KEY HIGHLIGHTS
- Continued operational execution in
Alberta Montney and Kaybob Duvernay with recent wells among the top in the WCSB. - Generated
$195 million of excess cash flow in second quarter, with 60 percent returned to shareholders. - Reduced net debt by
$620 million in second quarter with proceeds from non-core asset disposition and excess cash flow. - Issued
$1.0 billion of investment-grade senior notes, optimizing the balance sheet. - Expect significant excess cash flow of
$825 million in 2024 based onUS$80 /bbl WTI and$1.70 /Mcf AECO for the full year.
"Our second quarter results demonstrate our continued focus on operational execution and further strengthening and optimizing of our balance sheet," said
FINANCIAL HIGHLIGHTS
- Adjusted funds flow totaled
$611.7 million during second quarter 2024, or$0.99 per share diluted, driven by a strong operating netback of$40.00 per boe. - For the quarter ended
June 30, 2024 , development capital expenditures, which included drilling and development, facilities and seismic costs, totaled$350.6 million . - Veren's net debt as at
June 30, 2024 was$3.0 billion , reflecting a reduction of$620 million in the quarter. The Company reduced its net debt through a combination of proceeds received from its disposition of certain non-core assets inSaskatchewan and excess cash flow generated in second quarter. - During the quarter, Veren was assigned an issuer rating of BBB (low), with a Stable trend, by
DBRS Limited ("Morningstar DBRS"). This public investment-grade rating reflects the success of the Company's strategic transformation over the last few years, building scalable premium inventory, increasing production and cash flows, and strengthening and optimizing the balance sheet. - In second quarter, Veren repaid senior note maturities totaling
$316 million . As previously announced, the Company also issued$1.0 billion aggregate principal amount of investment-grade senior unsecured notes during the quarter, consisting of$550.0 million of 4.968% five-year notes priced at par and dueJune 2029 , and$450 million of 5.503% 10-year notes priced at par and dueJune 2034 . The net proceeds from the offering were used to repay existing indebtedness, including fully retiring Veren's bank term loan. This issuance of investment-grade notes is an important step in diversifying the Company's capital structure and improving its overall cost of capital. - The Company has hedged 50 percent of its oil and liquids production and 30 percent of its natural gas production for the second half of 2024, net of royalty interest. In the first half of 2025, Veren has hedged 30 percent of its oil and liquids production and 30 percent of its natural gas production, net of royalty interest. The Company has also diversified its pricing exposure for natural gas, with the majority of its production through 2025 receiving a combination of fixed prices and pricing related to major
U.S. markets. - Veren reported net income of
$261.0 million , or$0.42 per share diluted, for the quarter endedJune 30, 2024 .
Adjusted funds flow, adjusted funds flow per share diluted, excess cash flow, operating netback, development capital expenditures, total return of capital and net debt are specified financial measures - refer to the Specified Financial Measures section in this press release for further information. All financial figures are approximate and in Canadian dollars unless otherwise noted. This press release contains forward-looking information and references to specified financial measures. Significant related assumptions and risk factors, and reconciliations are described under the Specified Financial Measures, Forward-Looking Statements and Reserves and Drilling Data sections of this press release, respectively. Further information breaking down the production information contained in this press release by product type can be found in the "Product Type Production Information" section of this press release. |
RETURN OF CAPITAL HIGHLIGHTS
- During second quarter 2024, the Company's total return of capital to shareholders, including the base dividend, was
$114.1 million . Veren remains committed to returning 60 percent of its annual excess cash flow to shareholders through a combination of dividends and share repurchases. - The Company remained active on its normal course issuer bid ("NCIB") in second quarter, repurchasing 3.6 million shares for
$42.4 million . Year-to-date, Veren has repurchased 5.4 million shares under its NCIB. - Subsequent to the quarter, the Company's Board of Directors declared a quarterly cash base dividend of
$0.115 per share payable onOctober 1, 2024 , to shareholders of record onSeptember 15, 2024 .
OPERATIONAL HIGHLIGHTS
- Average production in second quarter 2024 was 192,648 boe/d, comprised of approximately 65 percent oil and liquids.
- The Company continued to demonstrate the strength of its operational execution in the Alberta Montney, delivering the top four oil and liquids producing wells in the
Western Canadian Sedimentary Basin ("WCSB") based on recent monthly liquids volumes. During second quarter, Veren also drilled a new pacesetter well in itsGold Creek area of the play. This well, which was a part of an eight-well pad, was drilled in 9.0 days with the overall pad averaging 11.3 days per well, an improvement of 3.0 days compared to the Company's average drill time in the area since entering the play. Veren will continue to focus on realizing further efficiencies through drilling optimization, consistent rig utilization and knowledge transfer across its assets. - During the quarter, the Company brought on stream its first fully-operated pad in its
Karr West area of the Alberta Montney, utilizing Veren's optimized drilling and completions design. This pad generated an average peak 30-day rate of 1,300 boe/d per well (65% liquids). The Company is in the process of bringing 11 wells on stream in itsGold Creek area which were completed in late second quarter and expects to bring an additional 22 wells on stream in the Alberta Montney through the remainder of 2024. - In the Kaybob Duvernay, the Company continues to realize strong and consistent well results, with three of its recent wells ranking within the top five oil and liquids producing wells in the
Duvernay based on monthly liquids volumes. Veren brought three pads on stream in the Volatile Oil window during second quarter, one of which has been on stream for over 30 days with an average peak 30-day rate of 1,300 boe/d per well (75% liquids). Veren plans to bring an additional 22 wells on stream in the Kaybob Duvernay through the remainder of 2024. - In its
Saskatchewan operations, the Company continues to advance its decline mitigation projects to further enhance its long-term sustainability and excess cash flow generation. Veren remains on track to convert approximately 70 producing wells to water injection wells in 2024, further supporting its current base decline rate of approximately 15 percent inSaskatchewan .
OUTLOOK
Veren remains on track to meet its 2024 annual average production guidance of 191,000 to 199,000 boe/d with development capital expenditures of
The Company expects to generate approximately
The Company will continue to return 60 percent of its excess cash flow to shareholders through its base dividend and share repurchases. The balance of Veren's excess cash flow remains directed toward debt reduction, with the Company expected to reduce its net debt to
Veren is in the initial stages of its annual budgeting process and plans to provide its 2025 outlook along with an updated five-year plan later this year. Similar to prior years, the Company's 2025 budget will remain disciplined and flexible with a focus on allocating capital to its highest return assets with attractive payback periods. The Kaybob Duvernay and
The Company will continue to focus on its strategic priorities of operational execution, further strengthening its balance sheet and increasing its return of capital to shareholders.
Net debt to adjusted funds flow is a specified financial measure - refer to the Specified Financial Measures section in this press release for further information. |
CONFERENCE CALL DETAILS
Veren's management will host a conference call on
Participants can listen to this event online via webcast. To join the call without operator assistance, participants may register online by entering their phone number to receive an instant automated call back. Alternatively, the conference call can be accessed with operated assistance by dialing 1‑888‑390‑0605. Participants will be able to take part in a question and answer session following management's opening remarks through both the webcast dashboard and the conference line.
The webcast will be archived for replay and can be accessed online. The replay will be available shortly after the completion of the call.
Shareholders and investors can also find the Company's most recent investor presentation on Veren's website.
2024 GUIDANCE
The Company's guidance for 2024 is as follows:
Total Annual Average Production (boe/d) (1) |
191,000 - 199,000 |
|
|
Capital Expenditures |
|
Development capital expenditures ($ millions) (2) |
|
Capitalized administration ($ millions) |
|
Total ($ million) (3) |
|
|
|
Other Information for 2024 Guidance |
|
Reclamation activities ($ millions) (4) |
|
Capital lease payments ($ millions) |
|
Annual operating expenses ($/boe) |
|
Royalties |
10.00% - 11.00% |
1) |
Total annual average production (boe/d) is comprised of approximately 65% Oil, Condensate & NGLs and 35% Natural Gas |
2) |
Specified financial measure that does not have any standardized meaning prescribed by IFRS and, therefore may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section for further information |
3) |
Land expenditures and net property acquisitions and dispositions are not included. Development capital expenditures spend is allocated on an approximate basis as follows: 90% drilling & development and 10% facilities & seismic |
4) |
Reflects Veren's portion of its expected total budget |
RETURN OF CAPITAL OUTLOOK
Base Dividend |
|
Current quarterly base dividend per share |
|
Total Return of Capital |
|
% of excess cash flow (1) |
60 % |
1) |
Total return of capital is based on a framework that targets to return to shareholders 60% of excess cash flow on an annual basis |
The Company's unaudited consolidated financial statements and management's discussion and analysis for the quarter ended
Net debt to adjusted funds flow is a specified financial measure - refer to the Specified Financial Measures section in this press release for further information. |
CONSOLIDATED FINANCIAL AND OPERATING HIGHLIGHTS
|
Three months ended |
Six months ended |
|
||
(Cdn$ millions except per share and per boe amounts) |
2024 |
2023 |
2024 |
2023 |
|
Financial |
|
|
|
|
|
Cash flow from operating activities |
625.8 |
462.1 |
1,037.0 |
935.5 |
|
Adjusted funds flow from operations (1) |
611.7 |
552.6 |
1,179.9 |
1,077.5 |
|
Per share (1) (2) |
0.99 |
1.01 |
1.90 |
1.96 |
|
Net income (loss) |
261.0 |
212.3 |
(150.7) |
429.0 |
|
Per share (2) |
0.42 |
0.39 |
(0.24) |
0.78 |
|
Adjusted net earnings from operations (1) |
237.8 |
205.4 |
424.8 |
424.3 |
|
Per share (1) (2) |
0.38 |
0.38 |
0.68 |
0.77 |
|
Dividends declared |
71.7 |
54.8 |
143.0 |
71.9 |
|
Per share (2) |
0.115 |
0.100 |
0.230 |
0.132 |
|
Net debt (1) |
2,962.7 |
3,000.7 |
2,962.7 |
3,000.7 |
|
Net debt to adjusted funds flow from operations (1) (3) |
1.2 |
1.4 |
1.2 |
1.4 |
|
Weighted average shares outstanding |
|
|
|
|
|
Basic |
618.7 |
543.0 |
619.3 |
545.9 |
|
Diluted |
620.3 |
545.3 |
621.4 |
549.0 |
|
Operating |
|
|
|
|
|
Average daily production |
|
|
|
|
|
Crude oil and condensate (bbls/d) |
110,399 |
101,347 |
112,003 |
97,045 |
|
NGLs (bbls/d) |
17,041 |
18,911 |
18,059 |
18,443 |
|
Natural gas (mcf/d) |
391,249 |
208,640 |
393,228 |
190,268 |
|
Total (boe/d) |
192,648 |
155,031 |
195,600 |
147,199 |
|
Average selling prices (4) |
|
|
|
|
|
Crude oil and condensate ($/bbl) |
101.81 |
92.26 |
95.93 |
93.18 |
|
NGLs ($/bbl) |
35.78 |
26.45 |
36.62 |
32.16 |
|
Natural gas ($/mcf) |
1.64 |
2.81 |
2.35 |
3.46 |
|
Total ($/boe) |
64.82 |
67.31 |
63.04 |
69.93 |
|
Netback ($/boe) |
|
|
|
|
|
Oil and gas sales |
64.82 |
67.31 |
63.04 |
69.93 |
|
Royalties |
(6.61) |
(8.79) |
(6.46) |
(9.33) |
|
Operating expenses |
(13.66) |
(14.40) |
(13.78) |
(14.85) |
|
Transportation expenses |
(4.55) |
(3.10) |
(4.54) |
(2.97) |
|
Operating netback |
40.00 |
41.02 |
38.26 |
42.78 |
|
Realized gain (loss) on commodity derivatives |
(0.19) |
1.79 |
0.03 |
0.67 |
|
Other (5) |
(4.92) |
(3.64) |
(5.15) |
(3.01) |
|
Adjusted funds flow from operations netback (1) |
34.89 |
39.17 |
33.14 |
40.44 |
|
Capital Expenditures |
|
|
|
|
|
Capital acquisitions (6) |
— |
1,702.7 |
— |
2,074.7 |
|
Capital dispositions (6) |
(541.1) |
(8.4) |
(646.9) |
(11.0) |
|
Development capital expenditures (1) |
|
|
|
|
|
Drilling and development |
318.2 |
212.2 |
668.7 |
492.7 |
|
Facilities and seismic |
32.4 |
17.9 |
80.5 |
51.6 |
|
Total |
350.6 |
230.1 |
749.2 |
544.3 |
|
Land expenditures |
27.4 |
7.1 |
35.1 |
8.4 |
|
(1) |
Specified financial measure that does not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section for further information. |
(2) |
The per share amounts (with the exception of dividends per share) are the per share – diluted amounts. |
(3) |
Net debt to adjusted funds flow from operations is calculated as the period end net debt divided by the sum of adjusted funds flow from operations for the trailing four quarters. |
(4) |
The average selling prices reported are before realized derivatives and transportation. |
(5) |
Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items. |
(6) |
Capital acquisitions and dispositions, net represent total consideration for the transactions, including long-term debt and working capital assumed, and exclude transaction costs. |
FINANCIAL AND OPERATING HIGHLIGHTS FROM CONTINUING OPERATIONS
|
Three months ended |
Six months ended |
||
(Cdn$ millions except per share and per boe amounts) |
2024 |
2023 |
2024 |
2023 |
Financial |
|
|
|
|
Cash flow from operating activities from continuing operations |
625.8 |
365.9 |
1,037.0 |
735.7 |
Adjusted funds flow from continuing operations (1) |
611.7 |
453.4 |
1,179.9 |
892.0 |
Per share (1) (2) |
0.99 |
0.83 |
1.90 |
1.62 |
Net income (loss) from continuing operations |
260.9 |
178.4 |
(138.0) |
363.2 |
Per share (2) |
0.42 |
0.33 |
(0.22) |
0.66 |
Adjusted net earnings from continuing operations (1) |
237.8 |
171.6 |
424.8 |
359.3 |
Per share (1) (2) |
0.38 |
0.32 |
0.68 |
0.65 |
Weighted average shares outstanding |
|
|
|
|
Basic |
618.7 |
543.0 |
619.3 |
545.9 |
Diluted |
620.3 |
545.3 |
621.4 |
549.0 |
Operating |
|
|
|
|
Average daily production from continuing operations |
|
|
|
|
Crude oil and condensate (bbls/d) |
110,399 |
84,944 |
112,003 |
81,586 |
NGLs (bbls/d) |
17,041 |
14,360 |
18,059 |
13,963 |
Natural gas (mcf/d) |
391,249 |
192,964 |
393,228 |
175,425 |
Production from continuing operations (boe/d) |
192,648 |
131,465 |
195,600 |
124,787 |
Average selling prices from continuing operations (3) |
|
|
|
|
Crude oil and condensate ($/bbl) |
101.81 |
91.08 |
95.93 |
91.83 |
NGLs ($/bbl) |
35.78 |
29.64 |
36.62 |
35.43 |
Natural gas ($/mcf) |
1.64 |
2.78 |
2.35 |
3.40 |
Total ($/boe) |
64.82 |
66.17 |
63.04 |
68.78 |
Netback from Continuing Operations ($/boe) |
|
|
|
|
Oil and gas sales |
64.82 |
66.17 |
63.04 |
68.78 |
Royalties |
(6.61) |
(7.00) |
(6.46) |
(7.52) |
Operating expenses |
(13.66) |
(15.28) |
(13.78) |
(15.58) |
Transportation expenses |
(4.55) |
(3.32) |
(4.54) |
(3.21) |
Operating netback |
40.00 |
40.57 |
38.26 |
42.47 |
Realized gain (loss) on commodity derivatives |
(0.19) |
2.11 |
0.03 |
0.79 |
Other (4) |
(4.92) |
(4.78) |
(5.15) |
(3.77) |
Adjusted funds flow from continuing operations netback (1) |
34.89 |
37.90 |
33.14 |
39.49 |
Capital Expenditures |
|
|
|
|
Development capital expenditures from continuing operations (1) |
350.6 |
123.5 |
749.2 |
308.5 |
(1) |
Specified financial measure that does not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section for further information. |
(2) |
The per share amounts (with the exception of dividends per share) are the per share – diluted amounts. |
(3) |
The average selling prices reported are before realized derivatives and transportation. |
(4) |
Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items. |
Specified Financial Measures
Throughout this press release, the Company uses the terms "total operating netback", "total operating netback from continuing operations", "total netback", "total netback from continuing operations", "operating netback", "netback", "adjusted funds flow from operations" (or "adjusted FFO"), "adjusted funds flow from operations per share - diluted", "adjusted funds flow from continuing operations", "adjusted funds flow from continuing operations per share - diluted", "adjusted funds flow from discontinued operations", "adjusted funds flow from operations netback", "adjusted funds flow from continuing operations netback" "excess cash flow", "base dividends", "total return of capital", "adjusted working capital deficiency", "net debt", "net debt to adjusted funds flow from operations", "adjusted net earnings from operations", "adjusted net earnings from operations per share - diluted", "adjusted net earnings from continuing operations", "adjusted net earnings from continuing operations per share – diluted", "adjusted net earnings from discontinued operations", "development capital expenditures", "development capital expenditures from continuing operations", and "development capital expenditures from discontinued operations". These terms do not have any standardized meaning as prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other issuers. For information on the composition of these measures and how the Company uses these measures, refer to the Specified Financial Measures section of the Company's MD&A for the quarter ended
Adjusted funds flow from operations netback is a non-GAAP financial ratio and is calculated as adjusted funds flow from operations divided by total production. Adjusted funds flow from operations netback is a common metric used in the oil and gas industry and is used to measure operating results on a per boe basis.
The following table reconciles oil and gas sales to total operating netback from continuing operations, total netback from continuing operations and total adjusted funds flow from continuing operations netback:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Oil and gas sales |
1,136.4 |
791.6 |
44 |
2,244.3 |
1,553.6 |
44 |
Royalties |
(115.9) |
(83.8) |
38 |
(229.8) |
(169.8) |
35 |
Operating expenses |
(239.5) |
(182.8) |
31 |
(490.5) |
(351.8) |
39 |
Transportation expenses |
(79.7) |
(39.7) |
101 |
(161.5) |
(72.5) |
123 |
Total operating netback from continuing operations |
701.3 |
485.3 |
45 |
1,362.5 |
959.5 |
42 |
Realized gain (loss) on commodity derivatives |
(3.4) |
25.3 |
(113) |
1.1 |
17.9 |
(94) |
Total netback from continuing operations |
697.9 |
510.6 |
37 |
1,363.6 |
977.4 |
40 |
Other (1) |
(86.2) |
(57.2) |
51 |
(183.7) |
(85.4) |
115 |
Total adjusted funds flow from continuing operations netback |
611.7 |
453.4 |
35 |
1,179.9 |
892.0 |
32 |
(1) |
Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items. |
The following table reconciles cash flow from operating activities to adjusted funds flow from operations and excess cash flow:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 (1) |
% Change |
2024 |
2023 (1) |
% Change |
Cash flow from operating activities |
625.8 |
462.1 |
35 |
1,037.0 |
935.5 |
11 |
Changes in non-cash working capital |
(34.3) |
70.0 |
(149) |
114.1 |
109.8 |
4 |
Transaction costs |
12.9 |
14.6 |
(12) |
14.2 |
16.4 |
(13) |
Decommissioning expenditures (2) |
7.3 |
5.9 |
24 |
14.6 |
15.8 |
(8) |
Adjusted funds flow from operations |
611.7 |
552.6 |
11 |
1,179.9 |
1,077.5 |
10 |
Development capital and other expenditures |
(387.7) |
(249.1) |
56 |
(805.6) |
(576.5) |
40 |
Payments on lease liability |
(8.8) |
(5.3) |
66 |
(17.4) |
(10.6) |
64 |
Decommissioning expenditures |
(7.3) |
(5.9) |
24 |
(14.6) |
(15.8) |
(8) |
Unrealized gain (loss) on equity derivative contracts |
(0.7) |
(2.5) |
(72) |
(0.6) |
(30.0) |
(98) |
Transaction costs |
(12.9) |
(14.6) |
(12) |
(14.2) |
(16.4) |
(13) |
Other items (3) |
(0.9) |
2.6 |
(135) |
(3.3) |
3.0 |
(210) |
Excess cash flow |
193.4 |
277.8 |
(30) |
324.2 |
431.2 |
(25) |
(1) |
Comparative period revised to reflect current period presentation. |
(2) |
Excludes amounts received from government grant programs. |
(3) |
Other items exclude net acquisitions and dispositions. |
The following table reconciles cash flow from operating activities from discontinued operations to adjusted funds flow from discontinued operations:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Cash flow from operating activities from discontinued operations |
— |
96.2 |
(100) |
— |
199.8 |
(100) |
Changes in non-cash working capital |
— |
3.0 |
(100) |
— |
(14.3) |
(100) |
Adjusted funds flow from discontinued operations |
— |
99.2 |
(100) |
— |
185.5 |
(100) |
The following tables reconcile cash flow from operating activities and adjusted funds flow from operations from continuing and discontinued operations:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Cash flow from operating activities from continuing operations |
625.8 |
365.9 |
71 |
1,037.0 |
735.7 |
41 |
Cash flow from operating activities from discontinued operations |
— |
96.2 |
(100) |
— |
199.8 |
(100) |
Cash flow from operating activities |
625.8 |
462.1 |
35 |
1,037.0 |
935.5 |
11 |
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Adjusted funds flow from continuing operations |
611.7 |
453.4 |
35 |
1,179.9 |
892.0 |
32 |
Adjusted funds flow from discontinued operations |
— |
99.2 |
(100) |
— |
185.5 |
(100) |
Adjusted funds flow from operations |
611.7 |
552.6 |
11 |
1,179.9 |
1,077.5 |
10 |
Adjusted funds flow from operations per share - diluted is a supplementary financial measure and is calculated as adjusted funds flow from operations divided by the number of weighted average diluted shares outstanding.
The following table reconciles adjusted working capital deficiency:
($ millions) |
|
|
% Change |
Accounts payable and accrued liabilities |
571.4 |
634.9 |
(10) |
Dividends payable |
71.2 |
56.8 |
25 |
Long-term compensation liability (1) |
51.2 |
66.8 |
(23) |
Cash |
(5.8) |
(17.3) |
(66) |
Accounts receivable |
(379.5) |
(377.9) |
— |
Prepaids and deposits |
(105.0) |
(87.8) |
20 |
Deferred consideration receivable (2) |
(63.1) |
(79.2) |
(20) |
Adjusted working capital deficiency |
140.4 |
196.3 |
(28) |
(1) |
Includes current portion of long-term compensation liability and is net of equity derivative contracts. |
(2) |
Deferred consideration receivable is comprised of |
The following table reconciles long-term debt to net debt:
($ millions) |
|
|
% Change |
Long-term debt (1) |
2,844.9 |
3,566.3 |
(20) |
Adjusted working capital deficiency |
140.4 |
196.3 |
(28) |
Unrealized foreign exchange on translation of hedged US dollar long-term debt |
(22.6) |
(24.5) |
(8) |
Net debt |
2,962.7 |
3,738.1 |
(21) |
(1) |
Includes current portion of long-term debt. |
The following table reconciles net income (loss) to adjusted net earnings from operations:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Net income (loss) |
261.0 |
212.3 |
23 |
(150.7) |
429.0 |
(135) |
Amortization of E&E undeveloped land |
29.8 |
5.3 |
462 |
59.4 |
7.9 |
652 |
Impairment |
— |
— |
— |
512.3 |
— |
100 |
Unrealized derivative losses |
4.8 |
116.2 |
(96) |
157.7 |
120.1 |
31 |
Unrealized foreign exchange (gain) loss on translation of hedged US dollar long-term debt |
(66.6) |
(128.5) |
(48) |
1.6 |
(129.1) |
(101) |
Net (gain) loss on capital dispositions |
(1.3) |
(2.1) |
(38) |
10.7 |
(4.1) |
(361) |
Deferred tax adjustments |
10.1 |
2.2 |
359 |
(166.2) |
0.5 |
(33,340) |
Adjusted net earnings from operations |
237.8 |
205.4 |
16 |
424.8 |
424.3 |
— |
The following table reconciles net income (loss) from discontinued operations to adjusted net earnings from discontinued operations:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Net income (loss) from discontinued operations |
0.1 |
33.9 |
(100) |
(12.7) |
65.8 |
(119) |
Net (gain) loss on capital dispositions |
(0.1) |
— |
(100) |
12.7 |
— |
100 |
Deferred tax adjustments |
— |
(0.1) |
(100) |
— |
(0.8) |
(100) |
Adjusted net earnings from discontinued operations |
— |
33.8 |
(100) |
— |
65.0 |
(100) |
The following table reconciles adjusted net earnings from continuing and discontinued operations:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Adjusted net earnings from continuing operations |
237.8 |
171.6 |
39 |
424.8 |
359.3 |
18 |
Adjusted net earnings from discontinued operations |
— |
33.8 |
(100) |
— |
65.0 |
(100) |
Adjusted net earnings from operations |
237.8 |
205.4 |
16 |
424.8 |
424.3 |
— |
The following table reconciles development capital and other expenditures to development capital expenditures:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Development capital and other expenditures |
387.7 |
249.1 |
56 |
805.6 |
576.5 |
40 |
Payments on drilling rig lease liabilities |
3.2 |
— |
100 |
6.3 |
— |
100 |
Land expenditures |
(27.4) |
(7.1) |
286 |
(35.1) |
(8.4) |
318 |
Capitalized administration (1) |
(11.4) |
(10.1) |
13 |
(25.0) |
(21.5) |
16 |
Corporate assets |
(1.5) |
(1.8) |
(17) |
(2.6) |
(2.3) |
13 |
Development capital expenditures |
350.6 |
230.1 |
52 |
749.2 |
544.3 |
38 |
(1) |
Capitalized administration excludes capitalized equity-settled SBC. |
The following table reconciles development capital expenditures from continuing and discontinued operations:
|
Three months ended |
Six months ended |
||||
($ millions) |
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Development capital expenditures from continuing operations |
350.6 |
123.5 |
184 |
749.2 |
308.5 |
143 |
Development capital expenditures from discontinued operations |
— |
106.6 |
(100) |
— |
235.8 |
(100) |
Development capital expenditures |
350.6 |
230.1 |
52 |
749.2 |
544.3 |
38 |
Total return of capital is a supplementary financial measure and is comprised of base dividends, special dividends and share repurchases, adjusted for the timing of special dividend payments.
Excess cash flow for 2024 is a forward-looking non-GAAP measures and is calculated consistently with the measures disclosed in the Company's MD&A. Refer to the Specified Financial Measures section of the Company's MD&A for the three and six months ended
Management believes the presentation of the specified financial measures above provide useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.
Notice to US Readers
The oil and natural gas reserves contained in this press release have generally been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects of
All amounts in the news release are stated in Canadian dollars unless otherwise specified.
Forward-Looking Statements
Any "financial outlook" or "future oriented financial information" in this press release, as defined by applicable securities legislation has been approved by management of Veren. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 and "forward-looking information" for the purposes of Canadian securities regulation (collectively, "forward-looking statements"). The Company has tried to identify such forward-looking statements by use of such words as "could", "should", "can", "anticipate", "expect", "believe", "will", "may", "intend", "projected", "sustain", "continues", "strategy", "potential", "projects", "grow", "take advantage", "estimate", "well-positioned" and other similar expressions, but these words are not the exclusive means of identifying such statements.
In particular, this press release contains forward-looking statements pertaining, among other things, to the following: optimized diversified balance sheet; diversified capital structure, significant excess cash flow of
Statements relating to "reserves" are also deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. Actual reserve values may be greater than or less than the estimates provided herein.
Unless otherwise noted, reserves referenced herein are given as at
With respect to disclosure contained herein regarding resources other than reserves, there is uncertainty that it will be commercially viable to produce any portion of the resources and there is significant uncertainty regarding the ultimate recoverability of such resources.
All forward-looking statements are based on Veren's beliefs and assumptions based on information available at the time the assumption was made. Veren believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon. By their nature, such forward-looking statements are subject to a number of risks, uncertainties and assumptions, which could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements, including those material risks discussed in the Company's Annual Information Form for the year ended
Included in this press release are Veren's 2024 guidance in respect of capital expenditures and average annual production which is based on various assumptions as to production levels, commodity prices and other assumptions and are provided for illustration only and are based on budgets and forecasts that have not been finalized and are subject to a variety of contingencies including prior years' results. The Company's return of capital framework is based on certain facts, expectations and assumptions that may change and, therefore, this framework may be amended as circumstances necessitate or require. To the extent such estimates constitute a "financial outlook" or "future oriented financial information" in this press release, as defined by applicable securities legislation, such information has been approved by management of Veren. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.
Additional information on these and other factors that could affect Veren's operations or financial results are included in Veren's reports on file with Canadian and
Credit ratings are intended to provide investors with an independent measure of credit quality of an issue of securities. Credit ratings are not recommendations to purchase, hold or sell securities and do not address the market price or suitability of a specific security for a particular investor. There is no assurance that any rating will remain in effect for any given period of time or that any rating will not be revised or withdrawn entirely by a rating agency in the future if, in its judgement, circumstances so warrant.
Product Type Production Information
The Company's annual aggregate production for the three and six months ended
|
Three months ended |
Six months ended |
||
|
2024 |
2023 |
2024 |
2023 |
Light & Medium Crude Oil (bbl/d) |
9,653 |
13,188 |
10,543 |
13,034 |
Heavy Crude Oil (bbl/d) |
2,866 |
3,857 |
3,243 |
3,933 |
Tight Oil (bbl/d) |
72,546 |
48,151 |
72,698 |
43,831 |
Total Crude Oil (bbl/d) |
85,065 |
65,196 |
86,484 |
60,798 |
|
|
|
|
|
NGLs (bbl/d) |
42,375 |
34,108 |
43,578 |
34,751 |
|
|
|
|
|
|
387,893 |
184,105 |
388,162 |
165,883 |
|
3,357 |
8,859 |
5,066 |
9,542 |
|
391,250 |
192,964 |
393,228 |
175,425 |
|
|
|
|
|
Total production from continuing operations (boe/d) |
192,648 |
131,465 |
195,600 |
124,787 |
|
Three months ended |
Six months ended |
||
|
2024 |
2023 |
2024 |
2023 |
Light & Medium Crude Oil (bbl/d) |
9,653 |
13,190 |
10,543 |
13,035 |
Heavy Crude Oil (bbl/d) |
2,866 |
3,857 |
3,243 |
3,933 |
Tight Oil (bbl/d) |
72,546 |
63,812 |
72,698 |
58,528 |
Total Crude Oil (bbl/d) |
85,065 |
80,859 |
86,484 |
75,496 |
|
|
|
|
|
NGLs (bbl/d) |
42,375 |
39,399 |
43,578 |
39,992 |
|
|
|
|
|
|
387,893 |
199,781 |
388,162 |
180,726 |
|
3,357 |
8,859 |
5,066 |
9,542 |
|
391,250 |
208,640 |
393,228 |
190,268 |
|
|
|
|
|
Total average daily production (boe/d) |
192,648 |
155,031 |
195,600 |
147,199 |
NI 51-101 includes condensate within the natural gas liquids (NGLs) product type. The Company has disclosed condensate as combined with crude oil and/or separately from other natural gas liquids in this press release since the price of condensate as compared to other natural gas liquids is currently significantly higher and the Company believes that this crude oil and condensate presentation provides a more accurate description of its operations and results therefore.
The Karr West pad's average peak 30-day rate, referred to herein, of 1,300 boe/d per well consisted of the following product types: 60% light oil, 7% NGLs and 33% shale gas.
In the Kaybob Duvernay, one pad brought on stream in the Volatile Oil window during second quarter, referred to above, that has been on stream for over 30 days generating an average peak 30-day rate of 1,300 boe/d per well had the following product types: 66% condensate, 11% NGL and 23% shale gas.
Reserves and Drilling Data
The reserves information contained in this press release has been prepared in accordance with NI 51-101.
Where applicable, a barrels of oil equivalent ("boe") conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6mcf:1bbl) has been used based on an energy equivalent conversion method primarily applicable at the burner tip. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different than the energy equivalency of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may be misleading as an indication of value.
This press release contains metrics commonly used in the oil and natural gas industry, including "netbacks" and "decline rate". These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies and, therefore, should not be used to make such comparisons. Readers are cautioned as to the reliability of oil and gas metrics used in this press release.
Netback is calculated on a per boe basis as oil and gas sales, less royalties, operating and transportation expenses and realized derivative gains and losses. Netback is used by management to measure operating results on a per boe basis to better analyze performance against prior periods on a comparable basis.
Decline rate is the reduction in the rate of production from one period to the next. This rate is usually expressed on an annual basis. Management uses decline rate to assess future productivity of the Company's assets.
There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGLs reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only. In general, estimates of economically recoverable crude oil, natural gas and NGLs reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially. For these reasons, estimates of the economically recoverable crude oil, NGLs and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary. The Company's actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material.
Individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation. This press release contains estimates of the net present value of the Company's future net revenue from our reserves. Such amounts do not represent the fair market value of our reserves. The recovery and reserve estimates of the Company's reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered.
The reserve data provided in this news release presents only a portion of the disclosure required under National Instrument 51-101. All of the required information is contained in the Company's Annual Information Form for the year ended
FOR MORE INFORMATION ON VEREN, PLEASE CONTACT:
Telephone: (403) 693-0020 Toll-free (US and
Address:
Veren shares are traded on the
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