Strathcona Resources Ltd. (SCR) Reports Third Quarter 2023 Financial and Operational Results
Key Highlights :
Calgary, AB – Strathcona Resources Ltd. (“Strathcona” or the “Company”) (TSX: SCR) today reported its third quarter 2023 financial and operational results. These results do not include contribution from Pipestone Energy Corp. (“Pipestone”), one of the Company’s predecessors which was acquired by way of a plan of arrangement (the “Pipestone Transaction”), which was completed subsequent to the quarter end, on . A copy of 2023 interim and 2022 annual financial statements and associated MD&A are available under the Company’s profile on SEDAR+ at .
In the third quarter of 2023, Strathcona received requisite shareholder and regulatory approvals for the Pipestone Transaction, and completed the transaction shortly thereafter on . As a result of the Pipestone Transaction, Strathcona is now a reporting issuer in , with its common shares listed and trading under the ticker “SCR” on the Toronto Stock Exchange. Waterous Energy Fund, controlling shareholder, continues to retain approximately 91% ownership in the Company.
Also in the third quarter of 2023, Strathcona completed the expansion of its Groundbirch gas plant to 60 MMcf/d (from 30 MMcf/d) and subsequently brought on three new wells to fill capacity, which are performing in-line with expectations. In addition, Strathcona tied-in and began steam circulation at the 8 well pair H-pad at Tucker, marking the first new well pairs to be added to the property in approximately five years. The H-pad is expected to benefit from improved reservoir characterization when compared to the majority of the previously drilled well pairs, driving higher production and a lower steam oil ratio for the asset into 2024.
The Company expects production for 2023 to average approximately 155 Mboe/d, including approximately 185 Mboe/d in the fourth quarter of 2023. Capital expenditures are expected to total approximately on a full-year basis. The Company expects to exit 2023 with approximately in debt outstanding and is on track to repay its bank term loan by the end of .
Strathcona’s board of directors has approved a 2024 capital budget of approximately . The budget is composed of: expects 2024 production of 190 to 195 Mboe/d (70% oil and condensate, 77% total liquids). The mid-point of this guidance reflects approximately 9% year-over-year production growth from 2023 legacy assets of 147 Mboe/d, and approximately flat production on full-year 2023 production of 33 Mboe/d (6% to 8% on a combined basis). 2024 guidance for the legacy assets reflects a disciplined capital program of approximately , focused on optimization of base production, which is expected to result in a reduced base decline rate and improved go-forward well economics.
Strathcona’s 2024 capital budget is expected to generate approximately of Adjusted Free Cash Flow , at / bbl WTI, assuming a / bbl WCS-WTI differential, -CAD, and / Mcf AECO, and is expected to be fully funded down to approximately / bbl WCS. These figures exclude the retirement of approximately of previously disclosed call premiums and foreign exchange derivatives inherited from a previous acquisition, which are not sensitive to oil or gas prices.
Strathcona’s board of directors has approved a debt target of , which is expected to be reached in 2024. The Company intends to allocate 100% of its free cash flow towards debt repayment until this debt target is reached, after which a shareholder return program is expected to be announced.
Strathcona will host a conference call on , starting at ( ), to review the Company’s third quarter 2023 results. , 2023 ( ) To join without operator assistance, up to 15 minutes before the start time. Enter your name and phone number to receive an automated call-back. Alternatively, you can join with operator assistance by dialing 1 (888) 390-0605 (North American Toll Free) and quote conference ID 256954. For those unable to participate in the conference call at the scheduled time, a recording of the conference call will be available for seven days following the call and can be accessed by dialing 1 (888) 390-0541 and entering the conference number 256954.
For more information about Strathcona Resources Ltd., visit .
This press release makes reference to certain financial measures and ratios which are not recognized measures under generally accepted accounting principles (“GAAP”) and do not have a standardized meaning prescribed by IFRS. Non-GAAP financial measures and ratios are used internally by management to assess the performance of the Company. They also provide investors with meaningful metrics to assess the Company’s performance compared to other companies in the same industry. However, the Company’s use of these terms may not be comparable to similarly defined measures presented by other companies. Investors are cautioned that these measures should not be construed as an alternative to financial measures determined in accordance with GAAP and these measures should not be considered to be more meaningful than GAAP measures in evaluating the Company’s performance.
“Operating Earnings” is calculated by deducting purchased product and blending costs from oil and natural gas sales, sales of purchased product and other income. Management uses this metric to isolate the revenue associated with Company production after accounting for the unavoidable cost of blending.
“Funds from Operations” is considered a key financial metric for evaluating the profitability of
