Riley Exploration Permian, Inc. press release
LOGAN ENERGY CORP. ANNOUNCES 2023 FINANCIAL RESULTS AND RESERVES, OPERATIONS UPDATE, AND UPSIZED CREDIT FACILITY
NYSE - New York Stock Exchange · Oil · Natural Gas · Natural Gas Liquids · United States
Canada NewsWire
CALGARY, AB , March 18, 2024 /CNW/ - Logan Energy Corp. (" Logan " or the " Company ") announces its financial and operating results for the period ended December 31, 2023 , and the results of the 2023 year end reserves evaluation and provides an operations update and details of the Company's upsized revolving credit facility.
[](https://mma.prnewswire.com/media/2365427/Logan_Energy_CorpLOGAN_ENERGY_CORPANNOUNCES_2023_FINANCIAL_R.html)
Selected financial and operational information set out below highlights results from the fourth quarter and second half of 2023 (" H2 2023 "), the first full period of operations following the spin-out of the early stage Montney assets of Spartan Delta Corp. (" Spartan ") to Logan on June 20, 2023 (the " Spin-Out "). This information should be read in conjunction with the Company's audited annual financial statements and related management's discussion and analysis (" MD&A ") as at and for the years ended December 31, 2023 and 2022. In addition, readers are also directed to the Company's Annual Information Form (" AIF ") for the year ended December 31, 2023 , dated March 18, 2024 . These documents are filed on SEDAR+ at www.sedarplus.ca and are available on the Company's website at www.loganenergycorp.com . The highlights reported in this press release include certain non-GAAP measures and ratios which have been identified using capital letters and are defined herein. The reader is cautioned that these measures may not be directly comparable to other issuers; refer to additional information under the heading "Reader Advisories – Non-GAAP Measures and Ratios" .
H2 2023 Financial and Operating Highlights
Since commencing active operations on June 20, 2023 :
Logan raised net equity proceeds of $102.2 million through completion of a private placement and the exercise of common share purchase warrants in the third quarter. Successfully executed on its exploration and development capital expenditure program spending $74.1 million during the second half of 2023, in line with budgeted Capital Expenditures before A&D of $75.0 million for the period. The Company also incurred $5.3 million of acquisition costs to expand its undeveloped acreage position at Simonette and to acquire certain equipment inventory. At Simonette, the Company began delineating its land base targeting both crude oil and liquids-rich natural gas prospects in the north and south sections of the play. Logan drilled, completed and brought 2.0 net wells on production in September. During the fourth quarter, Logan drilled two additional wells and a third well was spud in late 2023. At Pouce Coupe , Logan drilled, completed and brought 3.0 net oil wells on production in November driving the significant increase in oil production during the fourth quarter. Logan added 62.25 net sections of land around our core area of Simonette, consisting of 32.75 net sections of Montney acreage and 29.5 net sections of land in non- Montney plays on and surrounding our existing asset base. Within the Montney acreage added, Logan has acquired a 14 net section contiguous block of land in the Lator area west of Simonette.
Achieved production growth to 7,515 BOE per day (35% liquids) on average for the fourth quarter, up 39% from 5,394 BOE per day (24% liquids) during the previous quarter. Production for the second half of 2023 exceeded guidance by 8% averaging 6,455 BOE per day (31% liquids) compared to the Company's forecast of 6,000 BOE per day (28% liquids).
Logan's Operating Netback continues to improve as a result of operating leverage and improved scale in the business. The Company's Operating Netback averaged $23.63 per BOE during the fourth quarter, up 116% from $10.94 per BOE reported in the previous quarter, resulting in an average Operating Netback of $18.32 per BOE for the second half of 2023. Generated $15.4 million and $20.6 million of Adjusted Funds Flow during the respective three and six month periods ended December 31, 2023 . Adjusted Funds Flow for the fourth quarter increased by 198% from $5.2 million during the third quarter of 2023, driven by Logan's liquids-weighted production and revenue growth, together with lower average royalties and a decrease in per unit operating and transportation expenses quarter over quarter. Logan exited 2023 with a working capital surplus of $41.6 million , including $54.0 million of cash on hand and no bank debt. Subsequent to the reporting period in March 2024 , the Company's lender increased the authorized borrowing amount available on its revolving demand credit facility from $15.0 million to $50.0 million (refer to "Subsequent Events" below). Logan is well positioned to execute on its 2024 capital expenditure program.
The table below summarizes selected highlights from the Company's financial and operating results for the three and six month periods ended December 31, 2023 , representing the reporting periods subsequent to the Spin-Out:
| (CA$ thousands, except as otherwise noted) | Q4 2023 | H2 2023 | | FINANCIAL HIGHLIGHTS | | | | Oil and gas sales | 28,653 | 46,141 | | Net income and comprehensive income | 11,391 | 683 | | $ per common share, basic and diluted | 0.02 | 0.00 | | Cash provided by operating activities | 11,176 | 16,334 | | Adjusted Funds Flow (1) | 15,392 | 20,551 | | $ per common share, basic (1) | 0.03 | 0.05 | | $ per common share, diluted (1) | 0.03 | 0.04 | | Capital Expenditures before A&D (1) | 40,568 | 74,104 | | Acquisitions | 151 | 5,295 | | Total assets | 234,638 | 234,638 | | Working capital surplus | 41,633 | 41,633 | | Shareholders' equity | 174,116 | 174,116 | | Common shares outstanding (000s), end of period (2) | 465,537 | 465,537 | | OPERATING HIGHLIGHTS AND NETBACKS (5) | | | | Average daily production | | | | Crude oil (bbls/d) | 1,844 | 1,313 | | Condensate (bbls/d) (3) | 456 | 350 | | Natural gas liquids (bbls/d) (3) | 362 | 318 | | Natural gas (mcf/d) | 29,116 | 26,844 | | BOE/d | 7,515 | 6,455 | | % Liquids (4) | 35 % | 31 % | | Average realized prices | | | | Crude oil ($/bbl) | 90.40 | 95.82 | | Condensate ($/bbl) (3) | 102.39 | 103.37 | | Natural gas liquids ($/bbl) (3) | 51.61 | 51.20 | | Natural gas ($/mcf) | 2.72 | 2.70 | | Combined average ($/BOE) | 41.44 | 38.85 | | ($/BOE) | Q4 2023 | H2 2023 | | Netbacks ($/BOE) (5) | | | | Oil and gas sales | 41.44 | 38.85 | | Processing and other revenue | 1.25 | 1.46 | | Royalties | (3.37) | (4.41) | | Operating expenses | (11.82) | (13.48) | | Transportation expenses | (3.87) | (4.10) | | Operating Netback ($/BOE) (5) | 23.63 | 18.32 | | General and administrative expenses | (2.58) | (2.56) | | Financing income (6) | 1.35 | 1.61 | | Settlement of decommissioning obligations | (0.13) | (0.08) | | Adjusted Funds Flow Netback ($/BOE) (5) | 22.27 | 17.29 |
| (1) | "Adjusted Funds Flow" and "Capital Expenditures before A&D" 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) | The unaudited highlights reported for Q4 2023 and H2 2023 should be read in conjunction with the Company's audited annual financial statements and related MD&A as at and for the years ended December 31, 2023 and 2022. Since the shareholders of Logan and Spartan were the same both before and after the conveyance of the transferred assets (at the time, Logan was a wholly-owned subsidiary of Spartan), the Spin-Out was deemed to be a "common control transaction". The results reported in the annual financial statements and MD&A present the historic financial position, results of operations and cash flows of the transferred assets for all prior periods up to and including June 20, 2023 on a "carve-out" basis from the historical financial records of Spartan, as if the transferred assets had operated as a stand-alone entity subject to Spartan's control. The financial position, results of operations and cash flows from March 10, 2023 (the date of incorporation of Logan) to June 20, 2023 include both the transferred assets and Logan on a combined basis, and from June 20, 2023 forward include the actual historical results of Logan after assuming the transferred assets upon close of the Spin-Out. The historical information presented in the carve-out financial statements do not necessarily reflect what the financial position, results of operations and cash flows would have been had these net assets been in a separate entity, or the future results of Logan, as it exists after the completion of the Spin-Out. |
Operations Update
In late November 2023 , three new wells were brought onstream from the 6-18-079-10W6 (" 6-18 ") pad at Pouce Coupe . The completion design of this phase was further optimized and thus far the three new wells are outperforming the average 6-18 well by 8% and all three wells are exceeding the budgeted type curves. For the first 90 days of production, the pad has averaged 506 bbl/d of oil, 18 bbl/d of NGLs and 2.2 MMcf/d of gas per well (902 BOE/d with 58% liquids per well).
After the rig completed drilling the three wells at Pouce Coupe , the rig moved to South Simonette to drill three wells at the 4-10-062-27W5 (" 4-10 ") pad offsetting the previously announced success of the 02/14-33-061-27W5 (" 14-33 ") drill. The modern completion design and updated landing depth of South Simonette 14-33 continues to deliver substantially elevated oil rates compared to the legacy wells. The objective with 4-10 is to follow up on this success and demonstrate reduced capital costs with scale. The three well 4-10 pad has been successfully drilled and is awaiting completion which is planned for the summer following spring break up.
The rig then moved to drill a single well (02/13-34-062-02W6 or " 13-34 ") in the Lator area, west of Simonette. The Lator lands were acquired in the third quarter of 2023 and the 13-34 well will serve to validate the resource of the 14 section land block which is currently unbooked.
2023 reserves evaluation highlights
Logan is pleased to provide below select highlights from the results of its first year-end oil and gas reserves evaluation as of December 31, 2023 (the " McDaniel Report "), as prepared by its independent qualified reserves evaluator, McDaniel & Associates Consultants Ltd. (" McDaniel "). The evaluation of Logan's properties was prepared in accordance with the definitions, standards and procedures contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook (" COGEH ") and National Instrument 51-101 – _Standards of Disclosure for Oil and Gas Activities _(" NI 51-101 "), and was based on the published average forecast pricing of three independent reserves evaluation firms (McDaniel, GLJ Ltd., Sproule Associates Limited). See _"Reader Advisories – Reserves Disclosure" _for more information. Additional reserves information as required under NI 51-101 is included in Logan's AIF for the year ended December 31, 2023 , which is filed on SEDAR+ at www.sedarplus.ca and is available on the Company's website at www.loganenergycorp.com .
Logan's proved developed producing (" PDP ") reserves are 9.9 MMBOE, total proved (" TP ") reserves are 43.3 MMBOE, and total proved plus probable (" TPP ") reserves are 74.8 MMBOE at year-end 2023. The before-tax net present value (" NPV ") of reserves, discounted at 10%, was approximately $51.3 million on a PDP basis, $192.6 million on a TP basis, and $393.0 million on a TPP basis. The McDaniel Report is reflective of the early stage of development of Logans assets. Within the report, there are 68.3 net undeveloped Montney locations assigned within Simonette and Pouce Coupe which Logan expects to drill within the next five years. These booked locations account for approximately 11% of the Company's identified Montney inventory. The McDaniel Report includes future development capital (" FDC ") of $505.1 million in the TP category with 44.6 net locations and $771.7 million in the TPP category with 68.3 net locations.
The following tables highlight the findings of the McDaniel Report. The numbers in the tables below may not add due to rounding.
Summary of Reserves Volumes as at December 31, 2023
The Company's reserves volumes and undiscounted FDC costs as at December 31, 2023 are summarized below:
| SUMMARY OF RESERVE VOLUMES (1) | Crude Oil
(Mbbls) | NGL (2)
(Mbbls) | Natural Gas
(MMcf) | Combined
(MBOE) | FDC Costs
($MM) | | Proved developed producing | 1,736 | 812 | 44,187 | 9,913 | 15 | | Proved developed non-producing | - | 36 | 1,324 | 256 | - | | Proved undeveloped | 4,712 | 4,992 | 140,719 | 33,157 | 490 | | Total Proved | 6,447 | 5,840 | 186,230 | 43,326 | 505 | | Probable | 6,503 | 3,496 | 128,744 | 31,455 | 267 | | Total Proved plus Probable | 12,950 | 9,336 | 314,974 | 74,781 | 772 |
| (1) Gross working interest reserves before royalty deductions. | | (2) Natural gas liquids include condensate volumes. |
Net Present Value of Future Net Revenue as at December 31, 2023
The following table summarizes the NPV of the Company's reserves (before-tax) as at December 31, 2023 . The reserves value on a $/BOE basis, discounted at 10% per year, is also summarized for each category.
| | | | | | | Unit Value (1) Before Tax Discounted at 10%/Year ($/BOE) | | NET PRESENT VALUE BEFORE-TAX | 0 % ($MM) | 5 % ($MM) | 10 % ($MM) | 15 % ($MM) | 20 % ($MM) | | | Developed Producing | 18 | 45 | 51 | 52 | 52 | 5.97 | | Developed Non-Producing | 2 | 1 | 1 | 1 | 1 | 4.35 | | Undeveloped | 306 | 207 | 140 | 94 | 62 | 4.93 | | Total Proved | 325 | 254 | 193 | 148 | 115 | 5.17 | | Probable | 465 | 297 | 200 | 142 | 106 | 7.79 | | Total Proved plus Probable | 790 | 550 | 393 | 290 | 220 | 6.24 |
| (1) Unit values are based on net reserves. Net reserves are the Company's working interest reserves after deduction of royalties, plus its royalty interests in reserves. |
Future Development Capital
The following table outlines estimated annual future development capital expenditures required to bring TP and TPP reserves on production per the McDaniel Report:
| FUTURE DEVELOPMENT CAPITAL | TP Reserves ($MM) | TPP Reserves ($MM) | | 2024 | 80 | 80 | | 2025 | 82 | 82 | | 2026 | 105 | 105 | | 2027 | 105 | 105 | | 2028 | 116 | 116 | | Thereafter | 17 | 284 | | Total FDC, undiscounted | 505 | 772 | | Total FDC, discounted at 10% | 387 | 533 |
subsequent events
Upsized Credit Facility
Effective March 18, 2024 , the Company's lender increased the authorized borrowing amount available under the credit facility from $15.0 million to $50.0 million . The terms of the credit facility provided for certain minimum hedging requirements, which have been fully satisfied as of the date hereof.
Commodity Hedging Update
Logan has entered into short-term derivative financial contracts to hedge a notional 1,000 bbls/d of WTI oil at CA$102.00/bbl for March to June 2024 and an aggregate of 1,500 bbls/d of WTI oil at an average price of CA$101.33/bbl for July through December 2024 . Additionally, the Company has hedged a notional 15,000 GJ/d of AECO natural gas at $1.73 /GJ for the period from April to June 2024 and 20,000 GJ/d of AECO natural gas at $1.63 /GJ for the period from July to September 2024 .
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 March 2024 and can be access 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 March 18, 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 " is calculated by Logan as oil and gas sales, net of royalties, plus processing and other revenue, less operating and transportation expenses.
The Company refers to Operating Income expressed per unit of production as an " Operating Netback " which is a non-GAAP financial ratio. 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.
Capital Management Measures
Working capital
Management uses working capital as a measure to assess the Company's financial position. The working capital surplus (deficit) is calculated as current assets less current liabilities determined in accordance with GAAP.
Supplementary Financial Measures
The supplementary financial measures used in this press release (primarily average sales price per product type and certain per BOE and per share figures) are either a per unit disclosure of a corresponding GAAP measure, or a component of a corresponding GAAP measure, presented in the financial statements. Supplementary financial measures that are disclosed on a per unit basis are calculated by dividing the aggregate GAAP measure (or component thereof) by the applicable unit for the period. Supplementary financial measures that are disclosed on a component basis of a corresponding GAAP measure are a granular representation of a financial statement line item and are determined in accordance with GAAP.