CALGARY, AB, May 14, 2024 /PRNewswire/ – Strathcona Resources Ltd. (“Strathcona” or the “Company”) (TSX: SCR) today reported its first quarter 2024 financial and operational results.
Highlights
- Production of 185,122 boe/d (71% oil and condensate, 77% liquids)(1)
- Operating Earnings of $209.0 million ($0.98 / share)(2)
- Free Cash Flow of $157.9 million ($0.74 / share)(2)
| Three Months Ended | |||
| ($ millions, unless otherwise indicated) | March 31, 2024 | March 31, 2023 | December 31, 2023 |
| WTI (US$ / bbl) | 76.96 | 76.13 | 78.32 |
| WCS Hardisty (C$ / bbl) | 77.77 | 69.31 | 76.85 |
| AECO 5A (C$ / mcf) | 2.50 | 3.22 | 2.30 |
| Bitumen (bbls/d) | 60,150 | 51,097 | 59,845 |
| Heavy oil (bbls/d) | 51,835 | 57,443 | 52,736 |
| Condensate and light oil (bbls/d) | 19,279 | 8,068 | 19,184 |
| Total oil production (bbls/d) | 131,264 | 116,608 | 131,765 |
| Other NGLs (bbls/d) | 11,738 | 8,501 | 11,906 |
| Natural gas (mcf/d) | 252,720 | 114,304 | 254,361 |
| Production (boe/d) | 185,122 | 144,160 | 186,064 |
| Sales (boe/d) | 182,862 | 146,877 | 184,360 |
| % Oil and condensate | 71Â % | 81Â % | 71Â % |
| % Liquids(1) | 77Â % | 87Â % | 77Â % |
| Oil and natural gas sales, net of blending costs and other income(2) | 1,004.3 | 761.5 | 1,003.7 |
| Royalties | 126.2 | 113.1 | 134.9 |
| Production and operating – Energy | 78.8 | 88.7 | 72.5 |
| Production and operating – Non-energy | 135.4 | 115.9 | 133.3 |
| Transportation and processing | 143.4 | 127.9 | 135.7 |
| General and administrative | 22.0 | 25.9 | 24.5 |
| Depletion, depreciation and amortization | 221.8 | 163.1 | 227.5 |
| Interest and finance costs | 67.7 | 71.9 | 73.2 |
| Current income tax (recovery) | — | (46.9) | — |
| Operating Earnings(2) | 209.0 | 101.9 | 202.1 |
| Other items(3) | 108.4 | (11.4) | (61.6) |
| Income and comprehensive income | 100.6 | 90.5 | 263.7 |
| Operating Earnings(2) | 209.0 | 101.9 | 202.1 |
| Non-cash items(4) | 244.1 | 180.6 | 249.1 |
| Gain (loss) on risk management and foreign exchange contracts – realized | 2.5 | (5.6) | 19.6 |
| Funds from Operations(2) | 455.6 | 276.9 | 470.8 |
| Capital expenditures | (286.1) | (228.7) | (306.2) |
| Decommissioning costs | (11.6) | (12.1) | (13.8) |
| Free Cash Flow(2) | 157.9 | 36.1 | 150.8 |
| Debt | 2,642.5 | 3,041.7 | 2,665.0 |
| (1) | See “Presentation of Oil and Gas Information” and “Product Type Production Information” sections of this press release. |
| (2) | A non-GAAP financial measure which does not have a standardized meaning under IFRS; see “Non-GAAP Measures and Ratios” section of this press release. |
| (3) | Other items is an aggregation of loss/(gain) on risk management contracts, foreign exchange loss/(gain), transaction related costs (recoveries), unrealized loss/(gain) on Sable remediation fund, and deferred tax expense. |
| (4) | Non-cash items is an aggregation of depletion, depreciation and amortization, finance costs, and decommissioning government grant. |
| Three Months Ended | |||
| ($/boe) | March 31, 2024 | March 31, 2023 | December 31, 2023 |
| Oil and natural gas sales, net of blending costs and other income(1) | 60.36 | 57.53 | 59.16 |
| Royalties | 7.58 | 8.55 | 7.95 |
| Production and operating – Energy | 4.74 | 6.71 | 4.27 |
| Production and operating – Non-energy | 8.14 | 8.77 | 7.86 |
| Transportation and processing | 8.62 | 9.68 | 8.00 |
| General and administrative | 1.32 | 1.96 | 1.44 |
| Depletion, depreciation and amortization | 13.33 | 12.34 | 13.41 |
| Interest and finance costs | 4.07 | 5.44 | 4.31 |
| Current income tax (recovery) | — | (3.55) | — |
| Operating Earnings(1) | 12.56 | 7.63 | 11.92 |
| Effective royalty rate (%)(1) | 12.6Â % | 14.9Â % | 13.4Â % |
| (1) | A non-GAAP financial measure which does not have a standardized meaning under IFRS; see “Non-GAAP Measures and Ratios” section of this press release. |
Quarter Review and Near-Term Priorities
Strathcona delivered steady performance in the first quarter of 2024, with production, operating earnings and free cash flow consistent with the fourth quarter of 2023, amid substantially consistent commodity prices. As part of the commissioning of a new third-party crude-by-rail offloading terminal in the US Gulf Coast, Strathcona’s heavy oil volumes in inventory increased for the second consecutive quarter. The facility is now fully operational and the volumes in inventory at March 31, 2024 will be released over the balance of 2024, coinciding with improving heavy oil differentials.
In Cold Lake, Strathcona spud a new pad of 8-well pairs at Tucker and began tie-in of 7 infills and 5 well pairs at Lindbergh. Production at Cold Lake remains strong, with the first quarter of 2024 marking the fifth consecutive quarterly increase in production, driven by ongoing optimization of legacy well production at Lindbergh and Tucker.
In Lloydminster, Strathcona drilled 39 and tied-in 34 wells within its conventional heavy oil properties, across Cactus Lake, Winter, Bellis, and Bodo-Cosine. Capital activity for the remainder of 2024 is focused on new thermal well pairs in Meota and Edam, and the expansion of one of Meota’s steam generation facilities. The first phase of the facility expansion will be the addition of a new steam generator at our Meota West 2 facility to support development of the General Petroleum reservoir in 2025.
In the Montney, Strathcona spud the 4-well 3-4 pad at Kakwa, finished drilling the 7-well 2-24 pad at Grand Prairie, and spud the 3-well 13-25 pad at Groundbirch. As previously announced, Strathcona plans to defer the tie-in of the dry-gas Groundbirch pad until natural gas prices improve. Also in the first quarter, Strathcona began flowback of a Lower Montney appraisal well off the 6-20 pad, marking the fourth bench successfully developed by Strathcona in Kakwa. Initial results from the Lower Montney are encouraging, producing approximately 600 bbls per day of condensate and 2 MMcf per day of natural gas over a 17-day period, on a relatively short lateral of 2,200 meters.
Outlook
Strathcona’s production guidance of 187,500 to 192,500 boe per day (78% liquids, 71% oil and condensate) remains unchanged for 2024, as does Strathcona’s capital budget of $1.3 billion. Strathcona anticipates Q2 production to remain consistent with Q1 as a number of planned third party outages impact our Montney assets at Kakwa and Grande Prairie.
At current commodity prices, Strathcona anticipates achieving its debt target of $2.5 billion on or around June 30, 2024, and expects to provide further details around its shareholder return program as part of its second quarter results release in August 2024.
Conference Call Details
Strathcona will host a conference call on May 15, 2024, starting at 11:00AM ET (9:00AM MT), to review the Company’s first quarter 2024 financial and operating results.
Date:Â Wednesday, May 15, 2024
Time:Â 11:00AM ET (9:00AM MT)
URL Entry: To join without operator assistance, register at https://emportal.ink/3IYzW4p up to 15 minutes before the start time. Enter your name and phone number to receive an automated call-back.
Telephone Entry:Â Alternatively, you can join with operator assistance by dialing 1 (888) 390-0605 (North American Toll Free) and quote conference ID 965818
Webcast Link: Strathcona Resources Q1 2024 Conference Call – webinar.net
For those unable to participate in the conference call at the scheduled time, a recording of the conference call will be available for seven days following the call and can be accessed by dialing 1 (888) 390-0541 and entering the conference number 965818.
About Strathcona
Strathcona is one of North America’s fastest growing oil and gas producers with operations focused on thermal oil, enhanced oil recovery and liquids-rich natural gas. Strathcona is built on an innovative approach to growth achieved through the consolidation and development of long-life oil and gas assets. Strathcona’s common shares (symbol SCR) are listed on the Toronto Stock Exchange (TSX).
For more information about Strathcona, visit www.strathconaresources.com.
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