NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR DISSEMINATION IN UNITED STATES
Pieridae Updates 2020 Guidance
Projected 10 Times Increase in Net Operating Income
- Net operating income (“NOI”) growth to $80-$110 million with recent acquisition synergies
- Production in 2020 of 40,000-50,000 boe/d, a 230% to 290% increase over Q3 exit production
- $10.50-11.50/boe operating costs
- $32 million pre-final investment decision (“FID”) capital budget, $16 million Goldboro LNG development expense budget
- Commodities hedging of 55-65% on a boe/d basis
CALGARY, ALBERTA – December 12, 2019 - Pieridae Energy Limited (“Pieridae” or the “Company”) (PEA - TSXV) released updated corporate guidance for 2020 today which focuses on increasing NOI due to, among other things, operating efficiencies; increasing production with the recent, previously disclosed acquisition of key Alberta Foothills assets; lower per barrel operating costs; a higher capital budget; and a development expense budget for Goldboro LNG as we move toward FID for the project.
“We are guiding to an increase of up to 10 times our NOI from pre-acquisition levels which further accentuates the transformational nature and accretiveness of the Foothills assets acquisition,” said Pieridae CEO Alfred Sorensen. “A doubling or close to tripling of daily production speaks to the value of the acquisition and provides us with the majority of the gas resource necessary to supply train 1 at Goldboro. We have approved a pre-FID capital budget of $32 million and a development expense budget for Goldboro LNG of $16 million in 2020.
“It’s Pieridae’s advantage of being an integrated LNG company and not just a gas producer and processor that sets us apart from our peers,” added Sorensen. “Delivering on our stated goals of completing a fixed price contract with KBR and finalizing project financing puts us in a position to make a final investment decision for Goldboro LNG next year. We continue to make progress toward that goal.”
2020 Guidance Details
Pieridae anticipates a 2020 NOI in the range of $80-110 million through, among other things, finding efficiencies in the field and by expanding third party revenue. The top end of the range would be a 10 times increase in NOI compared to a pre-Foothills assets acquisition NOI at a maximum of $10 million.
With our Jumping Pound, Caroline and Waterton deep cut gas plants operating well below capacity, increasing processing with our own gas and other producers’ gas will improve output volumes and enhance operating efficiencies. These plants feed into the TC Energy Pipeline System and are located south of the often-congested James River transport corridor. This is anticipated to result in lower transportation tolls to AECO and fewer outages.
Pieridae has an extensive drilling inventory encompassing multiple dry gas and liquids-rich gas reservoirs within the Foothills area. The legacy assets acquired in the Foothills acquisition consist of long life, low decline production in the range of 10%, with high liquids and sulphur yields.
We expect 2020 production to be in the range of 40-50,000 boe/d (230% to 290% higher than our Q3 2019 exit production), with a product mix of approximately 80% natural gas and 20% liquids. As well, we expect our average per barrel operating costs to be $10.50-$11.50/boe.
Together with existing Foothills drilling and development experience within the Company, Pieridae is well positioned to leverage the US$1.5 billion of the government-backed loan guarantees for conventional gas supply development which the German government approved in principle.
Our drilling program continues to take shape as we plan to increase production up to 800 mmcf/d to supply the first train at Goldboro. We have enough existing processing capacity to operate at this level.
In Q2 2019, we implemented a physical hedging program. That resulted in a higher realized average natural gas price of $1.22 per gigajoule (“GJ”) in Q3, compared to an average price of $1.19 per GJ in Q2. The realized price of $1.22 per GJ in Q3 was 41% higher than the average AECO price, which speaks to the value of the program. For 2020, we anticipate hedging 55-65% of our production on a boe/d basis.
Founded in 2011, Pieridae, a majority Canadian owned corporation based in Calgary, is focused on the development of integrated energy-related activities, from the exploration and extraction of natural gas to the development, construction and operation of the Goldboro LNG facility and the production of LNG for sale to Europe and other markets. Pieridae is on the leading edge of the re-integration of the LNG value chain in North America. After completion of all the transactions disclosed in this news release, Pieridae has 157,459,584 common shares issued and outstanding which trade on the TSX Venture Exchange (PEA).
For further information please contact:
Alfred Sorensen, Chief Executive Officer
Telephone: (403) 261-5900
Rob Dargewitcz, Chief Financial Officer
Telephone: (403) 261-5900
James Millar, Director, External Relations
Telephone: (403) 261-5900
statements contained herein may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws (collectively "forward-looking statements"), including, but not limited to, statements concerning our anticipated NOI, production, operating costs and hedging commitments for 2020. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue", "shall", "estimate", "expect", "propose", "might", "project", "predict", "forecast" and similar expressions may be used to identify these forward-looking statements.
Forward-looking statements involve significant risk and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including, but not limited to, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, environmental risks, competition from other producers, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits or synergies from acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and the risk factors outlined under "Risk Factors" and elsewhere herein. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements.
Forward-looking statements are based on a number of factors and assumptions which have been used to develop such forward-looking statements, but which may prove to be incorrect. Although Pieridae believes that the expectations reflected in such forward-looking statements are reasonable, undue reliance should not be placed on forward-looking statements because Pieridae can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the ability of Pieridae to find efficiencies in the field; the general stability of the economic and political environment in which Pieridae operates; the timely receipt of any required regulatory approvals; the ability of Pieridae to obtain qualified staff, equipment and services in a timely and cost efficient manner; the ability of the operator of the projects which Pieridae has an interest in, to operate the field in a safe, efficient and effective manner; the ability of Pieridae to obtain financing on acceptable terms; the ability to replace and expand oil and natural gas resources through acquisition, development and exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of Pieridae to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Pieridae operates; timing and amount of capital expenditures, future sources of funding, production levels, weather conditions, success of exploration and development activities, access to gathering, processing and pipeline systems, advancing technologies, and the ability of Pieridae to successfully market its oil and natural gas products.
Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Pieridae's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), and at Pieridae's website (www.pieridaeenergy.com). Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, management cannot assure that actual results will be consistent with these forward-looking statements. Investors should not place undue reliance on forward-looking statements. These forward-looking statements are made as of the date hereof and Pieridae assumes no obligation to update or review them to reflect new events or circumstances except as required by applicable securities laws.
Forward-looking statements contained herein concerning the oil and gas industry and Pieridae's general expectations concerning this industry are based on estimates prepared by management using data from publicly available industry sources as well as from reserve reports, market research and industry analysis and on assumptions based on data and knowledge of this industry which Pieridae believes to be reasonable. However, this data is inherently imprecise, although generally indicative of relative market positions, market shares and performance characteristics. While Pieridae is not aware of any misstatements regarding any industry data presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
 NOI is a non-IFRS measure. It does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. See page 20 in the Company’s Q3 2019 MD&A
 Does not include transportation costs of ~$0.75/boe