Pieridae 2021 Guidance
Strong Financial Growth Anticipated Pre- and Post-FID Investments Approved for Goldboro LNG
HIGHLIGHTS:
- Net operating income (“NOI”)1 growth to $100-$130 million
- Adjusted Funds Flow From Operations (“AFFO”)1 increase to $80-$110 million
- Adjusted operating expenses1 of $9.50-10.50/boe
- Production of 40,000-45,000 boe/d
- $45-55 million upstream capital budget
- $10-$15 million pre-FID Goldboro LNG development expense budget, and post-FID Goldboro LNG capital expenditure budget of $250-$350 million2
- Commodities hedging of 55-65% on an 18-month rolling boe/d basis
- Corporate and upstream general and administrative (“G&A”) costs of $0.90 to $1.00 per boe/d
[1] NOI, AFFO and adjusted operating expenses are non-IFRS measures. They do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. See pages 21&22 in the Company’s Q3 2020 MD&A
[2] Assumes an FID of June 30, 2021
CALGARY, ALBERTA – December 7, 2020 - Pieridae Energy Limited (“Pieridae” or the “Company”) (PEA.TO) today released its corporate guidance for 2021 which focuses on continued improvement of key metrics including NOI, AFFO and production, an increased upstream capital budget and pre- and post-final investment decision (“FID”) budget allocations for our Goldboro LNG Project as we continue our commitment of the initiative.
“We are guiding to an increase in NOI primarily due to higher anticipated gas prices in 2021, as well as continued optimization of our assets, higher third-party processing fees, increased overall volumes and other cost-saving initiatives,” said Pieridae CEO Alfred Sorensen. “An upstream capital budget of $45-55 million has been approved that includes money to continue investing in our assets to ensure their safety and reliability, as well as funding to maintain our current level of production. Specifically, for Goldboro LNG, we have allocated $10-$15 million for development expenses. And assuming FID is declared by the end of June 2021, a further $250-$300 million capital expenditure budget for Goldboro would be triggered.
“We continue to believe that our share price does not reflect the significant upside offered by our Goldboro LNG Project, an initiative that sets us apart from other Alberta natural gas producing companies,” added Sorensen. “Besides the financial benefits the Project would mean to investors, the multi-billion-dollar initiative would create thousands of much-needed jobs across Canada, support reconciliation through our partnership with the Nova Scotia Mi’kmaq First Nation to build a $720 million workforce lodge, and lower global GHGs by delivering LNG to replace high emissions coal overseas.”
2021 Guidance Details
Financial
Pieridae anticipates 2021 NOI in the range of $100-130 million, primarily due to higher forecast natural gas prices, continued optimization of our assets, higher third-party processing fees, increased overall volumes and other cost-saving initiatives.
Our adjusted operating expense guidance of $9.50-10.50/boe normalizes our operating expense and is a reflection of third-party revenue and sulphur production revenue being netted off operating costs, as both of these line items add to the operating expenses in order to generate those revenue line items. This brings us closer to a more normalized Opex performance metric when comparing Pieridae to its peers.
Finally, Pieridae continues to take steps to ensure G&A costs are in line with our peers. When we strip out G&A costs related to the Goldboro LNG development project, our forecast G&A is in the range of $0.90 to $1.00 per boe/d, which, again, compares favourably to our peers.
Operations
Nearly half of the Company’s $45-$55 million upstream capital budget is comprised of investments for the safe and reliable operations of our assets. As part of our commitment to safety and our regulatory obligations to maintain gas gathering and processing infrastructure, we have two gas plant turnarounds planned next year, one at Caroline and the other at Jumping Pound.
An announcement regarding FID for Goldboro LNG is expected in mid-2021, at which point Pieridae would begin our approximate five-year drilling plan to eventually fill Train 1 at the Goldboro LNG Facility. Prior to FID, the Company plans to spend approximately $12 million on development capital to further flatten our low decline production base. Our ultimate goal through a multi-year conventional Foothills drilling program is to fill our three Alberta sour gas plants as we prepare to send feed gas to the LNG Facility in Nova Scotia.
We expect 2021 production to be in the range of 40-45,000 boe/d. Pieridae anticipates positive volume growth in the midst of two turnarounds and normal decline thanks to decisions that increased volumes in Q4 and investment in development capital in 2021 to further increase volumes.
The Company continues to have a strong hedging program in place to insulate itself from volatile commodity prices. The program is designed to enable us to maintain cashflow targets as we seek to hedge 55-65% of our production on an 18-month rolling boe/d basis.
Goldboro LNG
As the Company continues to advance the Goldboro LNG Project, $10-$15 million has been allocated for pre-FID development expenses in 2021. About half is for Bechtel to deliver a comprehensive engineering, procurement, construction and commissioning (“EPCC”) execution plan by March 31, 2021, and deliver a final lump sum, turnkey EPCC contract price proposal by May 31, 2021.
The remaining funds will be used for necessary third-party due diligence work and fees for midstream companies for the delivery of pipeline engineering analyses that all must be completed in order for the Company to be in a position to make a FID for the Project.
Assuming a successful FID, Goldboro LNG capital expenditures of $250-$350 million will be incurred in 2021. These expenditures would be made on early works at the LNG site: highway re-alignment around the site; a down payment for construction of a large-scale workforce lodge; building key marine facilities for LNG offloading; and site preparation such as areas to store equipment and large-scale Facility building materials.
Environmental, Social, Governance (“ESG”) Report Development
As companies continue to champion ethical responsibility, a focus on ESG can help firms understand the positive impacts and manage the risks its operations have on customers, investors, employees, communities and the environment.
At Pieridae, we are aligned with this, including the value it brings to what we strive to accomplish each and every day. We have formally started our ESG journey, partnering with a global leader in ESG strategy development within the energy sector to facilitate and guide the Company towards formulating and implementing our ESG strategy. Their strong knowledge of key stakeholders including Indigenous Peoples, investors, government and others is important in developing our ESG program as we pursue FID and financing of our Goldboro LNG Project.
The target is to issue an inaugural Pieridae ESG Report early in Q2 2021.
About Pieridae
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 157,641,871 common shares issued and outstanding which trade on the TSX (“PEA.TO”).
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
Forward-Looking Statements
statements contained herein may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws (collectively "forward-looking statements"). 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, imprecision of resources estimates, 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. The recovery and resources estimate of Pieridae's reserves provided herein are estimates only and there is no guarantee that the estimated resources will be recovered. 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 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.
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