Earnings call transcript: Petrus Resources Q3 2025 sees production rise amid low prices

Petrus Resources reported a mixed financial performance for the third quarter of 2025. The company posted an earnings per share (EPS) of -$0.02, with total revenue reaching $19.82 million. Despite a challenging commodity pricing environment, Petrus Resources managed to increase production and improve cash flow. The company's stock price remained stable in post-earnings trading, closing at $1.73, unchanged from the previous session.

Key Takeaways

• Production increased by 7% year-over-year, showcasing operational resilience.
• Cash flow grew by 17%, despite a 14% drop in WTI oil prices.
• The company achieved a 40% improvement in capital efficiency compared to 2022-2023.
• Costs per Barrel of Oil Equivalent (BOE) were reduced by 15%.
• The stock price remained stable post-earnings, reflecting steady investor sentiment.

Company Performance

Petrus Resources demonstrated robust operational performance in Q3 2025, with a 7% increase in production compared to the previous year. The company effectively navigated a challenging market environment, characterized by a 14% drop in WTI oil prices and historically low AECO spot natural gas prices. Petrus Resources continued to focus on operational efficiency and cost management, achieving a 40% improvement in capital efficiency over the past two years.

Financial Highlights

• Revenue: $19.82 million, reflecting strategic capital reallocation and product mix optimization.
• EPS: -$0.02, indicating a slight loss but improved margins.
• Cash flow: Increased by 17% year-over-year.
• Costs per BOE: Reduced by 15%, enhancing profitability.

Outlook & Guidance

Petrus Resources remains committed to optimizing capital allocation and improving operational efficiency. The company expects continued improvements in margins and cost per BOE. Future guidance suggests a focus on higher-value liquid products and further cost reductions across various expense categories.

Executive Commentary

Ken Gray, CEO of Petrus Resources, emphasized the company's resilience in a low-price environment: "Actual realized pricing can be quite different, and if you're really managing your business well, as we are, you can actually grow cash flow despite depressed prices." He also highlighted the team's efforts in improving efficiency: "We strive for and have seen continued improvement in both our operating and capital efficiency."

Risks and Challenges

• Volatility in oil and gas prices could impact revenue and margins.
• Regulatory changes in the energy sector may affect operations.
• Supply chain disruptions could lead to increased costs or operational delays.
• Market saturation and competition from other energy producers may pressure prices.
• Macroeconomic pressures, such as inflation, could affect cost structures.

Petrus Resources continues to demonstrate resilience and adaptability in a challenging market, with strategic initiatives aimed at sustaining growth and profitability.

Full transcript - Petrus Resources Ltd (PRQ) Q3 2025:

Conference Operator: Hello, and thank you for standing by. Welcome to Petrus Resources' Third Quarter 2025 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Ken Gray, Petrus CEO. You may begin.

Ken Gray, CEO, Petrus Resources: Good morning, and thanks for joining the Petrus Resources Q3 Earnings Call. I'm Ken Gray, CEO of Petrus, and I'm joined by our executive team of Matthew Wong, CFO; Matt Scandrup, COO; and Lindsay Hatcher, VP, Commercial and Corporate Development. The results of the drilling we did in the first half of the year are reflected in our Q3 results, with production up 7% and cash flow up 17% from last year. These are exceptional results, especially when you consider the quarter saw some of the worst commodity pricing we have ever seen. How did we do this? By managing our business to handle the volatility we see in oil and gas prices, and by continuing to improve our operating and capital efficiencies so that we can generate strong results even when prices are low.

We managed the volatility in oil and gas prices through hedging and optimizing our product mix to generate the most revenue. Headline prices for oil and natural gas were down this quarter, with the WTI oil price at only $65 US per barrel for the quarter, down 14% from a year ago, and the AECO Spot natural gas price dropping to an all-time low of 25 cents per MCF in September, and down 8% overall for the quarter. Our realized oil price was only down 10%, and our realized gas price was actually up 15% from a year ago. More importantly, our total price per BOE after hedging was down only 2% from a year ago, both because our realized prices were better than the headline prices and because our product mix included more higher-value liquids.

The higher liquids weighting was intentional as we reallocated capital to our developing Belle Rivera Oil Play in Ferrier. My point here is not to be too fixated on the headline prices reported in the media. Actual realized pricing can be quite different, and if you're really managing your business well, as we are, you can actually grow cash flow despite depressed prices. The other key factor in generating exceptional returns, especially now, is being efficient at what you do. We strive for and have seen continued improvement in both our operating and capital efficiency. On the operating side, we are constantly working to lower all our costs: royalties, transportation, operating expenses, G&A expense, finance expense, decommissioning expense. Because of these efforts, over the last year, our margins have improved by 10%, and our costs per BOE have improved by 15%.

That is with inflation, tariffs, taxes, etc., all driving costs up. On the capital side, we focus on capital efficiency, defined as the capital cost to drill, complete, equip, and tie in a well, divided by a measure of the productivity of that well. So far in 2025, we have seen a 40% improvement over where we were at in the 2022-2023 period. That is some serious improvement and is a testament to the talent of the team we have here at Petrus. It is these efficiencies that have and will continue to drive our results. I'll stop here. We're happy to answer any questions at this time, and if there are no questions, thanks for listening in and for your continued interest in Petrus.

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