CALGARY, Alberta , Nov. 09, 2017 — Prairie Provident Resources Inc. (TSX:PPR) (“Prairie Provident,” “PPR” or the “Company”) is pleased to announce its operating and financial results for the three and nine months ended September 30, 2017, and to provide an operational update. PPR’s consolidated financial statements (“Financial Statements”) and related Management's Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2017 are available on its website and filed on SEDAR.
Prairie Provident was formed through the business combination of Lone Pine Resources Inc. and Lone Pine Resources Canada Ltd. (now Prairie Provident Resources Canada Ltd.) (collectively, “Lone Pine”) and Arsenal Energy Inc. (“Arsenal”) which completed on September 12, 2016 (the “Arsenal Acquisition”). Financial Statements referenced herein present the results for the historical Lone Pine properties for the period up to September 12, 2016 and for the combination of Lone Pine and Arsenal after September 12, 2016. This is a significant factor in understanding the year-over-year and quarter-over-quarter financial results of Prairie Provident. THIRD QUARTER 2017 HIGHLIGHTSThird quarter production averaged 5,506 boe/d (61% liquids), an 81% increase over the same period in 2016 due primarily to production additions from the successful Wheatland drilling program, the Arsenal Acquisition, and the acquisition on March 22, 2017 of high-quality, light oil assets in the Greater Red Earth area of Northern Alberta (the “Red Earth Acquisition”), which were partially offset by natural production declines, extended downtime related to wet weather conditions, a scheduled turnaround of the Evi main battery and other minor maintenance;Adjusted funds from operations(1) were $4.5 million ($0.04 per diluted share) or 151% higher than the $1.8 million ($0.02 per diluted share) generated in the third quarter of 2016 primarily due to higher production offset by lower operating netbacks after realized hedging gains;Operating netbacks(1) after realized hedging gains were $13.95/boe, a decrease of $3.17/boe from the third quarter of 2016, primarily due to lower realized gains on derivative instruments partially offset by higher realized prices;Capital expenditures were $4.8 million, primarily directed to the Wheatland and Princess development programs. In the Princess area, PPR drilled one (0.7 net) well and began construction of pipelines for the tie-ins of two (1.7 net) standing wells, which are expected to bring on new production in the fourth quarter of 2017. In Wheatland, the Company drilled one (1.0 net) exploratory well and tied-in two (2.0 net) wells that were drilled in the first quarter of 2017 in the Wheatland area. Our third quarter activity was reduced due to a conscious decision to defer our capital spending in response to low commodity prices during the quarter; andRecorded a net loss of $12.0 million, compared to a net loss of $11.6 million in the same period of 2016, due primarily to impairment losses of $3.4 million (Q3 2016 – $1.7 million), unrealized loss on derivative instruments of $2.6 million (Q3 2016 – $1.9 million) and depletion and depreciation of $8.6 million (Q3 2016 – $4.2 million).SUBSEQUENT EVENTSOn October 31, 2017, PPR completed a two-part debt financing transaction (the “Financing Transaction”). The transaction includes a three-year USD $40 million senior secured revolving note facility (the “Revolving Facility”), under which USD $31 million principal amount of senior secured revolving notes due October 31, 2020 (“Secured Notes”) were issued at closing, and an issue of USD $16 million principal amount of four-year senior subordinated notes due October 31, 2021 (“Subordinated Notes”). The overall debt structure expanded the Company’s borrowing base from CAD $65 million to approximately CAD $72 million (applying a USD/CAD exchange rate of USD $1.00 to CAD $1.29) and extended the term of its debt instruments.Contemporaneously with the closing of the Financing Transaction, the Company issued to the lender warrants to purchase up to 2,318,000 common shares, or 2% of the PPR’s outstanding shares, at an exercise price of CAD $0.549 (subject to adjustment in certain circumstances) with a 5-year term expiring on October 31, 2022. The exercise price represents a 20% premium over the 30-day weighted-average trading price of the Company’s common shares at closing. On October 1, 2017, PPR sold certain non-core producing properties. The disposition is expected to reduce fourth quarter 2017 production by approximately 400 boe/d but have a neutral impact on cash flow from operating activities.Subsequent to September 30, 2017, the Company entered into the following derivative contracts:
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