Clearview Resources Ltd. Reports Second Quarter 2020 Results

CALGARY, AB, Aug. 28, 2020 /CNW/ - Clearview Resources Ltd. ("Clearview" or the "Company") is pleased to announce its financial and operational results for the three and six months ended June 30, 2020.

FINANCIAL and OPERATIONAL RESULTS

During the second quarter of 2020, Clearview's realized price per barrel of oil equivalent ("boe") was lower by 49% than the comparative period of 2019, due to lower prices being realized for all of the Company's products, except natural gas.  Crude oil and natural gas liquids prices were lower due to a significant drop in benchmark oil pricing as a result of the COVID-19 pandemic which affected selling prices significantly in the second quarter.  Natural gas prices were higher by 60% as a result of the shut-in of associated natural gas production and low natural gas storage levels in Canada.

Production for the three months ended June 30, 2020 was down 27% to 1,716 barrels of oil equivalent per day ("boe/d") versus the comparative period of 2019.  The decrease in production was primarily due to lower oil production of 55% as the Company chose to shut-in its operated oil production and the associated gas volumes to preserve the value of the reserves.  Low oil prices and low prices for natural gas liquids, benchmarked from oil prices, resulted in negative field netbacks for these products for much of the quarter due to the economic crisis caused by the COVID-19 pandemic.  Natural gas liquids, generally associated with natural gas production, decreased 14% for the quarter ended June 30, 2020 versus the comparative period.  Natural gas production decreased by 15% in the three months ended June 30, 2020 versus the comparative period. 

Revenue, net of royalties, decreased by $3.3 million in the second quarter, a 60% decrease from the comparative period.  This decrease was largely due to lower realized prices and lower production volumes.  The Company's cost structure was reduced in the three months ended June 30, 2020 with total costs for transportation, operating costs and general and administrative expenses down $1.4 million versus the comparative period.   Also offsetting the decrease in revenue was a $0.7 million increase in realized gains on commodity contracts versus the comparative period.  As a result of a reduced cost structure and the realized gains on commodity contracts, adjusted funds flow was reduced by $1.2 million versus the $3.3 million drop in net revenue.  The Company's corporate netback decreased by 91% to $0.53 per boe for the current quarter versus $5.98 per boe in the comparative period of 2019.

Adjusted funds flow for the current quarter ended March 31, 2020 was $0.1 million.  Capital expenditures and abandonment capital were $6 thousand in net proceeds which enabled the Company to reduce its net debt by $0.1 million during the quarter.  As of June 30, 2020, the Company had net debt of $15.0 million.

The Company's credit facility was set for its normal course review to be completed by no later than June 30, 2020.  The Company's lender, ATB Financial ("ATB"), has informed Clearview that the completion of the review will likely be extended to no later than September 15, 2020.  In the meantime, the Company remains in compliance in all aspects of the current credit facility.

Financial and Operating Highlights

Financial	Three months ended June 30			Six months ended June 30
($ 000's except per share amounts)	2020	2019	% Change	2020	2019	% Change
Oil and natural gas sales	2,350	6,318	(63)	6,8921	13,818	(50)
Net earnings (loss)	(2,755)	(658)	318	(25,972)	(1,112)	2,236
Per share–basic and diluted	(0.24)	(0.06)	300	(2.23)	(0.10)	2,130
Adjusted funds flow (1)	83	1,280	(94)	599	3,344	(82)
Per share–basic and diluted	0.01	0.11	(91)	0.05	0.30	(83)
Cash flow from operations	(304)	847	(136)	854	2,438	(65)
Per share–basic and diluted	(0.03)	0.07	(143)	0.07	0.22	(68)
Capital expenditures – net	(6)	772	(101)	203	1,485	(86)
Weighted average shares
Basic and diluted (000's)	11,667	11,667	-	11,667	11,269	4

(1)	See non-GAAP measures

Production	Three months ended June 30			Six months ended June 30
	2020	2019	% Change	2020	2019	% Change
Oil – bbl/d	320	709	(55)	451	738	(39)
Natural gas liquids – bbl/d	387	452	(14)	409	462	(11)
Total liquids – bbl/d	707	1,161	(39)	860	1,200	(28)
Natural gas – mcf/d	6,058	7,153	(15)	6,887	7,398	(7)
Total – boe/d	1,716	2,353	(27)	2,008	2,434	(18)

Realized sales prices	Three months ended June 30			Six months ended June 30
	2020	2019	% Change	2020	2019	% Change
Oil – $/bbl	26.31	69.12	(62)	38.07	65.69	(42)
NGLs – $/bbl	14.79	26.19	(44)	16.63	29.58	(44)
Natural gas – $/mcf	1.93	1.20	60	2.02	1.92	5
Total – $/boe	15.05	29.51	(49)	18.86	31.37	(40)

Netback analysis	Three months ended June 30			Six months ended June 30
Barrel of oil equivalent ($/boe)	2020	2019	% Positive (Negative)	2020	2019	% Positive (Negative)
Realized sales price	15.05	29.51	(49)	18.86	31.37	(40)
Royalties	(0.89)	(3.76)	76	(1.58)	(3.63)	56
Processing income	0.82	0.74	11	0.70	0.73	(4)
Transportation	(1.42)	(1.83)	22	(1.54)	(1.74)	11
Operating	(13.93)	(14.46)	4	(14.48)	(14.52)	-
Operating netback	(0.37)	10.20	(104)	1.96	12.21	(84)
Realized gain (loss) on commodity contracts	5.01	0.52	863	3.61	(0.16)	2,356
General & administrative	(2.44)	(3.26)	25	(2.39)	(2.81)	15
Transaction costs	-	(0.12)	100	-	(0.25)	100
Cash finance costs	(1.67)	(1.36)	(23)	(1.54)	(1.40)	(10)
Corporate netback	0.53	5.98	(91)	1.64	7.59	(78)

(1)	% Positive (Negative) is expressed as being positive (better performance in the category) or negative (reduced performance in the category) in relation to operating netback, corporate netback and net earnings.
(2)	See non-GAAP measures.

OPERATIONS UPDATE

With the unparalleled collapse in oil prices in early March of 2020, Clearview immediately began the implementation of cost reducing operating practices and minimized capital spending. With the continued decline in oil prices as a result of the spread of COVID-19 and significant reduction in global activity, austere operating practices were implemented.  Once storage tanks were filled, operated oil production and associated natural gas production were shut-in for a period of time to preserve reserve value. By the end of the second quarter of 2020, as oil prices improved, Clearview had begun selling oil and the associated natural gas production from several fields brought back on-stream and selling oil which was produced to storage tanks before shut-in operations were undertaken.

Net capital spending in the second quarter was net proceeds of $6 thousand. 

OUTLOOK

In March 2020, the World Health Organization declared a global pandemic following the rapid spread of the coronavirus ("COVID-19").  The subsequent responses and measures intended to limit the spread of the pandemic resulted in a sudden decline in economic activity and a significant increase in economic uncertainty. 

Although the global economies have recently begun to reopen and government authorities are easing restrictions, the situation remains dynamic and the ultimate duration and magnitude of the COVID-19 impact on the global economy is unknown at this time. 

Clearview has made significant reductions in its capital and operations to preserve cash flow from operations in these challenging times while at the same time not compromising on the core principles of environmental protection, health and safety and regulatory compliance.

Canadian light oil prices have recovered from their lows of $19.22 per barrel for the month of April to average $50.65 per barrel in June 2020.  The forward price curves for Canadian oil are looking stronger than $50.00 per barrel for the rest of this year with further increases forecasted for 2021.  Canadian natural gas prices were very steady during the second quarter, despite it being shoulder season, at around $2.00 per million cubic feet.  Forward price curves for Canadian natural gas are looking even stronger for the rest of the year and into future years.

Clearview's June 30, 2020 unaudited condensed interim financial statements and management's discussion and analysis are available on the Company's website at www.clearviewres.com and SEDAR at www.SEDAR.com.

On behalf of the Board of Directors and all the employees of Clearview, we would like to thank our shareholders for their continued support.

FOR FURTHER INFORMATION PLEASE CONTACT:

Note Regarding Forward-Looking Statements
This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of our anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities.  Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

The forward-looking information is based on certain key expectations and assumptions made by our management, including expectations and assumptions concerning prevailing commodity prices and differentials, exchange rates, interest rates as set out in the appendices to this press release, also applicable royalty rates and tax laws; the impact of government assistance programs with have on the Company in connection with, among other things, the COVID-19 pandemic; the impact on energy demands going forward and the inability of certain entitles, including OPEC to agree on crude oil production output constraints; the impact on commodity prices, production and cash flow due to production shut-ins; the impact of regional and/or global health related events on energy demand; global energy policies going forward; our ability to execute our plans as described herein; global energy policies going forward; that the current commodity price and foreign exchange environment will improve; future exchange rates; future debt levels; the availability and cost of financing, labour and services; the impact of increasing competition and the ability to market oil and natural gas successfully and our ability to access capital. Although Clearview believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Clearview can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties which could include the possibility that Clearview will not be able to execute some or all of its ongoing programs; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; further fluctuations in the price of crude oil, natural gas liquids and natural gas; fluctuations in foreign exchange or interest rates; adverse changes to differentials for crude oil and natural gas produced in Canada as compared to other markets and worsened transportation restrictions. Our actual results, performance or achievement could differ materially from those expressed in, or implied by, the 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 so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide securityholders with a more complete perspective on our future operations and such information may not be appropriate for other purposes.

Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

Non-GAAP Measures and Oil and Gas Metrics
The Company's management uses and reports certain measures not prescribed by International Financial Reporting Standards ("IFRS") (referred to as "non-GAAP measures") in the evaluation of operating and financial performance.

• Operating netback is a non-GAAP measure used by the Company to assess its operating results. The Canadian Oil and Gas Evaluation Handbook ("COGEH") describes netback as "an operations indicator to assess operating priorities and evaluate smaller capital expenditures normally associated with field maintenance and improvement". The COGEH provides guidance that "the netback calculation takes the price received for a unit of production at a point in time and deducts from it all production costs, royalties and production taxes to find the cash netback to the producer from each barrel of oil or mcf of sales gas". The Company computes the operating netback for the Company directly from the applicable amounts on the Statements of Operations in the financial statements being oil and natural gas sales and processing income less royalties, production and transportation costs. This amount divided by the associated production volume (usually in boe's) provides a per unit amount.
  
  
• Corporate netback is the adjusted funds flow amount divided by the total production for the period and represents the cash margin received on each barrel of oil equivalent sold.
  
  
• Adjusted funds flow is a non-GAAP measure derived from cash flow from operating activities excluding decommissioning expenditures and changes in non-cash working capital. The adjusted funds flow amount represents funds available for capital expenditures, repayment of net debt or distribution to shareholders. Readers are directed to review the reconciliation of adjusted funds flow to cash flow provided by operating activities set out in the Company's MD&A for the year ended December 31, 2019.
  
  
• Net debt consists of current assets (excluding financial derivatives) less current liabilities (excluding financial derivatives). Net debt is used to assess financial strength, capacity to finance future development and manage liquidity risk.
  
  
• Operating netback, adjusted funds flow, corporate netback and net debt do not have any standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of a similar measure for other companies. The Company uses these terms as an indicator of financial performance because such terms are used internally in managing and governing the Company and are often utilized by investors and other financial statement users to evaluate producers in the oil and natural gas industry.
  
  
• Boe means barrel of oil equivalent on the basis of 6 mcf of natural gas to 1 bbl of oil. Boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In addition, 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 6: 1, using a conversion on a 6: 1 basis may be misleading as an indication of value.

SOURCE Clearview Resources Ltd.

Related Links

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