Calgary, Alberta--(Newsfile Corp. - October 10, 2024) - Journey Energy Inc. (TSX: JOY) (OTCQX: JRNGF) ("Journey" or the "Company") is pleased to provide an operational and activity update. Third quarter, 2024 financial results are scheduled to be released on November 7, 2024.
TERM-DEBT REPAYMENT UPDATE
Journey and its long-term capital provider and largest shareholder, Alberta Investment Management Corporation ("AIMCo"), have reached an agreement today to amend the repayment terms of its remaining outstanding balance. Under the existing repayment schedule, a large repayment of $11.1 million plus accrued interest was to be made on October 31, 2024. AIMCo has agreed to blend this balloon payment with existing monthly repayments, and also extend the ultimate maturity of the debt. As a result, monthly principal repayments of $2.9 million will commence in November of 2024 and will continue until March of 2025. Thereafter, the repayments of principal will drop to $1.9 million for the period from April of 2025 until August of 2025. The ultimate maturity of all debt has now been extended from April 30, 2025 to August 29, 2025. Under the new repayment schedule the remaining indebtedness to AIMCo at the end of 2024 will now be $18.2 million versus $9.0 million under the previous repayment schedule. The revised repayment schedule will be instrumental in providing the Company with enhanced means to fund the anticipated obligations under the previously announced Duvernay joint venture with Spartan Delta Corp.
OPERATIONAL UPDATE
Journey has completed a divestment of assets in Berrymoor and Keystone, Alberta effective October 1, 2024. The sales volumes associated with these assets were approximately 130 boe/d (35% crude oil and natural gas liquids). The Adjusted Funds Flow impact of this divestment has no material impact on 2024 guidance. To date in 2024, Journey has completed a series of minor dispositions of non-core assets, all of which had no material impact on sales volumes or cash flow. These dispositions, combined with Journey's own asset retirement obligation program for 2024, are expected to result in a reduction of aggregate, end-of-life costs by over $20 million (undiscounted, unescalated) by the end of the year. The majority of this reduction relates to inactive assets.
CAPITAL PROGRAM UPDATE
Journey's Gilby Power Project continues to progress towards the projected in-service-date ("ISD") of March 2025. Journey has not received an ISD date for the Mazeppa project at this point and anticipates moving some previously forecasted Mazeppa expenditures from 2024 into 2025.
Spartan Delta Corp. has drilled the first of two Duvernay wells and is now drilling the second well. Journey's working interest in these two wells is 31.38%.
OUTLOOK & GUIDANCE
Journey is maintaining its current guidance pertaining to sales volumes and intends to provide additional guidance later in the year as it completes the 2025 budget process including the refinement of the Duvernay capital spending with its partner. Journey's Stolberg volumes (300 boe/d, 35% liquids) remain shut-in and Journey is continuing to look at alternative solutions to bringing these volumes back on. Journey currently forecasts these volumes will remain down until late 2024. Third quarter volumes were impacted by the Stolberg shut-ins as well as the shut-in of other minor natural gas properties. Current production guidance for the third quarter is to be between 10,900-11,100 boe/d (55% liquids).
Adjusted Funds Flow for the third quarter is forecast to be $13-14 million. Funds flow was positively impacted by lower operating costs, but partially offset by lower than forecast commodity prices, for natural gas in particular.
Journey has embarked on a careful and prudent expansion of its business plan to grow the Company profitably. This includes executing on acquisitions the timing of which can be unpredictable and when executed on, can defer drilling plans. In addition, this business plan includes the repayment of the remainder of the outstanding AIMCo term debt. AIMCo has been instrumental in helping achieve the Company's goals by working with us once again to adjust their debt repayments in the face of very low natural gas prices.
About the Company
Journey is a Canadian exploration and production company focused on conventional, oil-weighted operations in western Canada. Journey's strategy is to grow its production base by drilling on its existing core lands, implementing water flood projects, executing on accretive acquisitions. Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods. In addition, Journey is expanding its electricity generation footprint with one project operating in Countess, Alberta; one under construction in Gilby; and one in regulatory approvals in High River, Alberta.
For further information contact:
Alex G. Verge
President and Chief Executive Officer
403-303-3232
alex.verge@journeyenergy.ca
or
Gerry Gilewicz
Chief Financial Officer
403-303-3238
gerry.gilewicz@journeyenergy.ca
Journey Energy Inc.
700, 517 - 10th Avenue SW
Calgary, AB T2R 0A8
403-294-1635
www.journeyenergy.ca
ADVISORIES
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 the anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding decline rates, anticipated netbacks, drilling inventory, estimated average drill, complete and equip and tie-in costs, anticipated potential of the Assets including, but not limited to, EOR performance and opportunities, capacity of infrastructure, potential reduction in operating costs, production guidance, total payout ratio, capital program and allocation thereof, future production, decline rates, funds flow, net debt, net debt to adjusted funds flow, exchange rates, reserve life, development and drilling plans, well economics, future cost reductions, potential growth, and the source of funding Journey's capital spending. 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.
The forward-looking information is based on certain key expectations and assumptions made by management, including expectations and assumptions concerning prevailing commodity prices and differentials, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions, including the Acquisition, the ability to market oil and natural gas successfully and the ability to access capital. Although we believe 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 Journey 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. The 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 security holders with a more complete perspective on future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedarplus.ca). 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.
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Journeys prospective results of operations, funds flow, netbacks, debt, payout ratio well economics and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for providing further information about Journey's anticipated future business operations. Journey disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, which involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Journey, including, without limitation, those listed under "Risk Factors" and "Forward Looking Statements" in the Annual Information Form filed on www.SEDARplus.ca on March 28, 2024. Forward-looking information may relate to the future outlook and anticipated events or results and may include statements regarding the business strategy and plans and objectives. Particularly, forward-looking information in this press release includes, but is not limited to, information concerning Journey's drilling and other operational plans, production rates, and long-term objectives. Journey cautions investors in Journey's securities about important factors that could cause Journey's actual results to differ materially from those projected in any forward-looking statements included in this press release. Information in this press release about Journey's prospective funds flows and financial position is based on assumptions about future events, including economic conditions and courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that information regarding Journey's financial outlook should not be used for purposes other than those disclosed herein. Forward-looking information contained in this press release is based on current estimates, expectations and projections, which we believe are reasonable as of the current date. No assurance can be given that the expectations set out in the Prospectus or herein will prove to be correct and accordingly, you should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as required by applicable securities law.
Non-IFRS Measures
The Company uses the following non-IFRS measures in evaluating corporate performance. These terms do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable with the calculation of similar measures by other companies.
"Adjusted Funds Flow" is calculated by taking "cash flow provided by operating activities" from the financial statements and adding or deducting: changes in non-cash working capital; non-recurring "other" income; transaction costs; and decommissioning costs. Adjusted Funds Flow per share is calculated as Adjusted Funds Flow divided by the weighted-average number of shares outstanding in the period. Because Adjusted Funds Flow and Adjusted Funds Flow per share are not impacted by fluctuations in non-cash working capital balances, we believe these measures are more indicative of performance than the GAAP measured "cash flow generated from operating activities". In addition, Journey excludes transaction costs from the definition of Adjusted Funds Flow, as these expenses are generally in respect of capital acquisition transactions. The Company considers Adjusted Funds Flow a key performance measure as it demonstrates the Company's ability to generate funds necessary to repay debt and to fund future growth through capital investment. Journey's determination of Adjusted Funds Flow may not be comparable to that reported by other companies. Journey also presents "Adjusted Funds Flow per basic share" where per share amounts are calculated using the weighted average shares outstanding consistent with the calculation of net income (loss) per share, which per share amount is calculated under IFRS and is more fully described in the notes to the audited, year-end consolidated financial statements.
Journey uses "Capital Expenditures" to measure its capital investment level compared to the Company's annual budgeted capital expenditures for its organic capital program, excluding acquisitions or dispositions. The directly comparable GAAP measure to capital expenditures is cash used in investing activities. Journey then adjusts its capital expenditures for acquisition and divestiture ("A&D") activity to give a more complete analysis for its capital spending used for finding, development and acquisition purposes.
Measurements
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.
Where amounts are expressed in a barrel of oil equivalent ("boe"), or barrel of oil equivalent per day ("boe/d"), natural gas volumes have been converted to barrels of oil equivalent at nine (6) thousand cubic feet ("Mcf") to one (1) barrel. Use of the term boe may be misleading particularly if used in isolation. The boe conversion ratio of 6 Mcf to 1 barrel ("Bbl") of oil or natural gas liquids is based on an energy equivalency conversion methodology primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. This conversion conforms to the Canadian Securities Regulators' National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities.
Abbreviations
The following abbreviations are used throughout this press release and have the ascribed meanings:
| AIMCo | Alberta Investment Management Corporation, an Alberta government crown corporation |
| bbl | Barrel |
| bbls | Barrels |
| boe | barrels of oil equivalent (see conversion statement below) |
| boe/d | barrels of oil equivalent per day |
| WTI | West Texas Intermediate benchmark Oil price. This crude oil is light/sweet with API gravity of 39.6 degrees and sulfur content of 0.24%. |
All volumes in this press release refer to the sales volumes of crude oil, natural gas and associated by-products measured at the point of sale to third-party purchasers. For natural gas, this occurs after the removal of natural gas liquids.
No securities regulatory authority has either approved or disapproved of the contents of this press release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/226334
SOURCE: Journey Energy Inc.
