Canada’s Birchcliff targets debt elimination
Canadian gas-weighted producer Birchcliff Energy reported record Q2 2022 results August 10 and anticipates eliminating its debt in the fourth quarter.
“Birchcliff had a record quarter in Q2 2022,” CEO Jeff Tonken said. “We remain confident that Birchcliff will reach zero total debt and be in a cash surplus position in Q4 2022, based on the strength of forward commodity prices.”
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Net income in the quarter was a record C$31.9mn (US$25mn), up from C$6.4mn a year ago, while adjusted funds flow increased to a record C$42.6mn from C$13.2mn. Free funds flow, at C$201.3mn, was also a record, rising C$192mn from the year ago period.
Total debt at June 30 was reduced to C$266.9mn from C$770.9mn at June 30 last year, and with debt expected to be eliminated entirely in Q4 this year, the company is targeting an annual dividend of at least C$0.80/share in 2023, Tonken said.
Total production in Q2 averaged 73,746 barrels of oil equivalent (boe)/day, down slightly from 75,265 boe/day in Q2 2021, but natural gas production rose to 366.3mn ft3/day from 352.7mn ft3/day, nearly offsetting lower liquids production.
Birchcliff marketed 80% of its Q2 natural gas production at Henry Hub in the US and Dawn in southern Ontario, limiting its exposure to the volatile AECO hub in western Canada. All of its production is unhedged, allowing it full exposure to robust commodity prices: its realised price on natural gas sales in Q2 2022 rose to C$8.61/’000 ft3 from C$3.48/’000 ft3 in the comparable 2021 period.