Journey Energy Inc. Generates $18 Million in Adjusted Funds Flow, Announces Participation in a Duvernay Joint Venture, and Continues Construction of Gilby Power Facility in the First Quarter of 2024
Journey Energy Inc. announced its financial results for the first quarter of 2024, generating sales volumes of 11,906 boe/d and Adjusted Funds Flow of $17.7 million. The company closed a $38 million convertible debenture financing, continued construction of the Gilby power facility, and participated in a Duvernay Joint Venture with Spartan Delta Corp. Journey's Joint Venture aims to develop the Duvernay west shale basin with two planned wells in 2024. Financially, the company posted net income of $3.2 million, with net capital expenditures totaling $14.3 million. The outlook includes guidance for daily sales volumes, Adjusted Funds Flow, capital spending, and net debt for 2024.
Generated sales volumes of 11,906 boe/d in the first quarter.
Realized Adjusted Funds Flow of $17.7 million with a convertible debenture financing of $38 million.
Continued construction of the Gilby power facility and participation in a Duvernay Joint Venture.
Planned development of the Duvernay west shale basin with Spartan Delta Corp.
Solid financial performance with net income of $3.2 million and strong cash position of $20.9 million.
Net income decreased from $6.4 million in the first quarter of 2023 to $3.2 million in 2024.
Adjusted Funds Flow declined by 1% from the same quarter of 2023.
Net debt was $60.1 million at the end of the first quarter of 2024.
Lower volumes and natural gas prices impacted financial performance.
Calgary, Alberta--(Newsfile Corp. - May 9, 2024) - Journey Energy Inc. (TSX: JOY) (OTCQX: JRNGF) ("Journey" or the "Company") announces its financial results for the first quarter of 2024. The complete set of financial statements and management discussion and analysis for the periods ended March 31, 2024 and 2023 are posted on www.sedarplus.ca and on the Company's website www.journeyenergy.ca.
Highlights for the first quarter and year to date are as follows:
- Generated sales volumes of 11,906 boe/d in the first quarter (
46% crude oil;10% NGL's;44% natural gas).
- Realized Adjusted Funds Flow of
$17.7 million or$0.29 per basic share and$0.27 per diluted share.
- Closed a
$38 million convertible debenture financing on March 20, 2024. The proceeds of the financing were partially utilized to retire the remaining$11 million of vendor-take-back financing and to accelerate a$12.1 million payment to AIMCo. The remainder will be used to expand Journey's 2024 capital program from$41 million to$51 million , as discussed in the March 28, 2024 press release. Guidance for 2024 remains unchanged since incremental volumes are phased in a way that will impact the exit rate but not annual averages.
- Produced 6,968 megawatt hours of electricity at Journey's power generation facility in Countess, Alberta at an average price of
$117.69 /MWH.
- Continued with the construction of the Gilby power generation asset. The generators have been moved into the newly constructed building.
- On May 7, 2024 Journey announced its participation in a 128 section Joint Venture land block with Spartan Delta Corp. to mutually pursue the development of the west shale basin Duvernay. The initial working interest within the block is
37.5% Journey and62.5% Spartan Delta Corp. The partners currently control 94 sections within the block. Two wells are planned for later in 2024. Journey's share of these expenditures will be funded through a combination of internally generated cash flows and proceeds from the recent closing of convertible debentures.
| | Three months ended March 31, | | |||||||
| Financial ( | 2024 | 2023 | % change | | |||||
| Production revenue | 52,098 | 58,443 | (11 | ) | |||||
| Net income | 3,248 | 6,440 | (50 | ) | |||||
| Per basic share | 0.05 | 0.11 | (55 | ) | |||||
| Per diluted share | 0.05 | 0.10 | (50 | ) | |||||
| Adjusted Funds Flow | 17,720 | 17,959 | (1 | ) | |||||
| Per basic share | 0.29 | 0.31 | (6 | ) | |||||
| Per diluted share | 0.27 | 0.28 | (4 | ) | |||||
| Cash flow from operations | 7,994 | 11,461 | (30 | ) | |||||
| Per basic share | 0.13 | 0.20 | (35 | ) | |||||
| Per diluted share | 0.12 | 0.18 | (33 | ) | |||||
| Net capital expenditures | 14,287 | 6,818 | 110 | ||||||
| Net Debt | 60,131 | 71,071 | (16 | ) | |||||
| | |||||||||
| Share Capital (000's) | | ||||||||
| Basic, weighted average | 61,350 | 58,153 | 5 | | |||||
| Diluted, weighted average | 66,689 | 64,036 | 4 | ||||||
| Basic, end of period | 61,350 | 60,923 | 1 | ||||||
| Fully diluted | 68,378 | 67,863 | 1 | ||||||
| | |||||||||
| Daily Sales Volumes | | ||||||||
| Natural gas (Mcf/d) | |||||||||
| Conventional | 27,281 | 30,608 | (11 | ) | |||||
| Coal bed methane | 3,966 | 4,279 | (7 | ) | |||||
| Total natural gas volumes | 31,277 | 34,887 | (10 | ) | |||||
| Crude oil (Bbl/d) | |||||||||
| Light/medium | 3,227 | 3,564 | (9 | ) | |||||
| Heavy | 2,258 | 2,175 | 4 | | |||||
| Total crude oil volumes | 5,485 | 5,739 | (4 | ) | |||||
| Natural gas liquids (Bbl/d) | 1,208 | 1,367 | (12 | ) | |||||
| Barrels of oil equivalent (boe/d) | 11,906 | 12,920 | (8 | ) | |||||
| | |||||||||
| Average Realized Prices1 | | ||||||||
| Natural gas ($/mcf) | 2.37 | 3.66 | (42 | ) | |||||
| Crude Oil ($/bbl) | 80.53 | 79.16 | 2 | ||||||
| Natural gas liquids ($/bbl) | 46.83 | 49.32 | (5 | ) | |||||
| Barrels of oil equivalent ($/boe) | 48.08 | 50.26 | (4 | ) | |||||
| Operating Netback ($/boe) | | ||||||||
| Realized prices1 | 48.08 | 50.26 | (4 | ) | |||||
| Royalties | (9.38 | ) | (10.38 | ) | (10 | ) | |||
| Operating expenses | (18.50 | ) | (19.78 | ) | (6 | ) | |||
| Transportation expenses | (0.99 | ) | (1.06 | ) | (7 | ) | |||
| Operating netback | 19.21 | 19.04 | 1 | | |||||
Note:
- Realized prices include physical hedging gains.
OPERATIONS
Journey began its 2023 exploration and development program late in 2023, starting with a drilling program in the Medicine Hat pool. This pool was a cornerstone of the assets acquired from Enerplus Corporation in 2022. Journey drilled 4.0 gross (2.9 net) wells in Medicine Hat in late 2023. These wells have markedly exceeded expectations with respect to both costs and results. Based upon these results Journey has completed a second 4.0 (2.9 net) well program in this pool during the first quarter of 2024. Well costs and geological indicators are similar to, or better than, the first program. All of these wells were on stream by mid-March. In the second half of 2024 Journey is planning to convert four existing water injectors to polymer injection. With over thirty future locations, along with future waterflood and polymer flood expansion potential, Journey expects this field to continue to provide increasing shareholder value for years to come.
In addition to the 2023 Medicine Hat drilling program, Journey also drilled 3.0 gross (3.0 net) wells in Matziwin in the fourth quarter. Similar to Medicine Hat, the total program costs were significantly below forecast. On November 7, 2023 Journey moved a drilling rig to the Cherhill field where the Company drilled 3.0 gross (2.7 net) wells. The Cherhill program was followed up with 2.0 gross (1.7 net) wells drilled in Poplar Creek.
The 2023/2024 drilling program was funded with the proceeds of a flow through share issuance completed in the spring of 2023. Journey has now completed the required expenditures under this program.
In the first quarter of 2024, Journey had sales volumes of 11,906 boe/d (
For the medium term, the primary purpose of the debenture was to extend the near-term debt repayment obligations to 2029, thereby allowing for an expansion in E&D capital in 2024 and 2025 for projects including preliminary development of the Duvernay resource.
Spartan Delta Corp. Joint Venture
On May 7, 2024 Journey announced its participation in a 128 section Joint Venture land block with Spartan Delta Corp. ("Spartan") to mutually pursue the development of the Duvernay west shale basin. The initial working interest within the block is
The announcement of the Spartan - JOY Joint Venture (the "Joint Venture") on May 7, 2024 marks the beginning of the next chapter in Journey's effort to capitalize on this vast resource. As an early mover in the play Journey assembled a significant land position and entered into a Joint Venture with Kiwetinohk to develop the Duvernay resource in 2018. Even though this effort stalled due to lack of investment and the subsequent disposition by Kiwetinohk of their interest to Spartan in 2023, those early efforts produced three basin leading Duvernay wells that now have an extensive production history and confirm the value of this resource.
In 2023, Journey's continued belief in this play lead the Company to complete a farm-in agreement with a freehold mineral owner in the Gilby area of Alberta to re-acquire some of the expired lands. This farm-in, combined with Journey's existing acreage gave the Company access to approximately fifty contiguous, gross sections (34 net). These lands are adjacent to Journey's Gilby gas processing facility, are overlain by liquid-rich Glauconite natural gas production, and contain the three Duvernay discovery wells. The primary term of the option agreement is for four years with an option to extend the term to seven years. Previous to the Company entering into the Joint Venture, Journey planned on drilling a minimum of four Duvernay wells on this block during the four year primary term.
At the time of the Kiwetinohk joint venture in 2018, Journey was smaller and had little option but to sell down its working interest through the farm out to Kiwetinohk. In 2024, after the term out of the majority of its debt until 2029, Journey is larger and better capitalized. Further, 2025 will mark the first year that Journey realizes more revenue from power generation than it requires in capital for the power projects, creating significant free cash flow. Therefore, Journey set out to find a quality partner where it could take advantage of the economies of scale working with a larger operator while minimizing the risk of single events on the Company's business plan. The Company's desire was to accomplish this without diluting the existing land position while maximizing the net number on azimuth locations in the liquids window.
The new Joint Venture block with Spartan consists of 94 controlled sections within a 128 section block in the heart of the oil window. At a
Initial capital expenditures for the Joint Venture are capped at gross amounts of
The Duvernay resource is located within the sweet spot of the west shale basin and is contiguous, 30-40 meters thick, and covers an extensive area. In the Joint Venture block, production is forecast to be approximately
EXPANDING JOURNEY'S POWER BUSINESS
Journey budgeted
Journey has budgeted
Journey is planning to increase its power sales to the Alberta electricity grid by over
FINANCIAL
Sales volumes for the quarter were 11,906 boe/d of which
Journey realized net income of
Journey closed a bought deal convertible debenture financing on March 20, 2024 for gross proceeds of
Journey continued to be prudent with its capital spending during the first quarter as it underspent its Adjusted Funds Flows. Total capital expenditures in the first quarter were
OUTLOOK & GUIDANCE
The new Duvernay Joint Venture has the potential to alter where Journey allocates its capital in the second half of 2024. The actual amount and timing of the capital spending for 2024 will be determined over the coming months as plans for the Joint Venture spending are finalized. Therefore, guidance for 2024 remains unchanged from the guidance issued on March 28, 2024. Journey intends to update its guidance at regular intervals throughout the year and as circumstances materially change.
This guidance incorporates many material underlying assumptions including but not limited to:
- Forecasted commodity prices by month;
- Forecasted operating costs, including forecasted prices for power;
- Forecasted costs for the capital program and the timing of the spending; and
- Forecasted results and phasing of production additions from the capital program;
| 2024 Guidance | |
| Annual average daily sales volumes | 11,500-12,000 boe/d ( |
| Adjusted Funds Flow | |
| Adjusted Funds Flow per weighted average share | |
| Capital spending | |
| Year-end Net Debt Net Debt to Adjusted Funds Flow ratio | 0.6x |
| Reference commodity prices: WTI (USD $/bbl) MSW oil differentials (USD $/bbl) WCS oil differentials (USD $/bbl) AECO natural gas (CAD $/mcf) CAD/USD foreign exchange |
Notes:
- The weighting of the corporate sales volumes guidance is as follows:
- Heavy crude oil:
19% - Light/medium crude oil:
27% - NGL's:
10% - Coal-bed methane natural gas:
6% - Conventional natural gas:
38%
- Heavy crude oil:
Journey's low corporate decline, high working interest project inventory, operated infrastructure, and favourable mineral lease expiry profile allow the Company to weather periods of lower than forecast commodity prices by proactively deferring portions of the capital program on a temporary basis. Journey is focused on adjusting its capital program to meet its near term obligations without sacrificing the longer term priorities of sustainability and enhancing shareholder value.
Annual General Meeting
Journey's annual general meeting ("AGM" or the "Meeting") is scheduled for 3:00 pm (Calgary time) on May 23, 2024. Shareholders not attending in person must vote on the matters not less than forty-eight (48) hours (excluding Saturdays, Sundays and statutory holidays in the Province of Alberta) before the time of the Meeting. Journey is offering shareholders an opportunity to listen to the business to be conducted at the Meeting by teleconference. Further instructions on how to listen to the Meeting and how to vote in advance of the Meeting can be found in Journey's management information circular that is posted on the Company's website and on SEDARPLUS. Journey expects to only have a minimum number of in-person attendees present to conduct the formal business of the Meeting and does not intend to provide a corporate presentation after the Meeting.
About the Company
Journey is a Canadian exploration and production company focused on conventional, oil-weighted operations in western Canada. Journey's strategy is to grow its production base by drilling on its existing core lands, implementing water flood projects, and executing on accretive acquisitions. Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods. In addition, Journey is seeking to grow its power generation business. Journey currently produces approximately 4 MW of electricity and with the recently announced facility acquisitions is anticipating to expand its productive capacity to approximately 36 MW within the next year.
For further information contact:
Alex G. Verge
President and Chief Executive Officer
403-303-3232
alex.verge@journeyenergy.ca
or
Gerry Gilewicz
Chief Financial Officer
403-303-3238
gerry.gilewicz@journeyenergy.ca
Journey Energy Inc.
700, 517 - 10th Avenue SW
Calgary, AB T2R 0A8
403-294-1635
www.journeyenergy.ca
ADVISORIES
This press release contains forward-looking statements and forward-looking information (collectively "forward looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of the anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding decline rates, anticipated netbacks, drilling inventory, estimated average drill, complete and equip and tie-in costs, anticipated potential of the Assets including, but not limited to, EOR performance and opportunities, capacity of infrastructure, potential reduction in operating costs, production guidance, total payout ratio, capital program and allocation thereof, future production, decline rates, funds flow, net debt, net debt to funds flow, exchange rates, reserve life, development and drilling plans, well economics, future cost reductions, potential growth, and the source of funding Journey's capital spending. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.
The forward-looking information is based on certain key expectations and assumptions made by management, including expectations and assumptions concerning prevailing commodity prices and differentials, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions, including the Acquisition, the ability to market oil and natural gas successfully and the ability to access capital. Although we believe that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Journey can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. The actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedarplus.ca). These forward looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Journeys prospective results of operations, funds flow, netbacks, debt, payout ratio well economics and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for providing further information about Journey's anticipated future business operations. Journey disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, which involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Journey, including, without limitation, those listed under "Risk Factors" and "Forward Looking Statements" in the Annual Information Form filed on www.SEDARplus.ca on March 31, 2023. Forward-looking information may relate to the future outlook and anticipated events or results and may include statements regarding the business strategy and plans and objectives. Particularly, forward-looking information in this press release includes, but is not limited to, information concerning Journey's drilling and other operational plans, production rates, and long-term objectives. Journey cautions investors in Journey's securities about important factors that could cause Journey's actual results to differ materially from those projected in any forward-looking statements included in this press release. Information in this press release about Journey's prospective funds flows and financial position is based on assumptions about future events, including economic conditions and courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that information regarding Journey's financial outlook should not be used for purposes other than those disclosed herein. Forward-looking information contained in this press release is based on current estimates, expectations and projections, which we believe are reasonable as of the current date. No assurance can be given that the expectations set out in the Prospectus or herein will prove to be correct and accordingly, you should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as required by applicable securities law.
Non-IFRS Measures
The Company uses the following non-IFRS measures in evaluating corporate performance. These terms do not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable with the calculation of similar measures by other companies.
(1) "Adjusted Funds Flow" is calculated by taking "cash flow provided by operating activities" from the financial statements and adding or deducting: changes in non-cash working capital; non-recurring "other" income; transaction costs; and decommissioning costs. Adjusted Funds Flow per share is calculated as Adjusted Funds Flow divided by the weighted-average number of shares outstanding in the period. Because Adjusted Funds Flow and Adjusted Funds Flow per share are not impacted by fluctuations in non-cash working capital balances, Management believes these measures are more indicative of performance than the GAAP measured "cash flow generated from operating activities". In addition, Journey excludes transaction costs from the definitio
FAQ
What were Journey Energy Inc.'s sales volumes in the first quarter of 2024?
What was Journey Energy Inc.'s Adjusted Funds Flow in the first quarter of 2024?
What was the purpose of the convertible debenture financing closed by Journey Energy Inc. in March 2024?
With whom did Journey Energy Inc. announce its participation in a Joint Venture for the Duvernay west shale basin?
What was Journey Energy Inc.'s net income in the first quarter of 2024?
