Prairie Storm Resources Corp. is pleased to report its unaudited financial and operating results for the three and six months ended June 30, 2021.
Message to Shareholders
The Company completed its public listing process at the end of a difficult year for the energy sector, with its shares beginning to trade on the TSXV on December 21, 2020. In response to volatile market conditions and the sharp decline in global commodity prices during the course of 2020, the Company undertook many measures to protect its balance sheet, maintain liquidity and preserve long term value for shareholders. Throughout the first half of 2021, the Company elected to maintain its prudence in managing its capital program and preserving its balance sheet strength. The Company chose to defer activity until later in the year with a view to establishing more permanence to the welcome rise in commodity pricing experienced during the first half of 2021.
Despite minimal capital expenditures during the first half of 2021, which amounted to 12% of adjusted funds flow, production in the first six months of the year was 1,944 boe/d, a decline of only 4% from the 2,015 boe/d produced in the fourth quarter 2020. Production during the second quarter of 2021 was 1,964 boe/d, a slight increase of 2% from the first quarter figure of 1,926 boe/d.
With operatorship of three oil units under waterflood, our asset base demonstrated a moderate decline profile that allowed the Company to further strengthen its strong balance sheet. The Company ended the second quarter of 2021 with no debt and a positive working capital balance in excess of $8 million.
The recovery in commodity pricing in 2021 had a significant affect on production revenue, as the six-month figure increased 58% to $12.5 million from $7.9 million a year ago. When comparing the second quarter figures, production revenue was up 113%, to $6.5 million from $3.1 million in the comparative quarter.
Field netbacks also benefited from the increase in commodity prices, rising from $8.40/boe in the first half of 2020 to $19.79/boe in the first half of 2021. For second quarter comparatives, field netbacks were $5.54/boe in 2020 versus $20.77/boe in 2021.
The prudent measures undertaken to limit spending and control costs have put the Company in a strong financial position. The Company has also benefited from having no oil hedges in place during the first half of 2021 and remains completely unhedged on its oil production going forward, allowing for continued participation in a strong global oil pricing environment. With no debt and a dramatic improvement in its field netbacks, the Company has significant flexibility in managing its growth profile in the future by capitalizing on the vastly improving commodity pricing.
