TENAZ ENERGY CORP. ANNOUNCES Q3 2024 RESULTS AND SENIOR UNSECURED NOTES ISSUE

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CALGARY, AB, November 7, 2024 /CNW/ - Tenaz Energy Corp. ("Tenaz", "We", "Our", "Us" or the "Company") (TSX: TNZ) is pleased to announce its financial and operating results for the three and nine months ended September 30, 2024 and senior unsecured notes issue.

Tenaz Energy Corp. Logo (CNW Group/Tenaz Energy Corp.)
Tenaz Energy Corp. Logo (CNW Group/Tenaz Energy Corp.)

The unaudited interim condensed consolidated financial statements and related management's discussion and analysis ("MD&A") are available on SEDAR+ at www.sedarplus.ca and on Tenaz's website at www.tenazenergy.com. Select financial and operating information for the three and nine months ended September 30, 2024 appear below and should be read in conjunction with the related financial statements and MD&A.

HIGHLIGHTS

Corporate Update

  • We are pleased to announce a $140 million private placement offering (the "Offering") of Senior Unsecured Notes due 2029 (the "Notes"). The Offering has been placed with institutional investors and is expected to close on November 14, 2024. The Notes are non-callable for the first two-and-one-half years, bear interest at 12% per annum, and are priced at par. The Notes will replace the previously- announced $90 million delayed-draw term loan provided by National Bank of Canada ("NBC") to facilitate the acquisition of NAM Offshore B.V. ("NOBV"). This long-term debt financing provides significant liquidity to pursue our international M&A strategy, as well as funding the closing of the NOBV acquisition.

  • On July 18, 2024, we announced the execution of a definitive agreement to purchase NOBV. On August 5, the Netherlands Authority for Consumers and Markets ("ACM") completed its review of the transaction and cleared it to proceed as planned. We are now conducting transition activities with a target of a mid-2025 closing and assumption of operations. Free cash flow occurring between the effective date of January 1, 2024 and the closing date will be reflected as a reduction of the purchase price.

Third Quarter Operating and Financial Results

  • Production volumes averaged 2,535 boe/d(1) in Q3 2024, up approximately 1% from Q2 2024. Higher Netherlands production after completing annual offshore maintenance was largely offset by lower Canadian production.  Production increased 7% over Q3 2023, driven by an increase in Canadian production from Leduc-Woodbend wells brought on late in 2023. 

  • During Q3, we drilled an unstimulated multi-lateral well in the Ellerslie formation on recently-acquired land near the Watelet gas plant. During its initial 45 days of production, this well has averaged approximately 355 boe/d gross (310 boe/d net to Tenaz), with oil constituting 93% of this production. Based on these strong results, we are drilling a follow-up multi-lateral well to further develop this Ellerslie pool.

  • Our 2024 capital plan in Canada has been revised to include the two (1.75 net) horizontal multi-lateral wells targeting the Ellerslie formation. These two Ellerslie wells replace the four gross (3.5 net) Rex program in our original plan. The revised capital program is even more capital efficient than the original Rex-oriented plan. 

  • Funds flow from operations ("FFO")(2) for the third quarter was $3.4 million, down 42% from Q2 2024 and 30% from Q3 2023. Lower FFO resulted in part from higher G&A and transaction costs for M&A activity, including the NOBV acquisition. In the quarter-over-quarter comparison, FFO was further impacted by a prior-period income tax recovery recorded in Q2 2024.

  • We recorded a net loss of $2.5 million in Q3 2024, as compared to net income of $1.3 million in Q2 2024 and $20.9 million in Q3 2023. The shift to a net loss was driven in part by transaction expenses in Q3 2024, the positive impact of a prior-period income tax recovery in Q2 2024, and a gain on acquisition of non-operated Netherlands assets which was recorded in Q3 2023.

  • We ended Q3 2024 with positive adjusted working capital (2) of $9.0 million, down from $44.3 million at Q2 2024 and $49.4 million at Q4 2023. The decrease in positive adjusted working capital reflects the payment of the deposit for the NOBV acquisition, transaction costs associated with the NOBV acquisition and continuing M&A efforts, and the payment for the acquisition of the Watelet gas plant. Tenaz paid a €23 million ($34 million) deposit for the acquisition of NOBV and has incurred $2.8 million of transaction costs for the first three quarters of 2024.