Earnings call transcript: Petrus Resources Q4 2024 sees stable stock price

Petrus Resources Ltd reported its fourth-quarter 2024 earnings, revealing an EPS of -0.03 and revenue of $18.87 million. Despite the challenging market conditions, including historically low gas prices, the company’s stock remained unchanged at $1.35 in the extended session. According to InvestingPro analysis, the company appears slightly undervalued against its Fair Value, with a strong financial health score of 2.89 (GOOD). Investors appeared to maintain a neutral stance, reflecting confidence in the company’s operational efficiencies and future production plans.

Key Takeaways

• Petrus Resources generated $12.5 million in cash flow for Q4 2024.
• The company improved NGL yields by 25% compared to the previous year.
• Production remained steady at 9,066 barrels per day.
• Capital expenditures were reduced by over 60% from 2023 levels.

Company Performance

Petrus Resources demonstrated resilience in Q4 2024, maintaining steady production levels and generating significant cash flow despite facing the lowest gas prices in three decades. The company focused on operational efficiencies and capital discipline, reducing expenditures significantly compared to 2023. This strategic approach allowed Petrus to sustain its production levels and prepare for future growth.

Financial Highlights

• Revenue: $18.87 million for Q4 2024.
• Cash flow: $12.5 million for Q4; $50.1 million for the full year 2024.
• Production: 9,066 barrels per day in Q4.

Outlook & Guidance

Looking ahead, Petrus Resources plans to continue its drilling activities through the seasonal breakup and expects production to increase in Q2 2025. With a Price/Book ratio of 0.55 and strong return on assets of 10.6%, the company demonstrates solid fundamentals. The company remains optimistic about potential improvements in commodity prices and maintains confidence in its long-term performance, despite short-term market disruptions. For detailed analysis and growth projections, investors can access the comprehensive Pro Research Report available on InvestingPro.

Executive Commentary

CEO Ken Gray expressed confidence in the company’s fundamentals, stating, "When a business has strong fundamentals, short term disruptions have little effect on long term performance." He emphasized the company’s ability to generate strong cash flow even at relatively low prices, highlighting Petrus’ competitive cost structure in oil and gas production.

Risks and Challenges

• Persistently low gas prices could continue to pressure revenue.
• Political uncertainties, including a federal election, may impact the business environment.
• Potential U.S. tariffs could pose additional challenges.
• The company’s missed EPS may indicate underlying operational hurdles.
• Market volatility and commodity price fluctuations remain ongoing concerns.

The earnings call did not include a Q&A session, leaving some investor questions unanswered. However, Petrus Resources’ strategic focus on efficiency and cash flow generation positions it well to navigate current market conditions.

Full transcript - Petrus Resources Ltd (PRQ) Q4 2024:

Conference Operator: Good day and thank you for standing by. Welcome to the Pitcher Resources Fourth Quarter twenty twenty four Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer Please be advised that today’s conference is being recorded.

I would like to hand the conference over to your speaker today, Ken Gray. Please go ahead.

Ken Gray, CEO, Petrus Resources: Good morning, and welcome to Petrus Resources Q4 twenty twenty four and year end earnings call. My name is Ken Gray, CEO of Petrus, and I am joined here by our executive team of Matthew Wong, our CFO Matt Skandrep, our COO and Lindsay Hatcher, our VP, Commercial and Corporate Development. The story for Q4 and for 2024 in general was our ability to generate strong cash flow, $12,500,000 for the quarter and $50,100,000 for the year, and to hold production relatively flat, averaging 9,066 per day in Q4, down only 4% from Q4 twenty twenty three. We did this despite working through the lowest gas prices in thirty years. We also did it despite cutting capital over 60% from 2023 in response to these low gas prices.

A key to achieving these results was an improvement in capital efficiency, allowing us to generate more production and cash flow for each dollar of capital invested. This was primarily driven by advances in our completion design, which resulted in better productivity at a lower cost. We are also continuing to improve operating efficiencies. One achievement of note in that area has been the increase in NGL recoveries in Q4, where we generated a 25% improvement in NGL yields compared to Q4 twenty twenty three. We released our 2025 capital budget and guidance late last month and the year is off to a strong start.

We have already drilled as many operated wells as we did all of last year and a couple of them are already on production. We’ve also completed the extension of our North Barrier pipeline, which extends to our largely undeveloped lands to the north. And the remaining wells we’ve drilled will be completed and start flowing down that line in Q2. Looking forward, we are planning to continue drilling through breakup. Production should start to tick up in Q2, hopefully coinciding with continued strong liquids prices and improving natural gas prices.

With that, I’ll open the floor to questions.

Conference Operator: Thank you. I’m showing no questions at this time. I’ll now turn it back to Ken Gray for closing remarks.

Ken Gray, CEO, Petrus Resources: Okay. Thanks. There is one thing I just like to add here since since we don’t have any questions, but I think it’s been on a lot of investors’ minds. We kind of find ourselves in the middle of significant political turmoil here. We’ve got a federal election going on and of course the threat of tariffs from The U.

S. This can be somewhat unsettling and is never good for business. But I’d like to emphasize that at Petrus, we produce commodities that are in high demand and will remain so for the foreseeable future. We produce these commodities at a very competitive cost and are able to generate strong cash flow even at relatively low prices. When a business has strong fundamentals, short term disruptions have little effect on long term performance.

Petrus has proven its strength and demonstrated it is built for sustained success. So despite the current turmoil, we are excited about the future and look forward to continue finding, developing and producing oil and gas in Alberta. Thanks for listening and for your continued interest and support for Petrus.

Conference Operator: Thank you for participation in today’s conference. This does conclude the program. You may now disconnect.

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