Petrus Resources Ltd. ("Petrus" or the "Company") (TSX:PRQ) is pleased to report financial and operating results for the first quarter of 2017. Petrus is focused on organic growth and infrastructure control in its core area, Ferrier, Alberta. The Company is targeting liquids rich natural gas in the Cardium formation as well as investing in infrastructure in Ferrier to control operations and maximize the Company's return on investment. The Company's Management's Discussion and Analysis ("MD&A") and interim consolidated financial statements dated as at and for the period ended March 31, 2017 are available on SEDAR (the System for Electronic Document Analysis and Retrieval) at www.sedar.com.
Average production was 9,331 boe/d (72% natural gas) in the first quarter of 2017 compared to 8,821 boe/d (67% natural gas) in the first quarter of 2016. The 6% production increase is attributable to the organic drilling program at Ferrier. Sales volume exceeded expected field estimates in December and the first quarter, therefore the impact of the higher production was recognized during the first quarter.
The Company's natural gas sales weighting was higher in the first quarter of 2017 relative to the first quarter of 2016 due to the divestiture of the Peace River assets in 2016, in addition to the timing of the Ferrier development. Liquids rich natural gas production attributed to the wells drilled in the first quarter is expected to increase the Company's liquids weighting in the second quarter. The Company has generated average quarterly production growth of 31% since the divestiture of its Peace River area assets. The proceeds of the Peace River asset disposition were used to reduce debt and the capital investments in the Ferrier area were funded by funds flow.
In the first quarter of 2017, 8 gross (6.0 net) wells were drilled in the Ferrier area. Of those wells, one gross (0.4 net) well came on production during the first quarter. The remaining drilled but uncompleted "DUC" wells were scheduled to be fracture stimulated and completed subsequent to the end of the first quarter. The DUC wells are expected to be brought on production in the second quarter, after which time the Company's productive capability is estimated to be greater than 11,000 boe/d.
Petrus' Board of Directors approved a $50 to $60 million capital budget for 2017 (excluding acquisitions and dispositions) which provides for the drilling of 16 gross (11.7 net) Cardium wells in the Ferrier area. The Company's 2017 capital program also provides for investment in facilities. The processing and compression capability of the Ferrier gas plant is expected to be doubled to reach a capacity of approximately 60 mmcf/d by the fourth quarter of 2017.
Term Loan Extension
On January 24, 2017, Petrus entered into an agreement with Macquarie Bank Limited to extend the Company's $42 million second lien term loan by two years; now due October 2019. Concurrent with the extension, the Company reduced the amount outstanding by $7 million through working capital and available credit facilities. The interest rate on the remaining $35 million balance remains unchanged at a per annum rate of the (three-month) Canadian Dealer offered Rate (CDOR) plus 700 basis points.
Acquisition and Private Placement
On February 28, 2017, the Company closed an acquisition of certain oil and natural gas interests in the Ferrier area (the "Acquisition") for total consideration of $8.8 million after post-closing adjustments. Petrus acquired a minor amount of production as well as a 100% working interest in a drilled and completed Cardium horizontal well which is expected to be tied in later in 2017. In addition, Petrus acquired a 100% working interest in approximately 3,360 net acres (5.25 net sections) of undeveloped Cardium land in its Ferrier core area.
On February 28, 2017, the Company also closed a non-brokered private placement of 4,078,708 common shares of the Company ("Common Shares") at a purchase price of $2.53 per Common Share, for aggregate gross proceeds of $10.3 million (the "Private Placement"). A portion of the net proceeds of the Private Placement were used to fund the Acquisition and Petrus expects the remainder will be used to fund the Company's 2017 capital program.
The Company's Annual Meeting will be held at the Jamieson Place Conference Centre (3rd floor) 308, 4th Ave SW Calgary, Alberta, on Thursday May 18, 2017 at 9:00 a.m. (Calgary time). The Information Circular, Annual Information Form, 2016 Annual Report and the First Quarter 2017 Report are available on the SEDAR filing system (www.sedar.com) as well as on the Company's website (www.petrusresources.com).
SOURCE: Petrus Resources Ltd.
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