Greenfire Resources Announces Redemption of US$61 Million of the Company's US$300 Million Senior Secured Notes Due 2028

Rhea-AI Summary

Greenfire Resources (NYSE: GFR, TSX: GFR) has announced the redemption of US$61 million out of its US$300 million senior secured notes due 2028. The payment, scheduled for July 12, 2024, is part of the company’s commitment to reduce its debt in accordance with the indenture governing the notes. As of June 30, 2024, Greenfire had CAD$160 million in cash and cash equivalents, including CAD$50 million from accelerated oil sales collections. The indenture mandates that 75% of Excess Cash Flow (ECF) be directed towards note redemption until total indebtedness is under US$150 million, at which point the required redemption reduces to 25% of ECF. Greenfire plans to release its Q2 2024 operating and financial results on August 14, 2024.

Positive

• Redemption of US$61 million of company’s US$300 million senior secured notes due 2028.
• Company had CAD$160 million in cash and cash equivalents as of June 30, 2024.
• CAD$50 million in additional working capital from accelerated oil sales collections.
• 75% of Excess Cash Flow directed towards debt reduction until debt is under US$150 million.

Negative

• Requirement to redeem notes at a cash price equal to 105% of the principal every six months.

Financial Analyst

The redemption of US$61 million of Greenfire Resources' senior secured notes signifies a proactive step in debt management. By directing 75% of Excess Cash Flow (ECF) towards this redemption, it showcases the company's financial discipline and commitment to reducing its consolidated indebtedness. This move also indicates a healthy cash flow situation, with CAD$160 million in cash and cash equivalents as of June 30, 2024.

For investors, this act of debt reduction is reassuring as it lowers financial risk and interest expense over time, enhancing the company's creditworthiness. Additionally, the fixed redemption price at 105% of the principal suggests Greenfire Resources is willing to pay a premium for financial flexibility. However, the mandatory allocation of 75% ECF towards debt redemption until the debt is below US$150 million may limit immediate shareholder returns. This could be seen as a short-term trade-off for long-term financial health.

Investors should note that once indebtedness reduces below US$150 million, the company will have greater flexibility to increase shareholder returns, potentially boosting investor sentiment and stock performance. The upcoming Q2 2024 financial results on August 14th will provide further insights into the company's operating performance and future cash flow projections.

Market Research Analyst

The strategic move by Greenfire Resources to redeem a significant portion of its senior secured notes could have broader market implications. It signals to the market that the company is focused on building financial resilience and positioning itself for sustainable growth. This decision should positively affect investor perceptions, especially those interested in the energy sector's long-term prospects.

In the context of the energy market, where fluctuations in oil prices can impact cash flows, showcasing the ability to manage and reduce debt is an indicator of sound management practices. This may attract more risk-averse investors who seek stability amidst market volatility. Furthermore, the accelerated collection of oil sales for June 2024, contributing to additional working capital, demonstrates operational efficiency that could further enhance investor confidence.

For potential investors, understanding the long-term impact of debt management strategies is crucial. Reduced indebtedness enhances the company's ability to navigate market cycles, invest in growth opportunities and return value to shareholders in the future. The forthcoming Q2 2024 results will be a key event to watch for additional guidance on the company's financial health and strategic direction.

Calgary, Alberta--(Newsfile Corp. - July 10, 2024) - Greenfire Resources Ltd. (NYSE: GFR) (TSX: GFR) ("Greenfire" or the "Company"), a Calgary-based energy company focused on the production and development of thermal energy resources from the Athabasca region of Alberta, Canada, is pleased to announce the redemption of approximately US$61 million of the Company's US$300 million senior secured notes due 2028 (the "2028 Notes"), payable on July 12, 2024, in accordance with the indenture governing the 2028 Notes.

On June 30, 2024, the Company's closing cash and cash equivalents balance was approximately CAD$160 million, including approximately CAD$50 million of additional working capital resulting from the accelerated collection of oil sales for June 2024. Under the indenture governing the 2028 Notes, the Company must direct 75% of Excess Cash Flow ("ECF"), as defined in the indenture governing the 2028 Notes, towards the redemption of a portion of the 2028 Notes at a cash price equal to 105% of the principal every six-months until consolidated indebtedness is reduced to less than US$150 million. The remaining 25% of ECF in the period can be used for shareholder returns, subject to the terms of the indenture governing the 2028 Notes. Once consolidated indebtedness falls below US$150 million, the required redemption in every six-month period is reduced to 25% of ECF, with 75% of ECF becoming available for shareholder returns. The opening balance for the first ECF calculation was CAD$43 million.

The Company plans to issue Q2 2024 operating and financial results on August 14^th, 2024.

About Greenfire

Greenfire is an intermediate, lower-cost and growth-oriented Athabasca oil sands producer with concentrated Tier-1 assets that use steam assisted gravity drainage extraction methods. The Company is operationally focused with an emphasis on an entrepreneurial environment and a high level of employee ownership. Greenfire common shares are listed on the New York Stock Exchange and Toronto Stock Exchange under the symbol "GFR". For more information, visit greenfireres.com or find Greenfire on LinkedIn and X.

Forward-Looking Statements

This press release may contain "forward-looking information" within the meaning of the United States federal securities laws and applicable Canadian securities laws. These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," future," "opportunity," "plan," "may," "should," "will," "could," "will be," will continue," and similar expressions and include, without limitation, the timing of the issuance of the Company's Q2 2024 financial and operating results.

Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. You should carefully consider all of the risks and uncertainties described in the "Risk Factors" section of the Company's annual report on Form 20-F dated March 26, 2024, which is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov/edgar.shtml and in other documents filed by Greenfire from time to time on SEDAR+ and with the United States Securities and Exchange Commission. Forward-looking statements are statements about the future and are inherently uncertain. The Company does not intend, and does not assume any obligation, to update any forward-looking statements, other than as required by applicable law. For all of these reasons, the Company's securityholders should not place undue reliance on forward-looking statements.

Contact Information

Greenfire Resources Ltd.

205 5th Avenue SW
Suite 1900
Calgary, AB T2P 2V7
investors@greenfireres.com
greenfireres.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/216114

FAQ

What is Greenfire Resources' recent debt redemption news?

Greenfire Resources announced the redemption of US$61 million from their US$300 million senior secured notes due 2028.

When is Greenfire Resources paying the redeemed amount?

The payment is scheduled for July 12, 2024.

How much cash and cash equivalents did Greenfire Resources have on June 30, 2024?

Greenfire Resources had CAD$160 million in cash and cash equivalents.

What percentage of Excess Cash Flow is directed towards debt reduction?

75% of Excess Cash Flow is directed towards debt reduction until total indebtedness is under US$150 million.

When will Greenfire Resources release its Q2 2024 financial results?

Greenfire Resources plans to release its Q2 2024 financial results on August 14, 2024.