Category: Canada

Article content

Acquisition represents the Company’s initial entry into its sixth state; Intends to be a leader in Ohio through additional acquisitions

Expected to be immediately accretive on an EBITDA and cashflow basis

TORONTO, Nov. 06, 2024 (GLOBE NEWSWIRE) — TerrAscend Corp. (“TerrAscend” or the “Company”) (TSX: TSND, OTCQX: TSNDF), a leading North American cannabis company, today announced the signing of a definitive agreement to acquire the assets of Ratio Cannabis LLC (“Ratio Cannabis”), a well situated dispensary in Goshen Township, Ohio. Upon closing, this acquisition will be TerrAscend’s initial entry into Ohio, the Company’s sixth state. Upon closing, total consideration to the sellers of $10.3 million will be comprised of $5.0 million in cash, $1.32 million in Company common shares and a seller’s note for $3.98 million bearing 6% interest with a two-year maturity. The transaction, which is expected to be immediately accretive on an EBITDA and cashflow basis, and is subject to customary closing conditions, including regulatory approval from the Ohio Division of Cannabis Control (the “Division”).

Article content

“Entering Ohio and expansion in the Midwest has long been a priority for us. With the acquisition of this well situated and profitable dispensary, we will enter our sixth U.S. state through an accretive transaction at an attractive price,” stated Jason Wild, Executive Chairman of TerrAscend. “This acquisition is a great first step to becoming a leader in this emerging adult-use market.”

Ratio Cannabis is a high-performing dispensary in Ohio which is well situated in Goshen Township with no competition within a 20-mile radius. TerrAscend expects to achieve significant revenue growth at this location as the state expands its implementation of adult-use sales and as regulation for additional product categories are permitted. This acquisition will increase TerrAscend’s U.S. retail footprint to 38 dispensaries across six states. The Company intends to become a market leader in Ohio through the acquisition of additional dispensaries in the future.

Under the terms of the agreement, Ohio Dispensing 1, LLC, a subsidiary of TerrAscend USA, has the option to purchase, subject to certain conditions, the assets of Ratio Cannabis. The closing of the transaction is subject to standard closing conditions, including exercise of the option and regulatory approval from the Division.

Article content

Article content

Strike Partners acted as the exclusive financial advisor to Ratio Cannabis in connection with the transaction.

The Toronto Stock Exchange (“TSX”) has neither approved nor disapproved the contents of this news release. Neither the TSX nor any securities regulator accepts responsibility for the adequacy or accuracy of this release.

About TerrAscend
TerrAscend is a leading TSX-listed cannabis company with interests across the North American cannabis sector, including vertically integrated operations in Pennsylvania, New Jersey, Maryland, Michigan and California through TerrAscend Growth Corp. and retail operations in Canada through TerrAscend Canada Inc. (“TerrAscend”). TerrAscend operates The Apothecarium, Gage and other dispensary retail locations as well as scaled cultivation, processing, and manufacturing facilities in its core markets. TerrAscend’s cultivation and manufacturing practices yield consistent, high-quality cannabis, providing industry-leading product selection to both the medical and legal adult-use markets. The Company owns or licenses several synergistic businesses and brands including Gage Cannabis, The Apothecarium, Cookies, Lemonnade, Ilera Healthcare, Kind Tree, Legend, State Flower, Wana, and Valhalla Confections. For more information visit www.terrascend.com.

Article content

Caution Regarding Cannabis Operations in the United States
Investors should note that there are significant legal restrictions and regulations that govern the cannabis industry in the United States. Cannabis remains a Schedule I drug under the US Controlled Substances Act, making it illegal under federal law in the United States to, among other things, cultivate, distribute, or possess cannabis in the United States. Financial transactions involving proceeds generated by, or intended to promote, cannabis-related business activities in the United States may form the basis for prosecution under applicable US federal money laundering legislation.

While the approach to enforcement of such laws by the federal government in the United States has trended toward non-enforcement against individuals and businesses that comply with medical or adult-use cannabis programs in states where such programs are legal, strict compliance with state laws with respect to cannabis will neither absolve TerrAscend of liability under U.S. federal law, nor will it provide a defense to any federal proceeding which may be brought against TerrAscend. The enforcement of federal laws in the United States is a significant risk to the business of TerrAscend and any proceedings brought against TerrAscend thereunder may adversely affect TerrAscend’s operations and financial performance.

Article content

Forward Looking Information
This news release contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information contained in this press release may be identified by the use of words such as, “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe, “intend”, “plan”, “forecast”, “project”, “estimate”, “outlook” and other similar expressions, and include statements with respect to the Company’s expectations regarding the financial and operational results of any acquisitions in Ohio and any synergies and margin expansions achieved and whether the Company is able to close the transaction and the timeline thereof. Forward-looking information is not a guarantee of future performance and is based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors relevant in the circumstances, including assumptions in respect of current and future market conditions, the current and future regulatory environment, and the availability of licenses, approvals and permits.

Article content

Although the Company believes 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 the Company can give no assurance that they will prove to be correct. Actual results and developments may differ materially from those contemplated by these statements. Forward-looking information is subject to a variety of risks and uncertainties that could cause actual events or results to differ materially from those projected in the forward-looking information. Such risks and uncertainties include, but are not limited to, actual revenues and profitability achieved from an acquisition; the timeline required to close the transaction; the likelihood of being able to acquire additional licensed operators in Ohio; current and future market conditions; risks related to federal, state, local and foreign government laws, rules and regulations, including federal and state laws in the United States relating to cannabis operations in the United States; and the risk factors set out in the Company’s most recently filed MD&A, filed with the Canadian securities regulators and available under the Company’s profile on SEDAR+ at www.sedarplus.ca and in the section titled “Risk Factors” in the Company’s Annual Report for the year ended December 31, 2023 filed with the Securities and Exchange Commission on March 14, 2024.

The statements in this press release are made as of the date of this release. The Company disclaims any intent or obligation to update 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.

For more information regarding TerrAscend: 
Keith Stauffer
Chief Financial Officer
ir@terrascend.com

717-343-5386

Article content

Article content

CALGARY, Alberta, Nov. 06, 2024 (GLOBE NEWSWIRE) — Calfrac Well Services Ltd. (“Calfrac” or “the Company”) (TSX: CFW) announces its financial and operating results for the three and nine months ended September 30, 2024. The following press release should be read in conjunction with the management’s discussion and analysis and interim consolidated financial statements and notes thereto as at September 30, 2024. Readers should also refer to the “Forward-looking statements” legal advisory and the section regarding “Non-GAAP Measures” at the end of this press release. All financial amounts and measures are expressed in Canadian dollars unless otherwise indicated. Additional information about Calfrac is available on the SEDAR+ website at www.sedarplus.ca, including the Company’s Annual Information Form for the year ended December 31, 2023.

Article content

CEO’S MESSAGE

Calfrac achieved revenue of $430.1 million during the third quarter, which was consistent on a sequential basis with the second quarter as growth across multiple service lines in Argentina offset lower utilization in North America. The Company’s Argentinean operations leveraged its second horizontal fracturing fleet in the Vaca Muerta shale play and commencement of its first offshore coiled tubing program to produce the highest quarterly profit in the country’s history. During the period, Calfrac improved upon its year-over-year safety record as it exited September with a trailing twelve-month Total Recordable Injury Frequency (“TRIF”) of 0.81, as compared to 1.14 in 2023. The Company expects to navigate the changing market conditions through 2025 by prudently deploying capital and maximizing net income to generate sustainable returns for its shareholders.

Calfrac’s Chief Executive Officer, Pat Powell commented: “I am proud of the way that the Calfrac team performed during the third quarter. I am looking forward to finishing the year strong as we continue to safely and efficiently execute on our client’s development plans in North America and Argentina to maximize returns for our shareholders.”

Article content

SELECT FINANCIAL HIGHLIGHTS – CONTINUING OPERATIONS

⁽¹⁾ Refer to “Non-GAAP Measures” on page 7 for further information.
⁽²⁾ Refer to note 10 of the consolidated interim financial statements for further information.

Article content

Article content

THIRD QUARTER OVERVIEW

In the third quarter of 2024, the Company:

• generated revenue of $430.1 million, a decrease of 11 percent from the third quarter in 2023 resulting primarily from lower activity and a lower pricing environment in the United States;
• reported third-quarter Adjusted EBITDA of $65.0 million versus $91.3 million in the third quarter of 2023 mainly as a result of lower utilization in North America and pricing in the United States, offset partially by improved utilization in Argentina as the Company operated two unconventional fracturing spreads concurrently for portions of the third quarter;
• reported a net loss from continuing operations of $6.7 million or $0.08 per share diluted compared to net income of $97.5 million or $1.09 per share diluted during the third quarter in 2023;
• increased period-end working capital to $307.1 million from $236.4 million at December 31, 2023, due to a combination of higher activity and geographical mix; and
• incurred capital expenditures from continuing operations of $22.5 million, which included $8.7 million of expansion capital in Argentina.

Article content

FINANCIAL OVERVIEW – CONTINUING OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 VERSUS 2023

NORTH AMERICA

⁽¹⁾ Refer to “Non-GAAP Measures” on page 7 for further information.
⁽²⁾ Source: Bank of Canada.

OUTLOOK

Calfrac produced lower sequential profitability in the third quarter driven by decreased utilization in Canada combined with a change in customer mix in the United States. However, activity in the United States improved throughout the period and the Company expects this momentum to continue into the fourth quarter. In response to higher demand for the Company’s services, Calfrac temporarily transferred equipment from Canada to service clients in the Williston basin. However, the Company plans to return this large fracturing fleet to Canada late in the fourth quarter. Calfrac anticipates that solid utilization in the United States will drive improved sequential quarter-over-quarter profitability in North America.

Article content

The Company made further progress on its equipment modernization program and exited the third quarter with 60 Tier IV Dynamic Gas Blending (“DGB”) pumps and anticipates operating the equivalent of five Tier IV DGB fleets in the first quarter of 2025.

THREE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2023

REVENUE

Revenue from Calfrac’s North American operations decreased to $289.2 million during the third quarter of 2024 from $401.3 million in the comparable quarter of 2023. The Company’s operations in North America had a slow start to the quarter, but gained momentum as the quarter progressed. Utilization grew throughout the third quarter and the Company exited with high utilization of its 13 fracturing fleets in North America. The Company operated 15 fleets in the comparable quarter of 2023. Lower pricing in the United States contributed to the 19 percent decrease in average revenue per job in the third quarter of 2024 versus the same quarter in 2023. Coiled tubing revenue decreased by 37 percent as compared to the third quarter in 2023 mainly due to lower utilization of Calfrac’s six deep coiled tubing units combined with the completion of smaller jobs.

Article content

ADJUSTED EBITDA

The Company’s operations in North America generated Adjusted EBITDA of $31.4 million or 11 percent of revenue during the third quarter of 2024 compared to $83.0 million or 21 percent of revenue in the same period in 2023. This decrease was primarily due to the decline in fracturing fleet utilization in the United States combined with lower pricing relative to the same period in 2023.

NINE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2023

REVENUE

Revenue from Calfrac’s North American operations decreased to $871.7 million during the first nine months in 2024 from $1.2 billion in the comparable period in 2023. The 27 percent decrease in revenue was primarily due to lower activity in the United States combined with lower pricing. As a result, Calfrac idled two fracturing fleets during February 2024 and operated an average of 10 fleets in North America during the first nine months of 2024 as compared to 15 fleets in the comparable period in 2023. In addition, activity for the Company’s coiled tubing operations in North America decreased by 35 percent from the first nine months of 2023 due to lower industry demand for its six crewed units.

Article content

ADJUSTED EBITDA

The Company’s operations in North America generated Adjusted EBITDA of $100.6 million during the first nine months of 2024 compared to $234.8 million in the same period in 2023. This decrease in Adjusted EBITDA was largely driven by lower fracturing and coiled tubing utilization in North America during the first quarter of 2024 as well as lower overall pricing levels in the United States. However, utilization during the second quarter of 2024 improved for Calfrac’s fracturing fleets in North America, particularly in May and June, as the completion programs of the Company’s core clients significantly increased. The third quarter started slowly on both sides of the border, but gained momentum as the quarter progressed with the Company operating 13 fleets at near full utilization in September.

ARGENTINA

Article content

⁽¹⁾ Refer to “Non-GAAP Measures” on page 7 for further information.
⁽²⁾ Source: Bank of Canada.

OUTLOOK

Calfrac’s Argentinean operations leveraged the strong momentum from the second quarter to sequentially increase profitability by approximately three times, as it produced Adjusted EBITDA of $37.5 million, a record quarter for this operating division. Even with the expanded footprint, it improved upon its best-in-class safety record by exiting September with a TRIF of 0.33, a decrease from 0.41 in June. While the Company expects consistent utilization for its offshore coiled tubing unit through to the end of the year, activity for its fracturing operations in the Vaca Muerta shale play will experience a sequential decrease in available spot work. Currently, Calfrac is negotiating with its long-term customers on multi-year service contracts and plans to capitalize on the growing development in this country.

THREE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2023

REVENUE

Calfrac’s Argentinean operations generated revenue of $140.9 million during the third quarter of 2024 versus $81.8 million in the comparable quarter in 2023. The 72 percent increase in revenue was driven by a significant increase in the number of fracturing jobs completed during the quarter and improved pricing for spot work. For the first time in the Company’s history in Argentina, two unconventional fracturing spreads operated in the Vaca Muerta shale play at the same time. The successful operations and expanding customer base reinforces management’s decision to add equipment into the country, allowing the Company to support and participate in the anticipated growth of Argentina’s energy sector moving forward. The Company also demonstrated growth in activity across its other service lines primarily due to the additional revenue generated from its new offshore coiled tubing operations combined with the bundled nature of its service contracts.

Article content

ADJUSTED EBITDA

The Company’s operations in Argentina generated Adjusted EBITDA of $37.5 million during the third quarter of 2024 compared to $14.3 million in the same quarter of 2023, while the Company’s Adjusted EBITDA margins increased to 27 percent from 18 percent. This increase was primarily due to the significant revenue growth and efficiencies resulting from operating two unconventional fracturing spreads simultaneously during the quarter.

NINE MONTHS ENDED SEPTEMBER 30, 2024 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2023

REVENUE

Calfrac’s Argentinean operations generated revenue of $314.5 million during the first nine months of 2024 compared to $252.2 million in the first nine months of 2023 as the Company demonstrated strong activity growth across all service lines. The primary driver for the increase in revenue was higher fracturing activity as the Company operated two unconventional fracturing spreads simultaneously for portions of the third quarter combined with revenue generated from its newly commenced offshore coiled tubing operations. Cementing revenue also increased due to the bundled nature of the Company’s contracted services in the Vaca Muerta shale play.

Article content

ADJUSTED EBITDA

The Company’s operations in Argentina generated Adjusted EBITDA of $68.2 million or 22 percent of revenue during the first nine months in 2024 versus $43.6 million or 17 percent of revenue in the comparable period in 2023. The Company continued to focus on growing its operating presence in the Vaca Muerta shale play, which more than offset lower utilization in Las Heras following the completion of its contract with a major client in that region during the second quarter of 2024.

SUMMARY OF QUARTERLY RESULTS – CONTINUING OPERATIONS

Article content

⁽¹⁾ Refer to “Non-GAAP Measures” on page 7 for further information.
⁽²⁾ Effective January 1, 2023, recorded expenditures related to fluid end components as an operating expense rather than as a capital expenditure. This change in accounting estimate was recorded on a prospective basis.

CAPITAL EXPENDITURES – CONTINUING OPERATIONS

Capital expenditures were $22.5 million for the three months ended September 30, 2024 versus $50.8 million in the comparable period in 2023. Calfrac’s Board of Directors approved a 2024 total capital budget of approximately $210.0 million in December 2023. This was an increase of $45.0 million from the previous year, primarily to continue its fracturing fleet modernization program in North America and dedicate $40.0 million to support its Argentinean operations while implementing new company-wide field-based technologies. On March 13, 2024, the Board of Directors approved a deferral of up to $50.0 million of capital allocated to its North American fleet modernization program to align with market conditions at that time. On July 31, 2024, the Board of Directors approved a reinstatement of $40.0 million of its original capital budget to facilitate expansion of the Company’s fracturing operations in the Vaca Muerta shale play in Argentina and to accommodate incremental maintenance capital in North America, bringing the revised budget to $200.0 million.

Article content

OTHER DEVELOPMENTS

At the end of the third quarter, Marco Aranguren was appointed President, United States Operations in place of Mark Rosen who is no longer with the Company. Marco has been with Calfrac since 2010 and has held several senior management roles, most recently as Director General, Argentina Division since 2019. Marco’s experience in Argentina is expected to help drive improvement in our operating and financial performance in the United States.

In conjunction with this transfer, Adrian Martinez was appointed Director General, Argentina Division. Adrian joined the Company in 2008 and has been a significant contributor throughout various senior operations roles during his time at Calfrac, most recently as Senior District Manager in Neuquén since 2017.

NON-GAAP MEASURES

Certain supplementary measures presented in this press release, including Adjusted EBITDA, Adjusted EBITDA percentage and Net Debt do not have any standardized meaning under IFRS and, because IFRS have been incorporated as Canadian generally accepted accounting principles (GAAP), these supplementary measures are also non-GAAP measures. These measures have been described and presented to provide shareholders and potential investors with additional information regarding the Company’s financial results, liquidity and ability to generate funds to finance its operations. These measures may not be comparable to similar measures presented by other entities, and are explained below.

Article content

Adjusted EBITDA is defined as net income or loss for the period less interest, taxes, depreciation and amortization, foreign exchange losses (gains), non-cash stock-based compensation, and gains and losses that are extraordinary or non-recurring. Adjusted EBITDA is presented because it gives an indication of the results from the Company’s principal business activities prior to consideration of how its activities are financed and the impact of foreign exchange, taxation and depreciation and amortization charges. Adjusted EBITDA for the period was calculated as follows:

Article content

⁽¹⁾ Refer to note 4 of the Company’s consolidated interim financial statements for the three and nine months ended September 30, 2024.

Adjusted EBITDA percentage is a non-GAAP financial ratio that is determined by dividing Adjusted EBITDA by revenue for the corresponding period.

Net Debt is defined as long-term debt less unamortized debt issuance costs plus lease obligations, less cash and cash equivalents from continuing operations. The calculation of net debt is disclosed in note 10 to the Company’s interim financial statements for the corresponding period.

OTHER NON-STANDARD FINANCIAL TERMS

MAINTENANCE AND EXPANSION CAPITAL

Maintenance capital refers to expenditures in respect of capital additions, replacements or improvements required to maintain ongoing business operations. Expansion capital refers to expenditures primarily for new items, upgrades and/or equipment that will expand the Company’s revenue and/or reduce its expenditures through operating efficiencies. The determination of what constitutes maintenance capital expenditures versus expansion capital involves judgement by management.

Article content

BUSINESS RISKS

The business of Calfrac is subject to certain risks and uncertainties. Prior to making any investment decision regarding Calfrac, investors should carefully consider, among other things, the risk factors set forth in the Company’s most recently filed Annual Information Form under the heading “Risk Factors” which is available on the SEDAR+ website at www.sedarplus.ca under the Company’s profile. Copies of the Annual Information Form may also be obtained on request without charge from Calfrac at Suite 500, 407 – 8th Avenue S.W., Calgary, Alberta, Canada, T2P 1E5, or at www.calfrac.com.

ADDITIONAL INFORMATION

Calfrac’s common shares are publicly traded on the Toronto Stock Exchange under the trading symbol “CFW”.

Calfrac provides specialized oilfield services to exploration and production companies designed to increase the production of hydrocarbons from wells with continuing operations focused throughout western Canada, the United States and Argentina. During the first quarter of 2022, management committed to a plan to sell the Company’s Russian division, resulting in the associated assets and liabilities being classified as held for sale and presented in the Company’s financial statements as discontinued operations. The results of the Company’s discontinued operations are excluded from the discussion and figures presented above unless otherwise noted. See Note 3 to the Company’s interim consolidated financial statements for the three and nine months ended September 30, 2024 for additional information on the Company’s discontinued operations.

Article content

Further information regarding Calfrac Well Services Ltd., including the most recently filed Annual Information Form, can be accessed on the Company’s website at www.calfrac.com or under the Company’s public filings found at www.sedarplus.ca.

THIRD QUARTER CONFERENCE CALL

Calfrac will be conducting a conference call for interested analysts, brokers, investors and news media representatives to review its 2024 third-quarter results at 10:00 a.m. (Mountain Time) on Wednesday, November 6, 2024.

The call will also be webcast and can be accessed through the link below. A replay of the webcast call will also be available on Calfrac’s website for at least 90 days.

https://edge.media-server.com/mmc/p/u6rkjvae

To participate in the Q&A session, you may dial-in (toll free) 1-833-630-1956 (or at 1-412-317-1837 for international participants) fifteen (15) minutes prior to the start of the call and ask for the Calfrac Well Services Ltd. 2024 Third Quarter Earnings Release Conference Call to register.

CONSOLIDATED BALANCE SHEETS

Article content

CONSOLIDATED STATEMENTS OF OPERATIONS

Article content

CONSOLIDATED STATEMENTS OF CASH FLOWS

Article content

ADVISORIES
FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute “forward-looking statements” or “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). These statements relate to future events or the future performance of the Company (as hereinafter defined). All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “forecast”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” or similar expressions.

In particular, forward-looking statements in this press release include, but are not limited to, statements with respect to activity, demand, utilization and outlook for the Company’s operating divisions in North America and Argentina, including with respect to Argentina’s economic and political outlook and the anticipated impact of management changes in the United States; the supply and demand fundamentals of the pressure pumping industry; input costs, margin and service pricing trends and strategies; operating and financing strategies, performance, priorities, metrics and estimates, such as the Company’s strategic priorities to prudently deploy capital and maximize returns to shareholders; capital investment plans, including the Company’s fleet modernization program and timing thereof; the Company’s debt, liquidity and financial position; the Company’s service quality and the Company’s intentions and expectations with respect to the foregoing.

Article content

These statements are derived from certain assumptions and analyses made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors that it believes are appropriate in the circumstances, including, but not limited to, the economic and political environment in which the Company operates, including the continued implementation of Argentina economic reforms and liberalization of its oil and gas industry as well as the current state of the pressure pumping market in North America; the Company’s expectations for its customers’ capital budgets, demand for services and geographical areas of focus; the level of merger and acquisition activity among oil and gas producers and its impact on the demand for well completion services; the effect of unconventional oil and gas projects have had on supply and demand fundamentals for oil and natural gas; the effect of environmental, social and governance factors on customer and investor preferences and capital deployment; the effect of the military conflict in the Ukraine and related international sanctions and counter-sanctions and restrictions by Russia on the Company’s ownership and planned sale of the Russian division; industry equipment levels including the number of active fracturing fleets marketed by the Company’s competitors and the timing of deployment of the Company’s fleet upgrades; the Company’s existing contracts and the status of current negotiations with key customers and suppliers; the continued effectiveness of cost reduction measures instituted by the Company; and the likelihood that the current tax and regulatory regime will remain substantially unchanged.

Article content

Forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from the Company’s expectations. Such risk factors include but are not limited to: (A) industry risks, including but not limited to, global economic conditions and the level of exploration, development and production for oil and natural gas in North America and Argentina; excess equipment levels; impacts of conservation measures and technological advances on the demand for the Company’s services; an intensely competitive oilfield services industry; and hazards inherent in the industry; (B) business operations risks, including but not limited to, fleet reinvestment risk, including the ability of the Company to finance the capital necessary for equipment upgrades to support its operational needs while meeting government and customer requirements and preferences; difficulty retaining, replacing or adding personnel; failure to continuously improve equipment, proprietary fluid chemistries and other products and services; seasonal volatility and climate change; reliance on equipment suppliers and fabricators; cybersecurity risks; a concentrated customer base; obsolete technology; failure to maintain safety standards and records; constrained demand for the Company’s services due to merger and acquisition activity; improper access to confidential information or misappropriation of Company’s intellectual property rights; failure to realize anticipated benefits of acquisitions and dispositions; loss of one or more key employees; and growth related risk on internal systems or employee base; (C) financial risks, including but not limited to, restrictions on the Company’s access to capital, including the impacts of covenants under the Company’s lending documents; direct and indirect exposure to volatile credit markets, including interest rate risk; fluctuations in currency exchange rates and increased inflation; price escalation and availability of raw materials, diesel fuel and component parts; actual results which are materially different from management estimates and assumptions; insufficient internal controls; the Company’s access to capital and common share price given a significant number of common shares are controlled by two directors of the Company; possible dilution from outstanding stock-based compensation, additional equity or debt securities; and changes in tax rates or reassessment risk by tax authorities; (D) geopolitical risks, including but not limited to, foreign operations exposure, including risks relating to repatriation of cash from foreign jurisdictions, unsettled political conditions, war, foreign exchange rates and controls; risks that the sale of the discontinued operations in Russia may not occur or be delayed; and risk associated with compliance with applicable law; (E) legal and regulatory risks, including but not limited to, federal, provincial and state legislative and regulatory initiatives and laws; health, safety and environmental laws and regulations; and legal and administrative proceedings; and (F) environmental, social and governance risks, including but not limited to, failure to effectively and timely address the energy transition; the direct and indirect costs of various existing and proposed climate change regulations; various types of activism; and reputational risk or legal liability resulting from ESG commitments and disclosures. Further information about these and other risks and uncertainties are set forth in the Company’s most recently filed Annual Information Form under the heading “Risk Factors” which is available on the SEDAR+ website at www.sedarplus.ca under Company’s profile.

Article content

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurance that actual results or developments anticipated by the Company will be realized, or that they will have the expected consequences or effects on the Company or its business or operations. These statements speak only as of the respective date of this press release or the document by reference herein. The Company assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable securities laws.

For further information, please contact:

Pat Powell, Chief Executive Officer
Mike Olinek, Chief Financial Officer

Telephone: 403-266-6000
www.calfrac.com

Article content

Article content

• Solid consolidated revenue and adjusted EBITDA growth for the quarter
• Bank Act Security Registry successfully launched
• 2024 guidance re-affirmed

REGINA, Saskatchewan, Nov. 05, 2024 (GLOBE NEWSWIRE) — November 5, 2024 – Information Services Corporation (TSX:ISV) (“ISC” or the “Company”) today reported on the Company’s financial results for the third quarter ended September 30, 2024.

Capitalized terms that are used but not defined in this news release have the meaning ascribed to those terms in Management’s Discussion & Analysis for the three and nine months ended September 30, 2024.

Article content

2024 Third Quarter Highlights

• Revenue was $60.9 million for the quarter, an increase of 12 per cent compared to the third quarter of 2023. This increase was driven by increased volumes across the Saskatchewan Registries division, combined with a full quarter of fee adjustments compared to two months in the prior period, new revenue related to the Bank Act Security Registry (“the BASR”) and the advancement of project work on existing and new solution definition and implementation contracts in Technology Solutions.
• Net income was $4.2 million or $0.23 per basic and diluted share compared to $4.2 million or $0.24 per basic share and $0.23 per diluted share in the third quarter of 2023. Strong operating results were offset by increased share-based compensation expense, increased investment in information technology services primarily related to project delivery work in Technology Solutions as well as increased amortization associated with the Extension.
• Net cash flow provided by operating activities was $14.2 million for the quarter, a decrease of $0.4 million from $14.6 million in the third quarter of 2023. The change was driven by changes in non-cash working capital, partially offset by strength in the operating segments.
• Adjusted net income was $11.0 million or $0.61 per basic share and $0.60 per diluted share compared to $8.4 million or $0.47 per basic share and $0.46 per diluted share in the third quarter of 2023. The growth in adjusted net income for the three and nine months ended September 30, 2024, reflects the strong results from all operating segments.
• Adjusted EBITDA was $22.7 million for the quarter compared to $19.2 million in the third quarter of 2023. The increase was driven by volume increases across the Saskatchewan Registries division and fee adjustments, which resulted in higher revenues. Additionally, progress continues to be made on existing and new solution definition and implementation contracts in Technology Solutions. Adjusted EBITDA margin was 37.3 per cent compared to 35.2 per cent in the third quarter of 2023, driven mainly by the volume increases and fee adjustments in Registry Operations’ Saskatchewan Registries division discussed above.
• Adjusted free cash flow for the quarter was $15.9 million, up 10 per cent compared to $14.4 million in the third quarter of 2023. This growth was driven by strong performance across the Saskatchewan Registries division and progress on existing and new solutions definition and implementation contracts in Technology Solutions.
• Voluntary prepayments of $16.0 million were made towards the Company’s Credit Facility during the quarter. This is part of the Company’s plan to deleverage towards a long-term net leverage target of 2.0x – 2.5x.

Article content

Financial Position as at September 30, 2024

• Cash of $12.0 million compared to $24.2 million as of December 31, 2023.
• Total debt of $177.5 million compared to $177.3 million as of December 31, 2023.

Events

• On July 2, 2024, the Company launched the online, self-service Customer Portal for the Bank Act Security Registry (“the BASR”).
• On July 31, 2024, the first of five annual cash payments of $30.0 million was made pursuant to the Extension Agreement, using funds drawn from the Credit Facility.

Commenting on ISC’s results, Shawn Peters, President and CEO stated, “Similar to the first and second quarters for the year, the third quarter of 2024 delivered excellent results with revenue up 12 per cent and adjusted EBITDA up 18 per cent, compared to the third quarter of 2023. The diversified nature of our business is clearly a major strength for us based on these results.” Peters continued, “Given our performance for the year to date, we have re-iterated our guidance for 2024, which means that we expect to post our highest annual revenue and adjusted EBITDA upon completion of the year and since going public in 2013.”

Article content

Article content

Summary of 2024 Third Quarter Consolidated Financial Results

Article content

2024 Third Quarter Results of Operations

• Total revenue was $60.9 million, up 12 per cent compared to Q3 2023.
• Registry Operations segment revenue was $31.9 million, up compared to $27.4 million in Q3 2023:
  • Land Registry revenue was $20.7 million, up compared to $17.8 million in Q3 2023.
  • Personal Property Registry revenue was $3.3 million, up compared to the same prior year period.
  • Corporate Registry revenue was $3.1 million, up compared to $2.8 million in Q3 2023.
  • Property Tax Assessment Services revenue was $3.9 million, up compared to the same prior year period.
  • Other revenue was $0.8 million, up compared to the same prior year period.
• Services segment revenue was $25.6 million, consistent when compared to $25.6 million in Q3 2023:
  • Regulatory Solutions revenue was $18.9 million, down compared to $19.4 million in Q3 2023.
  • Recovery Solutions revenue was $3.7 million, up compared to $2.9 million in Q3 2023.
  • Corporate Solutions revenue was $2.9 million, down compared to $3.3 million in Q3 2023.
• Technology Solutions revenue from third parties was $3.5 million, up from $1.6 million in Q3 2023.
• Consolidated expenses (all segments) were $49.7 million, up $6.4 million compared to $43.3 million in Q3 2023.
• Net income was $4.2 million or $0.23 per basic share and $0.23 per diluted share, compared to $4.2 million or $0.24 per basic and $0.23 per diluted share for Q3 2023.

Article content

Outlook
The following section includes forward-looking information, including statements related to our strategy, future results, including revenue and adjusted EBITDA, segment performance, expenses, operating costs and capital expenditures, the industries in which we operate, economic activity, growth opportunities, investments and business development opportunities. Refer to “Caution Regarding Forward-Looking Information” in Management’s Discussion & Analysis for the three and nine months ended September 30, 2024.

The Bank of Canada has now lowered its key interest rate three times in 2024 with market expectations of further cuts into next year. Strong activity in the Saskatchewan real estate market is expected to continue in the near term, despite inventory challenges in lower-value homes. We continue to monitor interest rates and other economic conditions which can impact real estate activity. Factors such as strong population growth and improved market confidence create an environment for heightened real estate activity, most notably benefitting the Saskatchewan Land Registry. In addition, the realization of a full year of fee adjustments will continue to support strong revenue in the Saskatchewan Registries division of the Registry Operations segment.

Article content

Services will continue to be a significant part of our organic growth. The current trend of enhanced due diligence in an environment of increased regulatory oversight is expected to continue and positively impact the Regulatory Solutions division. Furthermore, the decline in used car values, which worsens the loan-to-value of the vehicle and reduces any equity debtors may have in their existing vehicle(s), coupled with current mortgage, rental and inflationary pressures is expected to negatively impact consumers’ disposable income as well as lead to increased assignment levels in our Recovery Solutions division for the next two years.

The key drivers of expenses in adjusted EBITDA in 2024 are expected to be wages and salaries and cost of goods sold. Furthermore, as a result of the Extension Agreement, the Company has additional operating costs associated with the enhancement of the Saskatchewan Registries and increased interest expense arising from additional borrowings, which are excluded from adjusted EBITDA. Our capital expenditures are expected to increase because of the enhancement of the Saskatchewan Registries but will remain immaterial overall.

Article content

In February, we provided our annual guidance that forecasted meaningful organic growth in 2024 for revenue and adjusted EBITDA. In light of the strong performance to date in 2024 and the view that market trends will continue to be in our favour, we are re-iterating our annual guidance for 2024 with revenue expected to be within a range of $240.0 million to $250.0 million and adjusted EBITDA to be within a range of $83.0 million to $91.0 million.

Note to Readers
The Board of Directors (“Board”) carries out its responsibility for review of this disclosure primarily through the Audit Committee, which is comprised exclusively of independent directors. The Audit Committee reviews and approves the fiscal year-end Management’s Discussion and Analysis (“MD&A”) and financial statements and recommends both to the Board for approval. The interim financial statements and MD&A are reviewed and approved by the Audit Committee.

This news release provides a general summary of ISC’s results for the quarters ended September 30, 2024, and 2023. Readers are encouraged to download the Company’s complete financial disclosures. Links to ISC’s financial statements and related notes and MD&A for the period are available on our website in the Investor Relations section at ww.isc.ca.

Article content

Copies can also be obtained SEDAR+ at www.sedarplus.ca by searching Information Services Corporation’s profile or by contacting Information Services Corporation at investor.relations@isc.ca.

All figures are in Canadian dollars unless otherwise noted.

Conference Call and Webcast
We will hold an investor conference call on Wednesday, November 6, 2024 at 11:00 a.m. ET to discuss the results. Those joining the call on a listen-only basis are encouraged to join the live audio webcast which will be available on our website at company.isc.ca/investor-relations/events. Participants who wish to ask a question on the live call may do so through the ISC website or by registering through the following live call URL: https://register.vevent.com/register/BI0ab31dca78164eebb5d1a27f40af3107

Once registered, participants will receive the dial-in numbers and their unique PIN number. When dialing in, participants will input their PIN and be placed into the call. The audio file with a replay of the webcast will be available about 24 hours after the event on our website at the link above. We invite media to attend on a listen-only basis.

Article content

About ISC
Headquartered in Canada, ISC is a leading provider of registry and information management services for public data and records. Throughout our history, we have delivered value to our clients by providing solutions to manage, secure and administer information through our Registry Operations, Services and Technology Solutions segments. ISC is focused on sustaining its core business while pursuing new growth opportunities. The Class A Shares of ISC trade on the Toronto Stock Exchange under the symbol ISV.

Cautionary Note Regarding Forward-Looking Information
This news release contains forward-looking information within the meaning of applicable Canadian securities laws including, without limitation, those contained in the “Outlook” section hereof and statements related to the industries in which we operate, growth opportunities and our future financial position and results of operations. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially from the Company’s plans or expectations include risks relating to changes in the condition of the economy, including those arising from public health concerns, reliance on key customers and licences, dependence on key projects and clients, securing new business and fixed-price contracts, identification of viable growth opportunities, implementation of our growth strategy, competition and other risks detailed from time to time in the filings made by the Company including those detailed in ISC’s Annual Information Form for the year ended December 31, 2023 and ISC’s Unaudited Condensed Consolidated Interim Financial Statements and Notes and Management’s Discussion and Analysis for the third quarter ended September 30, 2024, copies of which are filed on SEDAR+ at www.sedarplus.ca.

Article content

The forward-looking information in this release is made as of the date hereof and, except as required under applicable securities laws, ISC assumes no obligation to update or revise such information to reflect new events or circumstances.

Non-IFRS Performance Measures
Included within this news release are certain measures that have not been prepared in accordance with IFRS, such as adjusted net income, adjusted earnings per share, basic, adjusted earnings per share, diluted, EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow. These measures are provided as additional information to complement those IFRS measures by providing further understanding of our financial performance from management’s perspective, to provide investors with supplemental measures of our operating performance and, thus, highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures.

Management also uses non-IFRS measures to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet future capital expenditure and working capital requirements.

Article content

Accordingly, these non-IFRS measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Such measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies.

Article content

The following presents a reconciliation of adjusted net income to net income, a reconciliation of adjusted EBITDA to EBITDA to net income and a reconciliation of adjusted free cash flow to free cash flow to net cash flow from operating activities:

Reconciliation of Adjusted Net Income to Net Income

Reconciliation of Adjusted EBITDA to EBITDA to Net Income

Article content

Reconciliation of Adjusted Free Cash Flow to Free Cash Flow to Net Cash Flow Provided by Operating Activities

Investor Contact
Jonathan Hackshaw
Senior Director, Investor Relations & Capital Markets
Toll Free: 1-855-341-8363 in North America or 1-306-798-1137
investor.relations@isc.ca

Media Contact
Jodi Bosnjak
External Communications Specialist
Toll Free: 1-855-341-8363 in North America or 1-306-798-1137
corp.communications@isc.ca

Article content

Article content

CALGARY, Alberta, Nov. 05, 2024 (GLOBE NEWSWIRE) — Parex Resources Inc. (“Parex” or the “Company”) (TSX: PXT) is pleased to announce its financial and operating results for the three-month period ended September 30, 2024, the declaration of its Q4 2024 regular dividend of C$0.385 per share, as well as an operational update. All amounts herein are in United States Dollars (“USD”) unless otherwise stated.

“Following lower than expected results, Management is focused on driving production efficiency and optimizing performance from our key assets,” commented Imad Mohsen, President & Chief Executive Officer.

Article content

“As we transition from 2024 to our 2025 planning phase, we are committed to improving results, delivering safe and reliable production, and positioning Parex to outperform.”

Key Highlights

• Generated Q3 2024 funds flow provided by operations (“FFO”)⁽¹⁾ of $152 million and FFO per share⁽²⁾⁽³⁾ of $1.50.
• FY 2024 average production guidance increased from 48,000-50,000 boe/d to 49,000-50,000 boe/d, based on stable operations at key assets as well as successful well results at Capachos and LLA-32.
• FY 2024 capital expenditure⁽⁶⁾ guidance updated from $370-390 million to $350-370 million, based on a conservative capital program focused on improving capital returns.
• Declared Q4 2024 regular dividend of C$0.385 per share⁽⁴⁾ or C$1.54 per share annualized.
• Repurchased approximately 4.5 million shares YTD 2024 under the Company’s current normal course issuer bid (“NCIB”).
• October 2024 average production was 47,000 boe/d⁽⁵⁾.

Q3 2024 Results

• Quarterly average oil & natural gas production was 47,569 boe/d⁽⁷⁾.
• Realized net income of $66 million or $0.65 per share basic⁽³⁾.
• Generated quarterly FFO⁽¹⁾ of $152 million and FFO per share⁽²⁾⁽³⁾ of $1.50, a 4% decrease and a 1% increase from Q3 2023, respectively.
• Current taxes decreased from Q2 2024 by $39 million due to reduced corporate production as well as lower global oil prices; the Company also moved from an estimated 15% surtax to a projected 10% surtax with the depreciation of Brent oil price in the quarter.
• Produced an operating netback⁽²⁾ of $39.64/boe and an FFO netback⁽²⁾ of $34.58/boe from an average Brent price of $78.71/bbl.
• Incurred $82 million of capital expenditures⁽⁶⁾, primarily from activities at LLA-34, Capachos, LLA-32 and LLA-122.
• Generated $69 million of free funds flow⁽⁶⁾ that was used for return of capital initiatives and $20 million of bank debt repayment; working capital surplus⁽¹⁾ was $38 million and cash $147 million at quarter end.
• Paid a C$0.385 per share⁽⁴⁾ regular quarterly dividend and repurchased 1,584,650 shares.

Article content

(1) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory.”
(2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory.”
(3) Per share amounts (with the exception of dividends) are based on weighted-average common shares; dividends paid per share are based on the number of common shares outstanding at each dividend date.
(4) Supplementary financial measure. See “Non-GAAP and Other Financial Measures Advisory.”
(5) Light & medium crude oil: ~8,956 bbl/d, heavy crude oil: ~37,325 bbl/d, conventional natural gas: ~4,316 mcf/d; rounded for presentation purposes.
(6) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory.”
(7) See “Operational and Financial Highlights” for a breakdown of production by product type.

Article content

Article content

(1) Reference to crude oil or natural gas in the above table and elsewhere in this press release refer to the light and medium crude oil and heavy crude oil and conventional natural gas, respectively, product types as defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.
(2) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory”.
(3) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory”.
(4) Supplementary financial measure. See “Non-GAAP and Other Financial Measures Advisory”.
(5) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory”.
(6) Per share amounts (with the exception of dividends) are based on weighted average common shares. Dividends paid per share are based on the number of common shares outstanding at each dividend record date.
(7) Syndicated bank credit facility borrowing base of $200.0 million as at September 30, 2024.
(8) Diluted shares as stated include common shares and stock options outstanding at period end; September 30, 2024 closing price was C$12.00 per share.

Article content

Operational Update

2024 Corporate Guidance Update

FY 2024 average production guidance has been updated to 49,000 to 50,000 boe/d (49,500 boe/d midpoint) and concurrently, capital expenditure⁽⁵⁾ guidance for the year has been updated to $350 to $370 million ($360 million midpoint).

At $80/bbl Brent crude oil price, funds flow provided by operations⁽⁴⁾ is expected to be $575 to $585 million and generate roughly $220 million of free funds flow⁽⁵⁾ at the midpoint of guidance. A key driver of the funds flow provided by operations increase from the prior updated guidance is a lower projected effective tax rate for FY 2024.

Article content

(1) Non-GAAP ratio. See “Non-GAAP and Other Financial Measures Advisory”.
(2) 2024 updated assumptions: Vasconia differential: ~$4/bbl; production expense: $13-14/bbl; transportation expense: ~$3.50/bbl; G&A expense: ~$4.00/bbl; effective tax rate: 14-17%.
(3) Supplementary financial measure. See “Non-GAAP and Other Financial Measures Advisory”.
(4) Capital management measure. See “Non-GAAP and Other Financial Measures Advisory”.
(5) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures Advisory”.

Cabrestero and LLA-34⁽¹⁾⁽²⁾

The Cabrestero and LLA-34 blocks had average production of approximately 37,000 bbl/d of heavy crude oil (net) combined in Q3 2024. During the quarter, both blocks experienced higher-than-expected downtime that adversely affected quarterly production.

Additionally, at both blocks, annual decline rates are broadly in line with Management budgeting where there is a continued focus on ramping up injection rates. At Cabrestero specifically, the Company continues to progress its polymer injection pilot and is moving towards approving a full field expansion based on success to date.

Article content

(1) Cabrestero: 100% W.I.
(2) LLA-34: 55% W.I.

LLA-32 – Exploitation Update⁽¹⁾

Following the mid-year reallocation of 2024 capital to LLA-32, the Company has now drilled three successful wells on the block. The most recent well, the second follow-up appraisal well, is producing roughly 2,000 bbl/d of light crude oil (gross)⁽²⁾. Based on success to date, Parex is continuing to invest capital and has spud a horizontal well.

(1) 87.5% W.I.
(2) Short-term production rate. See “Oil & Gas Matters Advisory.”

Northern Llanos – Capachos Update⁽¹⁾

The first well of a three-well campaign came online in late Q3 2024. The well is currently producing roughly 4,000 bbl/d of light crude oil with approximately 6,000 mcf/d of natural gas (gross)⁽²⁾.

Parex plans to fulfill an exploration commitment and spud the second well of the campaign in the coming weeks.

(1) 50% W.I.
(2) Short-term production rate. See “Oil & Gas Matters Advisory.”

Northern Llanos – Arauca⁽¹⁾

The Arauca-81 well is expected to be onstream in Q4 2024, following a successful operational sidetrack.

(1) Business Collaboration Agreement with Ecopetrol S.A. (Parex 50% Participating Share); Ecopetrol S.A. currently holds 100% of the working interest in the Convenio Arauca while the assignment procedure is pending.

Article content

Big ‘E’ Exploration – Llanos Foothills – LLA-122⁽¹⁾

The drilling of the Arantes well in the high-potential Colombian Foothills continues to progress on an extended timeline. In Q3 2024, an operational sidetrack was executed following a stuck pipe event; the sidetrack was successful, and the well is now at roughly 17,750 feet. Parex is progressing toward the setting of the final liner immediately above the zones of interest, prior to drilling and evaluating the prospective zones. Based on the current pace of operations, the Company expects preliminary results by YE 2024.

(1) 50% W.I.

Return of Capital Update

Q4 2024 Dividend

Parex’s Board of Directors have approved a Q4 2024 regular dividend of C$0.385 per share to shareholders of record on December 9, 2024, to be paid on December 16, 2024. This regular dividend payment to shareholders is designated as an “eligible dividend” for purposes of the Income Tax Act (Canada).

Current Normal Course Issuer Bid

As at October 31, 2024, Parex has repurchased approximately 4.5 million shares under its current NCIB, for total consideration of roughly C$85 million.

Article content

2025 Budget & Guidance

The Company continues to assess its short- and long-term development and exploration opportunities as it progresses through its 2025 budgeting and planning process, with next year’s corporate guidance expected to be released in January 2025.

Q3 2024 Results – Conference Call & Webcast

Parex will host a conference call and webcast to discuss its Q3 2024 results on Wednesday, November 6, 2024, beginning at 9:30 am MT (11:30 am ET). To participate in the conference call or webcast, please see the access information below:

About Parex Resources Inc.

Parex is one of the largest independent oil and gas companies in Colombia, focusing on sustainable conventional production. The Company’s corporate headquarters are in Calgary, Canada, with an operating office in Bogotá, Colombia. Parex shares trade on the Toronto Stock Exchange under the symbol PXT.

For more information, please contact:

Article content

Mike Kruchten
Senior Vice President, Capital Markets & Corporate Planning
Parex Resources Inc.
403-517-1733
investor.relations@parexresources.com

Steven Eirich
Investor Relations & Communications Advisor
Parex Resources Inc.
587-293-3286
investor.relations@parexresources.com

NOT FOR DISTRIBUTION OR FOR DISSEMINATION IN THE UNITED STATES

Non-GAAP and Other Financial Measures Advisory

This press release uses various “non-GAAP financial measures”, “non-GAAP ratios”, “supplementary financial measures” and “capital management measures” (as such terms are defined in NI 52-112), which are described in further detail below. Such measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. Investors are cautioned that non-GAAP financial measures should not be construed as alternatives to or more meaningful than the most directly comparable GAAP measures as indicators of Parex’s performance.

These measures facilitate management’s comparisons to the Company’s historical operating results in assessing its results and strategic and operational decision-making and may be used by financial analysts and others in the oil and natural gas industry to evaluate the Company’s performance. Further, management believes that such financial measures are useful supplemental information to analyze operating performance and provide an indication of the results generated by the Company’s principal business activities.

Article content

Set forth below is a description of the non-GAAP financial measures, non-GAAP ratios, supplementary financial measures and capital management measures used in this press release.

Non-GAAP Financial Measures

Capital expenditures, is a non-GAAP financial measure which the Company uses to describe its capital costs associated with oil and gas expenditures. The measure considers both property, plant and equipment expenditures and exploration and evaluation asset expenditures which are items in the Company’s statement of cash flows for the period and is calculated as follows:

Free funds flow, is a non-GAAP financial measure that is determined by funds flow provided by operations less capital expenditures. The Company considers free funds flow to be a key measure as it demonstrates Parex’s ability to fund return of capital, such as the NCIB and dividends, without accessing outside funds and is calculated as follows:

Article content

EBITDA, is a non-GAAP financial measure that is defined as net income adjusted for finance income and expenses, income tax expense (recovery) and depletion, depreciation and amortization.

Adjusted EBITDA, is a non-GAAP financial measure defined as EBITDA adjusted for non-cash impairment charges, unrealized foreign exchange gains (losses), unrealized gains (losses) on risk management contracts and share-based compensation expense (recovery).

The Company considers EBITDA and Adjusted EBITDA to be key measures as they demonstrates Parex’s profitability before finance income and expenses, taxes, depletion, depreciation and amortization and other non-cash items. A reconciliation from net income to EBITDA and Adjusted EBITDA is as follows:

Article content

Non-GAAP Ratios

Operating netback per boe, is a non-GAAP ratio that the Company considers to be a key measure as it demonstrates Parex’ profitability relative to current commodity prices. Parex calculates operating netback per boe as operating netback (calculated as oil and natural gas sales from production, less royalties, operating, and transportation expense) divided by the total equivalent sales volume including purchased oil volumes for oil and natural gas sales price and transportation expense per boe and by the total equivalent sales volume excluding purchased oil volumes for royalties and operating expense per boe.

Article content

Funds flow provided by operations netback per boe or FFO netback per boe, is a non-GAAP ratio that includes all cash generated from operating activities and is calculated before changes in non-cash working capital, divided by produced oil and natural gas sales volumes. The Company considers funds flow provided by operations netback per boe to be a key measure as it demonstrates Parex’s profitability after all cash costs relative to current commodity prices.

Basic funds flow provided by operations per share or FFO per share,
is a non-GAAP ratio that is calculated by dividing funds flow provided by operations by the weighted average number of basic shares outstanding. Parex presents basic funds flow provided by operations per share whereby per share amounts are calculated using weighted-average shares outstanding, consistent with the calculation of earnings per share. The Company considers basic funds flow provided by operations per share or FFO per share to be a key measure as it demonstrates Parex’s profitability after all cash costs relative to the weighted average number of basic shares outstanding.

Article content

Capital Management Measures

Funds flow provided by operations, is a capital management measure that includes all cash generated from operating activities and is calculated before changes in non-cash working capital. The Company considers funds flow provided by operations to be a key measure as it demonstrates Parex’s profitability after all cash costs. A reconciliation from cash provided by operating activities to funds flow provided by operations is as follows:

Working capital surplus (deficit), is a capital management measure which the Company uses to describe its liquidity position and ability to meet its short-term liabilities. Working capital surplus (deficit) defined as current assets less current liabilities.

Article content

Supplementary Financial Measures

“Oil and natural gas sales per boe” is determined by sales revenue excluding risk management contracts, as determined in accordance with IFRS, divided by total equivalent sales volume including purchased oil volumes.

“Royalties per boe” is comprised of royalties, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.

“Net revenue per boe” is comprised of net revenue, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.

“Production expense per boe” is comprised of production expense, as determined in accordance with IFRS, divided by the total equivalent sales volume and excludes purchased oil volumes.

Article content

“Transportation expense per boe” is comprised of transportation expense, as determined in accordance with IFRS, divided by the total equivalent sales volumes including purchased oil volumes.

“Dividends paid per share”
is comprised of dividends declared, as determined in accordance with IFRS, divided by the number of shares outstanding at the dividend record date.

Oil & Gas Matters Advisory

The term “Boe” means a barrel of oil equivalent on the basis of 6 Mcf of natural gas to 1 barrel of oil (“bbl”). Boe’s may be misleading, particularly if used in isolation. A boe conversation ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value.

This press release contains a number of oil and gas metrics, including, operating netbacks and FFO netbacks. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included herein to provide readers with additional measures to evaluate the Company’s performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods and therefore such metrics should not be unduly relied upon. Management uses these oil and gas metrics for its own performance measurements and to provide security holders with measures to compare the Company’s operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.

Article content

Any reference in this press release to short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determination of the rates at which such wells will continue production and decline thereafter and readers are cautioned not to place reliance on such rates in calculating the aggregate production of Parex.

Distribution Advisory

The Company’s future shareholder distributions, including but not limited to the payment of dividends and the acquisition by the Company of its shares pursuant to an NCIB, if any, and the level thereof is uncertain. Any decision to pay further dividends on the common shares (including the actual amount, the declaration date, the record date and the payment date in connection therewith and any special dividends) or acquire shares of the Company will be subject to the discretion of the Board of Directors of Parex and may depend on a variety of factors, including, without limitation the Company’s business performance, financial condition, financial requirements, growth plans, expected capital requirements and other conditions existing at such future time including, without limitation, contractual restrictions and satisfaction of the solvency tests imposed on the Company under applicable corporate law. Further, the actual amount, the declaration date, the record date and the payment date of any dividend are subject to the discretion of the Board. There can be no assurance that the Company will pay dividends or repurchase any shares of the Company in the future.

Article content

Advisory on Forward Looking Statements

Certain information regarding Parex set forth in this document contains forward-looking statements that involve substantial known and unknown risks and uncertainties. The use of any of the words “plan”, “expect”, “prospective”, “project”, “intend”, “believe”, “should”, “anticipate”, “estimate”, “forecast”, “guidance”, “budget” or other similar words, or statements that certain events or conditions “may” or “will” occur are intended to identify forward-looking statements. Such statements represent Parex’s internal projections, estimates or beliefs concerning, among other things, future growth, results of operations, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, plans for and results of drilling activity, environmental matters, business prospects and opportunities. These statements are only predictions and actual events or results may differ materially. Although the Company’s management believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause Parex’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Parex.

Article content

In particular, forward-looking statements contained in this document include, but are not limited to, statements with respect to: the Company’s focus, plans, priorities and strategies; average production guidance and capital expenditure guidance; expectations and plans regarding the Cabrestero and LLA-34 blocks, the LLA-32 block, Northern Llanos – Capachos, the Arauca-81 well, and Llanos Foothills – LLA-122; the anticipated terms of the Company’s Q4 2024 regular quarterly dividend, including its expectation that it will be designated as an “eligible dividend”; and the anticipated date and time of Parex’s conference call to discuss Q3 2024 results.

These forward-looking statements are subject to numerous risks and uncertainties, including but not limited to, the impact of general economic conditions in Canada and Colombia; prolonged volatility in commodity prices; industry conditions including changes in laws and regulations including adoption of new environmental laws and regulations, and changes in how they are interpreted and enforced in Canada and Colombia; determinations by OPEC and other countries as to production levels; competition; lack of availability of qualified personnel; the results of exploration and development drilling and related activities; obtaining required approvals of regulatory authorities in Canada and Colombia; the risks associated with negotiating with foreign governments as well as country risk associated with conducting international activities; volatility in market prices for oil; fluctuations in foreign exchange or interest rates; environmental risks; changes in income tax laws or changes in tax laws and incentive programs relating to the oil industry; changes to pipeline capacity; ability to access sufficient capital from internal and external sources; failure of counterparties to perform under contracts; the risk that Brent oil prices may be lower than anticipated; the risk that Parex’s evaluation of its existing portfolio of development and exploration opportunities may not be consistent with its expectations; the risk that Parex may not have sufficient financial resources in the future to provide distributions to its shareholders; the risk that the Board may not declare dividends in the future or that Parex’s dividend policy changes; the risk that Parex may not be responsive to changes in commodity prices; the risk that Parex may not meet its production guidance for the year ended December 31, 2024; the risk that Parex’s 2024 capital expenditures may be greater than anticipated; the risk that plans and expectations related to Parex’s drilling program as disclosed herein do not materialize as expected and/or at all; the risk that Parex may not be able to increase production into year end; and other factors, many of which are beyond the control of the Company.

Article content

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Parex’s operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR+ website (www.sedarplus.ca).

Although the forward-looking statements contained in this document are based upon assumptions which Management believes to be reasonable, the Company cannot assure investors that actual results will be consistent with these forward-looking statements. With respect to forward-looking statements contained in this document, Parex has made assumptions regarding, among other things: current and anticipated commodity prices and royalty regimes; availability of skilled labour; timing and amount of capital expenditures; future exchange rates; the price of oil, including the anticipated Brent oil price; the impact of increasing competition; conditions in general economic and financial markets; availability of drilling and related equipment; effects of regulation by governmental agencies; receipt of partner, regulatory and community approvals; royalty rates; future operating costs; uninterrupted access to areas of Parex’s operations and infrastructure; recoverability of reserves and future production rates; the status of litigation; timing of drilling and completion of wells; on-stream timing of production from successful exploration wells; operational performance of non-operated producing fields; pipeline capacity; that Parex will have sufficient cash flow, debt or equity sources or other financial resources required to fund its capital and operating expenditures and requirements as needed; that Parex’s conduct and results of operations will be consistent with its expectations; that Parex will have the ability to develop its oil and gas properties in the manner currently contemplated; that Parex’s evaluation of its existing portfolio of development and exploration opportunities is consistent with its expectations; current or, where applicable, proposed industry conditions, laws and regulations will continue in effect or as anticipated as described herein; that the estimates of Parex’s production and reserves volumes and the assumptions related thereto (including commodity prices and development costs) are accurate in all material respects; that Parex will be able to obtain contract extensions or fulfill the contractual obligations required to retain its rights to explore, develop and exploit any of its undeveloped properties; that Parex will have sufficient financial resources to pay dividends and acquire shares pursuant to its NCIB in the future; that Parex is able to execute its plans with respect to the Company’s drilling program as disclosed herein; and other matters.

Article content

Management has included the above summary of assumptions and risks related to forward-looking information provided in this document in order to provide shareholders with a more complete perspective on Parex’s current and future operations and such information may not be appropriate for other purposes. Parex’s actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what benefits Parex will derive. These forward-looking statements are made as of the date of this document and Parex disclaims any intent or obligation to update publicly any forward-looking statements, 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 information that may be considered a financial outlook under applicable securities laws about the Company’s potential financial position, including, but not limited to; Parex’s FY 2024 capital expenditure guidance and midpoint capital expenditure guidance; Parex 2024 guidance, including anticipated Brent crude oil average prices, funds flow provided by operations netback; funds flow provided by operations, capital expenditures, free funds flow; and the anticipated terms of the Company’s Q4 2024 regular quarterly dividend including its expectation that it will be designated as an “eligible dividend”, all of which are subject to numerous assumptions, risk factors, limitations and qualifications, including those set forth in the above paragraphs. The actual results of operations of the Company and the resulting financial results will vary from the amounts set forth in this press release and such variations may be material. This information has been provided for illustration only and with respect to future periods are based on budgets and forecasts that are speculative and are subject to a variety of contingencies and may not be appropriate for other purposes. Accordingly, these estimates are not to be relied upon as indicative of future results. Except as required by applicable securities laws, the Company undertakes no obligation to update such financial outlook. The financial outlook contained in this press release was made as of the date of this press release and was provided for the purpose of providing further information about the Company’s potential future business operations. Readers are cautioned that the financial outlook contained in this press release is not conclusive and is subject to change.

The following abbreviations used in this press release have the meanings set forth below:

PDF available: http://ml.globenewswire.com/Resource/Download/036d688c-0a1e-4b88-a59e-ea8a6ec811a7

Article content