Clearview Resources Ltd. ("Clearview" or the "Company") is pleased to announce its financial and operational results for the three months ended March 31, 2023.
"Following a record year for Clearview in 2022, the Company completed its asset rationalization process in the first quarter of 2023 by disposing of two additional non-operated, non-core properties", commented Rod Hume, Clearview's CEO. "Clearview now operates over 90% of its production and is in a strong operational and financial position to execute its capital program, including drilling an extended reach Cardium light oil horizontal well in Wilson Creek", added Mr. Hume.
Q1 2023 HIGHLIGHTS
At March 31, 2023, Clearview had a working capital surplus of $2.2 million, including $3.8 million of cash on hand, resulting in a net debt(1) position of a $1.0 million surplus;
Closed the disposition of two more non-core assets in the first quarter of 2023 for gross proceeds of $2.2 million at $20,000 per flowing barrel of oil equivalent per day ("boe/d") (72% oil) reducing the Company's asset retirement obligations by an additional $2.5 million;
FINANCIAL and OPERATIONAL RESULTS
Production for the three months ended March 31, 2023 was down 14% to 1,801 boe/d versus the comparative quarter of 2022 at 2,008 boe/d. The decrease was due to the disposition of three non-core, non-operated properties in the fourth quarter of 2022 and the first quarter of 2023 and natural declines. The fourth disposition, which closed on March 31, 2023, had no impact on first quarter of 2023 production. Natural gas and natural gas liquids production was down primarily due to the gas weighted dispositions undertaken in the fourth quarter of 2022.
The Company incurred a loss of $0.8 million ($0.06 per share) in the first three months of 2023, versus a net loss of $1.7 million ($0.14 per share) in the comparative period of 2022. Adjusted funds flow(1) for the three months ended March 31, 2023 was $1.5 million, a decrease of 38%, primarily as a result of lower realized sales prices for all the Company's production and lower production volumes. The decrease in oil and natural gas sales of $3.0 million was primarily offset by no realized losses on hedges in the first three months of 2023 versus a $1.4 million loss in the comparative period of 2022. In addition, royalties and operating costs in the first quarter of 2023 were lower than the comparative period of 2022 by $0.9 million. Capital expenditures(2) for the three months ended March 31, 2023 were $0.4 million and decommissioning expenditures funded by Clearview were $0.3 million which enabled the Company to direct excess adjusted funds flow towards improving its working capital position, including cash on hand. Net proceeds from the disposition of non-core assets also increased the Company's working capital surplus. As of March 31, 2023, Clearview had a working capital surplus of $2.2 million, including cash on hand of $3.8 million. The Company's convertible debentures of $1.2 million remain outstanding, maturing November 2025.
Not unlike many other oil and gas producers in Alberta, some of Clearview's production has been affected by the ongoing wildfires in Alberta. The Company's Northville and Pembina fields were shut-in on May 5th as a result of downstream, third-party facilities being shut-down due to wildfires. Production at these fields was restored starting on May 22nd. Clearview's Niton field experienced intermittent shut-ins starting on May 6th due to its close proximity to a wildfire. Some of the production at Niton has been recently restored with the remaining wells waiting on start-up of downstream, third-party facilities. The Company is not aware of any damage to any of its assets or infrastructure. The shut-ins due to the wildfires has impacted the Company's May 2023 production volumes by approximately 500 boe/d. Clearview would like to thank its field operations staff for their proficient and diligent response to the ongoing wildfire situation; both in reacting to the ongoing threats and their timely response in bringing Clearview's production back on-stream. The Company would also like to thank the tireless efforts of first responders and firefighters in battling these wildfires. They not only keep our communities safe but also protect valuable energy infrastructure in Alberta. Our thoughts are with those that have been impacted and suffered personal loss due to the wildfires.
In the first quarter of 2023, Clearview disposed of two additional non-core, non-operated assets. The disposition of the Company's interest in the Lindale Cardium Unit closed on January 31, 2023 and the disposition of Clearview's interest in the Bantry property closed on March 31, 2023. Including the three assets disposed of in 2022, the five properties were sold for combined gross proceeds of $5.4 million with associated metrics of $20,900 per flowing boe/d.
Operated spending on decommissioning projects in 2023 began in the first quarter and has been forecast at approximately $0.9 million for the year. This year's program will be focused on an area closure project in east-central Alberta and multiple environmental site assessments.
Clearview is actively preparing for a Cardium drill at Wilson Creek in the third quarter of 2023, the first drill in almost 5 years for the Company, following up on the successful 15-20-044-04W5 horizontal Cardium well Clearview drilled in 2018. The Company also continues to evaluate reactivation opportunities and optimization projects in conjunction with its drilling program.
Clearview is also pleased to announce the results of its annual general meeting of shareholders (the "Meeting"), which was held on May 25, 2023. Shareholders voted in favour of all matters of business before the Meeting. Each of those matters is set out in detail in the Management Information Circular published in connection with the Meeting, which is available on the Company's profile at www.sedar.com.
Mr. Murray Scalf did not stand for re-election at the Meeting. Clearview would like to extend a sincere thank you to Mr. Scalf for his service to Clearview. Mr. Scalf served as our Executive Vice-President from 2010 to 2014 and joined the board of directors in 2016, serving on several board committees during that time. During his tenure as both an executive and board member Murray played an instrumental role in the development of Clearview, and his expertise in the oil and gas industry has been a valuable asset to the Company. We wish him the best in the future.
Clearview's strategy is to provide liquidity for its shareholders and as such, management and the Board of Directors continue to monitor the outlook for commodity prices and forecast adjusted funds flow to determine the appropriate timing for providing returns to shareholders. At the current time, the forward strip price for AECO gas indicates $2.30/mcf for the balance of 2023 which has had a negative impact to the Company's expectations of adjusted funds flow in 2023 and reflects prices not seen since the COVID-19 pandemic. The Company estimates that it requires annualized adjusted funds flow of approximately $7 million as a threshold for initiating shareholder returns without meaningful debt commitments. Current projections are approximately 25% below this target. As a result, Clearview has postponed, for the time being, its plans to undertake a Substantial Issuer Bid or a special dividend in the first half of the year.
Clearview would like to thank its shareholders for their continued support as we evaluate our internal development plans and external opportunities to grow production volumes and adjusted funds flow towards providing liquidity for shareholders.