Petrus Resources Ltd. (PRQ) Earnings Call Transcript & Summary

Yes. The volumes are slightly lower, I guess, but we're constantly trying to reduce our OpEx. And I think we can actually even get those OpEx numbers down a little bit. We do offset OpEx with fees, and we have more third-party gas coming into the plant now and through our North Ferrier pipeline. So that should help offset some of those costs. Some of the basic costs like electricity is a big cost for us, and that's come down a little bit here. I think our carbon tax expense because we've increased production. Our intensity has actually improved. And so carbon tax is -- should be lower this year. So that's helped. And then just overall, I think the fact that we've got fewer wells that we're bringing on, those wells have some increased costs when we bring them on initially and then that sort of goes away over time, and we're starting to see that effect as well. So all those things kind of come together to lower our OpEx, and we're continuing to work to keep that low because we think that's quite important to -- for us to generate good cash flow. And I give credit to Matt and to the guys in the field for their work in constantly trying to improve OpEx and our operations in general.

And last one for me is you had a hedging gain in the quarter, and you've had historically done well with your hedging program. Have you booked much into 2025? And as you mentioned, you can hedge north of $3. What's your status now? And what do you think is an appropriate amount to have heading into the latter part of this year with the 2025 hedge book.

So for the balance of 2024, we are approximately 45% hedged. And that natural gas price is just around $3. I think it's $2.94. And for oil, we're at about CAD 97 a barrel for the coming 12 months, we are similarly in hedge. So it's about 45% as well. Those numbers are a little bit higher, the hedge prices for gas because we have a winter contract in there. It's a little over $3, I want to say it's in the $3.20 range for gas, and a little bit lower on well because there is some [ vapordation ] in the curve there. So it's around 96.50 somewhere in that range. And then for months, sort of 13 to 24. We are 25% hedged. I don't know the prices that were hedged. The average price is off the top of my head, but I can certainly get that information to you, Joseph.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Ken.

Yes. Thanks. We've had a couple of questions over the last month or so that since our last call that maybe we'll address here as well. First of all, one of the questions people have been asking is if commodity prices improved through the year, do we think we would increase capital spending and go back into growth mode? And I'd say the short answer to that is yes. we've got some tremendous opportunities, both in core Ferrier and in North Ferrier. The pipeline that we put into North Ferrier allows us to develop that along our own time line. We're not constrained by anything there. We've already got these things in the pipeline, if you will, scheduled for later 2025 and beyond, and we can bring those forward fairly quickly if the environment, the pricing environment changes. So yes, we would certainly look at going back into growth mode. I think 2022 kind of showed our ability to ramp up and to grow fairly substantially and quickly when and if the environment is right for it. So we do have that ability. And I do think that we're going to see some better prices here going forward. Despite the current weakness in natural gas prices that we kind of are expecting over this summer. The fundamentals look fairly good for later this year and going into 2025, demand, both industrial and for electrical generation is increasing, and we've got additional LNG export coming on. So all of those things, I think, will combine to improve natural gas prices. Oil and NGL prices are already fairly strong. So we do see things increasing, and we are in a position to ramp up when and if it makes sense. Another question that we've had is, are we looking at any acquisitions right now? And do we think that there's going to be some good opportunities for acquisitions in this kind of low natural gas price environment. First, I'd say that we're pretty happy where we're at. We think we can generate good value for our shareholders with what we currently have. And with where we're at size-wise, we're paying a fairly good dividend right now and we have the ability to grow organically. So we're not under any pressure to make acquisitions to try to improve or generate value for our shareholders. We feel we can do that with what we have right now. But having said that, we do think there's going to be some opportunities for accretive acquisitions this year. Low prices can expose companies that have taken on more risk. And Paris, with our fairly strong financial position, we're poised to take advantage of that. So we have been and we'll continue to look at all the opportunities that are out there. Especially in our core Ferrier area and generally in the Deep Basin, we like that area. It generates great returns. So yes, we are looking at things. And if we can find something that makes sense and generates value for our shareholders, we'll certainly pursue it aggressively. I think that's about it for what we have today. So thanks, everyone, for calling in or listening after the fact and thank you again for your support of Petrus.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.