Calgary, Alberta--(Newsfile Corp. - August 29, 2024) - Criterium Energy Ltd. (TSXV: CEQ) ("Criterium" or the "Company"), an independent upstream energy development and production company focused on energizing growth for Southeast Asia and Criterium shareholders, is pleased to confirm the filing of its Q2 2024 financial and operating results for the three- and six-month periods ended June 30, 2024 ("Q2 2024 Results") in addition to providing an Operational Update. The unaudited interim consolidated financial statements and notes, as well as Management's Discussion and Analysis ("MD&A"), are available on the Company's website (https://criteriumenergy.com/reports-filings/) and SEDAR+ (www.sedarplus.ca.)
Quarterly Highlights
Realized average field production of 821 barrels per day ("bbl/d") in Q2 2024 from the Tungkal Production Sharing Contracts ("Tungkal PSC"), compared to 822 bbl/d in Q1 2024 and nil in Q2 2023, reflecting the Mont D'Or Petroleum Limited ("MOPL") acquisition in early 2024 and the impact of a successful, ongoing workover program.
Completed four workovers on existing wells during the quarter at a cost of approximately US$285,000 allocated to operating expenses. Workovers have exceeded expectations, producing at levels 50% above the projected well type curve1. All workovers completed during the first half of 2024 collectively reached pre-tax payout by the end of Q2 2024.
Decreased total expenses quarter-over-quarter, with operating expenses (inclusive of G&A) ("Opex") declining 7% to US$40/bbl in Q2 2024 from US$43/bbl in Q1 2024, owing to reduced fuel expenses, cost management, and operational efficiencies realized from the MOPL transaction. Opex is anticipated to fall below US$30/bbl by year end2.
Strengthened operating netbacks3 per barrel which averaged US$19/bbl in Q2, approximately 40% higher than the average in Q1 2024. Operating netbacks at year-end are expected to reach nearly US$30/bbl2 despite lower forecast Brent prices in the second half, underscoring the increasing resiliency of Criterium's portfolio.
Reduced total debt by C$1.4 million at June 30, 2024 compared to March 31, 2024, with Criterium benefitting from favourable interest rates of just over 8%, a level far better than the Company could expect to secure had it been required to find new sources of credit facilities.
Exited the period with cash and cash equivalents totaling C$6 million, and line of sight to positive free cash flow generation, positioning the Company with financial strength to execute its planned capital program across a variety of potential macro-economic environments or corporate events.
Operations Update
Through the second quarter of 2024, the Company continued its program of low cost, high-return workovers in the oil-producing Mengoepeh ("MGH") field with four workovers successfully completed, including one which produced from the newly discovered GH sand zone. The Q2 2024 workovers have continued to perform above expectations, enabling Criterium to rapidly recycle capital given cash paybacks average less than 30 days. Into the third quarter of 2024, the Company is currently working on its latest five well workover program, three of which were executed in August and are producing from the GH Sand Zone. Additional details on the results of these workovers can be found within the Company's Q2 Results and Operational Update Presentation.
The positive impact of this program is demonstrated by production increases that are supporting Criterium's continued growth in production, revenue and financial flexibility. During July, production averaged 850 bbl/d4, while August has averaged 860 bbl/d4 despite having approximately 100 bbl/d currently offline as the Company performs repairs on three different pumps in the PLT field in the Tungkal PSC. Volumes from those repaired pumps are expected to be back on-line by early September 2024.
Outlook
Infill Drilling Program
Through the balance of 2024, Criterium will focus on finalizing its well optimization work, along with commencing the inaugural two-well infill drilling program in September. This drilling program is targeting a previously undrilled section of the MGH Field and is forecast to add approximately 300 - 350 bbl/d1 of combined production, with volumes from the initial well expected on-stream in October and volumes from the second well being brought online in November. The Company will provide updates on drilling results and other key operational developments as information becomes available.
Progress at Tungkal PSC
In addition to oil-weighted developments at the MGH Field, Criterium is continuing to undertake technical feasibility for the development plan for the SE Mengoepeh gas field in the Tungkal PSC, and expects to make a submission to government for the gas field to be included in the existing Mengoepeh Plan of Development before year end 2024. In support of this strategy, Criterium successfully executed a Memorandum of Understanding related to gas offtake during Q2 2024 with PT Energasindo Heksa Karya ("EHK"), a company owned by Rukun Raharja and Tokyo Gas, whereby EHK will purchase discovered gas from SE Mengoepeh and the Tungkal PSC.
Bulu Transaction Progress
As previously announced on June 25, 2024, Criterium continues to progress the sale of its 42.5% non-operated working interest in the Bulu Production Sharing Contract ("Bulu PSC") and expects to provide an update shortly.
Financial Runway
Criterium intends to maintain its focus on cost reductions, netback enhancements and deleveraging while simultaneously taking a prudent approach to capital allocation decisions. As a growth-focused entity, the Company plans to ensure appropriate investment is directed to value-creating development programs within its asset portfolio in order to maintain financial flexibility and support the generation of positive cash flow. This strategy is expected to be further supported by the reduced lender payment negotiated in July of 2024, which is forecast to have a net positive cash impact of US$1,500,000 through the second half of 2024.
Stay Connected to Criterium
Shareholders and other interested parties who would like to learn more about the Criterium opportunity are encouraged to visit the Company's website and review a recent corporate presentation, and to follow the Company on X (formerly Twitter) at https://x.com/CriteriumEnergy and on LinkedIn at https://www.linkedin.com/company/criterium-energy/ for ongoing corporate updates and relevant international oil and gas industry information.
About Criterium Energy Ltd.
Criterium Energy Ltd. (TSXV: CEQ) is Canadian-based upstream energy company focused on the consolidation and sustainable development of assets in Southeast Asia that can deliver scalable growth and cash flow generation. This region is expected to house a population approaching 800 million people within the next 25 years, driving world-leading economic growth and record energy demand. With international operating expertise and a local presence, Criterium intends to contribute responsible, safe and secure sources of energy to help meet this demand. The Company is committed to maximizing total shareholder return by executing across three strategic pillars that include (1) fostering a successful and sustainable reputation; (2) leveraging innovation and technology arbitrage; and (3) achieving operational excellence with an unwavering commitment to safety. For further information please visit our website (www.criteriumenergy.com) or contact:
Matthew Klukas Interim President and Chief Executive Officer Criterium Energy Ltd. Email: info@criteriumenergy.com
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Acquisition, any information released or received with respect to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of Criterium should be considered highly speculative.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Notes
1Management estimate based on previously disclosed 'Mont D'Or Venture Limited YE Evaluation' reserve and resource report, effective December 31, 2022. This report was conducted by an independent qualified reserves evaluator or auditor in accordance with the COGE Handbook. 2 Management estimate based on past operating costs and forecasted reductions. Unit costs assume production profile as per production target which is based on Management Estimates of future workover and infill programs. 3 Non-IFRS financial measure or ratio that does not have any standardized meaning as prescribed by International Financial Reporting Standards, and therefore, may not be comparable with calculations of similar measures or ratios for other entities. See "Advisories - Non-IFRS and Other Financial Measures" contained within this press release and in the Company's most recently filed MD&A, available on SEDAR+ at sedarplus.ca. 4 Estimate based on field production reports
This press release contains certain forward-looking information and statements that are based on expectations, estimates, projections, and interpretations as at the date of this news release. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends", "seek", "aims" and similar expressions are intended to identify forward-looking information or statements.
Factors that could cause actual results to vary from forward-looking statements or may affect the operations, performance, development and results of Criterium's businesses include, among other things: risks and assumptions associated with operations; risks inherent in Criterium's future operations; increases in maintenance, operating or financing costs; the availability and price of labour, equipment and materials; competitive factors, including competition from third parties in the areas in which Criterium intends to operate, pricing pressures and supply and demand in the oil and gas industry; fluctuations in currency and interest rates; inflation; risks of war, hostilities, civil insurrection, pandemics, instability and political and economic conditions in or affecting Indonesia or other countries in which Criterium intends to operate (including the ongoing Russian-Ukrainian conflict); severe weather conditions and risks related to climate change; terrorist threats; risks associated with technology; changes in laws and regulations, including environmental, regulatory and taxation laws, and the interpretation of such changes to Criterium future business; availability of adequate levels of insurance; difficulty in obtaining necessary regulatory approvals and the maintenance of such approvals; general economic and business conditions and markets; and such other similar risks and uncertainties. The impact of any one assumption, risk, uncertainty or other factor on a forward-looking statement cannot be determined with certainty, as these are interdependent and the Company's future course of action depends on the assessment of all information available at the relevant time. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
With respect to forward-looking statements contained in this press release, Criterium has made assumptions regarding, among other things: future exchange and interest rates; supply of and demand for commodities; inflation; the availability of capital on satisfactory terms; the availability and price of labour and materials; the impact of increasing competition; conditions in general economic and financial markets; access to capital; the receipt and timing of regulatory and other required approvals; the ability of Criterium to implement its business strategies; the continuance of existing and proposed tax regimes; and effects of regulation by governmental agencies.
The forward-looking statements contained in this press release are made as of the date hereof and the parties do not undertake any obligation to update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Non-IFRS and Other Financial Measures
Throughout this press release and other materials disclosed by the Company, Criterium uses certain measures to analyze financial performance, financial position and cash flow. These non-IFRS and other specified financial measures do not have any standardized meaning prescribed under IFRS and therefore may not be comparable to similar measures presented by other entities. The non-IFRS and other specified financial measures should not be considered alternatives to, or more meaningful than, financial measures that are determined in accordance with IFRS as indicators of Criterium's performance. Management believes that the presentation of these non-IFRS and other specified financial measures provides useful information to shareholders and investors in understanding and evaluating the Company's ongoing operating performance, and the measures provide increased transparency and the ability to better analyze Criterium's business performance against prior periods on a comparable basis.
Operating Netback per bbl
Operating netback per bbl equals petroleum sales less royalties and net opex calculated on a per bbl basis. Management considers operating netback per bbl an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices.
