Pine Cliff Energy Ltd. Announces Record Annual Results, Filing of 2022 Disclosure Documents, 2022 Year-End Reserves, and Provides 2023 Guidance

Calgary, Alberta--(Newsfile Corp. - March 7, 2023) - Pine Cliff Energy Ltd. (TSX: PNE) ("Pine Cliff" or the "Company") announces its year-end financial and operating results, the filing of its 2022 disclosure documents, its 2022 year-end reserves and 2023 guidance.

2022 and Fourth Quarter 2022 Highlights

Pine Cliff's adjusted funds flow¹ of $40.2 million generated during the fourth quarter of 2022 and $163.2 million for 2022 were the highest fourth quarter and annual adjusted funds flow for the Company since inception.

Highlights from the fourth quarter and 2022 include:

• generated $40.2 million of adjusted funds flow¹ ($0.11 per basic and fully diluted share) for the three months ended December 31, 2022, and $163.2 million ($0.47 per basic and $0.45 per fully diluted share) for the year ended December 31, 2022, 53% and 176% higher than the respective periods in the prior year;

• generated net earnings of $24.7 million ($0.07 per basic and fully diluted share) for the three months ended December 31, 2022, and $108.9 million ($0.31 per basic and $0.30 per fully diluted share) for the year then ended;

• production averaged 21,041 Boe/d² and 21,015 Boe/d³ during the three months and year ended December 31, 2022, 10% and 14% higher than the comparable periods in 2021;

• paid dividends of $10.8 million ($0.03 per basic and fully diluted share) for the three months ended December 31, 2022 and $23.6 million ($0.07 per basic and fully diluted share) for the year ended December 31, 2022;

• repaid in full $30.0 million of term debt and $12.0 million of promissory notes outstanding by the end of the second quarter of 2022 to be debt free;

• had positive net cash¹ of $55.9 million at December 31, 2022 compared to $49.7 million of net debt at December 31, 2021, a year over year change of $105.6 million;

• drilled, four (2.8 net) Pekisko oil wells and seven (1.4 net) Ellerslie liquids rich natural gas wells in 2022; and

• 2022 capital expenditures totaled $34.7 million, including development capital of $20.5 million, facilities optimization and maintenance capital of $8.4 million and abandonment and reclamation expenditures of $5.8 million.

Included in the filings were Pine Cliff's annual information form ("AIF"), which includes disclosure and reports related to reserves data and other oil and gas information pursuant to National Instrument 51‐101 Standards of Disclosure for Oil and Gas Activities and its consolidated financial statements and related management's discussion and analysis for the year ended December 31, 2022 (the "Annual Report").

Reserve Report Highlights

Pine Cliff's independent reserve report was prepared by McDaniel & Associates Limited ("McDaniel") in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") with the effective date of December 31, 2022.

Highlights of the McDaniel reserve report include:

• Net present value for proved plus probable ("P+P") reserves of $411.5 million, discounted at 10%, an increase of $133.6 million, or 48%, from December 31, 2021, primarily as a result of an increase in forecast commodity prices;

• Pine Cliff increased its 2022 P+P reserves by 12.5 MMBoe⁴ (20%) prior to adjusting for 2022 production, a reserve replacement ratio of 163%, largely as a result of 10.0 MMBoe⁵ (16%) due to economic factors, 1.7 MMBoe⁶ (3%) of extensions and an increase of 0.8 MMBoe⁷ (1%) from technical revisions;

• Remaining P+P reserves of 67.6 MMBoe⁸ (86% conventional natural gas and coal bed methane) at December 31, 2022 increased by 4.8 MMBoe⁹ (8%) from 62.8 MMBoe¹⁰ (84% conventional natural gas and coal bed methane) at December 31, 2021, mainly as a result of economic factors; and

• Approximately 77% of total reserve volumes are classified as total proved reserves and approximately 23% are classified as probable reserves.

Pine Cliff's Reserves

McDaniel has used a three consultant average price (McDaniel, GLJ & Sproule) forecast, resulting in a price forecast of $4.23 and $4.40 per Mcf for AECO natural gas and US$80.33 and US$78.50 per Bbl for WTI oil in 2023 and 2024 respectively.

Summary of Remaining Working Interest Reserves, as of December 31, 2022

Reserve Category		Oil1,2			Natural Gas Liquids			Conventional Natural Gas			Coal Bed Methane			Oil Equivalent
		MBbl			MBbl			MMcf			MMcf			MBoe
Proved
Developed Producing		2,069.2			3,408.4			232,665.8			27,934.2			48,911.0
Developed Non-Producing		17.5			10.4			2,101.1			-			378.1
Undeveloped		1,012.6			244.3			7,813.7			-			2,559.2
Total Proved		3,099.3			3,663.1			242,580.6			27,934.2			51,848.3
Probable		1,783.5			1,171.0			70,623.5			6,449.5			15,800.0
Total Proved plus Probable		4,882.9			4,834.2			313,204.2			34,383.6			67,648.4

 

¹ Amounts may not add due to rounding.
² Oil includes Light and Medium and Heavy Oil. Light and Medium oil represents 100 per cent of Total Proved and Proved plus Probable reserves.

Summary of Net Present Values of Future Net Revenue, Before Income Taxes, as of December 31, 2022

Discounted at (% per year)
($ millions)		0%			5%			10%			15%			20%
Reserve Category1
Proved
Developed Producing		91.7			279.1			275.9			251.5			228.0
Developed Non-Producing		6.9			5.4			4.5			3.9			3.4
Undeveloped		61.2			37.8			24.5			16.4			11.1
Total Proved		159.8			322.3			304.9			271.8			242.5
Probable		271.8			161.0			106.6			76.3			57.7
Total Proved plus Probable		431.6			483.3			411.5			348.0			300.2

 

¹ Amounts may not add due to rounding.

Reconciliation of Gross Reserves by Principal Product Type, as of December 31, 2022

Reserve Reconciliation Company Gross1		Oil2			Natural Gas Liquids			Natural Gas3			Oil Equivalent
		MBbl			MBbl			MMcf			MBoe
Total Proved
December 31, 2021		3,044.0			3,853.4			253,292.5			49,112.8
Extension		228.4			186.7			4,413.4			1,150.7
Technical Revisions		343.8			(295.9	)		5,737.2			1,004.1
Acquisitions		3.1			18.7			2,778.4			484.9
Dispositions		(191.2	)		(3.3	)		(1,815.3	)		(497.1	)
Economic Factors		129.8			436.1			46,183.7			8,263.2
Production		(458.5	)		(532.6	)		(40,075.1	)		(7,670.3	)
December 31, 2022		3,099.3			3,663.1			270,514.8			51,848.3
Total Proved plus Probable
December 31, 2021		4,673.1			5,321.5			316,913.0			62,813.4
Extension		411.2			245.9			6,337.5			1,713.4
Technical Revisions		348.7			(725.5	)		7,337.8			846.2
Acquisitions		3.3			23.9			3,205.4			561.4
Dispositions		(248.8	)		(4.4	)		(2,400.3	)		(653.3	)
Economic Factors		153.9			505.4			56,269.6			10,037.6
Production		(458.5	)		(532.6	)		(40,075.1	)		(7,670.3	)
December 31, 2022		4,882.9			4,834.2			347,587.8			67,648.4

 

¹ Amounts may not add due to rounding.
² Oil includes Light and Medium and Heavy Oil. Light and Medium oil represents 100 per cent of Total Proved and Proved plus Probable reserves.
³ Natural gas includes Conventional Natural Gas and Coal Bed Methane. Conventional Natural Gas represents 90 per cent Total Proved and Proved plus Probable reserves.

2023 Guidance

Pine Cliff's Board of Directors has approved a 2023 capital budget of $27.9 million to be fully funded from adjusted funds flow. Pine Cliff intends to spend approximately $12.8 million drilling four (2.8 net) Pekisko oil wells in Central Alberta and three (0.3 net) Ellerslie natural gas well in the Edson area, $8.6 million on facility optimization and maintenance capital and $6.5 million on abandonments and reclamation.

Based on $13.0 million of development capital and assuming that Pine Cliff makes no acquisitions or does not add to its 2023 capital program, Pine Cliff expects 2023 annual production volumes to range between 20,000 Boe/d¹¹ and 21,000 Boe/d¹².

Retirement of Chairman of the Board

Mr. George Fink has advised the Board that he will not be standing for re-election at the next Annual Meeting of Shareholders, scheduled to be held on May 17, 2023, and will be retiring as Chairman of the Board ("Chairman").

Mr. Fink founded Pine Cliff in November 2004 and was the President & CEO until succeeded by Mr. Hodge on January 1, 2012. Mr. Fink has been the Chairman since inception and has been instrumental in guiding and building Pine Cliff to a debt free, dividend paying natural gas company. Mr. Fink is the third largest shareholder in Pine Cliff (7.3%) and was instrumental in developing and maintaining the retail investor base that makes Pine Cliff unique. The Board would like to thank Mr. Fink for his dedication and service to Pine Cliff and wish him continued success and enjoyment with his retirement.

Financial and Operating Results

		Three months ended December 31,						Year ended December 31,
		2022			2021			2022			2021
($000s, unless otherwise indicated)
Commodity sales (before royalty expense)		76,928			54,413			306,208			163,985
Cash provided by operating activities		33,791			20,431			150,452			49,483
Adjusted funds flow1		40,200			26,279			163,206			59,106
Per share - Basic ($/share)1		0.11			0.08			0.47			0.18
Per share - Diluted ($/share)1		0.11			0.07			0.45			0.17
Earnings		24,685			80,522			108,939			81,421
Per share - Basic ($/share)1		0.07			0.24			0.31			0.24
Per share - Diluted ($/share)1		0.07			0.23			0.30			0.23
Capital expenditures		6,637			10,741			29,077			21,568
Acquisitions		528			23,136			1,119			23,147
Dividends		10,797			-			23,574			-
Per share - Basic ($/share)1		0.03			-			0.07			-
Per share - Diluted ($/share)1		0.03			-			0.07			-
Positive net cash (net debt)1		55,913			(49,652	)		55,913			(49,652	)
Production (Boe/d)		21,041			19,056			21,015			18,445
Percent Natural Gas (%)		87%			90%			87%			91%
Weighted-average common shares outstanding (000s)
Basic		350,216			339,213			346,443			337,254
Diluted		360,322			350,806			360,033			348,285
Combined sales price ($/Boe)		39.74			31.04			39.92			24.36
Operating netback ($/Boe)1		21.06			16.50			22.41			10.36
Corporate netback ($/Boe)1		20.76			15.00			21.28			8.78
Operating netback ($ per Mcfe)1		3.51			2.75			3.74			1.73
Corporate netback ($ per Mcfe)1		3.46			2.50			3.55			1.46

 

¹ 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

Reader Advisories

Notes to Press Release

1. See Non-GAAP Measures.

2. Comprised of 109,307 Mcf/d natural gas, 1,463 Bbl/d NGLs and 1,360 Bbl/d light and medium oil.

3. Comprised of 109,801 Mcf/d natural gas, 1,459 Bbl/d NGLs and 1,256 Bbl/d light and medium oil.

4. Comprised of 70.8 MMcf natural gas, 0.67 MMbbls light and medium oil and 0.04 MMbbls NGLs.

5. Comprised of 56.3 MMcf natural gas, 0.15 MMbbls light and medium oil and 0.50 MMbbls NGL's.

6. Comprised of 6.3 MMcf of natural gas, 0.41 MMbbls light and medium oil and 0.24 MMbbls NGL's.

7. Comprised of 7.3 MMcf of natural gas, 0.35 MMbbls light and medium oil and (0.73) MMbbls NGL's.

8. Comprised of 313.2 MMcf of conventional natural gas, 34.4 MMcf of coal bed methane gas, 4.88 MMbbls of light and medium oil and 4.83 MMbbls of NGL's.

9. Comprised of 37.4 MMcf of conventional natural gas, (6.7) MMcf of coal bed methane gas, 0.21 MMbbls of light and medium oil and (0.49) MMbbls of NGL's.

10. Comprised of 275.8 MMcf of conventional natural gas, 41.1 MMcf of coal bed methane gas, 4.67 MMbbls light and medium oil and 5.32 MMbbls NGL's.

11. Comprised of approximately 102,000 Mcf/d natural gas, 1,400 Bbl/d NGLs and 1,600 Bbl/d light and medium oil.

12. Comprised of approximately 107,000 Mcf/d natural gas, 1,470 Bbl/d NGLs and 1,680 Bbl/d light and medium oil.

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 acquisition opportunities including Pine Cliff's ability to execute on those opportunities; 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; Pine Cliff's ability to generate free funds flow; Pine Cliff's ability to pay a dividend; 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; risks inherent in the ability to generate sufficient cash provided by operating activities 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 including the reduction in municipal taxes and surface land rentals, 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", "free funds flow", "operating netbacks", "corporate netbacks" and "positive net cash/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. Free funds flow is a non-GAAP measure calculated as adjusted funds flow less the Company's capital expenditures. Positive net cash/net debt is a non-GAAP measure calculated as the sum of cash, investments, trade and other receivables, prepaid expenses and deposits less term debt, promissory notes at the principal amount, amounts due to related party and trade and other payables less trade and other receivables. Operating netback is a non-GAAP measure calculated as the Company's total revenue, less royalties, operating expenses and transportation expenses, divided by the Boe production of the Company. Corporate netback is a non-GAAP measure calculated as the Company's operating netback plus interest income, less general and administrative expenses and interest 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.

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