Return to News Categories

ALL NEWS SECTIONS:
MOST POPULAR SECTIONS:
Cattle - Hogs / Livestock News Currencies News Energy News Grain News Index News Interest Futures News Metals Futures News Reports: Crops, CFTC, etc Soft Commodities News

Futures and Commodity Market News

Birchcliff Energy Ltd. Announces Strong Q2 2019 Results Resulting in an Expanded 2019 Capital Program

CALGARY, Alberta, Aug 14, 2019 (GLOBE NEWSWIRE via COMTEX) --

Birchcliff Energy Ltd. ("Birchcliff" or the "Corporation") (TSX: BIR) is pleased to announce its financial and operational results for the three and six months ended June 30, 2019 and an expanded 2019 capital program. Birchcliff's unaudited interim condensed financial statements for the three and six months ended June 30, 2019 and related management's discussion and analysis (the "MD&A") will be available on its website at www.birchcliffenergy.com and on SEDAR at www.sedar.com. Birchcliff is also pleased to provide an operational update, including encouraging results from its recent well pads brought on production in Pouce Coupe and Gordondale.

"We had strong results in the second quarter, which were underpinned by the strong performance of our assets and our new oil and liquids-rich wells, the successful execution of our capital program, our record low operating costs and our natural gas market diversification initiatives. Our average production for the quarter was 78,453 boe/d, which was ahead of our internal budget and represents a 3% increase from Q2 2018. Given these production results, we expect that we would have achieved the mid-point of our 2019 annual average production guidance of 76,000 to 78,000 boe/d, before taking into account the expansion to our 2019 capital program," commented Jeff Tonken, President and Chief Executive Officer of Birchcliff. "As a result of our achievements year-to-date and our strong quarterly results and balance sheet, we have determined to drill an additional 7 (7.0 net) horizontal wells in 2019, all of which are expected to be on-stream by November 1, 2019. Accordingly, we have increased our capital budget by $38 million to $242 million. We anticipate that this additional capital will allow us to maintain production in 2020 at or near current levels and reduce the amount of capital that we will need to spend in 2020. Notwithstanding this increase, our capital expenditures in 2019 are still expected to be significantly less than our forecast of 2019 adjusted funds flow. Based on the strong performance of our wells and the expansion to our capital program, we are increasing our 2019 annual average production guidance to 77,000 to 79,000 boe/d."

Q2 2019 Highlights

Encouraging Initial Production Rates in Pouce Coupe and Gordondale

Expanded 2019 Capital Program and Revised Guidance

SECOND QUARTER 2019 FINANCIAL AND OPERATIONAL HIGHLIGHTS

                                                    Three months ended        Six months ended
                                                    June 30,                  June 30,
                                                    2019         2018         2019         2018
OPERATING
Average production
Light oil - (bbls/d)                                4,853        5,599        4,827        4,872
Condensate - (bbls/d)                               5,505        3,934        4,963        3,808
NGLs - (bbls/d)                                     6,923        6,036        6,834        5,816
Natural gas - (Mcf/d)                               367,033      364,360      360,327      370,880
Total - boe/d                                       78,453       76,296       76,678       76,309
Average realized sales price (CDN$)
Light oil - (per bbl)                               72.25        79.55        69.20        76.33
Condensate - (per bbl)                              71.69        87.52        68.93        85.35
NGLs - (per bbl)                                    11.13        21.94        14.36        23.46
Natural gas - (per Mcf)                             1.95         2.01         2.73         2.37
Total - per boe                                     19.59        21.68        22.92        22.45
NETBACK AND COST ($/boe)
Petroleum and natural gas revenue                   19.59        21.69        22.93        22.45
Royalty expense                                     (0.75   )    (1.53   )    (0.98   )    (1.48   )
Operating expense                                   (3.17   )    (3.36   )    (3.28   )    (3.57   )
Transportation and other expense                    (4.29   )    (3.64   )    (4.45   )    (3.60   )
Operating netback ($/boe)                           11.38        13.16        14.22        13.80
G&A expense, net                                    (0.87   )    (0.88   )    (0.89   )    (0.88   )
Interest expense                                    (0.92   )    (0.96   )    (0.97   )    (0.96   )
Realized gain (loss) on financial instruments       0.74         (0.93   )    1.34         (0.69   )
Other income                                        0.03         0.03         0.03         0.03
Adjusted funds flow netback ($/boe)                 10.36        10.42        13.73        11.30
Depletion and depreciation expense                  (7.40   )    (7.60   )    (7.47   )    (7.50   )
Unrealized gain (loss) on financial instruments     (6.50   )    0.36         (6.14   )    (0.43   )
Other expenses                                      (1.17   )    (1.47   )    (0.76   )    (0.90   )
Dividends on Series C preferred shares              (0.12   )    (0.13   )    (0.13   )    (0.13   )
Income tax recovery (expense)                       3.65         (0.51   )    1.37         (0.71   )
Net income (loss) ($/boe)                           (1.18   )    1.07         0.60         1.63
Dividends on Series A preferred shares              (0.15   )    (0.15   )    (0.15   )    (0.15   )
Net income (loss) to common shareholders ($/boe)    (1.33   )    0.92         0.45         1.48
FINANCIAL
Petroleum and natural gas revenue ($000s)           139,857      150,561      318,212      310,092
Cash flow from operating activities ($000s)         97,857       71,825       192,601      163,678
Adjusted funds flow ($000s)                         73,957       72,369       190,605      156,027
Per common share - basic ($)                        0.28         0.27         0.72         0.59
Per common share - diluted ($)                      0.28         0.27         0.72         0.58
Net income (loss) ($000s)                           (8,458  )    7,437        8,388        22,562
Net income (loss) to common shareholders ($000s)    (9,505  )    6,390        6,294        20,468
Per common share - basic ($)                        (0.04   )    0.02         0.02         0.08
Per common share - diluted ($)                      (0.04   )    0.02         0.02         0.08
Common shares outstanding (000s)
End of period - basic                               265,935      265,845      265,935      265,845
End of period - diluted                             287,381      285,253      287,381      285,253
Weighted average common shares for period - basic   265,933      265,820      265,924      265,809
Weighted average common shares for period - diluted 265,933      267,773      266,297      266,793
Dividends on common shares ($000s)                  6,981        6,646        13,961       13,291
Dividends on Series A preferred shares ($000s)      1,047        1,047        2,094        2,094
Dividends on Series C preferred shares ($000s)      875          875          1,750        1,750
Total capital expenditures ($000s)                  68,532       66,464       200,490      199,608
Long-term debt ($000s)                              622,282      617,291      622,282      617,291
Adjusted working capital deficit ($000s)            32,427       44,118       32,427       44,118
Total debt ($000s)                                  654,709      661,409      654,709      661,409

(1) Beginning in Q1 2019, Birchcliff began presenting condensate and NGLs separately. Prior period sales and volumes have been adjusted to conform to this current period presentation.

(2) Excludes the effects of financial instruments but includes the effects of physical delivery contracts.

(3) Includes non-cash expenses such as compensation, accretion, amortization of deferred financing fees and other losses.

(4) See "Advisories - Capital Expenditures". Total capital expenditures for the six months ended June 30, 2019 include the $39 million Acquisition (as defined below).

(5) Birchcliff adopted IFRS 16: Leases effective January 1, 2019 using the modified retrospective approach; therefore 2018 comparative information has not been restated.

This press release contains forward-looking statements within the meaning of applicable securities laws. For further information regarding the forward-looking statements contained herein, please see "Advisories - Forward-Looking Statements". In addition, this press release contains references to "adjusted funds flow", "adjusted funds flow per common share", "free funds flow", "operating netback", "adjusted funds flow netback", "total cash costs", "adjusted working capital deficit" and "total debt", which do not have standardized meanings prescribed by GAAP. For further information regarding these non-GAAP measures, please see "Non-GAAP Measures".

Q2 2019 FINANCIAL AND OPERATIONAL RESULTS

FINANCIAL RESULTS

Production

Birchcliff's production averaged 78,453 boe/d in Q2 2019, a 3% increase from 76,296 boe/d in Q2 2018. The increase was primarily attributable to the incremental production from new horizontal oil wells in Gordondale and horizontal condensate-rich natural gas wells in Pouce Coupe that were brought on production in Q2 2019, partially offset by production curtailments on the NGTL and TCPL Canadian Mainline systems and natural production declines.

Production consisted of approximately 6% light oil, 7% condensate, 9% NGLs and 78% natural gas in Q2 2019 as compared to 7% light oil, 5% condensate, 8% NGLs and 80% natural gas in Q2 2018. Birchcliff's liquids production weighting increased by 8% from Q2 2018. The change in the commodity production mix was primarily attributable to the addition of condensate-rich natural gas wells in Pouce Coupe and an increase in C3+ recovered from the natural gas stream at Birchcliff's 100% owned and operated natural gas processing plant located in Pouce Coupe (the "Pouce Coupe Gas Plant").

Production from Pouce Coupe was 51,746 boe/d (66% of total corporate production) in Q2 2019 as compared to 47,761 boe/d (63% of total corporate production) in Q2 2018. Production from Gordondale was 26,703 boe/d (34% of total corporate production) in Q2 2019 as compared to 28,308 boe/d (37% of total corporate production) in Q2 2018.

Adjusted Funds Flow

Birchcliff's adjusted funds flow for Q2 2019 was $74.0 million, or $0.28 per basic common share, a 2% increase and a 4% increase, respectively, from $72.4 million and $0.27 per basic common share in Q2 2018. The increases were primarily due to lower royalty expense and a realized gain on financial instruments in Q2 2019 as compared to a realized loss on financial instruments in Q2 2018, largely offset by an increase in transportation and other expense as a result of Birchcliff's increased Dawn and AECO firm service and lower reported revenue. Revenue received by the Corporation was lower mainly due to a decrease in the average realized liquids pricing, partially offset by increased production of high-value condensate in Pouce Coupe.

Net Loss to Common Shareholders

Birchcliff recorded a net loss to common shareholders of $9.5 million, or $0.04 per basic common share, in Q2 2019 as compared to net income to common shareholders of $6.4 million and $0.02 per basic common share in Q2 2018. The change to a net loss position from a net income position was primarily due to a $46.4 million unrealized mark-to-market loss on financial instruments recorded in Q2 2019 as compared to a $2.5 million unrealized mark-to-market gain on financial instruments in Q2 2018, partially offset by a $26.1 million income tax recovery in Q2 2019 as compared to a $3.6 million income tax expense in Q2 2018.

The unrealized mark-to-market loss on financial instruments on an after-tax basis was $35.7 million, or $0.13 per basic common share. Included in the $26.1 million income tax recovery in Q2 2019 was approximately $18.9 million related to the reduction in future income tax liability resulting from the change in Alberta's corporate income tax rate from 12% to 8% over the next four years.

Operating Expense

Birchcliff's operating expense was $3.17/boe in Q2 2019, a 6% decrease from $3.36/boe in Q2 2018. The decrease was primarily due to: (i) a step-down reduction in natural gas processing fees which became effective January 1, 2019 at AltaGas' deep-cut sour gas processing facility in Gordondale; (ii) reduced take-or-pay processing commitments in Pouce Coupe beginning in November 2018, which resulted in natural gas being redirected from third-party facilities to the Pouce Coupe Gas Plant; and (iii) increased operating efficiencies resulting from expanded liquids-handling capabilities in Pouce Coupe.

Transportation and Other Expense

Birchcliff's transportation and other expense was $4.29/boe in Q2 2019, an 18% increase from $3.64/boe in Q2 2018. The increase was primarily due to an additional 30,000 GJ/d of firm service transportation to Dawn which became available on November 1, 2018 and unused firm transportation costs associated with Birchcliff's commitments on the NGTL system.

G&A Expense

Birchcliff's G&A expense was $0.87/boe in Q2 2019, a 1% decrease from $0.88/boe in Q2 2018. The decrease was primarily due to higher corporate production, with no significant change to aggregate G&A expense.

Interest Expense

Birchcliff's interest expense was $0.92/boe in Q2 2019, a 4% decrease from $0.96/boe in Q2 2018. The decrease was primarily due to higher corporate production, with no significant change to aggregate interest expense.

Total Cash Costs

Birchcliff's total cash costs were $10.00/boe in Q2 2019, a 4% decrease from $10.37/boe in Q2 2018. The decrease was primarily due to lower per boe royalty and operating expenses, partially offset by higher transportation and other expense.

Operating Netback

Birchcliff's operating netback was $11.38/boe in Q2 2019, a 14% decrease from $13.16/boe in Q2 2018. The decrease was primarily due to a 10% decrease in the corporate average realized sales price, partially offset by lower per boe total cash costs as noted above.

Pouce Coupe Gas Plant Netbacks

During the six months ended June 30, 2019, Birchcliff processed approximately 69% of its total corporate natural gas production and 59% of its total corporate production through the Pouce Coupe Gas Plant as compared to 67% and 57%, respectively, during the six months ended June 30, 2018. The following table sets forth Birchcliff's average daily production and operating netback for wells producing to the Pouce Coupe Gas Plant for the periods indicated:

                                  Six months ended   Six months ended
                                  June 30, 2019      June 30, 2018
Average production:
Condensate (bbls/d)                        3,272              2,147
NGLs (bbls/d)                              753                51
Natural gas (Mcf/d)                        246,920            249,317
Total (boe/d)                              45,178             43,751
Liquids-to-gas ratio (bbls/MMcf)           16.3               8.8
Netback and cost:                 $/Mcfe   $/boe     $/Mcfe   $/boe
Petroleum and natural gas revenue 3.38     20.30     2.91     17.49
Royalty expense                   (0.06  ) (0.35   ) (0.05  ) (0.29   )
Operating expense                 (0.39  ) (2.34   ) (0.39  ) (2.36   )
Transportation and other expense  (0.75  ) (4.55   ) (0.55  ) (3.33   )
Operating netback                 $2.18    $13.06    $1.92    $11.51
Operating margin                  64     % 64      % 66     % 66      %

(1) Excludes the effects of financial instruments but includes the effects of physical delivery contracts. Please see "Q2 2019 Financial and Operational Results - Financial Results - Risk Management".

(2) Represents plant and field operating expense.

(3) Operating margin is calculated by dividing the operating netback for the period by the petroleum and natural gas revenue for the period.

Birchcliff's liquids-to-gas ratio increased by 85% as compared to the six months ended June 30, 2018 primarily due to: (i) the re-configuration of Phases V and VI of the Pouce Coupe Gas Plant in Q4 2018 which provided for shallow-cut capability, allowing Birchcliff to extract C3+ from the natural gas stream; and (ii) specifically targeted condensate-rich natural gas wells in Pouce Coupe. The amount of condensate being produced at the Pouce Coupe Gas Plant increased by 52% as compared to the six months ended June 30, 2018. The increase in the liquids-to-gas ratio improved Birchcliff's average realized sales price and operating netback at the Pouce Coupe Gas Plant.

Debt

At June 30, 2019, Birchcliff had significant liquidity with long-term bank debt of $622.3 million (June 30, 2018: $617.3 million) from credit facilities in the aggregate principal amount of $1.0 billion (June 30, 2018: $950.0 million), leaving $357.6 million of unutilized credit capacity after adjusting for outstanding letters of credit and unamortized interest and fees. Total debt at June 30, 2019 was $654.7 million as compared to $661.4 million at June 30, 2018.

As previously disclosed in Birchcliff's press release dated May 15, 2019, the agreement governing Birchcliff's extendible revolving credit facilities (the "Credit Facilities") was amended effective May 10, 2019 to: (i) extend the maturity dates of each of the extendible revolving syndicated term credit facility (the "Syndicated Credit Facility") and the extendible revolving working capital facility (the "Working Capital Facility") from May 11, 2021 to May 11, 2022; and (ii) increase the borrowing base limit to $1.0 billion from $950.0 million, with the Syndicated Credit Facility being increased to $900.0 million from $850.0 million and the Working Capital Facility remaining at $100.0 million. The Credit Facilities do not contain any financial maintenance covenants.

Commodity Prices

The following table sets forth the average benchmark index prices and Birchcliff's average realized sales prices for the periods indicated:

                                                     Three months ended Three months ended % Change
                                                     June 30, 2019      June 30, 2018
Average benchmark index prices:
Light oil - WTI Cushing (US$/bbl)                    59.79              67.88              (12  %)
Light oil - MSW (Mixed Sweet) (CDN$/bbl)             73.18              80.30              (9   %)
Natural gas - NYMEX HH (US$/MMBtu)                   2.64               2.83               (7   %)
Natural gas - AECO 5A Daily (CDN$/GJ)                0.98               1.12               (13  %)
Natural gas - AECO 7A Month Ahead (US$/MMBtu)        0.87               0.80               9    %
Natural gas - Dawn Day Ahead (US$/MMBtu)             2.34               2.77               (16  %)
Natural gas - ATP 5A Day Ahead (CDN$/GJ)             1.17               1.46               (20  %)
Exchange rate (CDN$ to US$1)                         1.3376             1.2911             4    %
Exchange rate (US$ to CDN$1)                         0.7476             0.7745             (3   %)
Birchcliff's average realized sales prices:
Light oil (CDN$/bbl)                                 72.25              79.55              (9   %)
Condensate (CDN$/bbl)                                71.69              87.52              (18  %)
NGLs (CDN$/bbl)                                      11.13              21.94              (49  %)
Natural gas (CDN$/Mcf)                               1.95               2.01               (3   %)
Birchcliff's average realized sales price (CDN$/boe) 19.59              21.68              (10  %)

(1) Previously referred to as the "Edmonton Par price".

(2) $1.00/MMBtu = $1.00/Mcf based on a standard heat value Mcf. Please see "Advisories - MMBtu Pricing Conversions".

(3) Excludes the effects of financial instruments but includes the effects of physical delivery contracts.

Marketing and Natural Gas Market Diversification

Birchcliff continues to be strategic and opportunistic in advancing its market access initiatives. The Corporation actively monitors market conditions and executes a marketing strategy that diversifies its sales portfolio to ensure that production gets to market at optimal pricing. Birchcliff also proactively secures takeaway capacity for future development projects and uses excess transportation capacity to mitigate the impact of third-party infrastructure outages. Birchcliff's physical natural gas sales exposure currently consists of AECO, Dawn and Alliance markets. In addition, the Corporation has various financial instruments outstanding that provide it with exposure to NYMEX HH pricing. Please see "Q2 2019 Financial and Operational Results - Financial Results - Risk Management".

The following table details Birchcliff's effective sales, production and average realized sales price for natural gas and liquids for Q2 2019, after taking into account the Corporation's financial instruments:

Three months ended June 30, 2019
                  Effective  Percentage of Effective   Percentage of     Percentage of   Effective average
                  sales      total sales   production  total natural gas total corporate realized
                  (CDN$000s) (%)           (per day)   production        production      sales price
                                                       (%)               (%)             (CDN$)
Markets
AECO              12,760     9             126,321 Mcf 34                27              1.11/Mcf
Dawn              41,104     28            135,953 Mcf 37                29              3.32/Mcf
Alliance          1,856      1             13,727 Mcf  4                 3               1.49/Mcf
NYMEX HH          15,355     11            91,032 Mcf  25                19              1.85/Mcf
Total natural gas 71,075     49            367,033 Mcf 100               78              2.13/Mcf
Light oil         31,907     22            4,853 bbls                    6               72.25/bbl
Condensate        35,906     25            5,504 bbls                    7               71.69/bbl
NGLs              7,011      4             6,923 bbls                    9               11.13/bbl
Total liquids     74,824     51            17,280 bbls                   22              47.58/bbl
Total corporate   145,899    100           78,453 boe                    100             20.44/boe

(1) A portion of AECO 5A sales and production that effectively received NYMEX HH pricing under Birchcliff's long-term physical and financial NYMEX/AECO 7A basis swap contracts has been included as effective sales and production in NYMEX HH markets. Any impact from the sales pricing variance between the average AECO 5A and AECO 7A benchmark price during the period has also been included as effective sales in NYMEX HH markets.

(2) Birchcliff sold AECO 7A basis swaps for 100,000 MMBtu/d at an average contract price of NYMEX less US$1.28/MMBtu during Q2 2019.

Effectively 91% of the Corporation's sales revenue, representing 66% of its total natural gas production and 73% of its total corporate production, was generated from markets outside of AECO in Q2 2019, after taking into account its liquids sales and long-term financial NYMEX/AECO basis swap position.

The following table sets forth Birchcliff's sales, production, average realized sales price, transportation costs and natural gas sales netback by natural gas market for the periods indicated, before taking into account the Corporation's financial instruments:

Three months ended June 30, 2019
         Natural gas Percentage of Natural gas production Percentage of Average realized  Natural gas transportation Natural gas
         sales       natural gas   (Mcf/d)                natural gas   natural gas sales costs                      sales
         (CDN$000s)  sales                                production    price             (CDN$/Mcf)                 netback
                     (%)                                  (%)           (CDN$/Mcf)                                   (CDN$/Mcf)
AECO     22,049      34            217,353                59            1.11              0.32                       0.79
Dawn     41,104      63            135,953                37            3.32              1.38                       1.94
Alliance 1,856       3             13,727                 4             1.49              -                          1.49
Total    65,009      100           367,033                100           1.95              0.71                       1.24
Three months ended June 30, 2018
         Natural gas Percentage of Natural gas            Percentage of Average realized  Natural gas transportation Natural gas
         sales       natural gas   production             natural gas   natural gas sales costs                      sales
         (CDN$000s)  sales         (Mcf/d)                production    price             (CDN$/Mcf)                 netback
                     (%)                                  (%)           (CDN$/Mcf)                                   (CDN$/Mcf)
AECO     25,092      38            219,135                60            1.27              0.29                       0.98
Dawn     37,542      56            108,950                30            3.79              1.34                       2.45
Alliance 3,985       6             36,275                 10            1.21              -                          1.21
Total    66,619      100           364,360                100           2.01              0.58                       1.43

(1) Excludes the effects of financial instruments but includes the effects of physical delivery contracts.

(2) Reflects costs to transport natural gas from the field receipt point to the delivery sales trading hub.

(3) Natural gas sales netback denotes the average realized natural gas sales price less natural gas transportation costs.

(4) Birchcliff has agreements for the firm service transportation of an aggregate of 175,000 GJ/d of natural gas on TCPL's Canadian Mainline for a 10-year term, whereby natural gas is transported to the Dawn trading hub in Southern Ontario. The first tranche of this service (120,000 GJ/d) became available on November 1, 2017 and the second tranche (30,000 GJ/d) became available on November 1, 2018, bringing the total to 150,000 GJ/d. The last tranche of service (25,000 GJ/d) will become available on November 1, 2019.

(5) Birchcliff has sales agreements with a third party marketer to sell and deliver into the Alliance pipeline system. Alliance sales are recorded net of transportation tolls.

The Corporation's average realized natural gas sales price was $1.95/Mcf in Q2 2019, an 89% premium to the average AECO 5A benchmark price of $1.03/Mcf in the quarter.

During Q2 2019, approximately 66% of Birchcliff's natural gas sales revenue, representing approximately 41% of its total natural gas production, was generated from the Dawn and Alliance markets with an average realized natural gas sales price of $3.15/Mcf, a 184% premium to Birchcliff's average realized natural gas sales price of $1.11/Mcf from the AECO market in Q2 2019. Birchcliff's average realized natural gas sales netback from the Dawn and Alliance markets was $1.90/Mcf, a 141% premium to its realized natural gas sales netback of $0.79/Mcf from the AECO market in Q2 2019.

For information regarding Birchcliff's natural gas market exposure during 2019, please see "Outlook and Guidance".

Risk Management

Birchcliff engages in risk management activities by utilizing various financial instruments and physical delivery contracts to diversify its sales points or fix commodity prices and market interest rates, including NYMEX/AECO basis swaps which fix the basis differential between AECO and NYMEX HH prices, effectively providing for a floating NYMEX HH price.

Birchcliff realized a cash gain on financial instruments of $5.3 million in Q2 2019 as compared to a realized cash loss of $6.5 million in Q2 2018. The realized gain was primarily due to the settlement of financial NYMEX/AECO basis swap contracts that were outstanding in the period with an average basis differential that was above the average contract basis in Q2 2019.

Birchcliff recorded an unrealized non-cash loss of $46.4 million on financial instruments in Q2 2019 due to a decrease in the fair value of its financial instruments from a net asset position of $21.3 million at March 31, 2019 to a net liability position of $25.1 million at June 30, 2019. The fair value of the net asset or liability is the estimated value to settle outstanding financial contracts at a point in time. The decrease in the fair value of Birchcliff's financial instruments during Q2 2019 was primarily attributable to the decrease in the forward basis spread between NYMEX HH and AECO 7A for contracts outstanding at June 30, 2019 as compared to March 31, 2019 and the settlement of financial contracts in Q2 2019. The unrealized gains and losses on financial NYMEX HH basis contracts can fluctuate materially from period-to-period due to movement in the forward NYMEX HH and AECO 7A strip prices. Unrealized gains and losses on financial instruments do not impact adjusted funds flow and may differ materially from the actual gains or losses realized on the eventual cash settlement of financial contracts in a period.

For further information regarding Birchcliff's risk management program, including a summary of Birchcliff's outstanding risk management contracts as at June 30, 2019, please see note 13 to the Corporation's unaudited interim condensed financial statements for the three and six months ended June 30, 2019 and the MD&A under the heading "Discussion of Operations - Risk Management".

OPERATIONAL RESULTS

Overview

Birchcliff's operations are concentrated within its one core area, the Peace River Arch of Alberta, which is centred northwest of Grande Prairie, Alberta adjacent to the Alberta/British Columbia border, where the Corporation is focused on its high-quality Montney/Doig Resource Play and the exploration and development of its low-cost natural gas, crude oil and liquids-rich assets. Within the Montney/Doig Resource Play, Birchcliff's operations are primarily concentrated in the Pouce Coupe and Gordondale areas of Alberta where it owns large contiguous blocks of high working interest land and the Corporation continues to implement various initiatives in order to capitalize on its large contiguous land base. Birchcliff's strong capital and operating efficiencies are supported by the fact that it owns and operates many of its own facilities, including the Pouce Coupe Gas Plant. In addition, Birchcliff is the operator of predominantly 100% working interest lands, which allows it to have greater control over its costs and its pace of development and greater flexibility to target liquids. Birchcliff is also focused on continuous improvements in all aspects of its business. In 2019, Birchcliff is continuing to pilot innovative technologies in its drilling and completions operations in order to achieve better well results and maximize return on capital.

Capital Activities and Investment

During Q2 2019, Birchcliff's capital activities were primarily directed towards drilling and completion activities. Total capital expenditures in the quarter were $68.5 million, with total capital expenditures of $32.6 million in Pouce Coupe and $35.4 million in Gordondale. F&D capital expenditures in Q2 2019 were $67.9 million.

The following table sets forth the number of wells drilled and brought on production in Q2 2019:

Area                                                      Total wells drilled in Q2 2019 Total wells brought on production in Q2 2019
Pouce Coupe
      Montney D1 horizontal natural gas wells             1                              4
      Montney D2 horizontal natural gas wells             0                              1
      Montney C horizontal natural gas wells              1                              1
      Total - Pouce Coupe                                 2                              6
Gordondale
                          Montney D2 horizontal oil wells 2                              5
                          Montney D1 horizontal oil wells 1                              3
                          Total - Gordondale              3                              8
TOTAL - COMBINED                                          5                              14

OPERATIONAL UPDATE

Achievements Year-to-Date

Birchcliff has been very active in its execution of the 2019 Capital Program. By the end of Q2 2019, Birchcliff had completed the drilling of all 17 (17.0 net) wells that were originally contemplated under the program, 100% of which were successful, and had brought on production all 26 (26.0 net) wells as originally planned, including 9 wells that were drilled and rig released in 2018. Additionally, Birchcliff has accomplished the following:

â?? The Corporation completed the construction of two pipeline connections between its Pouce Coupe and Gordondale areas. The first connection allows Birchcliff to flow natural gas between the two areas, which helps to reduce downtime and operating costs. The second connection allows Birchcliff to flow condensate from Pouce Coupe to its large oil batteries in Gordondale, which enables the Corporation to blend oil and condensate, resulting in better pricing and netbacks on its liquids.

â?? In Pouce Coupe, Birchcliff has initiated the construction of a 20,000 bbls/d inlet liquids-handling facility at the Pouce Coupe Gas Plant which will give it the ability to grow its condensate production in Pouce Coupe from 3,000 to 10,000 bbls/d. It is anticipated that this facility will be brought online in Q3 2020.

â?? In Gordondale, Birchcliff completed the construction of a pipeline to debottleneck the southeastern part of the field. In addition, Birchcliff recently installed and commissioned a related field compressor resulting in an increase in production from the drop in line pressure.

Expanded 2019 Capital Program

As a result of Birchcliff's achievements year-to-date and its strong quarterly results and balance sheet, Birchcliff has expanded the 2019 Capital Program to include the drilling of an additional 7 (7.0 net) horizontal wells in 2019, consisting of 3 condensate-rich natural gas wells in Pouce Coupe and 4 oil wells in Gordondale. It is anticipated that all of these wells will be brought on production by November 1, 2019. In total, the expanded 2019 Capital Program contemplates the drilling of 24 (24.0 net) wells and the bringing on production of 33 (33.0 net) wells. As a result of this expansion, Birchcliff has increased its 2019 F&D capital budget to $242 million from $204 million. Notwithstanding this increase, Birchcliff's capital expenditures in 2019 are still expected to be significantly less than its forecast of 2019 adjusted funds flow and Birchcliff anticipates that it will generate significant free funds flow in 2019. See "Outlook and Guidance".

Benefits of Expanded Capital Program

Birchcliff expects that this additional capital investment in 2019 will result in a number of benefits, including the following:

Capital Spending Allocation

The following table sets forth details regarding Birchcliff's expected capital spending allocation under the expanded 2019 Capital Program and a comparison to the original 2019 Capital Program:

Classification                                                            Gross Wells        Net Wells          Capital            Change in Capital
                                                                                                                (MM)
                                                                          Previous  Revised  Previous  Revised  Previous  Revised
Drilling and Development
        Pouce Coupe
                                  Montney D1 horizontal natural gas wells 6         9        6.0       9.0      $34.8     $49.3    42%
                                  Montney D2 horizontal natural gas wells 2         2        2.0       2.0      $11.4     $12.3    8%
                                  Montney C horizontal natural gas wells  1         1        1.0       1.0      $6.2      $6.0     (3%)
        Gordondale
                                  Montney D2 horizontal oil wells         5         7        5.0       7.0      $27.4     $38.2    39%
                                  Montney D1 horizontal oil wells         3         5        3.0       5.0      $16.2     $26.3    62%
                Additional Well Completions Capital                       -         -        -         -        $26.2     $25.3    (3%)
Total Drilling and Development                                            17        24       17.0      24.0     $122.2    $157.4   29%
Facilities and Infrastructure                                                                                   $33.9     $35.1    4%
Maintenance and Optimization                                                                                    $22.8     $24.7    8%
Land and Seismic                                                                                                $8.4      $8.6     2%
Other                                                                                                           $16.7     $16.2    (3%)
TOTAL                                                                                                           $204.0    $242.0   19%

(1) As previously disclosed on February 13, 2019.

(2) On a DCCET basis, the average well cost in 2019 is estimated to be $5.7 million for Pouce Coupe and $5.6 million (previously $5.8 million) for Gordondale. These costs can vary depending on factors such as the size of the associated multi-well pads, the costs of construction, the existence of pipelines and other infrastructure and the distance to existing or planned pipelines and other infrastructure.

(3) On a DCCET basis.

(4) The amount disclosed in the "Previous" column represented the estimated completion, equipping and tie-in costs associated with the 9 (9.0 net) wells that were drilled and rig released in Q4 2018, as the amount of the actual costs was not yet known when the previous 2019 Capital Program was disclosed on February 13, 2019. The amount disclosed in the "Revised" column represents the actual completion, equipping and tie-in costs associated with such wells.

(5) Includes capital for the inlet liquids-handling facility at the Pouce Coupe Gas Plant and other infrastructure enhancement projects, pipeline twinning and replacements and water storage. Birchcliff plans on spending approximately $9.5 million on the associated engineering and long-lead equipment for the inlet liquids-handling facility in 2019.

(6) Includes capital for crown sales and rental payments but does not include other property acquisitions and dispositions.

(7) The estimate of capital set forth in the table above represents F&D capital expenditures and does not take into account the purchase price for the $39 million asset acquisition in Pouce Coupe completed by Birchcliff in Q1 2019 (the "Acquisition") or any other acquisitions or dispositions. After taking into account the purchase price for the Acquisition, Birchcliff's revised estimate of total capital expenditures in 2019 is $283 million. See "Outlook and Guidance". Net property acquisitions and dispositions have not been included in the table above as these amounts are generally unbudgeted. Birchcliff makes acquisitions and dispositions in the ordinary course of business and any acquisitions and dispositions completed during 2019 could have an impact on Birchcliff's capital expenditures, production, adjusted funds flow, costs and total debt, which impact could be material. See "Advisories - Capital Expenditures".

(8) Approximately 50% of Birchcliff's F&D capital expenditures are directed towards its Pouce Coupe area and approximately 45% towards its Gordondale area (previously 40%). Birchcliff expects that its F&D capital investment in 2019 will now be approximately $122 million in Pouce Coupe (previously $100 million) and $109 million in Gordondale (previously $84 million).

Wells Drilled and Brought on Production

The following tables summarize the wells that Birchcliff has drilled and brought on production year-to-date, as well as the remaining and total number of wells to be drilled and brought on production in 2019:

Wells Drilled - 2019

Area                                                      Wells drilled Remaining wells to be Total wells to be
                                                          year to-date  drilled in 2019       drilled in 2019
Pouce Coupe
      Montney D1 horizontal natural gas wells             6             3                     9
      Montney D2 horizontal natural gas wells             2             0                     2
      Montney C horizontal natural gas wells              1             0                     1
      Total - Pouce Coupe                                 9             3                     12
Gordondale
                          Montney D2 horizontal oil wells 7             0                     7
                          Montney D1 horizontal oil wells 5             0                     5
                          Total - Gordondale              12            0                     12
TOTAL - COMBINED                                          21            3                     24

Wells Bought on Production - 2019

Area                                                      Wells brought on        Remaining wells to be brought on production Total wells to be brought
                                                          production year-to-date in 2019                                     on production in 2019
Pouce Coupe
      Montney D1 horizontal natural gas wells             11                      3                                           14
      Montney D2 horizontal natural gas wells             2                       0                                           2
      Montney C horizontal natural gas wells              1                       0                                           1
      Total - Pouce Coupe                                 14                      3                                           17
Gordondale
                          Montney D2 horizontal oil wells 7                       2                                           9
                          Montney D1 horizontal oil wells 5                       2                                           7
                          Total - Gordondale              12                      4                                           16
TOTAL - COMBINED                                          26                      7                                           33

(1) Includes 9 (9.0) net wells that were drilled and rig released in Q4 2018.

Pouce Coupe

Key focus areas for Pouce Coupe in 2019 are the drilling of condensate-rich natural gas wells and the further exploitation and delineation of condensate-rich trends in the Montney D1, D2 and C intervals. Birchcliff recently brought on production a six-well pad located at 14-06-079-12W6M on the lands that Birchcliff acquired pursuant to the Acquisition in Q1 2019. The six wells were drilled in three different intervals (4 in the Montney D1, 1 in the Montney D2 and 1 in the Montney C). During the initial 30 days of production, this six-well pad was flowing inline post-fracture treatment raw natural gas, condensate and frac water. The production rates of the wells have been stabilizing as the frac water flowing back to surface diminishes over time and during the initial 30 days of production, the stabilized flow of the wells had an aggregate average production rate of 6,350 boe/d (27.9 MMcf/d of raw natural gas and 1,690 bbls/d of condensate). For further details regarding these initial production rates, please see "Advisories - Initial Production Rates" and Birchcliff's updated corporate presentation available on its website at www.birchcliffenergy.com/investors/corporate-presentation/.

Gordondale

Key focus areas for Gordondale in 2019 are the drilling of crude oil wells and the further exploitation and delineation of oil in the Montney D1 and D2 intervals, specifically in the southeastern part of the Gordondale field. Birchcliff recently brought on production a five-well pad located at 01-10-078-11W6M. The five wells were drilled in two different intervals (2 in the Montney D1 and 3 in the Montney D2). During the initial 30 days of production, this five-well pad was flowing inline post-fracture oil, raw natural gas and frac water. The production rates of the wells have been stabilizing as the frac water flowing back to surface diminishes over time and during the initial 30 days of production, the stabilized flow of the wells had an aggregate average production rate of 4,446 boe/d (2,114 bbls/d of oil and 14.0 MMcf/d of raw natural gas). For further details regarding these initial production rates, please see "Advisories - Initial Production Rates" and Birchcliff's updated corporate presentation available on its website at www.birchcliffenergy.com/investors/corporate-presentation/.

OUTLOOK AND GUIDANCE

Birchcliff currently believes that it is well positioned to generate significant free funds flow in 2019 supported by its natural gas diversification and financial risk management contracts and its mix of long-life and low-decline assets, which provide it with a stable base of production. Birchcliff is committed to maintaining financial flexibility and a strong balance sheet and will allocate remaining free funds flow based on what it believes will provide the most value to its shareholders. Birchcliff expects to generate approximately $335 million of adjusted funds flow and $93 million of free funds flow in 2019.

Birchcliff has revised its 2019 guidance and commodity price assumptions to reflect the expansion to the 2019 Capital Program, the Corporation's results year-to-date and current economic conditions. Significant changes include the following:

The following table sets forth Birchcliff's previous and revised guidance and commodity price assumptions for 2019:

                                                          Previous 2019 Guidance  Revised 2019 Guidance and
                                                          and Assumptions         Assumptions
Production
Annual average production (boe/d)                         76,000 - 78,000         77,000 - 79,000
% Light oil                                               7%                      6%
% Condensate                                              6%                      7%
% NGLs                                                    8%                      9%
% Natural gas                                             79%                     78%
Average Expenses ($/boe)
Royalty                                                   1.30 - 1.50             1.10 - 1.30
Operating                                                 3.15 - 3.35             3.15 - 3.35
Transportation and other                                  4.65 - 4.85             4.65 - 4.85
Adjusted Funds Flow (MM$)                                 330                     335
F&D Capital Expenditures (MM$)                            204                     242
Free Funds Flow (MM$)                                     126                     93
Total Capital Expenditures (MM$)                          245                     283
Natural Gas Market Exposure
AECO exposure as a % of total natural gas production      35%                     34%
Dawn exposure as a % of total natural gas production      39%                     38%
NYMEX HH exposure as a % of total natural gas production  25%                     25%
Alliance exposure as a % of total natural gas production  1%                      3%
Commodity Prices
Average WTI spot price (US$/bbl)                          56.00                   57.50
Average WTI-MSW differential (CDN$/bbl)                   10.00                   7.50
Average AECO 5A spot price (CDN$/GJ)                      1.65                    1.50
Average Dawn spot price (CDN$/GJ)                         3.40                    3.05
Average NYMEX HH spot price (US$/MMBtu)                   3.00                    2.70
Exchange rate (CDN$ to US$1)                              1.32                    1.32

(1) As previously disclosed on March 13, 2019. Birchcliff's previous guidance for its commodity mix, average expenses, funds flow, capital expenditures and natural gas market exposure in 2019 was based on an annual average production rate of 77,000 boe/d during 2019, which was the mid-point of Birchcliff's previous annual average production guidance for 2019.

(2) Birchcliff's revised guidance for its commodity mix, average expenses, funds flow, capital expenditures and natural gas market exposure in 2019 is based on an annual average production rate of 78,000 boe/d during 2019, which is the mid-point of Birchcliff's revised annual average production guidance for 2019.

(3) Includes transportation tolls for 150,000 GJ/d of natural gas sold at the Dawn price from January 1, 2019 to October 31, 2019 and 175,000 GJ/d from November 1, 2019 to December 31, 2019. Also includes any unused firm transportation costs associated with Birchcliff's commitments on the NGTL system.

(4) Birchcliff's estimate of adjusted funds flow takes into account the settlement of financial and physical commodity risk management contracts outstanding as at August 13, 2019. Please see "Q2 2019 Financial and Operational Results - Financial Results - Risk Management".

(5) Birchcliff's estimate of F&D capital expenditures corresponds to Birchcliff's revised 2019 capital budget of $242 million. This estimate excludes the purchase price for the Acquisition and any other net potential acquisitions and dispositions. Birchcliff's estimate of total capital expenditures includes the purchase price for the Acquisition; however, this estimate does not take into account any other potential acquisitions or dispositions as these amounts are unbudgeted. The estimate of total capital expenditures also includes minor administrative assets. Please see "Advisories - Capital Expenditures".

(6) Free funds flow is calculated as adjusted funds flow less F&D capital expenditures and is prior to administrative assets, acquisitions, dispositions, dividend payments and abandonment and reclamation obligations. Please see "Non-GAAP Measures".

(7) Birchcliff's guidance regarding its natural gas market exposure in 2019 assumes: (i) 150,000 GJ/d being sold at the Dawn index price from January 1, 2019 to October 31, 2019 and 175,000 GJ/d from November 1, 2019 to December 31, 2019; (ii) 5 MMcf/d being sold at Alliance's Trading Pool daily index price; and (iii) 100,000 MMBtu/d being hedged at a fixed basis differential between the AECO 7A price and the NYMEX HH price.

(8) $1.00 per MMBtu equals $1.00 per Mcf based on a standard heat value of 37.4 MJ/mor a heat uplift of 1.055 when converting from $/GJ.

Birchcliff continues to be strategic and opportunistic in advancing its market access initiatives and its physical natural gas sales exposure currently consists of AECO, Dawn and Alliance markets, with additional exposure to NYMEX HH pricing through its outstanding financial instruments. Effective November 1, 2019, Birchcliff's level of firm service on TCPL's Canadian Mainline to Dawn will increase to 175,000 GJ/d from 150,000 GJ/d. Effectively 88% of Birchcliff's total revenue in 2019, representing 74% of its total production, is expected to be based on non-AECO benchmark prices after taking into account its commodity risk management contracts and expected sales from liquids and based on the commodity price assumptions set forth in the table above. This natural gas market diversification together with Birchcliff's financial risk management contracts will help to further strengthen Birchcliff's balance sheet and protect its cash flow and project economics.

The following table illustrates the expected impact of changes in commodity prices and the CDN/US exchange rate on the Corporation's estimate of adjusted funds flow for 2019 of $335 million, after taking into account its financial instruments outstanding as at August 13, 2019:

                                        Estimated change to 2019 adjusted funds flow
                                        (CDNMM$)
Change in WTI US$1.00/bbl               5.0
Change in NYMEX HH US$0.10/MMBtu        3.4
Change in Dawn CDN$0.10/GJ              5.6
Change in AECO 5A CDN$0.10/GJ           6.4
Change in CDN/US exchange rate CDN$0.01 2.6

(1) Please see the guidance table above.

(2) The calculated impact on adjusted funds flow is only applicable within the limited range of change indicated. Calculations are performed independently and may not be indicative of actual results. Actual results may vary materially when multiple variables change at the same time.

Changes in assumed commodity prices and variances in production estimates can have a significant impact on the Corporation's estimate of adjusted funds flow. For further information regarding Birchcliff's guidance, please see "Advisories - Forward-Looking Statements".

2018 CORPORATE RESPONSIBILITY REPORT

Birchcliff has released its 2018 Corporate Responsibility Report, a copy of which is available at http://birchcliffenergy.com/media/uploads/documents/birchcliff_corporate_responsibility_report_2018.pdf. This report has been designed to provide investors and stakeholders with additional information regarding Birchcliff's corporate responsibility initiatives, including environmental, social and governance (ESG) related topics.

ABBREVIATIONS

AECO       benchmark price for natural gas determined at the AECO 'C' hub in southeast Alberta
bbl        barrel
bbls       barrels
bbls/d     barrels per day
boe        barrel of oil equivalent
boe/d      barrel of oil equivalent per day
C3+        propane plus
condensate pentanes plus (C5+)
DCCET      drill, case, complete, equip and tie-in
F&D        finding and development
G&A        general and administrative
GAAP       generally accepted accounting principles for Canadian public companies which are currently IFRS
GJ         gigajoule
GJ/d       gigajoules per day
HH         Henry Hub
HZ         horizontal
IFRS       International Financial Reporting Standards as issued by the International Accounting Standards Board
liquids    light oil, condensate and NGLs
m          cubic metres
Mcf        thousand cubic feet
Mcf/d      thousand cubic feet per day
Mcfe       thousand cubic feet of gas equivalent
MJ         megajoule
MM         millions
MM$        millions of dollars
MMBtu      million British thermal units
MMBtu/d    million British thermal units per day
MMcf       million cubic feet
MMcf/d     million cubic feet per day
MPa        megapascal
MSW        price for mixed sweet crude oil at Edmonton, Alberta
NGLs       natural gas liquids consisting of ethane (C2), propane (C3) and butane (C4) and specifically excluding condensate
NGTL       NOVA Gas Transmission Ltd.
NYMEX      New York Mercantile Exchange
TCPL       TransCanada PipeLines Limited
WTI        West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma, for crude oil of standard grade
000s       thousands
$000s      thousands of dollars

NON-GAAP MEASURES

This press release uses "adjusted funds flow", "adjusted funds flow per common share", "free funds flow", "operating netback", "adjusted funds flow netback", "total cash costs", "adjusted working capital deficit" and "total debt". These measures do not have standardized meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies where similar terminology is used. Management believes that these non-GAAP measures assist management and investors in assessing Birchcliff's profitability, efficiency, liquidity and overall performance. Each of these measures is discussed in further detail below.

"Adjusted funds flow" denotes cash flow from operating activities before the effects of decommissioning expenditures and changes in non-cash working capital and "adjusted funds flow per common share" denotes adjusted funds flow divided by the basic or diluted weighted average number of common shares outstanding for the period. Birchcliff eliminates changes in non-cash working capital and settlements of decommissioning expenditures from cash flow from operating activities as the amounts can be discretionary and may vary from period-to-period depending on its capital programs and the maturity of its operating areas. The settlement of decommissioning expenditures is managed with Birchcliff's capital budgeting process which considers available adjusted funds flow. Management believes that adjusted funds flow and adjusted funds flow per common share assist management and investors in assessing Birchcliff's profitability, as well as its ability to generate the cash necessary to fund future growth through capital investments, decommission its assets, pay dividends and repay debt. Investors are cautioned that adjusted funds flow should not be construed as an alternative to or more meaningful than cash flow from operating activities or net income or loss as determined in accordance with GAAP as an indicator of Birchcliff's performance. "Free funds flow" denotes adjusted funds flow less F&D capital expenditures. Management believes that free funds flow assists management and investors in assessing Birchcliff's ability to generate the cash necessary to repay debt, pay dividends, fund a portion of its future growth investments and/or fund share buybacks. The following table provides a reconciliation of cash flow from operating activities, as determined in accordance with GAAP, to adjusted funds flow and free funds flow for the periods indicated:

                                    Three months ended        Six months ended
                                    June 30,                  June 30,
($000s)                             2019         2018         2019          2018
Cash flow from operating activities 97,857       71,825       192,601       163,678
Add back:
Change in non-cash working capital  (24,351 )    469          (3,320   )    (8,148   )
Funds flow                          73,506       72,294       189,281       155,530
Adjustments:
Decommissioning expenditures        451          75           1,324         497
Adjusted funds flow                 73,957       72,369       190,605       156,027
F&D capital expenditures            (67,937 )    (69,826 )    (159,403 )    (202,348 )
Free funds flow                     6,020        2,543        31,202        (46,321  )

"Operating netback" denotes petroleum and natural gas revenue less royalty expense, less operating expense and less transportation and other expense. "Adjusted funds flow netback" denotes petroleum and natural gas revenue less royalty expense, less operating expense, less transportation and other expense, less net G&A expense, less interest expense and less any realized losses (plus realized gains) on financial instruments and plus any other cash income sources. All netbacks are calculated on a per unit basis, unless otherwise indicated. Management believes that operating netback and adjusted funds flow netback assist management and investors in assessing Birchcliff's profitability and its operating results on a per unit basis to better analyze its performance against prior periods on a comparable basis. The following table provides a breakdown of Birchcliff's operating netback and adjusted funds flow netback for the periods indicated:

                                              Three months ended                          Six months ended
                                              June 30,                                    June 30,
                                              2019                  2018                  2019                  2018
                                              ($000s)     ($/boe)   ($000s)     ($/boe)   ($000s)     ($/boe)   ($000s)     ($/boe)
Petroleum and natural gas revenue             139,857     19.59     150,561     21.69     318,212     22.93     310,092     22.45
Royalty expense                               (5,347  )   (0.75 )   (10,632 )   (1.53 )   (13,556 )   (0.98 )   (20,443 )   (1.48 )
Operating expense                             (22,652 )   (3.17 )   (23,319 )   (3.36 )   (45,569 )   (3.28 )   (49,252 )   (3.57 )
Transportation and other expense              (30,599 )   (4.29 )   (25,239 )   (3.64 )   (61,676 )   (4.45 )   (49,779 )   (3.60 )
Operating netback                             81,259      11.38     91,371      13.16     197,411     14.22     190,618     13.80
G&A, net                                      (6,220  )   (0.87 )   (6,079  )   (0.88 )   (12,308 )   (0.89 )   (12,119 )   (0.88 )
Interest expense                              (6,596  )   (0.92 )   (6,658  )   (0.96 )   (13,532 )   (0.97 )   (13,290 )   (0.96 )
Realized gain (loss) on financial instruments 5,317       0.74      (6,462  )   (0.93 )   18,635      1.34      (9,581  )   (0.69 )
Other income                                  197         0.03      197         0.03      399         0.03      399         0.03
Adjusted funds flow netback                   73,957      10.36     72,369      10.42     190,605     13.73     156,027     11.30

(1) All per boe amounts are calculated by dividing each aggregate financial amount by the production (boe) in the respective period.

The breakdown for the operating netback of the Pouce Coupe Gas Plant is provided under the heading "Q2 2019 Financial and Operational Results - Financial Results - Pouce Coupe Gas Plant Netbacks".

"Total cash costs" are comprised of royalty, operating, transportation and other, G&A and interest expenses. Total cash costs are calculated on a per unit basis. Management believes that total cash costs assists management and investors in assessing Birchcliff's efficiency and overall cash cost structure.

"Adjusted working capital deficit" is calculated as current assets minus current liabilities excluding the effects of any current portion of financial instruments and capital securities. Birchcliff's capital securities were long-term in nature and therefore were excluded as a non-GAAP adjustment to adjusted working capital deficit in the comparative periods. Management believes that adjusted working capital deficit assists management and investors in assessing Birchcliff's short-term liquidity. The following table reconciles working capital deficit (current assets minus current liabilities), as determined in accordance with GAAP, to adjusted working capital deficit:

As at, ($000s)                           June 30, 2019 December 31, 2018 June 30, 2018
Working capital deficit (surplus)        81,617        (15,611  )        58,502
Financial instrument - current asset     1,927         36,798            5,037
Financial instrument - current liability (1,427  )     -                 (19,421 )
Capital securities - current liability   (49,690 )     -                 -
Adjusted working capital deficit         32,427        21,187            44,118

"Total debt" is calculated as the revolving term credit facilities plus adjusted working capital deficit. Management believes that total debt assists management and investors in assessing

(C) Copyright 2019 GlobeNewswire, Inc. All rights reserved.

Please read the End User Agreement.
By accessing this page, you agree to the terms and conditions of the End User Agreement.

News provided by COMTEX.


Extreme Futures: Movers & Shakers

Hottest

Actives

Gainers

Today's Hottest Futures
Market Last Vol % Chg
Loading...

close_icon
open_icon