Defense Metals Corp. is a mineral exploration and development company focused on the acquisition, exploration and development of mineral deposits containing metals and elements commonly used in the electric power market, defense industry, national security sector and in the production of green energy technologies, such as, rare earths magnets used in wind turbines and in permanent magnet motors for electric vehicles. Defense Metals owns 100% of the Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Significant milestone ahead. Defense Metals expects to complete a preliminary feasibility study (PFS) in the second calendar quarter of 2024 for which metallurgical test work has been completed. Bench-scale and hydrometallurgical pilot plant test work indicate that the planned acid bake process will deliver approximately 90% total rare earth oxide (TREO) extraction from the mineral concentrate to a mixed rare earth carbonate product. Eleven mixed rare earth precipitate samples from the hydrometallurgical test-work have been sent to potential partners, processors, or end users.
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VANCOUVER, BC, Feb. 13, 2024 /PRNewswire/ – Defense Metals Corp. (Defense Metals or the Company) (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) is pleased to provide an update on the metallurgical work programs, undertaken by SGS Canada Inc. (SGS) and the ongoing Preliminary Feasibility Study (PFS) work by SRK Consulting (Canada) Inc. (SRK) and Hatch Limited (Hatch), for its wholly-owned Wicheeda Rare Earth Element Project located in British Columbia, Canada.
Highlights of Metallurgical Test Work and PFS-related Matters
The metallurgical test work required for the PFS has been completed. Multiple bench-scale flotation and flotation pilot plant test work resulted in the production of a high-grade mineral concentrate containing 50% Total Rare Earth Oxide (TREO) with an 80% recovery rate, which will be included in the PFS for the first 8 years of mine-life.
Bench-scale and hydrometallurgical pilot plant test work shows that the planned acid bake process will deliver approximately 90% TREO extraction from the mineral concentrate to a Mixed Rare Earth Carbonate product.
The PFS plant flowsheets are completed, based on the metallurgical test work, and equipment specifications have been issued to vendors for cost quotations.
The field-based geotechnical, geochemical and environmental test work required for the PFS has been completed and lab-based studies are in progress.
Other PFS tasks, including open pit mine design and tailings storage trade-off studies, are well advanced.
Economic evaluation and cashflow modelling are in progress.
PFS report completion in the second quarter of 2024 is on schedule.
Eleven mixed rare earth precipitate samples from the hydrometallurgical test work have been sent to potential partners, processors or end-users.
Over the past 5 years, Defense Metals drilled 58 core holes totalling 12,073 metres (m; ~39,610 feet) to define the Wicheeda Rare Earth Element (REE) deposit and provide samples for metallurgical test work. This work resulted in measured and indicated (M+I) resources of 34.2 million tonnes, averaging 2.02% TREO1, inclusive of 17.8 million tonnes of high-grade dolomite carbonatite averaging 2.92% TREO, in addition to inferred resources of 11.1 million tonnes, averaging 1.02% TREO. This represents a 260% increase over the Defense Metals initial 2019 mineral resource estimate, and a conversion to M+I of 101% of the prior 2021 mineral resource estimate.
Total expenditures on the Wicheeda REE Project since 2019, including costs for mineral resource estimate definition, all metallurgical test work, earlier studies and the remaining PFS-related costs are in excess of CAD $17.5 million.
Defense Metals has entered into a strategic Co-Design Agreement with the McLeod Lake Indian Band (MLIB), the First Nations community having the traditional territory on which the Wicheeda Project sits.
____________________________________ 1 TREO % is the sum of CeO2, La2O3, Nd2O3, Pr6O11, Sm2O3, Eu2O3, Gd2O3, Tb4O7, Dy2O3 and Ho2O3 percentages.
Craig Taylor, CEO of Defense Metals, stated:
“Continuing positive results from our technical studies suggest that our wholly-owned Wicheeda REE Project has the potential to become the next producer of rare earth elements in North America accounting for a significant amount of the rare earths needed for the western world’s future magnet metal production. We look forward to completing and filing the PFS for the Wicheeda REE Project in Q2-2024 and, subject to financing, moving directly into our feasibility study.”
Metallurgical Test Work
Extensive comminution, beneficiation, hydrometallurgical, and environmental tests have been completed and the resulting data have been applied in the PFS. These tests have studied development and optimization of milling and hydrometallurgical processes and the response of twenty-one variability samples representing different REE grades, lithologies and locations within the deposit.
From 2018 to date, about CAD$5 million has been spent on metallurgical test work and the development of the metallurgical flowsheets for the Wicheeda REE Project.
Thirty-one samples of deposit material, flotation and hydrometallurgical products have been subjected to detailed mineralogical examination.
Twenty-one samples have been subjected to Bond milling index and SMC comminution tests.
210 open circuit flotation tests and seven locked cycle flotation tests, of samples ranging from 1 to 12 kilograms (kg), and a 26-tonne pilot flotation operation have been completed.
Sixty-three static acid bake tests, sixteen short-duration acid bake kiln runs with associated water leach tests were completed. Additionally, SGS completed a total of 15 days of continuous kiln operation (in one 5-day and one 10-day segment) as part of a fully integrated hydrometallurgical pilot plant operation that processed 560 kg of flotation concentrate.
Approximately 40 bench-scale impurity removal tests were done as well as about 40 rare earth precipitation tests and results incorporated in the integrated hydrometallurgical pilot plant operation and the project process design criteria.
Many other small-scale tests examined water recycle options and other aspects of the metallurgical flowsheets.
The liquid-solid separation characteristics of the flotation plant products and those of the hydrometallurgical plant have been determined through appropriate thickening and filtration tests.
____________________________ Technical Report for the Wicheeda Rare Earth Element Project, British Columbia, Canada, dated October 27, 2023, with an effective date of August 28, 2023, and prepared by APEX Geoscience Ltd. is filed under Defense Metals Corp.’s Issuer Profile on SEDAR+ (www.sedarplus.com) and on the Company’s website at www.defensemetals.com.
PFS Plant Design
Results from the metallurgical test work have been used to develop flowsheets for the planned comminution, beneficiation and hydrometallurgical plants. These flowsheets have been completed, reviewed and used to generate major equipment specifications for grinding mills, kilns, etc., which have been issued to equipment suppliers for quotes.
The metallurgical process design, engineering and costing is on track to allow completion of the PFS in Q2 of 2024.
Optimization of Open Pit Mining
Geotechnical investigation work for the mine design and pit optimization was performed by SRK and completed in December 2023. This work included sixteen geotechnical drill holes totaling 225.5 m, and twenty excavated overburden geotechnical test pits. Within the Wicheeda REE deposit pit shell, six diamond drill holes totaling 1,182 m were completed, inclusive of 4 open pit geotechnical drill holes totaling 920 m, and in-pit exploration holes totaling 262 m.
Pit design work is underway, incorporating the latest geotechnical information provided from the 2023 geotechnical drilling program.
Community Engagement
Defense Metals entered into a Co-Design Agreement with the McLeod Lake Indian Band (MLIB) (see news release dated January 17, 2024), thus solidifying a joint commitment to the successful advancement of the Wicheeda REE Project. The Co-Design Agreement emphasizes a joint planning approach, empowering MLIB to play an integral part in the design and decision-making process in the technical, social, engineering and environmental aspects of the Wicheeda REE Project. This agreement expands upon the Mineral Exploration Agreement Memorandum of Understanding previously entered into with MLIB.
The McLeod Lake Indian Band purchased an equity stake in Defense Metals, signalling their long-term commitment to the success of the Wicheeda REE Project.
Infrastructure and Tailings Management Studies
Tradeoff studies are being performed on the various options being considered for tailings management and infrastructure locations are being determined.
The Wicheeda REE Project has excellent infrastructure and logistics, which are expected to allow for lower operating and capital costs, including:
The future mine site and beneficiation plant will be located:
along a permitted Forest Service Road approximately 38 km east from the paved John Hart Provincial Highway at the community of Bear Lake.
~37 km from the Canadian National Railway mainline.
~36 km from the main natural gas distribution pipeline..
~34 km from high-voltage powerlines that supply BC with abundant green hydroelectric power.
~ 110 km from an international airport in Prince George
British Columbia has a long history of mining and its industry participants are recognized worldwide as expert in open pit mining and mineral processing.
Prince George is a major industrial center supplying both the mining and wood products industries. Most of the equipment that will be required for the mining operation will be supplied by companies already established in the area.
Multiple options exist for location of the hydrometallurgical plant site close to reagent supply.
Easy access to the year-round port of Prince Rupert, the closest North American port to Asian markets.
Environmental Test Work and Field Studies
Environmental and geochemical test work has been performed on both flotation and hydrometallurgical plant products and mixtures thereof. Data have been used by SRK in the design of facilities.
Surface water sampling and field investigations commenced in 2022 and will continue through 2024. The results of these and future environmental investigations will be used to inform siting, design, and mitigation planning as well as to prepare technical data reports to support Environmental Assessment and permitting processes.
Qualified Persons
The scientific and technical information concerning metallurgy and processing contained in this news release as it relates to the Wicheeda REE Project has been reviewed and approved by J.R. Goode, P.Eng., a metallurgical consultant to the Company and a “Qualified Person” as defined in NI 43-101. This news release has also been reviewed and approved by Kristopher J. Raffle, P.Geo. (B.C.), a technical consultant to the Company, a Principal and Consultant of APEX Geoscience Ltd. of Edmonton, Alberta, and a “Qualified Person” as defined in NI 43-101.
About Defense Metals Corp. and its Wicheeda Rare Earth Element Project
Defense Metals Corp. is a mineral exploration and development company focused on the development of its 100% owned, 8,301-hectare (~20,534-acre) Wicheeda REE Project that is located on the traditional territory of the McLeod Lake Indian Band in British Columbia, Canada.
The Wicheeda REE Project, approximately 80 kilometres (~50 miles) northeast of the city of Prince George, is readily accessible by a paved highway and all-weather gravel roads and is close to infrastructure, including hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the port facilities at Prince Rupert, the closest major North American port to Asia.
Defense Metals Corp. trades on the TSX Venture Exchange under the symbol “DEFN”, in the United States, trading symbol “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”
Defense Metals is a proud member of Discovery Group. For more information please visit: www.discoverygroup.ca .
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Statement Regarding “Forward-Looking” Information or Statements
This news release contains “forward–looking information or statements” within the meaning of applicable securities laws, which may include, without limitation, statements relating to completion of the PFS and the expected timelines, the completion of additional work and studies and the expected timelines, advancing the Wicheeda REE Project, completing the PFS and progressing towards a feasibility study, the technical, financial and business prospects of the Company, its project and other matters. All statements in this news release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the price of rare earth elements, the anticipated costs and expenditures, the ability to achieve its goals, that general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed and on reasonable terms. Such forward-looking information reflects the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including the risks and uncertainties relating to the interpretation of exploration and metallurgical results, risks related to the inherent uncertainty of exploration and development and cost estimates, the potential for unexpected costs and expenses and those other risks filed under the Company’s profile on SEDAR+ (www.sedarplus.com). While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Factors that could cause actual results to differ materially from those in forward looking statements include, but are not limited to, continued availability of capital and financing and general economic, market or business conditions, adverse weather and climate conditions, failure to maintain or obtain all necessary government permits, approvals and authorizations, failure to maintain or obtain community acceptance (including First Nations), risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of personnel, materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), risks relating to inaccurate geological, metallurgical, engineering and pricing assumptions, decrease in the price of rare earth elements, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, restriction on labour and international travel and supply chains, loss of key employees, consultants, officers or directors, increase in costs, delayed results, litigation, and failure of counterparties to perform their contractual obligations. The Company does not undertake to update forward–looking statements or forward–looking information, except as required by law.
Texas-based Diamondback Energy announced Monday that it will purchase Endeavor Energy Partners, the largest privately held oil and gas producer in the prolific Permian Basin, in a cash-and-stock deal valued at approximately $26 billion including debt.
The deal represents one of the largest energy sector acquisitions announced so far in 2024 and highlights the ongoing consolidation in the Permian as companies seek scale and improved efficiencies. Once completed, the merged company will be the third-largest producer in the basin behind only oil majors ExxonMobil and Chevron.
“Diamondback has proven itself to be a premier low-cost operator in the Permian Basin over the last 12 years, and this combination allows us to bring this cost structure to a larger asset base and allocate capital to a stronger pro forma inventory position,” said Travis Stice, CEO of Diamondback, in a statement.
The combined company is projected to pump 816,000 barrels of oil equivalent per day (boepd), with Diamondback estimating $550 million in annual cost savings. Diamondback shareholders will own approximately 60.5% of the new entity, while Endeavor owners will hold the remaining 39.5% stake.
The Permian Basin is located in West Texas and southeastern New Mexico. Technological advances in hydraulic fracturing and horizontal drilling have transformed the Permian into the most prolific oil field in the United States, responsible for about 40% of the country’s crude output.
Endeavor operates in the Midland sub-basin on the Texas side of the Permian, with its acreage located adjacent to existing Diamondback properties. This geographic overlap should allow for significant synergies as the companies integrate operations, infrastructure and drilling inventory.
Diamondback management highlighted Endeavor’s status as one of the Permian’s lowest-cost producers as a key rationale behind the acquisition. Folding Endeavor’s assets into Diamondback’s portfolio should lower overall expenses and boost cash flow on a per-share basis.
The merged company will hold approximately 1.1 million net acres in the Permian Basin and control over 2 billion barrels of recoverable oil equivalent resources. This expanded footprint provides enhanced scale for Diamondback to fund further development.
“This combination allows us to bring this cost structure to a larger asset base and allocate capital to a stronger pro forma inventory position,” noted Stice.
While offering enticing synergies, the partnership also carries risks if oil prices decline significantly from current levels near $80 per barrel. Diamondback is assuming roughly $7 billion of Endeavor’s debt as part of the transaction.
However, the substantial cost efficiencies and expanded production capacity position the newly merged business well for strong free cash flow generation, even in a lower price environment.
The deal is expected to close in Q4 2024 after customary approvals. Shares of Diamondback were up nearly 3% in Monday morning trading on news of the acquisition. The transaction continues the consolidation wave among Permian Basin independents as companies strive to improve margins and gain scale.
For Diamondback, the bold bet on Endeavor represents an opportunity to solidify its status as a Permian leader, while acquiring premium assets that should drive growth for years to come. The combined corporation will boast immense resources, significant capital flexibility and a management team with a proven track record in the basin.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Excitement builds around Hopedale. The district-scale 100% owned Hopedale property in Labrador covers a 43-kilometer strike length of the Florence Lake greenstone belt. The company is targeting greenstone hosted orogenic gold and komatiite hosted nickel. To date, eight occurrences have been identified reflecting multiple mineralization styles, including orogenic gold, magmatic nickel sulfide, copper-silver vein, and zinc-rich volcanogenic massive sulfide. Labrador Gold released results of its 2023 exploration program which underscored the property’s prospectivity and resource potential across a variety of metals.
Fire Ant and Rusty Ridge. High grade gold grab samples containing up to 106 grams per tonne were discovered at a new occurrence, Fire Ant, that has been traced over a strike length of ~200 meters and brings the number of significant gold occurrences on the property to five. Labrador extended an anomalous nickel area at Rusty Ridge to 550 meters and identified a new anomalous nickel area, Last Resort, over a strike length of 1.6 kilometers.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
TORONTO, Feb. 08, 2024 (GLOBE NEWSWIRE) — Labrador Gold Corp. (TSX.V:LAB | OTCQX:NKOSF | FNR: 2N6) (“LabGold” or the “Company”) is pleased to announce the results of the 2023 exploration program at its 100% owned Hopedale Project in Labrador. The district scale Hopedale property covers a 43km strike length of the Florence Lake greenstone belt which has characteristics typical of greenstone belts around the world but has been underexplored by comparison.
Highlights
Fire Ant gold occurrence
high-grade gold up to 106g/t with 20.4g/t Ag in rock grab samples
mineralization traced over approximately 200 metres strike length
Rusty Ridge and Last Resort nickel occurrences
anomalous Ni area at Rusty Ridge extended to 550m
rock samples up to 0.28% Ni and soil samples up to 0.23% Ni
Identified a new anomalous nickel area (Last Resort) over a strike length of 1.6km coincident with a significant magnetic high
Jasmine zinc occurrence
anomalous zinc zone identified over 400m at Jasmine with values up to 0.97% Zn in rock and 0.22% in soil
Jasmine also shows high copper and gold values indicating potential for volcanogenic style mineralization
Thurber Boundary copper occurrence
highest copper in soil value (3,493 ppm) found on the property to date identified in a 400m anomalous trend
Eight occurrences identified on the Hopedale project to date reflecting multiple mineralization styles including orogenic gold, magmatic Ni sulphide, copper-silver vein and Zn-rich volcanogenic massive sulphide
Significant gold and silver in rock grab samples was found in the Rusty Ridge area with a high of 106g/t Au and 20.4 g/t Ag, 3.7g/t Au and 4.9g/t Ag and 2.9g/t Au and 4.7g/t Ag. This newly discovered mineralization named the Fire Ant occurrence, is hosted in gossanous felsic volcanic rocks close to the contact with ultramafic volcanic rocks and has been traced over a strike length of approximately 200 metres.
Work during 2022 found significant nickel anomalies in soil and rock at an area named Rusty Ridge. The anomalies occur in ultramafic rocks indicating potential for magmatic nickel style mineralization. One of the goals of the 2023 exploration program was to follow up and extend these anomalies. A total of 14 grab samples of rock assayed over 0.1% Ni and included values up to 0.28% Ni while nickel values in soil up to 2,271ppm (0.23%) show a significant northeast-southwest trend extending the anomalous area over 550m. Approximately 1.2km south of Rusty Ridge, anomalous nickel in soil samples was outlined over a 1.6km strike length and is coincident with a significant magnetic high. Six of the samples assayed over 1,000ppm (0.1%) Ni with a high of 2,271ppm (0.23%) Ni. Limited rock sampling showed assays of 0.28%, 0.17% and 0.16% Ni in grab samples in this area named Last Resort.
The highest copper value in soil (3,493ppm) on the property to date was recorded at Thurber Boundary, where it forms a northeast-southwest trend over approximately 500 metres. The location of the soil anomaly is in a similar stratigraphic location, close to the contact of mafic and ultramafic volcanic rocks, as the high grade (3.31% Cu over 0.76m and 1.55% Cu over 1m in channel samples) Kaapak copper occurrence approximately 3 kilometres to the south.
In addition to the copper, nickel and gold found during the exploration program, anomalous zinc was found in soil samples (up to 0.22%) and rock (up to 0.97%) in the Jasmine area. The anomalous zone extends over approximately 400 metres and is coincident with a contact highlighted by a change from magnetic high to magnetic low. The Jasmine area is also known to have high copper and gold values indicating potential for volcanogenic massive sulphide deposits.
“Our 2023 exploration program over the district scale Hopedale property confirmed the significant prospectivity of the Rusty Ridge area for nickel associated with ultramafic rocks and identified a new area, Last Resort, with similar potential for magmatic sulphide type mineralization,” said Roger Moss, President and CEO of Labrador Gold. “The highest grade gold found on the property to date, 106g/t Au and 20.4g/t Ag, was sampled at a new occurrence, Fire Ant, in the Rusty Ridge area and brings the number of significant gold occurrences on the property to five. Potential for zinc-rich volcanogenic massive sulphide was identified at Jasmine as well as a significant copper in soil anomaly at Thurber Boundary. Work conducted by LabGold at Hopedale demonstrates that the Florence Lake greenstone belt contains many of the same mineralization styles seen in some of the most productive greenstone belts elsewhere in the world.”
Figure 1. Location of the nickel, copper, gold and zinc occurrences on the Hopedale Property.
Figure 2. Highlights of nickel in soil and rock samples over Rusty Ridge and Last Resort Occurrences.
Figure 3. Location of high-grade gold mineralization at Fire Ant occurrence.
Table 1. Highlights of rock samples assays from 2023 exploration program. Note that grab samples are selective samples and may not be representative of the mineralization found on the property. n/a = not assayed.
QA/QC
Rock samples comprise grab samples, which are selective samples and not necessarily representative of mineralization found on the property. Samples were securely stored prior to shipping to analytical labs for assay. Rock samples were assayed at Eastern Analytical Laboratory in Springdale, an ISO/IEC17025 accredited laboratory for gold by standard 30g fire assay with atomic absorption finish as well as by ICP-OES for an additional 34 elements. Additional samples were sent to SGS Canada for whole rock assays by borate fusion XRF and ICP-MS/AES. Soil samples were submitted to SGS for gold by standard 30g fire assay with atomic absorption finish as well as ICP-MS for an additional 48 elements. The company submits blanks and certified reference standards amounting to 5% of each sample batch.
Qualified Person
Roger Moss, PhD., P.Geo., President and CEO of LabGold, a Qualified Person in accordance with Canadian regulatory requirements as set out in NI 43-101, has read and approved the scientific and technical information that forms the basis for the disclosure contained in this release.
The Company gratefully acknowledges the Newfoundland and Labrador Ministry of Natural Resources’ 2023 Junior Exploration Assistance (JEA) Program and the Atlantic Canada Opportunities Agency’s Critical Minerals Assistance for its financial support for exploration of the Hopedale property.
About Labrador Gold Labrador Gold is a Canadian based mineral exploration company focused on the acquisition and exploration of prospective gold projects in Eastern Canada.
Labrador Gold’s flagship property is the 100% owned Kingsway project in the Gander area of Newfoundland. The four licenses comprising the Kingsway project cover approximately 12km of the Appleton Fault Zone which is associated with numerous gold occurrences in the region. Infrastructure in the area is excellent located just 18km from the town of Gander with road access to the project, nearby electricity and abundant local water. LabGold is drilling a projected 100,000 metres targeting high-grade epizonal gold mineralization along the Appleton Fault Zone with encouraging results.
The Hopedale property covers much of the Florence Lake greenstone belt that stretches over 60 km. The belt is typical of greenstone belts around the world but has been underexplored by comparison. Work to date by Labrador Gold show gold anomalies in rocks, soils and lake sediments over a 3 kilometre section of the northern portion of the Florence Lake greenstone belt. Four gold occurrences lie along this trend, three of which Thurber North, TD500 and Thurber South were discovered by LabGold. Anomalous gold in soil and lake sediment samples also occur over approximately 40 km along the southern section of the greenstone belt. LabGold’s recent exploration has also demonstrated the potential for the critical metals copper, nickel and cobalt in the belt.
The Company has 170,009,979 common shares issued and outstanding and trades on the TSX Venture Exchange under the symbol LAB.
For more information please contact: Roger Moss, President and CEO Tel: 416-704-8291
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release .
Forward-Looking Statements: This news release contains forward-looking statements that involve risks and uncertainties, which may cause actual results to differ materially from the statements made. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to risks and uncertainties. Many factors could cause our actual results to differ materially from the statements made, including those factors discussed in filings made by us with the Canadian securities regulatory authorities. Should one or more of these risks and uncertainties, such as actual results of current exploration programs, the general risks associated with the mining industry, the price of gold and other metals, currency and interest rate fluctuations, increased competition and general economic and market factors, occur or should assumptions underlying the forward looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, or expected. We do not intend and do not assume any obligation to update these forward-looking statements, except as required by law. Shareholders are cautioned not to put undue reliance on such forward-looking statements .
The biggest publicly traded oil companies in the West had a clear message for investors this earnings season: We’re going to keep paying you billions in dividends and stock buybacks, no matter how much our profits fluctuate.
BP, Chevron, ExxonMobil, Shell and TotalEnergies doled out over $111 billion to shareholders in 2023, an all-time record for the group, according to a Reuters analysis. This lavish payout comes even as the companies’ combined net profits sank 37% from 2022’s windfall heights of $196 billion.
It’s a calculated move to reassure investors, particularly major institutional shareholders like pension funds, that the oil supermajors still deserve a place in their portfolios despite LAST year’s stark reminder of the sector’s persistent volatility.
For over a decade, Big Oil has seen its status as a stalwart, dividend-paying pillar of investors’ portfolios slowly erode. The energy sector’s weighting in the S&P 500 index sat at just 4.4% in January, down dramatically from 14% in 2012.
Several factors catalyzed this decline: poor capital discipline leading to wasted spending and subsequent dividend cuts, huge swings in oil and gas prices, the rise of the tech sector, and growing concerns about oil’s role in climate change.
But Russia’s invasion of Ukraine in 2023 sparked an unexpected fossil fuel rally, with Brent crude prices averaging over $100 per barrel and natural gas prices skyrocketing. The oil giants cashed in with their highest profits ever, starkly highlighting the sector’s persistent upside potential.
Now with economic headwinds buffeting energy markets, their mammoth payouts to shareholders seek to underscore oil’s reliability versus more speculative investments. “During a time of geopolitical turmoil and economic uncertainty, our objective remained unchanged: safely deliver higher returns and lower carbon,” said Chevron CEO Mike Wirth after announcing a 6% dividend increase.
Besides dividends, oil majors are channeling these record buybacks to shareholders. Exxon Mobil alone spent $35 billion last year snapping up its own shares, while Shell has vowed “complete predictability” around shareholder returns.
This focus on payouts over production indicates Big Oil has absorbed the lessons of overspending on large-scale projects with uncertain demand outlooks. After former CEO John Browne spearheaded a failed push for aggressive growth at BP, lease write-downs of $60 billion soon followed.
Now with the transition to cleaner energy casting further uncertainty over long-term oil demand, companies are tightly rationing investment. Bernstein analyst Oswald Clint said investors “absolutely remember the sins of the past investment cycles and are pretty determined not to repeat those.”
While Exxon and Chevron are still expanding oil output, others like BP and Shell plan to cut production over this decade as part of their climate strategies. But all are aligning around far greater capital discipline and what they call “high-grading” their portfolios.
Rather than chasing growth, new projects must meet stricter hurdles for returns, emissions, and regulations. Tobias Wagner of Moody’s Investors Service expects only minimal investment increases industry-wide in 2024 given the cautious outlook.
So even as society decarbonizes, the oil supermajors are making a case that their stocks can still reward shareholders through the transition. Yet it remains to be seen whether investors who have fled the sector for greener pastures like clean energy and tech will find these guarantees compelling enough to return.
General Motors (GM) announced Wednesday its largest investment yet to lock up critical raw materials needed for its ambitious electric vehicle (EV) production plans. The Detroit automaker said it will spend $19 billion over the next decade to source cathode materials from South Korean supplier LG Chem.
The materials—including nickel, cobalt, manganese and aluminum—are key ingredients for the lithium-ion batteries that power EVs. Under the agreement spanning 2026-2035, LG Chem will ship over 500,000 tons of cathode materials to GM’s joint battery cell plants with LG spinoff Ultium Cells in the United States.
GM stated this is enough supply for approximately 5 million EVs with an estimated range of over 300 miles per charge. The materials will come from an LG Chem plant currently under construction in Tennessee.
For GM, signing a long-term purchase agreement helps mitigate risks around securing sufficient future EV battery supplies amid intensifying competition. As automakers collectively invest billions to shift their lineups to mostly EVs by 2030, critical mineral shortages could constrain production plans.
“This contract builds on GM’s commitment to create a strong, sustainable battery EV supply chain to support our fast-growing EV production needs,” said Jeff Morrison, GM vice president of global purchasing and supply chain.
The LG Chem deal ranks among the largest—if not the largest—EV supply contract inked by GM to date. It highlights an urgency by the company to lock up raw materials as the global auto industry accelerates its electric shift. GM aspires to exclusively sell EVs by 2035.
However, the 14-year LG Chem agreement also implies GM may be adapting its EV strategy to account for adoption happening slower than anticipated. The original pact was scheduled to expire in 2030, but GM extended it another five years.
After initially forecasting aggressive EV sales growth, GM has pulled back on targets amid steeping battery costs and strained consumer budgets. “We’re also being a little bit prudent about the pace at which the transition occurs,” said CEO Mary Barra.
Nonetheless, GM remains laser-focused on its EV future. It recently announced a $650 million investment to expand production of its profitable full-size SUVs—but as electric versions only by 2024. “We have the manufacturing flexibility to build EVs at scale,” said Barra.
For investors, GM’s major bet on EVs represents an opportunity to capitalize on the immense growth projected in the electric vehicle market over the next decade. Research firm IDTechEx forecasts the EV market will balloon from $287 billion in 2021 to over $1.3 trillion by 2031 as adoption accelerates globally. GM’s plan to phase out gas-powered cars and transition to an all-electric lineup positions it as a leading EV player in this booming new automotive era.
Meanwhile, LG Chem said it aims to “bolster cooperation with GM in the North American market” through the expanded cathode materials agreement. The supplier has jockeyed with China’s CATL for the title of world’s top EV battery maker.
For both LG and GM, ensuring cathode supply security with a US-based plant mitigates geopolitical risks. President Biden’s Inflation Reduction Act requires automakers to source critical minerals domestically or from allies to qualify for EV tax credits.
While the road to an all-electric future remains bumpy, GM’s huge bet on sourcing vital battery ingredients shows its commitment to phasing out the internal combustion engine. As Barra stated, “We’re on our way to an all-electric portfolio.”
Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, nickel and cobalt-based high-performance alloys, primarily for use in the aerospace, industrial gas turbine and chemical processing industries.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Haynes to be acquired by Acerinox, S.A. Haynes International entered into a definitive agreement to be acquired in an all-cash transaction by Acerinox’s wholly owned U.S. subsidiary, North American Stainless, Inc. Acerinox is a leader in the manufacturing and distribution of stainless steel and high-performance alloys and will acquire all the outstanding shares of Haynes for $61.00 per share valuing Haynes at an enterprise value of approximately $970 million and a fully diluted equity value of $798 million. The shares are trading close to the proposed transaction price per share.
Closing is expected in the third calendar quarter. The transaction has been unanimously approved by the board of directors of both companies and is expected to close in the third calendar quarter of 2024, subject to the satisfaction of closing conditions, including receipt of regulatory approvals and approval by Haynes stockholders. Because the Haynes shareholder meeting is tentatively planned for April 2024, we think the transaction could close sooner than later.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Feasibility study expected in the first quarter of 2024. Century’sClayton Valley lithium project is among the most advanced pre-permitted lithium projects in North America with the third largest deposit in the United States. In2023, the company focused on pilot plant operations with the project feasibility study (FS) expected to be complete in the first quarter of 2024. Production will be consistent with the earlier preliminary feasibility study (PFS) although the company is examining the benefits of a phased approach to full scale production.
Feasibility study expectations. While weexpect the feasibility study to reflect higher capital and operating costs, the economics may improve relative to the PFS due to several factors. These include: 1) a higher base case pricing assumption for lithium carbonate equivalent that could be in the range of US$22,000 to US$25,000 per tonne compared to US$9,500 per tonne used in the PFS, 2) a potential economic benefit from the by-product sales of sodium hydroxide, 3) the leaching process will be based on using hydrochloric acid instead of sulfuric acid, and 4) the project will likely incorporate lower cost renewable solar or geothermal power. Based on improvements to the process flowsheet since the publication of the PFS, we expect a compelling feasibility study.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Fourth quarter and full year 2023 financial results. Alliance reported fourth-quarter EBITDA and earnings per unit (EPU) of $185.4 million and $0.88, respectively, compared to $296.9 million and $1.63 during the prior year period. We had forecast EBITDA and EPU of $226.6 million and $1.02. On a full year basis, Alliance generated EBITDA and EPU of $933.1 million and $4.81, respectively, compared to our estimates of $969.9 million and $4.95. Fourth quarter results were negatively impacted by lower Appalachia coal volumes due to reduced recoveries, fewer operating units at MC Mining, and challenging conditions that delayed development of a new longwall district at Alliance’s Mettiki operation. Operating expenses increased $20.4 million due to outside coal purchases and accounted for a portion of the variance to our earnings estimate.
Management guidance for 2024. Total coal sales are expected to be in the range of 34.0 million to 35.8 million tons, while the coal sales price per ton is expected to be in the range of $61.75 to $63.75. Segmented adjusted EBITDA expense per ton sold is expected to be $41.00 to $43.00. The company has committed and priced over 90% of 2024 expected coal sales volumes, or 32.5 million tons of which 4.1 million tons will be sold in the export market.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Record full year 2023 total revenue of $2.6 billion, coal sales price realizations of $64.17 per ton sold, and net income of $630.1 million
Full year 2023 EBITDA of $933.1 million
Fourth quarter 2023 total revenue of $625.4 million, EBITDA of $185.4 million, and net income of $115.4 million
Completed $24.8 million in oil & gas mineral interest acquisitions during fourth quarter 2023 and $110.9 million during full year 2023, resulting in record BOE volumes
Reduced debt by $22.9 million during fourth quarter 2023 and $85.0 million during full year 2023, resulting in total and net leverage ratios of 0.37 times and 0.31 times, respectively
In January 2024, declared quarterly cash distribution of $0.70 per unit, or $2.80 per unit annualized
2024 expected coal sales volumes over 90% committed and priced at levels similar to 2023
TULSA, Okla.–(BUSINESS WIRE)– Alliance Resource Partners, L.P. (NASDAQ: ARLP) (“ARLP” or the “Partnership”) today reported financial and operating results for the quarter and full year ended December 31, 2023 (the “2023 Quarter” and “2023 Full Year”). This release includes comparisons of results to the quarter and year ended December 31, 2022 (the “2022 Quarter” and “2022 Full Year”, respectively), as well as the quarter ended September 30, 2023 (the “Sequential Quarter”). All references in the text of this release to “net income” refer to “net income attributable to ARLP.” For a definition of EBITDA and related reconciliation to its comparable GAAP financial measure, please see the end of this release.
2023 Full Year performance saw total revenues increase $146.7 million to a record $2.6 billion primarily due to higher coal sales revenues. Coal sales prices and coal sales revenues during the 2023 Full Year were higher by 8.6% and 5.1%, respectively, compared to the 2022 Full Year. Increased revenues and lower income tax expense were partially offset by higher total operating expenses in the 2023 Full Year, resulting in record net income of $630.1 million, or $4.81 per basic and diluted limited partner unit, for the 2023 Full Year, compared to $586.2 million, or $4.39 per basic and diluted limited partner unit, for the 2022 Full Year, a 7.5% increase.
Total revenues in the 2023 Quarter decreased to $625.4 million compared to $704.2 million for the 2022 Quarter primarily as a result of lower coal and oil & gas prices and reduced coal sales volumes, partially offset by record oil & gas royalty volumes and higher transportation and other revenues. Lower revenues and higher total operating expenses reduced net income for the 2023 Quarter to $115.4 million, or $0.88 per basic and diluted limited partner unit, compared to $216.9 million, or $1.63 per basic and diluted limited partner unit, for the 2022 Quarter. EBITDA for the 2023 Quarter was $185.4 million compared to $296.9 million in the 2022 Quarter.
Compared to the Sequential Quarter, total revenues in the 2023 Quarter decreased 1.7% primarily as a result of lower average coal sales prices of $60.60 per ton sold compared to $64.94 per ton sold in the Sequential Quarter, partially offset by higher coal sales volumes, which increased 1.9% to 8.6 million tons sold in the 2023 Quarter. Lower revenues and higher total operating expenses contributed to a reduction in net income and EBITDA of 24.9% and 18.5%, respectively, compared to the Sequential Quarter.
CEO Commentary
“For the 2023 Full Year, we once again delivered record revenues and net income, relying upon the strength of our well-contracted coal order book and the resilience of the entire ARLP team who persevered through volatile market challenges and difficult mining conditions,” commented Joseph W. Craft III, Chairman, President and Chief Executive Officer. “Our strategic relationships with our long-standing customers were evident in the 2023 Quarter as we contracted an additional 12.0 million tons for domestic deliveries over the 2024 through 2028 time period at attractive, escalating prices, bringing our committed and priced order book for 2024 to over 90% of expected shipments.”
Mr. Craft added, “We believe the worst of the adverse geological conditions, which delayed development of a new district at Mettiki, idling the longwall there for essentially the entire second half of the 2023 Full Year, are behind us. With the longwall at Mettiki resuming production in late December 2023, we are expecting production in the first quarter of 2024, for our Appalachia operations, to compare favorably to the first quarter of 2023.”
Mr. Craft concluded, “Our Oil & Gas Royalty business completed $24.8 million in oil & gas mineral interest acquisitions during the 2023 Quarter and $110.9 million for the 2023 Full Year, resulting in record BOE volumes. We plan to continue allocating capital to grow this business line in 2024. Combining the stability of our heavily contracted coal order book with continued growth in our Oil & Gas Royalty business, we are well-positioned for another record year of revenues in 2024.”
Coal Operations
ARLP’s coal sales prices per ton declined in both regions compared to the 2022 and Sequential Quarters. Lower export pricing in the Illinois Basin reduced coal sales prices by 4.2% in the region compared to the 2022 Quarter. Compared to the Sequential Quarter, Illinois Basin coal sales prices were lower by 2.8% as a result of reduced domestic price realizations. In Appalachia, coal sales price per ton decreased by 14.1% and 10.4% compared to the 2022 and Sequential Quarters, respectively, as a result of lower domestic pricing, partially offset by higher export price realizations. Illinois Basin coal sales volumes increased by 2.1% and 6.1% compared to the 2022 and Sequential Quarters, respectively, as a result of increased volumes from our Hamilton and Warrior mines compared to the 2022 Quarter and from our Gibson South operation sequentially. Tons sold decreased in Appalachia compared to the 2022 and Sequential Quarters due to reduced volumes across the region, primarily caused by lower recoveries, fewer operating units at MC Mining, the previously mentioned challenging geologic conditions that delayed development of a new district at our Mettiki longwall operation, customer plant maintenance and a longwall move at our Tunnel Ridge mine during the 2023 Quarter. ARLP ended the 2023 Quarter with total coal inventory of 1.3 million tons, representing an increase of 0.8 million tons compared to the end of the 2022 Quarter and a decrease of 0.5 million tons compared to the end of the Sequential Quarter. 2023 Quarter coal inventory and tons sold were negatively impacted by approximately 0.6 million tons due to an unexpected temporary outage at a Gulf Coast export terminal we use for export market sales.
Segment Adjusted EBITDA Expense per ton for the 2023 Quarter decreased by 7.2% in the Illinois Basin compared to the 2022 Quarter, due primarily to increased volumes and lower expenses at our Hamilton mine, that experienced an unexpected outage in the 2022 Quarter. Segment Adjusted EBITDA Expense per ton in Appalachia increased compared to the 2022 and Sequential Quarters due primarily to lower volumes as discussed above and purchased coal.
Royalties
Segment Adjusted EBITDA for the Oil & Gas Royalties segment decreased to $31.0 million in the 2023 Quarter compared to $35.3 million and $31.4 million in the 2022 and Sequential Quarters, respectively. Compared to the 2022 Quarter, the decrease was due to lower price realizations, partially offset by record oil & gas volumes, which increased 13.1% to 809 MBOE sold in the 2023 Quarter. Higher volumes during the 2023 Quarter resulted from increased drilling and completion activities on our interests and acquisitions of additional oil & gas mineral interests.
Segment Adjusted EBITDA for the Coal Royalties segment increased to $10.2 million for the 2023 Quarter compared to $8.2 million and $9.9 million for the 2022 and Sequential Quarters, respectively. Compared to the 2022 Quarter, the increase resulted from higher average royalty rates per ton, partially offset by lower royalty tons sold and increased selling expenses. Sequentially, the increase in Segment Adjusted EBITDA for Coal Royalties primarily resulted from lower selling expenses.
Balance Sheet and Liquidity
As of December 31, 2023, total debt and finance leases outstanding were $348.1 million, including $284.6 million in ARLP’s 2025 senior notes. During the 2023 Quarter, ARLP reduced its total debt and finance leases by $22.9 million. The Partnership’s total and net leverage ratios were 0.37 times and 0.31 times, respectively, as of December 31, 2023. ARLP ended the 2023 Quarter with total liquidity of $492.1 million, which included $59.8 million of cash and cash equivalents and $432.3 million of borrowings available under its revolving credit and accounts receivable securitization facilities.
Distributions
On January 26, 2024, the Board of Directors of ARLP’s general partner (the “Board”) approved a cash distribution to unitholders for the 2023 Quarter of $0.70 per unit (an annualized rate of $2.80 per unit), payable on February 14, 2024, to all unitholders of record as of the close of trading on February 7, 2024. The announced distribution is consistent with the cash distributions for the 2022 and Sequential Quarters.
Acquisition of Oil & Gas Mineral Interests
In December 2023, ARLP closed on an acquisition of mineral interests in approximately 2,372 oil & gas net royalty acres in the Anadarko, Williston and Delaware Basins for a purchase price of $14.5 million. During the 2023 Quarter, ARLP also separately purchased approximately 864 net royalty acres in the Permian Basin for $10.3 million.
Outlook
“As we look to 2024, our coal sales book is expected to be equally as strong as last year and be the anchor to deliver another record year of revenues,” commented Mr. Craft. “Our dependability and the reliability of our coal quality is highly valued by our customers, evidenced by the premium pricing we have received, relative to the spot market, on recent commitments with domestic customers for multi-year contracts. We are entering 2024 with over 90% of our coal sales volumes committed and priced at similar levels relative to 2023. We are expecting our production to be more consistent in 2024, believing we have moved beyond the several negative geological areas that we faced in 2023.”
“We expect to complete the major infrastructure projects at Tunnel Ridge, Hamilton, Warrior and the River View complex in 2024,” Mr. Craft continued. “ARLP will start to recognize the benefits from these strategic investments in 2025 as total capital expenditures will be significantly lower and these mines will be more productive, ensuring we maintain our position as one of the most reliable, low-cost producers in the eastern United States over the next decade. We are forecasting domestic natural gas prices to rise in 2025 as new LNG terminal capacity comes online, driving an increase in natural gas exports, benefitting both our Coal and Royalties segments.”
Mr. Craft added, “As we think about the outlook for the coal industry and the markets we serve, we should all take notice that grid planners have nearly doubled five-year load growth forecasts in support of ongoing investments in U.S. industrial and manufacturing sectors, as well as rising energy needs associated with datacenters and artificial intelligence. While the speed of electrifying the transportation sector may have slowed, the enthusiasm for AI has accelerated.”
Mr. Craft concluded, “We remain confident in our projections for sustained coal demand for ARLP and the likelihood that the pre-mature closures of coal-fired power plants in the eastern U.S. will be delayed.”
ARLP is providing the following updated guidance for the full year ended December 31, 2024 (the “2024 Full Year”):
Conference Call
A conference call regarding ARLP’s 2023 Quarter and Full Year financial results is scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (877) 407-0784 and request to be connected to the Alliance Resource Partners, L.P. earnings conference call. International callers should dial (201) 689-8560 and request to be connected to the same call. Investors may also listen to the call via the “Investors” section of ARLP’s website at www.arlp.com.
An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial U.S. Toll Free (844) 512-2921; International Toll (412) 317-6671 and request to be connected to replay using access code 13743714.
About Alliance Resource Partners, L.P.
ARLP is a diversified energy company that is currently the largest coal producer in the eastern United States, supplying reliable, affordable energy domestically and internationally to major utilities, metallurgical and industrial users. ARLP also generates operating and royalty income from mineral interests it owns in strategic coal and oil & gas producing regions in the United States. In addition, ARLP is evolving and positioning itself as a reliable energy partner for the future by pursuing opportunities that support the advancement of energy and related infrastructure.
News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission (“SEC”), are available at www.arlp.com. For more information, contact the investor relations department of ARLP at (918) 295-7673 or via e-mail at investorrelations@arlp.com.
The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. We have included more information below regarding business risks that could affect our results.
FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. Those forward-looking statements include expectations with respect to our future financial performance, coal and oil & gas consumption and expected future prices, our ability to increase unitholder distributions in future quarters, business plans and potential growth with respect to our energy and infrastructure transition investments, optimizing cash flows, reducing operating and capital expenditures, preserving liquidity and maintaining financial flexibility, and our future repurchases of units and senior notes, among others. These risks to our ability to achieve these outcomes include, but are not limited to, the following: decline in the coal industry’s share of electricity generation, including as a result of environmental concerns related to coal mining and combustion, the cost and perceived benefits of other sources of electricity and fuels, such as oil & gas, nuclear energy, and renewable fuels and the planned retirement of coal-fired power plants in the U.S.; changes in macroeconomic and market conditions and market volatility, and the impact of such changes and volatility on our financial position; changes in global economic and geo-political conditions or changes in industries in which our customers operate; changes in commodity prices, demand and availability which could affect our operating results and cash flows; the outcome or escalation of current hostilities in Ukraine and the Israel-Gaza conflict; the severity, magnitude and duration of any future pandemics and impacts of such pandemics and of businesses’ and governments’ responses to such pandemics on our operations and personnel, and on demand for coal, oil, and natural gas, the financial condition of our customers and suppliers, available liquidity and capital sources and broader economic disruptions; actions of the major oil-producing countries with respect to oil production volumes and prices could have direct and indirect impacts over the near and long term on oil & gas exploration and production operations at the properties in which we hold mineral interests; changes in competition in domestic and international coal markets and our ability to respond to such changes; potential shut-ins of production by operators of the properties in which we hold oil & gas mineral interests due to low commodity prices or the lack of downstream demand or storage capacity; risks associated with the expansion of our operations and properties; our ability to identify and complete acquisitions and to successfully integrate such acquisitions into our business and achieve the anticipated benefits therefrom; our ability to identify and invest in new energy and infrastructure transition ventures; the success of our development plans for our wholly owned subsidiary, Matrix Design Group, LLC, and our investments in emerging infrastructure and technology companies; dependence on significant customer contracts, including renewing existing contracts upon expiration; adjustments made in price, volume, or terms to existing coal supply agreements; the effects of and changes in trade, monetary and fiscal policies and laws; central bank policy actions including interest rates, bank failures and associated liquidity risks; the effects of and changes in taxes or tariffs and other trade measures adopted by the United States and foreign governments; legislation, regulations, and court decisions and interpretations thereof, both domestic and foreign, including those relating to the environment and the release of greenhouse gases, mining, miner health and safety, hydraulic fracturing, and health care; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; investors’ and other stakeholders’ increasing attention to environmental, social, and governance matters; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; our productivity levels and margins earned on our coal sales; disruptions to oil & gas exploration and production operations at the properties in which we hold mineral interests; changes in equipment, raw material, service or labor costs or availability, including due to inflationary pressures; changes in our ability to recruit, hire and maintain labor; our ability to maintain satisfactory relations with our employees; increases in labor costs including costs of health insurance and taxes resulting from the Affordable Care Act, adverse changes in work rules, or cash payments or projections associated with workers’ compensation claims; increases in transportation costs and risk of transportation delays or interruptions; operational interruptions due to geologic, permitting, labor, weather, supply chain shortage of equipment or mine supplies, or other factors; risks associated with major mine-related accidents, mine fires, mine floods or other interruptions; results of litigation, including claims not yet asserted; foreign currency fluctuations that could adversely affect the competitiveness of our coal abroad; difficulty maintaining our surety bonds for mine reclamation as well as workers’ compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding post-mine reclamation as well as pension, black lung benefits, and other post-retirement benefit liabilities; uncertainties in estimating and replacing our coal mineral reserves and resources; uncertainties in estimating and replacing our oil & gas reserves; uncertainties in the amount of oil & gas production due to the level of drilling and completion activity by the operators of our oil & gas properties; uncertainties in the future of the electric vehicle industry and the market for EV charging stations; the impact of current and potential changes to federal or state tax rules and regulations, including a loss or reduction of benefits from certain tax deductions and credits; difficulty obtaining commercial property insurance, and risks associated with our participation in the commercial insurance property program; evolving cybersecurity risks, such as those involving unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, malware, social engineering, physical breaches, or other actions; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.
Additional information concerning these, and other factors can be found in ARLP’s public periodic filings with the SEC, including ARLP’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on February 24, 2023,and ARLP’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, filed on May 9, 2023, August 8, 2023 and November 8, 2023, respectively. Except as required by applicable securities laws, ARLP does not intend to update its forward-looking statements.
Reconciliation of Non-GAAP Financial Measures
Reconciliation of GAAP “net income attributable to ARLP” to non-GAAP “EBITDA” and “Distributable Cash Flow” (in thousands).
EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes and depreciation, depletion and amortization. Distributable cash flow (“DCF”) is defined as EBITDA excluding equity method investment earnings, interest expense (before capitalized interest), interest income, income taxes and estimated maintenance capital expenditures and adding distributions from equity method investments. Distribution coverage ratio (“DCR”) is defined as DCF divided by distributions paid to partners.
Management believes that the presentation of such additional financial measures provides useful information to investors regarding our performance and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation and planning decisions and (iii) present measurements that investors, rating agencies and debt holders have indicated are useful in assessing us and our results of operations.
EBITDA, DCF and DCR should not be considered as alternatives to net income attributable to ARLP, net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA and DCF are not intended to represent cash flow and do not represent the measure of cash available for distribution. Our method of computing EBITDA, DCF and DCR may not be the same method used to compute similar measures reported by other companies, or EBITDA, DCF and DCR may be computed differently by us in different contexts (i.e., public reporting versus computation under financing agreements).
Reconciliation of GAAP “Cash flows from operating activities” to non-GAAP “Free cash flow” (in thousands).
Free cash flow is defined as cash flows from operating activities less capital expenditures and the change in accounts payable and accrued liabilities from purchases of property, plant and equipment. Free cash flow should not be considered as an alternative to cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Our method of computing free cash flow may not be the same method used by other companies. Free cash flow is a supplemental liquidity measure used by our management to assess our ability to generate excess cash flow from our operations.
Reconciliation of GAAP “Operating Expenses” to non-GAAP “Segment Adjusted EBITDA Expense” and Reconciliation of non-GAAP ” EBITDA” to “Segment Adjusted EBITDA” (in thousands).
Segment Adjusted EBITDA Expense includes operating expenses, coal purchases, if applicable, and other income or expense. Transportation expenses are excluded as these expenses are passed on to our customers and, consequently, we do not realize any margin on transportation revenues. Segment Adjusted EBITDA Expense is used as a supplemental financial measure by our management to assess the operating performance of our segments. Segment Adjusted EBITDA Expense is a key component of EBITDA in addition to coal sales, royalty revenues and other revenues. The exclusion of corporate general and administrative expenses from Segment Adjusted EBITDA Expense allows management to focus solely on the evaluation of segment operating performance as it primarily relates to our operating expenses. Segment Adjusted EBITDA Expense – Coal Operations represents Segment Adjusted EBITDA Expense from our wholly-owned subsidiary, Alliance Coal, which holds our coal mining operations and related support activities.
Segment Adjusted EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes, depreciation, depletion and amortization and general and administrative expenses. Segment Adjusted EBITDA – Coal Operations represents Segment Adjusted EBITDA from our wholly-owned subsidiary, Alliance Coal, which holds our coal mining operations and related support activities and allows management to focus primarily on the operating performance of our Illinois Basin and Appalachia segments.
Cary P. Marshall Senior Vice President and Chief Financial Officer 918-295-7673 investorrelations@arlp.com
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Recent drilling results. Labrador Gold released results from recent drilling targeting the Appleton Fault Zone. The drilling is part of the company’s 100,000-meter diamond drilling program at its 100%-owned Kingsway project. The most recent results are for holes drilled at Pristine, the northeast extension of Big Vein, initial holes at Knobby and Peter Easton, and the first hole in the recently identified HM occurrence.
A new discovery at HM. The HM occurrence was discovered by prospecting and is roughly 570 meters along strike to the southwest of Big Vein. Hole K-23-334 tested for gold mineralization at depth below the quartz vein at surface. The hole returned gold grading 0.87 grams of gold per tonne over 55.9 meters, including a zone with visible gold that graded 38.37 grams of gold per tonne over 0.8 meters. Hole K-23-334 is the only hole drilled into this occurrence to date.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Vancouver, British Columbia–(Newsfile Corp. – January 25, 2024) – Hemisphere Energy Corporation (TSXV: HME) (OTCQX: HMENF) (“Hemisphere” or the “Company”) is pleased to provide a corporate update, announce the declaration of a quarterly dividend payment to shareholders, and deliver guidance for 2024.
Corporate Update
Hemisphere realized another successful year in 2023, balancing production growth with balance sheet strength and shareholder return. During the year, $17.5 million was returned to shareholders in the form of dividends ($13.1 million) and share buybacks ($4.4 million), representing an approximate 14% yield to shareholders based on the market capitalization of Hemisphere at year-end.
The Company achieved record average production in the fourth quarter of 3,375 boe/d (99% heavy oil), which represents a 16% increase over the same period in 2022. This growth in production year-over-year is the combined result of Hemisphere’s successful third quarter drilling program with the Company’s effective enhanced oil recovery (“EOR”) polymer flood projects. Hemisphere’s annual average production for 2023 was approximately 3,100 boe/d (99% heavy oil), representing 10% growth as compared to 2022.
Balance sheet strength continued to be a priority in 2023, with Hemisphere exiting the year in a cash position. Hemisphere funded all of its shareholder returns and entire $16 million capital expenditure1 program on 2023 cash flow. In addition to drilling 8 successful Atlee Buffalo wells and upgrading some of its facilities, the Company acquired over 2,500 hectares of new land in Saskatchewan and Alberta. Hemisphere has plans to drill a new prospect on some of these Saskatchewan lands in the first half of 2024, and believes it to be prospective for EOR polymer flooding.
Given the significant free cash flow generated by Hemisphere’s ultra-low production decline and long-life reserve asset base, the Company was able to complement its $0.025 per share quarterly base dividend with a $0.03 per share special dividend paid in the fourth quarter of 2023. This brought total shareholder returns last year to $0.13 per share in dividends. Hemisphere also invested $4.4 million into its normal course issuer bid (“NCIB”) share buyback program to purchase and cancel 3.5 million shares in 2023.
Quarterly Dividend
Hemisphere is pleased to announce that its Board of Directors has approved a quarterly cash dividend of $0.025 per common share in accordance with the Company’s dividend policy. The dividend will be paid on February 23, 2024 to shareholders of record as of the close of business on February 9, 2024. The dividend is designated as an eligible dividend for income tax purposes.
2024 Corporate Guidance
Hemisphere’s Board of Directors has approved a 2024 capital expenditure program of $21 million, which is planned to be entirely funded by Hemisphere’s estimated 2024 adjusted funds flow1 (“AFF”) of $40 million and is anticipated to provide 10% annual production growth. The majority of capital will be allocated to drilling and facility work, with approximately 10% allotted to exploration and land acquisition. Over half of the planned capital expenditures are scheduled for the third quarter, providing Hemisphere with the flexibility to adjust plans subject to the commodity price environment.
The start of 2024 brought with it some extreme cold weather which has substantially affected corporate production during the month of January. The failure of an electrical panel at Hemisphere’s G pool facility resulted in the loss of power to its operations. Subsequent sustained -40°C weather led to freezing of most of the G pool wells and facility, which experienced 5 days of complete downtime and an additional few days of lower production as equipment was repaired and wells were brought back online. All impacts of this production disruption have been accounted for in the guidance set out below, and the team has now restored operations back to normal levels.
After capital expenditures and asset retirement obligations (“ARO”), 2024 free funds flow1 (“FFF”) is estimated to be $19 million, of which approximately 50% is planned to be paid in quarterly dividends as shown in the table below. The balance of cash will be used for discretionary purposes, which may include potential acceleration of other development or exploration projects, acquisitions, and additional return of capital to shareholders through Hemisphere’s NCIB program and/or special dividends.
Management believes that the 2024 development plan provides stable production growth and consistent shareholder returns, while still allowing for modest investment in a new EOR play with exciting growth potential for the Company.
Highlights and assumptions of Hemisphere’s guidance at US$75/bbl WTI are as follows:
Average annual production of 3,400 boe/d (99% heavy oil), a 10% increase as compared to 2023
Average WTI price of US$75/bbl, with sensitivities shown at US$65/bbl and US$85/bbl
WCS differential of US$15.50/bbl and quality adjustment of $7.50/bbl
CAD/US FX of 1.35
Operating and transportation costs of $14.85/boe
Royalties and GORRs on gross revenue of 20% at US$75/bbl WTI, 18% at US$65/bbl WTI, and 22% at US$85/bbl WTI
Net G&A of $3.65/boe
Tax Costs of $7.29/boe at US$75/bbl WTI, $4.91/boe at US$65/bbl WTI, and $9.53/boe at US$85/bbl WTI
2024 Corporate Guidance(2)
US$65 WTI
US$75 WTI
US$85 WTI
Adjusted Funds Flow (AFF)
$ million
31
40
49
AFF per Basic Share(1,3)
$/share
0.32
0.41
0.49
Capital Expenditures& ARO
$ million
21
21
21
Free Funds Flow (FFF)
$ million
10
19
28
FFF per Basic Share(1,3)
$ million
0.10
0.19
0.28
Dividend per Basic Share(3)
$ million
0.10
0.10
0.10
Notes:
(1) AFF, Capital Expenditures, and FFF are non-IFRS financial measures that are forward looking and do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. AFF per basic share and FFF per basic share are non-IFRS financial ratios that are forward looking and do not have any standardized meaning under IFRS and therefore may not be comparable to similar ratios presented by other entities and include non-IFRS financial measure components of AFF and FFF. See “Non-IFRS Measures“. (2) See assumptions noted above within “2024 Corporate Guidance”. (3) Using a 2024 weighted average of 98,988,539 basic shares issued and outstanding. (4) The amounts above do not include potential future purchases through the Company’s NCIB program or other discretionary uses of available funds.
About Hemisphere Energy Corporation
Hemisphere is a dividend-paying Canadian oil company focused on maximizing value-per-share growth with the sustainable development of its high netback, ultra-low decline conventional heavy oil assets through EOR polymer flood projects. Hemisphere trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “HME” and on the OTCQX Venture Marketplace under the symbol “HMENF”.
For further information, please visit the Company’s website at www.hemisphereenergy.ca to view its corporate presentation or contact:
Don Simmons, President & Chief Executive Officer Telephone: (604) 685-9255 Email: info@hemisphereenergy.ca
Certain statements included in this news release constitute forward-looking statements or forward-looking information (collectively, “forward-looking statements”) within the meaning of applicable securities legislation. Forward-Looking statements are typically identified by words such as anticipate, continue, estimate, expect, forecast, may, will, project, could, plan, intend, should, believe, outlook, potential, target, and similar words suggesting future events or future performance. In particular, but without limiting the generality of the foregoing, this news release includes forward-looking statements regarding the Company’s plans to drill its new Saskatchewan prospect in early 2024 and its belief that it is prospective for EOR polymer flooding; the record date and payment date for Hemisphere’s quarterly dividend; that Hemisphere’s 2024 capital budget is planned to be entirely funded by Hemisphere’s estimated 2024 AFF and is anticipated to provide 10% annual production growth, including that the majority of capital will be allocated to drilling and facility work, with approximately 10% of it allotted to exploration and land acquisition as well as expectations for the timing of such expenditures; Hemisphere’s anticipation that approximately 50% of estimated $19 million in free funds flow will be paid in quarterly dividends with the balance of cash being used for discretionary purposes, which may include potential acceleration of other development or exploration projects, acquisitions, and additional return of capital to shareholders through Hemisphere’s NCIB program and/or special dividends; the expected manner in which the Company’s 2024 capital budget will be spent, including the timing of such expenditures and any discretionary amounts, which may include potential acceleration of other development or exploration projects, acquisitions, and return of capital to shareholders through Hemisphere’s NCIB program and/or dividends, and the anticipated effects thereof, including as set forth under “2024 Corporate Guidance” and the Company’s dividend policy and the other matters and guidance set forth under “2024 Corporate Guidance”.
Forward‐Looking statements are based on a number of material factors, expectations or assumptions of Hemisphere which have been used to develop such statements and information, but which may prove to be incorrect. Although Hemisphere believes that the expectations reflected in such forward‐looking statements or information are reasonable, undue reliance should not be placed on forward‐looking statements because Hemisphere can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified herein (including the assumptions noted in respect of “2024 Corporate Guidance”), assumptions have been made regarding, among other things: the current and go-forward oil price environment; that Hemisphere will continue to conduct its operations in a manner consistent with past operations; that results from drilling and development activities are consistent with past operations; the quality of the reservoirs in which Hemisphere operates and continued performance from existing wells; the continued and timely development of infrastructure in areas of new production; inflationary pressure and related costs; that the Company’s dividend policy will remain the same and the Company will continue to be able to declare dividends; the accuracy of the estimates of Hemisphere’s reserve volumes; certain commodity price and other cost assumptions; continued availability of debt and equity financing and cash flow to fund Hemisphere’s current and future plans and expenditures; the impact of increasing competition; the general stability of the economic and political environment in which Hemisphere operates; the general continuance of current industry conditions; the timely receipt of any required regulatory approvals; the ability of Hemisphere to obtain qualified staff, equipment and services in a timely and cost efficient manner; drilling results; the ability of the operator of the projects in which Hemisphere has an interest in to operate the field in a safe, efficient and effective manner; the ability of Hemisphere to obtain financing on acceptable terms; field production rates and decline rates; the accuracy of the Company’s reservoir modelling; the ability to replace and expand oil and natural gas reserves through acquisition, development and exploration; the timing and cost of pipeline, storage and facility construction and expansion and the ability of Hemisphere to secure adequate product transportation; future commodity prices; currency, exchange and interest rates; regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Hemisphere operates; and the ability of Hemisphere to successfully market its oil and natural gas products.
The forward‐looking statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Such information and statements, including the assumptions made in respect thereof, involve known and unknown risks, uncertainties and other factors that may cause actual results or events to defer materially from those anticipated in such forward‐looking statements including, without limitation: changes in commodity prices; regulatory risks, including penalties or other remedial actions, the ability of the Company to maintain legal title to its properties; changes in the demand for or supply of Hemisphere’s products, the early stage of development of some of the evaluated areas and zones; unanticipated operating results or production declines; results of Hemisphere’s waterflood operations; the ability of Hemisphere to, pending future events, return capital to shareholders as a result of any required third party approvals; changes in budgets; changes in tax or environmental laws, royalty rates or other regulatory matters; changes in development plans of Hemisphere or by third party operators of Hemisphere’s properties, increased debt levels or debt service requirements; inaccurate estimation of Hemisphere’s oil and gas reserve volumes; limited, unfavourable or a lack of access to capital markets; increased costs; a lack of adequate insurance coverage; the impact of competitors; and certain other risks detailed from time‐to‐time in Hemisphere’s public disclosure documents, (including, without limitation, those risks identified in this news release and in Hemisphere’s most recent Annual Information Form).
The forward‐looking statements contained in this news release speak only as of the date of this news release, and Hemisphere does not assume any obligation to publicly update or revise any of the included forward‐looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
Forward-Looking Financial Information
This news release may contain future oriented financial information (“FOFI”) within the meaning of applicable securities laws, including with respect to the Company’s anticipated 2024 Free Funds Flow and Adjusted Funds Flow. The FOFI has been prepared by management to provide an outlook of the Company’s activities and results. The FOFI has been prepared based on a number of assumptions including the assumptions discussed and disclosed above, including in relation to “2024 Corporate Guidance” above and “Forward-Looking Statements” above and that the Company is cash taxable in 2024. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on FOFI. The Company’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these FOFI, or if any of them do so, what benefits the Company will derive therefrom. The Company has included the FOFI in order to provide readers with a more complete perspective on the Company’s future operations and such information may not be appropriate for other purposes. The Company disclaims any intention or obligation to update or revise any FOFI statements, whether as a result of new information, future events or otherwise, except as required by law.
Non-IFRS and Other Measures
This news release contains terms that are non-IFRS measures or ratios that are forward-looking and commonly used in the oil and gas industry which are not defined by or calculated in accordance with International Financial Reporting Standards (“IFRS”), such as: (i) adjusted funds flow (ii) adjusted funds flow per basic share; (iii) capital expenditures; (iv) free funds flow; and (v) free funds flow per basic share. These terms should not be considered an alternative to, or more meaningful than the comparable IFRS measures (as determined in accordance with IFRS) which in the case of funds flow is cash provided by operating activities, in the case of adjusted funds flow (and adjusted funds flow per share) is cash provided by operating activities and in the case of capital expenditures is cash flow used in investing activities. There is no IFRS measure that is reasonably comparable to free funds flow. These measures are commonly used in the oil and gas industry and by Hemisphere to provide shareholders and potential investors with additional information regarding: (i) in the case of adjusted funds flow and free funds flow, the Company’s ability to generate the funds necessary to support future growth through capital investment and to repay any debt.
Hemisphere’s determination of these measures may not be comparable to that reported by other companies. Adjusted funds flow is calculated as cash generated by operating activities, before changes in non-cash working capital and adjusted for any decommissioning expenditures; Adjusted funds flow per share is calculated using the outstanding basic shares of the company as footnoted in the 2024 Corporate Guidance table; Free Funds Flow is calculated as Adjusted Funds Flow less capital expenditures; and Free funds flow per share is calculated using the outstanding basic shares of the company as footnoted in the 2024 Corporate Guidance table. The Company has provided additional information on how these measures are calculated, including a reconciliation of such measures to their comparable IFRS measure, in the Management’s Discussion and Analysis for the year ended December 31, 2022 and the interim period ended September 30, 2023, which are available under the Company’s SEDAR+ profile at www.sedarplus.ca.
In respect of any forward-looking non-IFRS measures, there is no significant difference between the non-GAAP financial measure that are forward-looking information and the equivalent historical non-GAAP financial measures.
In this news release, Hemisphere uses the term market capitalization at year-end. Hemisphere’s market capitalization was $128 million at the close of December 29, 2023, the last trading day of the year.
Oil and Gas Advisories
Any references in this news release to recent production rates (including as a result of recent waterflood activities) which may be considered to be initial rates and are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and are not necessarily indicative of long-term performance or ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Company. Such rates are based on field estimates and may be based on limited data available at this time.
A barrel of oil equivalent (“boe”) 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, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.
Definitions and Abbreviations
bbl
Barrel
WTI
West Texas Intermediate
bbl/d
barrels per day
WCS
Western Canadian Select
$/bbl
dollar per barrel
US$
United States Dollar
boe
barrel of oil equivalent
boe/d
barrel of oil equivalent per day
IFRS
International Financial Reporting Standards
$/boe
dollar per barrel of oil equivalent
G&A
General and Administrative Costs
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
