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Petrus Resources Ltd (TSX:PRQ)

Summary

Petrus Resources Ltd. is a Toronto Stock Exchange listed oil and gas company based in Calgary, Canada. The company is focused on property exploitation and strategic acquisitions in the province of Alberta.

Market Overview

$2.25 (-5.940%)
Vol 10,100.00
10 Days Avg Vol 30,424.67
3 Mo Avg Vol 22,020.16
52 Wk Lo/Hi $1.71 - $3.43
YTD Price Gain % -18.18%
12 Wks Moving Avg 2.237111
200 Days Moving Avg 2.502500
Market Cap 111,212,775

Company Background

Petrus Resources Ltd. (“Petrus”) is a public Canadian oil and gas company focused on property exploitation and strategic acquisitions in the province of Alberta. Petrus is positioned to create sustainable long-term value and deliver superior returns through the controlled growth of quality, low cost, low risk and low decline assets.

Highlights

Financial Strength

In the first quarter of 2017, Petrus generated funds flow of $11.7 million ($1.00/share annualized); a 166% increase compared to the first quarter of 2016. The increase was achieved through production growth, cost reductions and improved commodity prices. Over this same time period, Petrus reduced net debt by 17% and continues to focus on managing leverage to maintain financial flexibility.

Low Cost Operations

Throughout 2016, Petrus transformed its operating cost structure through divesting higher cost assets and constructing a gas processing facility in the Ferrier area. Corporate operating expenses decreased 47% from the first quarter of 2016 to the first quarter of 2017. In Ferrier specifically, operating expenses decreased approximately 77% in the first quarter compared to the same period in 2016.

Production Growth

First quarter 2017 production was 9,331 boe/d; a 6% increase compared to the same quarter of 2016. Since the divestiture of its Peace River area assets in July 2016, the company has generated quarterly average production growth of 31% which is attributable to drilling in Ferrier. Successful execution of the drilling program has continued throughout the second quarter and average field production for May 2017 is estimated to be 10,783 boe/d. Petrus is targeting production growth of 15-18% in Ferrier throughout 2017.

Share Structure

Petrus Resources Ltd.
TSX:PRQ
   Share Structure
    Common Shares 49,427,900
    Outstanding Options 2,906,330
    Common Stock Warrants 329,667
    Fully Diluted Shares 52,663,897
    Board and Management Holdings 37.3%
   Share Trading Activity
    3 month average daily   volume(shares) 21,700
    52 week low/high ($/share) $1.71 / $3.43
    Current Share Price (June 12/17) $2.10
    Average Option Price $4.46
    Average Warrant Price $8.18
   Market Capitalization (I/O) $104 million
   Cash Balance $2 million
   Debt Outstanding $125 million
 (all amounts as of Jun 12, 2017)

Other Information

Projects / Properties Information

Petrus’ foundation is a portfolio of diversified, low risk assets with strong economics and consistent reserves growth. Capital deployment is largely focused on the company’s core area of Ferrier, Alberta; a low risk, manufacturing style resource play targeting liquids rich gas. Petrus acquired Ferrier through a corporate acquisition in 2014. Since that time, the company’s undeveloped land position in the area has grown by 5 times and production has increased by approximately 800%. Developmental drilling programs in Ferrier offer superior economic results and infrastructure expansion in the area allows for increased control, reduced operating costs and maximized return on investment.  The majority of Petrus’ $50-$60 million 2017 capital budget will support drilling activity (11.7 net wells) and infrastructure investment in Ferrier. In late 2015, Petrus completed the construction of a gas processing facility in Ferrier. The current plant capacity of 30 mmcf/d is expected to expand to 60 mmcf/d in Q4 2017. The facility has contributed to significant operating costs reductions and increased Petrus’ infrastructure control. The plant also generates third party processing revenue, which further improves project economics; internal rates of return are as high as 85% on jointly owned wells in Ferrier. Petrus’ balanced asset base also includes low decline assets in the Foothills area of Alberta and stable, cash flow generating properties in Central Alberta that offer material upside potential through the implementation of waterfloods.

Management Profiles

Neil Korchinski, BSc, P. Eng.

President & Chief Executive Officer

Prior to becoming President and CEO of Petrus, Mr. Korchinski held the position of Chief Operating Officer and Vice President Engineering. Preceding his time at Petrus, Mr. Korchinski spent 7 years as the Senior Exploitation Engineer for Peyto Exploration & Development Corp.; during his tenure, over $1 billion in capital was invested in Deep Basin drilling. Earlier in his career he worked in exploitation, operation and production engineering roles for Renaissance Energy, Husky Energy and Crescent Point Energy.

Cheree Stephenson, BCom CA CPA

Vice President, Finance & Chief Financial Officer

Ms. Stephenson has been with Petrus since inception in 2011 and was appointed Vice President, Finance and Chief Financial Officer on January 1, 2012. Prior to her time at Petrus, she served as Controller at Peyto Exploration & Development Corp. after which she played an integral role in the start-up and growth of three private oil and gas companies. Ms. Stephenson is a Chartered Professional Accountant and obtained her professional designation through Ernst & Young LLP in an audit and assurance public practice role.

Brett Booth, BA

Vice President, Land

Mr. Brett Booth has been with the company since 2011. Prior to Petrus, Mr. Booth worked in various Land roles at Bonavista Energy.

Marcus Schlegel, Bsc, P. Eng.

Vice President, Engineering

Mr. Marcus Schlegel originally joined the Petrus team as the company’s Exploitation Manager in July 2014. Previous to his time at Petrus, Mr. Schlegel worked as a Professional Engineer for CanEra Energy Corp., CNRL and Anadarko Canada in exploitation, operations and production engineering roles.

Ross Keilly, MSc

Vice President, Exploration

Mr. Ross Keilly joined Petrus as a Senior Geologist in 2012. His experience prior to Petrus includes 5 years working as a Senior Geologist in the Deep Basin of Western Canada with Bonavista Energy as well as holding exploration and development roles with both Husky Energy and Anadarko Canada.