Q4 2022 Tamarack Valley Energy Ltd Earnings Call
Resulted in a 59%.
Speaker 1: transactions resulted in a 59% increase in fourth-order production relative to 2021.
Speaker 1: At the same time, we achieved an uplift in our corporate oil waiting from 69% to 82%. I'll pass it over to Steve for a run through or further details relating to the plan.
Speaker 2: Thanks, Brian . 22 was a record year for financial performance, which saw Tamarack generate 727 million of after-tax adjusted funds flow, and 268.5 million of free funds flow, excluding acquisition expenditures.
Speaker 2: which enabled the implementation of a return of capital to shareholders and established a strong financial position that provided a foundation for the accretive and transformational 2022 acquisitions.
Speaker 2: We initiated a return of capital framework during the year and we were able to increase our base monthly dividend by 50 percent on the back of our successful ongoing development and highly accrued of acquisitions through the year.
Speaker 2: During the fourth quarter, we integrated the acquired Delta Stream assets and delivered average production of 64,344 BuA-8, which came in ahead of the high end of our guidance range, despite the unexpected downtime owing to the extreme cold weather to end the year.
Speaker 2: Capitol spending during the quarter was at the low end of guidance totaling 125 million.
Speaker 2: Full year 2022 production averaged 48,283 BOEA day. On total capital expenditures of 458 million contributed to the drilling of 100 net clear water oil wells, 17.2 net Charlie Lake Oil Wells.
Speaker 2: Part of our portfolio rationalization strategy, we disposed of a non-core asset consisting of 160 BOE a day of net production for over 24 million during the quarter, and in conjunction with our previously announced Viking non-core sale, had gross...
Speaker 2: proceeds for the year of approximately $94 million.
Speaker 2: America and as part of the Delta Stream acquisition we structurally transformed Tamarack's reserve-based revolving credit facility to a three-year senior secured sustainably-linked revolving credit facility.
Speaker 2: Keep priorities for us in 2023 will be debt repayment to advance our enhanced return of capital framework for shareholders.
Speaker 2: for us in 2023 will be debt repayment to advance our enhanced return of capital framework for shareholders.
Speaker 1: The ongoing positive impact of Tamarax drilling program, combined with the clear water acquisitions, contributed significantly to our reserves growth in 2022. There's further underscores the long-term resiliency and sustainability of free funds for generation.
Speaker 1: The key highlights from our year end reserve report include a 35% increase to our approved and developed producing or PDP reserves, which replaced 210% of production.
Speaker 1: Above that, 118% was replaced organically through the drill bit.
Speaker 1: Secondly, a 33% increase to our total approved, plus probable or TPP reserves, which now totaled 242 million B a week. Before tax net present value of reserves, discounted at 10% of 5 billion on a TPP basis.
Speaker 1: Our year end, year over year reserves, net present value per BLE increased by 36% and 27% on a PDP and TPP basis respectively. Illustrating the value added is a result of our 2022 activity on both organic and acquisition basis.
Speaker 1: We're extremely proud of the way the Delta Stream assets have enhanced our portfolio. The Delta Stream acquisition assets outperformed our initial evaluation estimates by 27% on a PDP basis and 12% on a 2P basis.
Speaker 1: I'll pass it back to Steve.
Speaker 2: With respect to our 2023 previously announced guidance, nothing changes. We're maintaining our prior CAPEX and production guidance at 425 to 470 million of expenditures with production expected to range between 68 to 72,000 BUE a day respectively.
Speaker 2: With respect to the capex, we have some pretty large infrastructure projects that have been announced with respect to the Charlie Lake gas plant, as well as the Nipasy Clearwater Pipeline and Terminal project, which will occur through mid-year. These projects will drive lower off-ex and enhance netbacks long-term for the company.
Speaker 2: Brian , sorry, looking at the commodity price performance, well we continue to see volatility in the ACO and WTI markets. We have seen WCS heavy oil differentials move materially in our favor in recent weeks, providing a positive backstop to our outlook for 2023.
Speaker 2: We estimate an increase to our adjusted free funds flow of approximately $9 million on an annual basis for each dollar per barrel improvement in the WCS differential.
Speaker 2: the free funds flow of approximately $9 million on an annual basis for each dollar in the WCS differential. Back to you, Brian .
Speaker 1: Operationally, we currently have eight drilling rates running, including three in the Charity Lake and five in the clear water.
Speaker 1: The 124 Charity Lakewell Drill in Q422 continues to exceed expectations and ranks as one of the top performing oil wells drilled in the plate to date.
Speaker 1: Based on our field estimates for February , the 1-24 well produced 1900 BUE of per day of production, which 70% was liquids. At Martin Hills, we recently brought on two three new extended reach wells.
Speaker 1: and put them on stream at over 5-15 pad, which were drilled under our West Prophecy Water Foot Design.
Speaker 1: And it delivered recent production of over 700 barrels per day.
Speaker 1: Combined production from Martin Hilsen, Kennell averaged 16,300 B.O.E. per day for the first three weeks of February up from 15,100 B.O.E. per day at the close of the acquisition.
Speaker 1: Episcopal year to date in 2023, we have released two
Speaker 1: Oil wells, one multilateral injector which we expect to run a two-rate program here through spring breakup.
Speaker 1: By the end of the first quarter, Tamarack will have commenced injection into eight new West Nipacy Wells, building on our strong water flood pilot results on our 13-19 pilot.
Speaker 1: The producing well in the pilot supported by three single-leg injectors has delivered over 140,000 barrels of human-of-oil production in just 14 months and is currently producing over 400 barrels of oil per day with a 15% water cut.
Speaker 1: In support of ongoing development, expansion of our 15 to 22 oil batteries is expected to be completed in Q423.
Speaker 1: Buying from this battery will be connected to a third-party pipeline where Tamarack holds an agreement for firm surface. Once the battery is operational, 70% of Tamarack's nip disease boil production will be shipped in via pipeline.
Speaker 2: The camera continues to balance our near-term priorities with our long-term objectives to deliver on our return of capital framework and enhance our business value through the execution of our five-year plan. In 2023, we are making investments in critical infrastructure, which I highlighted, which provide for longer-term cost efficiency improvements.
Speaker 2: enhance reliability and facilitate strategic execution of our development and exploration programs.
Speaker 2: Alongside that, investment in exploration, a high-grade and extend our future inventory of drilling opportunities and the expansion of our water flood program to support long-life low-declined production are all designed to improve our profitability by growing our debt-adjusted free funds flow on a per share basis.
Speaker 1: We'll turn it back to Brian for some final comments. Thank you, Steve. As we look ahead, I am pleased to announce the appointment of Carolyn Bennett to our Board of Directors. Ms. Bennett is Executive Vice President and Chief Strategy Officer of GLJ, and she also serves as President of the Kennedy and Ovi Heavy Oil Association. Carolyn brings strong advisory experience in reserves and resource governance.
Speaker 1: and contribute to strategic expertise to business transformation, including sustainability, decarbonization, and energy diversification.
Speaker 1: 2022, represented a year where Tremac truly transformed our business.
Speaker 1: And that would not have happened without the support of our Board of Directors.
Speaker 1: With successful closing of three material and targeted clear water acquisitions and the divestment of two non-core assets We've clearly defined ourselves as the leader in the clear water and charty make resource plays
Speaker 1: He's out come reflect the successful execution of a strategic plan drafted three years ago to establish footholds in core areas and grow those through follow-on acquisitions in organic droplet development.
Speaker 1: We look forward to continuing to develop our high quality assets to create shareholder value in a sustainable, responsive way.
Speaker 3: I'll now turn it back to the moderator for questions. Thank you. Ladies and gentlemen, if you have a question to star one on your telephone keypad, if you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one for any questions at this time.
Speaker 3: So far, I do not have any signal, but again, that was star one if you had a question or comment at this time.
Speaker 4: Ladies and gentlemen, I believe we may have been disconnected from the moderator.
Speaker 4: This will conclude our call for today. Thank you.
Speaker 5: And.
Speaker 5: We.
Speaker 5: I.
Speaker 5: And.