Altura Energy Inc. is pleased to announce its financial and operating results for the three and six months ended June 30, 2021.
SECOND QUARTER 2021 HIGHLIGHTS
• Production volumes averaged 1,009 boe per day in the quarter, up 132 percent year-over-year and seven percent from the first quarter of 2021.
• The Corporation closed two previously announced asset dispositions on April 27, 2021 and June 15, 2021, divesting of an aggregate 2.06 percent working interest for cash proceeds of $1,312,000.
• Altura's net debt1 was $2.2 million at June 30, 2021, down from $4.1 million at March 31, 2021, which represents 0.5 times the annualized quarterly adjusted funds flow. Excluding the impact of the realized loss on financial instruments, Altura's net debt to adjusted funds flow ratio would be very low at 0.2 times.
• Altura's realized heavy oil price increased 17 percent to $66.71 per barrel in the quarter compared to $56.92 per barrel in the first quarter of 2021 and increased 212 percent compared to $21.39 per barrel in the second quarter of 2020.
• Operating expenses were $13.96 per boe, compared to $16.27 per boe in the second quarter of 2020. Transportation expenses were $2.45 per boe, consistent with $2.46 per boe in the second quarter of 2020.
• The Corporation's operating netback1 averaged $24.41 per boe, up 16 percent from the first quarter of 2021 due to higher crude oil and natural gas prices, partially offset by higher royalties and operating expenses.
• Adjusted funds flow1 was $1.1 million in the quarter, which is a 39 percent increase from the first quarter of 2021. This was mainly from higher commodity prices and higher production volumes which were partially offset by a $0.6 million realized hedging loss.
• The net loss in the quarter was $0.4 million, which decreased from $0.9 million in the prior quarter and $1.2 million in the second quarter of 2020.
• Altura invested $0.4 million in capital expenditures which included workover costs related to four rod upgrades at Leduc-Woodbend to improve run-time efficiency and the lease construction costs related to the July 2021 drilling operation.
OPERATIONAL UPDATE
In July 2021, Altura drilled and completed an extended reach horizontal ("ERH") well under budget at 100/11-14-048-26W4 (the "11-14" well) (87.5% working interest) into the Rex member of the Upper Mannville at Leduc-Woodbend. The 11-14 well was drilled in the southern half of the pool and was classified as a probable location2 in Altura's December 31, 2020 reserve report. Management believes that a successful 11-14 well will enable Altura to convert additional probable locations2 adjacent to 11-14 to proved locations2 in Altura's reserve report ending December 31, 2021.
The 11-14 ERH well is Altura's longest well to-date with a completed lateral length of 2,270 meters, which is 170 meters longer than previous Rex horizontal wells. The well was completed with 83 frac stages, which is a record number of stages for Altura. The longer well and increased frac density is expected to result in increased production and reserves compared to the average Leduc-Woodbend well of approximately 2,100 meters and a frac density of 55 stages. The 11-14 well commenced production mid-August and is in the cleanup phase, showing strong initial production rates and exceeding management's expectations. Altura will report production results on this well in the next quarterly release once it is fully cleaned-up.
OUTLOOK
Altura has an active third quarter remaining with a second Leduc-Woodbend well (87.5% working interest) planned for September, with subsequent production in October. Additionally, the Corporation has budgeted a waterflood pilot project at Leduc-Woodbend, which is planned for the fourth quarter of 2021. Success of the pilot would result in gas/oil (GOR) ratio suppression, reservoir pressure maintenance and attenuated production declines which could add material upside to Altura's Rex oil pool reserve recoveries.
Altura's capital expenditure forecast for 2021 (excluding proceeds from asset dispositions) remains at $7.5 million and average 2021 production is forecasted to be 1,100 to 1,150 boe per day, representing more than 25 percent growth over 2020 on a per share basis. With added production from the two new wells, improving commodity prices and a more favorable hedge book, Altura is forecasting substantial adjusted funds flow3 growth in the second half of 2021.
