Shell Assets Lift Pieridae Higher in Q1
A full quarter of production from assets Pieridae Energy acquired from Anglo-Dutch major Shell in October 2019 pushed the Canadian LNG developer to a second straight quarter of solid financial performance in Q1 2020, it said May 28.
“We continue to see the benefits of last fall’s Foothills asset acquisition, with Pieridae recording strong financial results in spite of very challenging market conditions,” CEO Alfred Sorensen said. “Once again, our strong operational performance and positive hedging strategy helped insulate us from the current harsh realities, as realised natural gas prices were 15% higher than the benchmark price for the quarter.”
Q1 2020 revenue jumped more than 220%, to C$74mn (US$53.7mn) from C$23mn in Q1 2019, while net operating income rose 273%, to C$19.2mn from C$5.1mn.
Production in the first quarter averaged 41,211 barrels of oil equivalent (boe)/day, an increase of nearly 24,000 boe/day year-over-year. The increase reflected a full quarter’s production from the Shell assets, offset by unplanned outages early in the quarter at two gas plants as extremely cold temperatures in January and February caused some wells to freeze off.
Condensate and NGL production were up sharply, again reflecting the deep cut capacity at two gas plants acquired as part of the Shell acquisition.
Many Canadian oil and gas companies have been hit hard in Q1 by impairment charges related to the sharp drop in global crude oil prices following the Saudi-Russian price war and in March and economic measures globally to suppress the Covid-19 pandemic. But Pieridae has so far escaped such measures, and its C$28mn annual capital plan and C$16mn development budget for its 10mn mt/yr Goldboro LNG project in Nova Scotia remain intact, Sorensen said.
“With a number of global LNG projects either being cancelled or delayed, now is the time for Canada to seize the opportunity to enter into this industry at a time when others are exiting,” he said. “Our Goldboro LNG project is sound and supports the fundamental principles of First Nations reconciliation; interlocks with the goals of the Paris Climate Accord; would create good paying, middle-class jobs across the country; and opens up new energy trade routes to get sustainably-produced Canadian natural gas to global markets.”
In response to the Covid-19 pandemic and to preserve jobs and its balance sheet, Pieridae has rolled back wages for its salaried employees by 10%, while executives have taken a 15% cut in pay and the board and CEO have absorbed 20% reductions in compensation.