Veren Announces Closing of Non-Core Asset Disposition

Rhea-AI Summary

Veren has announced the completion of its sale of non-core assets in Saskatchewan for $600 million in cash (adjusted to $540 million). The proceeds will be used to strengthen the company's balance sheet. Veren expects net debt to be $2.8 billion by the end of 2024, assuming average commodity prices of US$75/bbl WTI and $2.10/Mcf AECO. The company will focus on operational execution, optimizing its balance sheet, and increasing shareholder returns. Financial measures like 'net debt' are not standardized under IFRS and may vary with other issuers.

Positive

• Successful sale of non-core assets in Saskatchewan for $540 million.
• Proceeds aimed at strengthening the balance sheet.
• Focus on operational execution and optimizing balance sheet.
• Plan to increase return of capital to shareholders.

Negative

• Net debt expected to remain high at $2.8 billion by year-end 2024.
• Non-standardized financial measures like 'net debt' may create comparability issues.

Insights

Financial Analyst

Veren Inc.'s sale of non-core assets for $600 million in cash is a significant financial move. By directing the net proceeds towards strengthening its balance sheet, Veren aims to reduce its net debt to $2.8 billion by year-end. This sale highlights the company's strategic focus on financial optimization and operational efficiency.

Firstly, reducing net debt by nearly $800 million could enhance Veren's credit profile and lower interest expenses, improving profitability. Furthermore, focusing on core assets might yield better operational efficiencies and returns. However, this asset disposition also means reduced revenue generation from non-core assets, which investors should consider.

It's worth noting that the term "net debt" differs from standardized metrics under IFRS. Investors should be cautious and refer to the company's MD&A for precise definitions and comparisons.

Market Research Analyst

The asset sale's impact on Veren's market strategy could be substantial. The reallocation of capital towards core business areas suggests a strategic pivot towards higher growth or more profitable sectors. This streamlined focus could potentially enhance shareholder value through increased returns, assuming successful execution.

However, market conditions, particularly average commodity prices (US$75/bbl WTI and $2.10/Mcf AECO), play a important role in Veren's projections. Investors should monitor these variables as fluctuations could significantly impact the company's financial targets and overall strategy.

For investors, understanding the balance between long-term strategic benefits and short-term financial implications will be key to evaluating this asset sale.

CALGARY, AB, June 14, 2024 /PRNewswire/ - Veren Inc. ("Veren", or the "Company") (TSX: VRN) (NYSE: VRN) is pleased to announce that it has successfully closed its previously announced disposition of certain non-core assets in Saskatchewan for $600 million in cash (approximately $540 million including closing adjustments). 

Net proceeds from this strategic disposition will be directed to further strengthen the Company's balance sheet. Veren expects its net debt to total $2.8 billion by year-end 2024 based on average commodity prices of US$75/bbl WTI and $2.10/Mcf AECO for the full year.

The Company will continue to focus on its strategic priorities of operational execution, strengthening and optimizing its balance sheet, and increasing its return of capital to shareholders.

Advisory

Specified Financial Measures

"Net debt" does not have any standardized meaning as prescribed by International Financial Reporting Standards ("IFRS") and, therefore, may not be comparable with the calculation of similar measures presented by other issuers. Refer to the Specified Financial Measures section of the Company's MD&A for the three months ended March 31, 2024, which section is incorporated herein by reference, and available on SEDAR+ at www.sedarplus.com and on EDGAR at www.sec.gov/edgar.

The most directly comparable financial measure for net debt disclosed in the Company's financial statements is long-term debt, which was $3.59 billion as at March 31, 2024.

Forward-Looking Statements

Any "financial outlook" or "future oriented financial information" in this press release, as defined by applicable securities legislation has been approved by management of Veren. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

Certain statements contained in this press release constitute "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 and "forward-looking information" for the purposes of Canadian securities regulation (collectively, "forward-looking statements"). This press release contains forward-looking statements pertaining to use of proceeds from the disposition and 2024 year-end net debt, based on the commodity prices specified.

By their nature, such forward-looking statements are subject to a number of risks, uncertainties and assumptions, which could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements, including those material risks and assumptions discussed in the Company's Annual Information Form for the year ended December 31, 2023 and our Management's Discussion and Analysis for the year ended December 31, 2023 and for the quarter ended March 31, 2024.

Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed herein or otherwise. Veren undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so pursuant to applicable law.

FOR MORE INFORMATION ON VEREN, PLEASE CONTACT:

Sarfraz Somani, Manager, Investor Relations

Telephone: (403) 693-0020 Toll-free (US and Canada): 888-693-0020

Address: Veren Inc. Suite 2000, 585 - 8th Avenue S.W. Calgary AB │T2P 1G1

www.vrn.com

View original content:https://www.prnewswire.com/news-releases/veren-announces-closing-of-non-core-asset-disposition-302173373.html

SOURCE Veren Inc.

FAQ

What is the value of the non-core assets sold by Veren?

Veren sold its non-core assets in Saskatchewan for $600 million in cash, adjusted to $540 million.

What will Veren use the proceeds from the asset sale for?

The proceeds will be used to strengthen the company's balance sheet.

What is Veren's expected net debt by the end of 2024?

Veren expects its net debt to be $2.8 billion by the end of 2024.

What are the assumed average commodity prices for Veren's 2024 net debt projection?

The assumed average commodity prices are US$75/bbl WTI and $2.10/Mcf AECO.

What are Veren's strategic priorities going forward?

Veren will focus on operational execution, optimizing its balance sheet, and increasing shareholder returns.

Are the financial measures used by Veren standardized under IFRS?

No, financial measures like 'net debt' are not standardized under IFRS and may vary with other issuers.