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Pine Cliff Energy Ltd. Announces Third Quarter 2021 Results and Update to 2021 Guidance

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Calgary, Alberta--(Newsfile Corp. - November 4, 2021) - Pine Cliff Energy Ltd. (TSX: PNE) ("Pine Cliff" or the "Company") is pleased to announce the filing of its third quarter financial and operating results (the "Q3-Report"). Selected highlights are shown below and should be read in conjunction with the Q3-Report.

Third Quarter 2021 Highlights

The Company benefited from AECO 5A benchmark pricing averaging $3.58 per mcf for the quarter, resulting in Pine Cliff generating positive adjusted funds flow of $13.3 million.

Highlights from Pine Cliff's third quarter ended September 30, 2020 include:

  • repaid in full $19.0 million of Term Debt due July 31, 2022;

  • generated $13.3 million of adjusted funds flow ($0.04 per basic and fully diluted share) for the three months ended September 30, 2021, and $32.8 million ($0.10 per basic share and $0.09 per fully diluted share) for the nine months ended September 30, 2021;

  • the adjusted funds flow of $32.8 million for the nine months ended September 30, 2021, is the highest adjusted funds flow for the first nine months of the year in the history of Pine Cliff;

  • generated net earnings of $2.3 million ($0.01 per basic and fully diluted share) for the three months ended September 30, 2021, and $0.1 million ($0.00 per basic and fully diluted share) for the nine months then ended;

  • net debt decreased by 34% or $21.6 million from $63.0 million on December 31, 2020, to $41.4 million as at September 30, 2021 and is Pine Cliff's lowest net debt level since the third quarter of 2015; and

  • drilled 2 gross (2.0 net) Pekisko oil wells and 2 gross (0.4 net) Ellerslie natural gas wells that were all on production by the end of October 2021.

Outlook

In Q3 2021, the benchmark AECO natural price was $3.58 per Mcf, a level not seen for a comparable third quarter since 2014. Higher natural gas prices in North America are reacting to supply and demand factors including North American industrial and residential demand, increases in liquefied natural gas exports due to increased demand in Europe and Asia, natural gas exports to Mexico, weather and economic conditions in producing and consuming regions throughout North America. The strengthening of forward AECO natural gas prices has continued into Q4, where today, spot daily AECO 5A was priced at $5.30 per Mcf and the forward AECO 5A price for calendar 2022 was $4.31 per Mcf. It is anticipated that circumstances in 2022 will permit Pine Cliff to take the steps necessary to implement a sustainable dividend model.

2021 Updated Guidance

Pine Cliff's Board of Directors has approved a $8.5 million increase in the 2021 capital budget to $21.5 million, to accommodate the drilling of 1 gross (0.9 net) Mannville natural gas well in Central Alberta, 1 gross (0.2 net) Ellerslie natural gas well at Edson, along with the drilling of 2 gross (1.4 net) and the reactivation of 4 gross (2.8 net) Peksiko oil wells, all during the fourth quarter of 2021. The increased 2021 capital budget will be fully funded from adjusted funds flow. Pine Cliff expects 2021 annual production volumes to average at the high end of the guidance range of 18,000 to 18,500 Boe per day, weighted 91% to natural gas.

Financial and Operating Results1

Three months ended September 30,

Nine months ended September 30,

2021

2020

2021

2020

($000s, unless otherwise indicated)

Commodity sales (before royalty expense)

39,890

24,744

109,572

71,878

Cash flow from operating activities

12,411

3,945

29,053

6,121

Adjusted funds flow2

13,333

809

32,827

733

Per share - Basic ($/share)2

0.04

0.00

0.10

0.00

Per share - Diluted ($/share)2

0.04

0.00

0.09

0.00

Earnings/(Loss)

2,323

(12,110)

899

(46,285)

Per share - Basic ($/share)2

0.01

(0.04)

0.00

(0.14)

Per share - Diluted ($/share)2

0.01

(0.04)

0.00

(0.14)

Capital expenditures

8,903

2,213

10,827

6,210

Net debt2

41,413

69,312

41,413

69,312

Production (Boe/d)

18,316

18,755

18,239

18,963

Percentage natural gas (%)

91%

92%

91%

91%

Weighted-average common shares outstanding (000s)

Basic

337,921

330,230

336,760

330,230

Diluted

346,732

330,230

345,571

330,230

Combined sales price ($/Boe)

23.67

14.34

22.01

13.83

Operating netback ($/Boe)2

9.22

1.90

8.21

1.58

Corporate netback ($/Boe)2

7.92

0.47

6.59

0.14

Operating netback ($ per Mcfe)2

1.54

0.32

1.37

0.26

Corporate netback ($ per Mcfe)2

1.32

0.08

1.10

0.02

1 Includes results for acquisitions and excludes results for disposition from the closing date.
2 This is a non-GAAP measure, see "NON-GAAP Measures" for additional information.

For further information, please contact:

Philip B. Hodge - President and CEO
Alan MacDonald - CFO and Corporate Secretary
Telephone: (403) 269-2289
Fax: (403) 265-7488
Email: info@pinecliffenergy.com

Cautionary Statements

Certain statements contained in this news release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this news release includes, but is not limited to: future capital expenditures, including the amount and nature thereof; future drilling opportunities and Pine Cliff's ability to generate reserves and production from the undrilled locations; oil and natural gas prices and demand; expansion and other development trends of the oil and natural gas industry; business strategy and guidance; expansion and growth of our business and operations; maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; risks; Pine Cliff's ability to generate funds flow; and other such matters.

All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of oil and natural gas companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; the effects of COVID-19 on global crude oil demand and pricing; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive.

Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived there from. Except as required by law, Pine Cliff disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Natural gas liquids and oil volumes are recorded in barrels of oil ("Bbl") and are converted to a thousand cubic feet equivalent ("Mcfe") using a ratio of one (1) Bbl to six (6) thousand cubic feet. Natural gas volumes recorded in thousand cubic feet ("Mcf") are converted to barrels of oil equivalent ("Boe") using the ratio of six (6) thousand cubic feet to one (1) Bbl. This conversion ratio is based on energy equivalence primarily at the burner tip and does not represent a value equivalency at the wellhead. The terms Boe or Mcfe may be misleading, particularly if used in isolation.

Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of oil, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

The forward-looking information contained in this news release is expressly qualified by this cautionary statement.

NON-GAAP Measures

This press release uses the terms "adjusted funds flow", "operating netbacks", "corporate netbacks" and "net debt" which are not recognized under International Financial Reporting Standards ("IFRS") and may not be comparable to similar measures presented by other companies. These measures should not be considered as an alternative to, or more meaningful than, IFRS measures including net income (loss), cash provided by operating activities, or total liabilities. The Company uses these measures to evaluate its performance, leverage and liquidity. Adjusted funds flow is a non-Generally Accepted Accounting Principles ("non-GAAP") measure that represents the total of funds provided by operating activities, before adjusting for changes in non-cash working capital, and decommissioning obligations settled. Net debt is a non-GAAP measure calculated as the sum of Term Debt, subordinated promissory notes at the principal amount, amounts due to related party and trade and other payables less trade and other receivables, cash, investments and prepaid expenses and deposits. Operating netback is a non-GAAP measure calculated as the Company's total revenue, less net operating expenses, divided by the Boe production of the Company. Corporate netback is a non-GAAP measure calculated as the Company's operating netback, less general and administrative expenses and interest expense and bank charges, divided by the Boe production of the Company. Please refer to the Annual Report for additional details regarding non-GAAP measures and their calculation.

The TSX does not accept responsibility for the accuracy of this release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/102102

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