to the quarter, the Company's lender increased the authorized borrowing amount available under its credit facility from $50.0 million to $75.0 million (refer to "Subsequent Events").
_______________________ 1 Refer to guidance published in the Company's press release dated May 22, 2024.
The following table summarizes selected highlights for the three and six month periods ended June 30, 2024 and June 30, 2023:
Three months ended June 30 Six months ended June 30 (CA$ thousands, except as otherwise noted) 2024 2023 % 2024 2023 % FINANCIAL HIGHLIGHTS
Average daily production
Crude oil (bbls/d) 2,148 660 225 1,965 706 178 Condensate (bbls/d) (3) 223 271 (18) 244 277 (12) Natural gas liquids (bbls/d) (3) 250 185 35 270 191 41 Natural gas (mcf/d) 27,934 23,396 19 28,006 23,871 17 BOE/d 7,277 5,015 45 7,147 5,153 39 % Liquids (4) 36 % 22 % 64 35 % 23 % 52 Average realized prices, before financial instruments
Crude oil ($/bbl) 100.54 92.41 9 95.73 97.30 (2) Condensate ($/bbl) (3) 99.44 92.66 7 93.68 94.34 (1) Natural gas liquids ($/bbl) (3) 53.68 40.92 31 52.76 47.51 11 Natural gas ($/mcf) 1.44 2.43 (41) 1.96 3.22 (39) Combined average ($/BOE) 40.09 30.02 34 39.19 35.08 12 Netbacks ($/BOE) (5)
Oil and gas sales 40.09 30.02 34 39.19 35.08 12 Processing and other revenue 1.04 1.83 (43) 1.20 1.77 (32) Royalties (4.35) (2.49) 75 (3.77) (4.61) (18) Operating expenses (17.46) (15.77) 11 (16.08) (16.15) (0) Transportation expenses (3.57) (3.58) (0) (3.75) (3.43) 9 Operating Netback, before hedging (5) 15.75 10.01 57 16.79 12.66 33 Realized loss on derivative financial instruments (0.37) - - (0.35) - - Operating Netback, after hedging (5) 15.38 10.01 54 16.44 12.66 30 General and administrative expenses (2.33) (3.08) (24) (2.35) (2.96) (21) Financing income (expenses) (6) 0.35 (0.01) nm 0.60 (0.01) nm Realized foreign exchange gain 0.01 - - - - - Settlement of decommissioning obligations (0.20) (0.04) 400 (0.39) (0.27) 44 Adjusted Funds Flow Netback (5) 13.21 6.88 92 14.30 9.42 52
(1) "Adjusted Funds Flow", "Capital Expenditures before A&D", and "Net Debt" do not have standardized meanings under IFRS Accounting Standards, refer to "Non-GAAP Measures and Ratios" section of this press release. (2) Refer to "Share Capital" section of this press release. (3) Condensate is a natural gas liquid ("NGL") as defined by NI 51-101. See "Other Measurements". (4) "Liquids" includes crude oil, condensate and NGLs. (5) "Netbacks" are non-GAAP financial ratios calculated per unit of production. "Operating Netback", and "Adjusted Funds Flow Netback" do not have standardized meanings under IFRS, refer to "Non-GAAP Measures and Ratios" section of this press release. (6) Excludes non-cash accretion of decommissioning obligations. (7) Logan was spun-out from Spartan Delta Corp. ("Spartan") on June 20, 2023. Comparative information for the three and six months ended June 30, 2023 is prepared on a "carve-out" basis from the historical records of Spartan. The information should be read in conjunction with the Company's unaudited condensed interim financial statements and MD&A as at June 30, 2024 and 2023 and the audited annual financial statements and related MD&A as at and for the years ended December 31, 2023 and 2022.
OPERATIONS UPDATE
Logan has successfully completed its drilling and completion program for the 2024 onstream wells.
At Pouce Coupe, the three well "7-12" pad was brought onstream in mid-May. For the first 60 days on production, the pad averaged 422 bbls/d of oil, 12 bbls/d of NGLs and 1.5 mmcf/d of natural gas (685 BOE/d, 63% liquids) per well. Initial performance of the 7-12 pad is consistent with our budgeted type curves despite flowing against substantially elevated system pressure due to constrained infrastructure. This elevated gathering system pressure is expected to persist until Logan's planned new Pouce Coupe gas plant is operational.
At Simonette, Logan brought onstream the three well "4-10" pad in mid-July and began flowing back the single well at Lator in late July. Logan will provide additional details on these wells upon receiving sufficient production data in future updates.
Logan plans to resume drilling in the fourth quarter for its 2025 program.
SUBSEQUENT EVENTS
Upsized Credit Facility
Effective August 21, 2024, the Company's lender increased the authorized borrowing amount available under its revolving demand credit facility from $50.0 million to $75.0 million. The next scheduled borrowing base review is set to occur in May 2025. The terms of the credit facility are otherwise unchanged.
Commodity Hedging Update
In August 2024, the Company entered into a derivative financial contract to fix the price of WTI crude oil at CA$102.05 per barrel on a notional 500 barrels per day for calendar year 2025. The contract price represented a premium of approximately CA$5.75 per barrel relative to WTI strip pricing at the time of entering the swap. To earn this premium, the Company also sold monthly call options on an incremental 500 barrels per day of WTI crude oil at CA$102.05 per barrel for calendar year 2025.
EXECUTIVE APPOINTMENTS
The Board of Directors is pleased to announce that Brendan Paton (currently Vice President, Engineering and COO) has been promoted to President and COO. Richard McHardy will continue as Chief Executive Officer and will continue to be involved in the execution of the Company's strategic growth plans and the day-to-day operations of the Company. Mr. McHardy stated, "Brendan's appointment as President of the Company represents Logan's long-term commitment to succession planning and to advancing the next generation of leaders in the oil and gas industry in Canada".
The Board of Directors is also pleased to announce that Dylan Van Brunt (currently Manager, Engineering) has been appointed Vice President, Engineering and Victoria Biersteker (currently Manager, Geoscience) has been appointed Vice President, Geoscience. Mr. Van Brunt and Ms. Biersteker are both key members of Logan's Montney development team and bring a wealth of technical experience in the Montney from their tenure at Spartan Delta and Velvet Energy, as well as their previous positions. Mr. McHardy stated, "We are pleased to welcome Dylan and Victoria to Logan's executive team, and I want to congratulate each of Brendan, Dylan and Victoria on their well-deserved promotions."
ABOUT LOGAN ENERGY CORP.
Logan is a growth-oriented exploration, development and production company formed through the spin-out of Spartan's early stage Montney assets. Logan is founded with a strong initial capitalization and three high quality and opportunity rich Montney assets located in the Simonette and Pouce Coupe areas of northwest Alberta and the Flatrock area of northeastern British Columbia. The management team brings proven leadership and a track record of generating excess returns in various business cycles.
Logan's corporate presentation has been updated as of August 2024 and can be accessed on the Company's website at www.loganenergycorp.com .
READER ADVISORIES
Non-GAAP Measures and Ratios
This press release contains certain financial measures and ratios which do not have standardized meanings prescribed by International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards"), also known as Canadian Generally Accepted Accounting Principles ("GAAP"). As these non-GAAP financial measures and ratios are commonly used in the oil and gas industry, Logan believes that their inclusion is useful to investors. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used.
The non-GAAP measures and ratios used in this press release, represented by the capitalized and defined terms outlined below, are used by Logan as key measures of financial performance and are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net income or other measures of financial performance calculated in accordance with IFRS.
The definitions below should be read in conjunction with the "Non-GAAP and Other Financial Measures" section of the Company's MD&A dated August 21, 2024, which includes discussion of the purpose and composition of the specified financial measures and detailed reconciliations to the most directly comparable GAAP financial measures.
Operating Income and Operating Netback
Operating Income, a non-GAAP financial measure, is a useful supplemental measure that provides an indication of the Company's ability to generate cash from field operations, prior to administrative overhead, financing and other business expenses. "Operating Income, before hedging" is calculated by Logan as oil and gas sales, net of royalties, plus processing and other revenue, less operating and transportation expenses. "Operating Income, after hedging" is calculated by adjusting Operating Income, before hedging for realized gains or losses on derivative financial instruments.
The Company refers to Operating Income expressed per unit of production as an "Operating Netback" and reports the Operating Netback before and after hedging, both of which are non-GAAP financial ratios. Logan considers Operating Netback an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices.
Adjusted Funds Flow
Cash provided by operating activities is the most directly comparable measure to Adjusted Funds Flow. "Adjusted Funds Flow" is reconciled to cash provided by operating activities by excluding changes in non-cash working capital, adding back transaction costs on acquisitions (if applicable). Logan utilizes Adjusted Funds Flow as a key performance measure in the Company's annual financial forecasts and public guidance.
The Company refers to Adjusted Funds Flow expressed per unit of production as an "Adjusted Funds Flow Netback".
Capital Expenditures before A&D
"Capital Expenditures before A&D" is used by Logan to measure its capital investment level compared to the Company's annual budgeted capital expenditures for its organic drilling program. It includes capital expenditures on exploration and evaluation assets and property, plant and equipment, before acquisitions and dispositions. The directly comparable GAAP measure to capital expenditures is cash used in investing activities.
Net Debt
Throughout this press release, references to "Net Debt" includes bank debt (if any), net of Adjusted Working Capital. Net Debt and Adjusted Working Capital are both non-GAAP financial measures. "Adjusted Working Capital" is calculated as current liabilities less current assets, excluding derivative financial instrument assets and liabilities and the current portion of bank debt (if any).
Supplementary Financial Measures
Other Measurements
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted. This press release contains various references to the abbreviation "BOE" which means barrels of oil equivalent. Where amounts are expressed on a BOE basis, natural gas volumes have been converted to oil equivalence at six thousand cubic feet (mcf) per barrel (bbl). The term BOE may be misleading, particularly if used in isolation. A BOE conversion ratio of six thousand cubic feet per barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and is significantly different than the value ratio based on the current price of crude oil and natural gas. This conversion factor is an industry accepted norm and is not based on either energy content or current prices. Such abbreviation may be misleading, particularly if used in isolation.
References to "oil" in this press release include light crude oil, medium crude oil, heavy oil and tight oil combined. NI 51-101 includes condensate within the product type of "natural gas liquids". References to "natural gas liquids" or "NGLs" include pentane, butane, propane and ethane. References to "gas" or "natural gas" relates to conventional natural gas. References to "liquids" includes crude oil, condensate and NGLs.
References in this press release to peak rates, peak monthly production, first 60 days of production, producing day rates and other short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production of Logan.
Share Capital
Forward-Looking and Cautionary Statements
Certain statements contained within this press release constitute forward-looking statements within the meaning of applicable Canadian securities legislation. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "budget", "plan", "endeavor", "continue", "estimate", "evaluate", "expect", "forecast", "monitor", "may", "will", "can", "able", "potential", "target", "intend", "consider", "focus", "identify", "use", "utilize", "manage", "maintain", "remain", "result", "cultivate", "could", "should", "believe" and similar expressions. Logan believes that the expectations reflected in such forward-looking statements are reasonable as of the date hereof, but no assurance can be given that such expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Without limitation, this press release contains forward-looking statements pertaining to: the Company's opportunity rich assets; management's track record of generating excess returns in various business cycles; success of the Company's drilling program based on initial results; future drilling plans; continuing to advance key infrastructure projects; forecast production for the second half of 2024; and the expectation that per unit operating expenses will decrease with production growth.
The forward-looking statements and information are based on certain key expectations and assumptions made in respect of Logan including expectations and assumptions concerning the business plan of Logan, the timing of and success of future drilling, development and completion activities, the performance of existing wells, the performance of new wells, the availability and performance of facilities and pipelines, the geological characteristics of Logan's properties, the successful integration of the recently acquired assets into Logan's operations, the successful application of drilling, completion and seismic technology, prevailing weather conditions, prevailing legislation affecting the oil and gas industry, prevailing commodity prices, price volatility, price differentials and the actual prices received for Logan's products, impact of inflation on costs, royalty regimes and exchange rates, the application of regulatory and licensing requirements, the availability of capital (including under the upsized credit facility), labour and services, the creditworthiness of industry partners and the ability to source and complete acquisitions.
Neither TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Abbreviations
A&D acquisitions and dispositions AEC Alberta Energy Company "C" Meter Station of the NOVA Pipeline System AIF refers to the Company's Annual Information Form dated March 18, 2024 bbl barrel bbls/d barrels per day bcf one billion cubic feet BOE barrels of oil equivalent BOE/d barrels of oil equivalent per day CA$ or CAD Canadian dollar GJ gigajoule H2 2024 second half of 2024 or six month period ending December 31, 2024 Mbbl one thousand barrels MBOE one thousand barrels of oil equivalent mcf one thousand cubic feet mcf/d one thousand cubic feet per day MMbtu one million British thermal units MMcf one million cubic feet MD&A refers to Management's Discussion and Analysis of the Company dated August 21, 2024 MM millions $MM millions of dollars MPa megapascal unit of pressure NGL(s) natural gas liquids NI 51-101 National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities nm "not meaningful", generally with reference to a percentage change NYMEX New York Mercantile Exchange, with reference to the U.S. dollar "Henry Hub" natural gas price index TSXV TSX Venture Exchange US$ or USD United States dollar WTI West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil of standard grad
SOURCE Logan Energy Corp.
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