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

Good day, and thank you for standing by. Welcome to the Petrus Resources Second Quarter 2026 Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today. Ken, you may go ahead.

Good morning. Thanks for tuning in to the Petrus Resources 2026 Q2 Conference Call. I'm Ken Gray, CEO of Petrus. And as usual, I'm joined by our executive team of Matt Skanderup, COO; Matthew Wong, CFO; and Lindsay Hatcher, VP, Commercial and Corporate Development. I want to thank Matt for filling in for me last quarter on the conference call, but I'm happy to be back on this call to talk about our Q2 results and what lays ahead. Q2 was a strong quarter for the company and some of the moves we've made recently are starting to show up in our results. I think the biggest thing to note in Q2 was the improvement in our operating netback, which was up 92% from a year ago to $24.9 million. This was the result of both increased production, higher liquids weighting and improved liquids pricing. Hedging losses somewhat masked the dramatic improvement in operating results, but funds flow for the quarter was still up a very respectable 32% from a year ago. Production averaged 11,070 BOE per day for the quarter, up 21% from a year ago. We did bring on 7, 6.1 net new Ferrier wells in the quarter, but we still didn't see full contribution from the Harmattan acquisition as we had some scheduled facility maintenance in April and May that temporarily curtailed production. In June, we finally saw full contribution from Harmattan and the new wells and corporate production was over 12,000 BOE per day, the highest average monthly production in Petra's history. Global events continue to support liquids pricing, which was quite strong for the quarter with oil prices up 59% and NGL prices up 39% from a year ago. The increased liquids pricing, combined with an increased liquids weighting of 39% for the quarter, led to a realized price of $37.66 per BOE, which was up 46% from a year ago despite an 18% drop in natural gas prices. Overall, that's a very good first half of the year. We've since drilled and completed a couple of oil wells in Harmattan, which were brought on production August 1. These are the first wells we've drilled in the area since acquiring it in the first quarter, and we look forward to sharing the results once available. We also have one more Ferrier well to complete and bring on production later this month. And we are currently drilling some joint venture block wells, which are scheduled to come on in October. We continue to execute efficiently on the operations side. On the pricing side, oil prices have been very volatile with no end to that in sight. Natural gas prices remain weak, but with a positive long-term outlook. To be honest, price volatility is a constant in this business. So it's really business as usual for us. Regardless of where prices go, Petrus, with its strong operational efficiency, disciplined capital investment and consistent risk management is in a fundamentally strong position to take advantage of future opportunities while continuing to pay a high-yield dividend to our shareholders. Thanks for your interest in Petrus, and thanks to our shareholders for their continued support. With that, we'll now be happy to answer any questions.

[Operator Instructions] The first question that I have is coming from the line of Joseph [ Senter ] of [ CRC ].

Great quarter. So very pleased on that. $35 million was spent -- $33 million was spent in the first 6 months, and you gave a range of 50 to 60. What are the thought process of that extra $10 million spend from the low to the high? What are you thinking there? Where are you thinking you're spending that money? Just your thoughts on that. And if you do spend at the higher end, are we looking at an exit number north of 13,000 BOEs a day for 2026?

Thanks for calling in, Joseph. Right now, I think we're expecting to come in sort of in the higher end of that range, under 60, but on the higher end. We don't have any additional plans -- like that $10 million range is just kind of depending on variability. We like to give ourselves a little bit of room for whatever might happen. And certainly, lots of things go on and go into the forecast. So we're right on schedule. As far as production goes, we're -- we hit 12,000 in June. We're expecting to kind of maintain that 12,000 or a little higher through the rest of the year exit rate. I don't -- I'd love if we hit 13,000. I'm not sure we'll quite get there, but you never know. The other thing I'd say on the capital side of things is that's kind of current plans, and that was the plan at the start of the year, depending on what happens sort of with the rest of the year, we do have wells that we can accelerate into 2026, like pulling from our 2027 program if things kind of work out. And it looks like that's the right thing to do. So that could change those exit values, change the capital values if we decide to do that. But the current plan is, yes, we'll be just executing our plan capital in that higher end of the range and production in that 12,000 or a little above for the rest of the year.

Okay. One more for me. Are you finding any serendipitous in the drilling where the outcomes have been much better than you thought? Are there certain areas that are standing out where you have more drilling inventory that you may focus on and as you said, move wells in from '27 to '26 or be aggressive more on those in '27?