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    Canada’s Birchcliff raises guidance on improved prices


Montney producer reversed Q1 2020 loss

by: Dale Lunan

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Canada’s Birchcliff raises guidance on improved prices

Canadian Montney producer Birchcliff Energy said May 12 it will increase its 2021 guidance estimates for production, adjusted funds flow and free funds flow on the back of an improved outlook for commodity prices.

In releasing Q1 2021 results, CEO Jeff Tonken said the period was highlighted by “excellent” drilling results on its Pouce Coupe lands in northwest Alberta and a 49% increase in barrel of oil equivalent (boe) realised prices.

“As a result of our strong new well performance and our improved outlook for commodity prices, we are increasing our 2021 guidance for production, adjusted funds flow and free funds flow,” he said. “We are now targeting annual average production of 79,000 to 81,000 boe/d, up from 78,000 to 80,000 boe/d, and adjusted funds flow of $400mn (US$330mn), up from $360mn.”

But capital discipline will be maintained, he said: capital expenditure guidance for 2021 remains unchanged in the C$210-C$230mn range, resulting in free cash flow in the C$170-C$190mn range, “and puts us in an excellent position to significantly reduce our total debt during the second half of 2021.” 

For the quarter, Birchcliff reported net income of C$22.2mn, reversing a C$45.2mn loss in Q1 2020 that it attributed to lower commodity prices and realised losses on financial instruments.

Cash flow from operating activities rose to C$82.6mn from C$50.6mn, while adjusted funds flow more than doubled, to C$87.8mn from C$36.9mn, which Birchcliff said was largely the result of higher realised commodity prices.

Total production increased about 2%, to 75,065 b/d from 73,580 b/d, as liquids production rose 7%, to 17,556 b/d from 16,440 b/d, reflecting the strong drilling results on the liquids-rich Pouce Coupe lands. Natural gas production averaged 345.06mn ft3/day in Q1 2021, slightly higher than the 342.8mn ft3/day reported a year ago.