Calgary, Alberta--(Newsfile Corp. - March 12, 2025) - Journey Energy Inc. (TSX: JOY) (OTCQX: JRNGF) ("Journey" or the "Company") is pleased to announce its financial and operating results for the three and twelve month periods ending December 31, 2024. The complete set of financial statements and management discussion and analysis for the periods ended December 31, 2024 and 2023 are posted on www.sedar.com and on the Company's website www.journeyenergy.ca.
Highlights from 2024 are as follows:
- Generated net income of $5.1 million for 2024. On a basic, weighted average per share basis, this amounted to $0.08.
- Realized Adjusted Funds Flow of $51.7 million for the year. On a basic, weighted average per share basis, this amounted to $0.83 and $0.82 per diluted share.
- Achieved sales volumes of 10,815 boe/d in the fourth quarter of 2024 and 11,275 boe/d for the entire year. Liquids volumes (crude oil and natural gas liquids) accounted for 6,351 boe/d or 59% of total volumes during the fourth quarter and 6,371 boe/d or 57% for the entire year.
- On March 20, 2024 Journey closed a bought-deal convertible debenture financing to issue $38.0 million of convertible debentures with a coupon rate of 10.25%.
- On May 8, 2024 Journey entered into a joint venture with Spartan Delta Corp. ("Spartan Delta") to develop a contiguous block of land in the oil window of the Duvernay (the "Joint Venture"). Journey's current working interest in the Joint Venture is 30%.
- Continued with the construction of the 15.1 MW power generation facility in Gilby Alberta.
- Closed a divestment of Central Alberta assets to a private company for nominal value on October 1, 2024. Production from this minor divestment was 130 boe/d (35% liquids). The divested assets, along with Journey's ongoing asset retirement program is forecast to reduce Journey's end-of-life-costs by over $20 million. The divestment was neutral to PDP value and adjusted funds flow.
- Two wells have been drilled to date from the 05-18-042-03W5 pad as part of the Joint Venture with Spartan Delta in the Duvernay in the west shale basin. 03-26-042-04W5 was drilled to a lateral length of 3,511 meters and 09-05-042-03W5 was drilled to a lateral length of 3,650 meters. Both wells were placed on production in December.
- To assist with funding the 2025 Duvernay drilling and completion costs, Journey and AIMCo agreed to a further amendment to the term debt agreement on January 29, 2025. Payments will be paused from March to September of 2025 and extend the ultimate maturity of the debt to February 27, 2026.
Financial & Operating Highlights
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||||
| Financial ($000's except per share amounts) | 2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||
| Sales revenue | 47,480 | 55,914 | (15 | ) | 197,149 | 225,149 | (12 | ) | ||||||||||
| Net income | 3,626 | 3,440 | 5 | 5,144 | 15,819 | (67 | ) | |||||||||||
| Basic ($/share) | 0.06 | 0.06 | - | 0.08 | 0.26 | (69 | ) | |||||||||||
| Diluted ($/share) | 0.06 | 0.05 | 20 | 0.08 | 0.24 | (67 | ) | |||||||||||
| Adjusted Funds Flow(1) | 10,951 | 18,376 | (40 | ) | 51,730 | 66,140 | (22 | ) | ||||||||||
| Basic ($/share) | 0.17 | 0.30 | (43 | ) | 0.83 | 1.10 | (25 | ) | ||||||||||
| Diluted ($/share) | 0.17 | 0.27 | (37 | ) | 0.82 | 1.00 | (18 | ) | ||||||||||
| Cash flow provided by operating activities | 13,121 | 31,278 | (58 | ) | 35,622 | 66,643 | (47 | ) | ||||||||||
| Basic ($/share) | 0.20 | 0.51 | (61 | ) | 0.57 | 1.11 | (49 | ) | ||||||||||
| Diluted ($/share) | 0.20 | 0.47 | (57 | ) | 0.56 | 1.01 | (45 | ) | ||||||||||
| Capital expenditures, including A&D(1) | 15,406 | 17,029 | (10 | ) | 41,168 | 40,856 | 1 | |||||||||||
| Net debt(1) | 60,320 | 61,676 | (2 | ) | 60,320 | 61,676 | (2 | ) | ||||||||||
| | ||||||||||||||||||
| Share Capital (000's) | ||||||||||||||||||
| Basic, weighted average | 65,394 | 61,197 | 7 | 62,366 | 60,310 | 3 | ||||||||||||
| Diluted, weighted average | 65,866 | 66,955 | (2 | ) | 63,049 | 66,170 | (5 | ) | ||||||||||
| Basic, end of period | 67,107 | 61,350 | 9 | 67,107 | 61,350 | 9 | ||||||||||||
| Fully diluted(1) | 69,151 | 68,378 | 1 | 69,151 | 68,378 | 1 | ||||||||||||
| | ||||||||||||||||||
| Daily Sales Volumes | ||||||||||||||||||
| Natural gas (Mcf/d) | ||||||||||||||||||
| Conventional | 22,653 | 29,754 | (24 | ) | 25,160 | 29,661 | (15 | ) | ||||||||||
| Coal bed methane | 4,131 | 4,343 | (5 | ) | 4,264 | 4,238 | 1 | |||||||||||
| Total natural gas volumes | 26,784 | 34,097 | (21 | ) | 29,424 | 33,899 | (13 | ) | ||||||||||
| Crude oil (Bbl/d) | ||||||||||||||||||
| Light/medium | 3,229 | 3,317 | (3 | ) | 3,112 | 3,343 | (7 | ) | ||||||||||
| Heavy | 2,135 | 2,313 | (8 | ) | 2,191 | 2,148 | 2 | |||||||||||
| Total crude oil volumes | 5,364 | 5,630 | (5 | ) | 5,303 | 5,491 | (3 | ) | ||||||||||
| Natural gas liquids (Bbl/d) | 987 | 1,282 | (23 | ) | 1,068 | 1,274 | (16 | ) | ||||||||||
| Barrels of oil equivalent (boe/d) | 10,815 | 12,595 | (14 | ) | 11,275 | 12,415 | (9 | ) | ||||||||||
| Average Realized Prices (including hedging) | ||||||||||||||||||
| Natural gas ($/mcf) | 1.32 | 2.29 | (42 | ) | 1.31 | 2.70 | (51 | ) | ||||||||||
| Crude Oil ($/bbl) | 81.41 | 83.93 | (3 | ) | 85.07 | 85.21 | - | |||||||||||
| Natural gas liquids ($/bbl) | 44.56 | 44.61 | - | 45.94 | 45.16 | 2 | ||||||||||||
| Barrels of oil equivalent ($/boe) | 47.72 | 48.26 | (1 | ) | 47.77 | 49.68 | (4 | ) | ||||||||||
| Operating Netback ($/boe) | ||||||||||||||||||
| Realized prices | 47.72 | 48.26 | (1 | ) | 47.77 | 49.68 | (4 | ) | ||||||||||
| Royalties | (9.05 | ) | (10.45 | ) | (13 | ) | (9.07 | ) | (10.37 | ) | (13 | ) | ||||||
| Operating expenses | (23.09 | ) | (17.02 | ) | 36 | (21.16 | ) | (20.20 | ) | 5 | ||||||||
| Transportation expenses | (0.69 | ) | (1.87 | ) | (63 | ) | (1.08 | ) | (1.13 | ) | (4 | ) | ||||||
| Operating netback(1) | 14.89 | 18.92 | (21 | ) | 16.46 | 17.98 | (8 | ) | ||||||||||
Notes:
(1) See appendix for reconciliation of Non-IFRS measures.
OPERATIONS
During 2024 Journey continued to move forward on its initiatives with a view to increasing free cash flow beginning in 2025 and with a long-term strategy of increasing its proved, developed, producing value and adjusted funds flow on a per share basis. The central pillar of this strategy is participation in the Duvernay Joint Venture with capital spending beginning in late 2024 and accelerating in 2025 and 2026. This pillar is augmented by realizations on investment in the power business and by future investments in the conventional business, led by expanding the polymer flood in Medicine Hat.
On March 20, 2024 Journey issued $38 million in convertible debentures to term-out a portion of its debt obligations, and to also increase its 2024 capital program. On May 7, 2024 Journey entered into the Joint Venture agreement with Spartan Delta to jointly develop lands concentrated in the liquids-rich portion of the Duvernay in the West Shale Basin. Journey used a portion of the proceeds from the convertible debenture to fund its working interest participation in the initial two Duvernay wells. The Duvernay wells were placed on-stream in late 2024 and have resulted in positive revisions to the Duvernay type curve. Journey's working interest in the initial wells is 31.38%. The Joint Venture currently controls 104 sections and Journey's working interest moving forward will be 30%.
Total capital spending for the fourth quarter of 2024 was $16.3 million. $8.2 million of this amount was spent on drilling, completion, equipping and tie-in work on the two Duvernay wells. Results from these wells have significantly exceeded Management's expectations. In addition, $5.5 million was spent on advancing the Gilby and Mazeppa power projects during the quarter. Journey also spent $3.2 million in respect of abandonment and reclamation work during the quarter. Capital expenditures for the quarter were consistent with previous guidance.
Journey achieved sales volumes of 10,815 boe/d (59% crude oil and NGL's) in the fourth quarter 2024. Sales volumes were 14% lower in the quarter compared to 12,595 boe/d in the fourth quarter of 2023. Quarter over quarter volumes were 3% lower for the fourth quarter of 2024 as compared to the third quarter of 2024, which were 11,152 boe/d. At the beginning of the fourth quarter of 2024, Journey disposed of assets in the Pembina Keystone Cardium Unit, which were producing approximately 130 boe/d. Production volumes for the fourth quarter were also impacted by shut-in natural gas volumes for the first half of October due to reduced pricing. Natural gas shut-in volumes amounted to 1,150 boe/d resulting in a reduction of 190 boe/d for the entire quarter. The 2 (0.6 net) Duvernay wells placed on-production in December had a minor impact on average volumes during the fourth quarter. Production levels from field receipts increased to 11,500 boe/d for December (59% liquids), largely due to the addition of the new Duvernay wells.
At the beginning of August, Journey was notified by a third-party operator that they were shutting in Journey volumes in Stolberg, which had been going to a third-party processing facility, due to a dispute on processing fees compounded by low natural gas prices. The majority of Journey's Stolberg production volumes are impacted by this closure due to a lack of takeaway capacity in the area for solution gas. These volumes were curtailed in late July, 2024 and are expected to reduce sales volumes by approximately 300 boe/d for the duration of the curtailment. Journey and its partners have initiated a process to redirect the volumes north to Hanlon Robb and are forecasting a return of these volumes to production in summer 2025.
In October, Journey closed the divestment of certain Central Alberta assets to a private company for nominal consideration. Production from this minor divestment was 130 boe/d (35% liquids). The divestment is neutral to Journey's proved, developed, producing value and Adjusted Funds Flow. The assets contained 153 gross wells, the majority of which were shut-in or abandoned. The assets had approximately $14 million of end-of-life costs associated with them. The divested assets, along with Journey's ongoing asset retirement program reduced Journey's end-of-life-costs by over $20 million in 2024.
In mid-February 2025, Journey entered into an agreement to sell assets in the Brooks area for $3.8 million, prior to closing adjustments, and effective January 1, 2025. These assets were forecast to produce approximately 260 boe/d (58% liquids) in 2025. This impact of this transaction will be included in the updated guidance the company will provide in May of 2025.
Joint Venture with Spartan Delta
On May 7, 2024 Journey announced its participation with Spartan Delta in a 128-section Joint Venture in the Duvernay west shale basin. Journey's current working interest within the block is 30%. The partners currently control 104 sections within the block. Recent negotiations on freehold lands within the joint venture block allow for the retention of a significant portion of lands for several years under certain circumstances. This will provide both a runway and land tenure to economically develop this world class resource.
Two wells have been drilled to date from a 05-18-042-03W5 pad as part of the Joint Venture with Spartan Delta in the Duvernay in the west shale basin. 03-26-042-04W5 was drilled to a lateral length of 3,511 meters and 09-05-042-03W5 was drilled to a lateral length of 3,650 meters. The success of these initial wells led Journey to upwardly revise its Duvernay type curve. As shown in Journey's March, 2025 corporate presentation, the wells continue to outperform the revised type curve.
Capital expenditures for the Joint Venture are capped at a gross amount of $100 million for 2025. The cap on expenditures can be increased upon mutual agreement of both parties. These funds are forecast to be sufficient to drill 8.0 gross (2.4 net) wells and to complete 7.0 gross (2.1 net) wells. Drilling operations are currently underway with two rigs. Three wells (0.9 net) have been drilled to date and two rigs are currently active. All wells are forecast to be drilled by early in the second quarter. Completion operations are forecast to begin in April. This program will provide meaningful data regarding the play moving forward as well as a significant increase in production and cash flow starting in mid-2025.
With the revised term-out of the majority of its debt until 2029, the recent amendments to the AIMCo term debt payments (January 29, 2025 press release), and with future revenues from its power business, Journey is in a solid position to fund its working interest portion of the Joint Venture development. Journey believes it has found a quality partner in Spartan Delta to help benefit from the economies of scale while minimizing the risk of single events on the Company's business plan. Journey's plan is to maintain its net acreage position with a smaller working interest in a larger land block. This strategy will maximize the net number of azimuth locations in the liquids window. Journey's working interest share in the joint lands is enough to support 60 net 2.5 mile wells on azimuth locations.
FINANCIAL
Journey achieved Adjusted Funds Flow of $11.0 million during the fourth quarter of 2024 and $51.7 million for the entire year. Sales volumes were 10% higher than the comparable quarter of 2023. Journey's overall liquids weighting continued to strengthen and was 59% for the fourth quarter and 57% for the entire year. Crude oil sales volumes for the fourth quarter of 2024 represented 50% of total boe volumes but contributed 84% of total petroleum and natural gas revenues. Natural gas sales volumes contributed 41% of total boe volumes in the fourth quarter of 2024 while contributing only 7% of total sales revenues.
On the expense side, aggregate royalties were 26% lower in the fourth quarter of 2024 compared to the fourth quarter of 2023, which was mainly due to lower realized prices. On a per boe basis, royalties were $9.05/boe in the fourth quarter of 2024 as compared to $10.45 in the fourth quarter of 2023.
For the year-to-date in 2024 aggregate operating expenses were $92.6 million, which was 6% lower than the $98.4 million from 2023. The majority of this decrease is related to a reduction in fuel and power costs, partially offset by increasing carbon taxes and a loss on power hedging. Aggregate field operating expenses increased 12% during the fourth quarter of 2024 to $24.3 million. Quarterly costs are subject to more variation than annual costs, which are more representative of costs moving forward. Although aggregate costs have declined year-over-year, the per boe costs have increased slightly. Per boe costs have a high fixed component and are negatively impacted when Journey does not employ enough growth capital to maintain its production, especially if capital is phased later in the year. This trend will be positively impacted in 2025, and more so in 2026, as Journey increases growth capital spending in the Duvernay and front-end loads capital expenditures to early in the year. This is forecast to have an even greater impact on netbacks than operating expenses.
Journey's general and administrative ("G&A") costs were higher in the fourth quarter of 2024 as compared to the same quarter in 2023 at $2.6 million and $2.0 million respectively. On a per boe basis, Journey's G&A costs were $2.65/boe for the fourth quarter of 2024 and $1.74/boe for the fourth quarter of 2023. Total salaries and benefits (excluding short-term incentives) paid to staff for 2024 were $7.9 million as compared to $7.5 million in 2023. The moderate increase of 4.9% was attributable to inflationary cost-of-living increases. G&A includes short-term incentive payments declared in 2023 and 2024 of $2.25 million and $1.75 million respectively. $284 thousand of the 2023 payments were deferred to 2024, making the total cost of salaries, benefits and short-term incentives comparable between the years.
In addition, head office lease payments rose in 2024 by $250 thousand over 2023. This was a scheduled increase early in 2024 pursuant to the renegotiation of the lease in 2020. Journey received a very favorable lease rate during the difficult COVID year of 2020 including an overall rate reduction for the remaining term of the lease. However, pursuant to the renegotiated lease there was a 26% escalation caused by an increase in both rental rates and an increase to occupied space during 2024. Office lease costs are forecast to remain at current levels until the end of the lease term in August of 2026.
Finance expenses related to borrowings, decreased by 8% to $1.7 million in the fourth quarter of 2024 from $1.8 million in the same quarter of 2023. This decrease was mainly attributable to reductions in debt levels as monthly payments continued to be made to AIMCo throughout the fourth quarter. Repayments of $25.5 million of AIMCo term debt and $17.0 million of the vendor-take-back debt during 2024 resulted in a lower interest burden during the year. The issuance of a $38.0 million convertible debenture issued in March of 2024 partially funded these repayments, and provided funding for the Duvernay Joint Venture.
Journey realized net income of $3.6 million in the fourth quarter of 2024. Net income per basic and diluted share was $0.06 for the fourth quarter, which was the same as the fourth quarter of 2023. Adjusted Funds Flow of $11.0 million in the fourth quarter of 2024 was 40% lower compared to the same quarter of 2023, and was mainly due to the 14% decrease in average commodity volumes sold. For the entire year, Journey realized net income of $5.1 million in 2024 as compared to $15.8 million for 2023. Sales volumes decreased 9% from 2023 to 2024 while average commodity prices decreased by 4% during the same period.
Total capital expenditures in the fourth quarter were $16.3 million including $8.2 million for the drilling, completing and equipping of the 2 (0.6) Duvernay wells drilled in the fourth quarter. In addition, the Company spent $5.5 million on the continuing work on its power generation projects. Journey exited the fourth quarter of 2023 with net debt of $60.3 million, which was 2% lower than the $61.7 million of net debt at the beginning of the year. On January 29, 2025 Journey entered into an amendment to the AIMCo term debt to pause monthly repayments from March of 2025 to September of 2025. The ultimate maturity of the debt was also extended to February 27, 2026. These adjustments to the repayment schedule were designed to assist with the currently expected spending profile on the Duvernay Joint Venture in 2025.
OUTLOOK & GUIDANCE
Journey intends to update its guidance at regular intervals throughout the year as assumptions are further refined, with the first update to be provided in May 2025, in conjunction with the first quarter press release.
Initial guidance was issued on January 29, 2025 and incorporated many underlying assumptions including but not limited to:
- Forecasted commodity prices;
- No material changes to the current regulatory framework;
- Forecasted growth capital investment;
- Forecast operating costs, including forecasted prices for power;
- Forecast results and phasing in of production additions from the capital program.
About the Company
Journey is a Canadian exploration and production company focused on conventional, oil-weighted operations in western Canada. Journey's strategy is to grow its production base by drilling on its existing core lands, implementing water flood projects, executing on accretive acquisitions. Journey seeks to optimize its legacy oil pools on existing lands through the application of best practices in horizontal drilling and, where feasible, with water floods.
For further information contact:
Alex G. Verge
President and Chief Executive Officer
403-303-3232
alex.verge@journeyenergy.ca
or
Gerry Gilewicz
Chief Financial Officer
403-303-3238
gerry.gilewicz@journeyenergy.ca
Journey Energy Inc.
700, 517 - 10th Avenue SW
Calgary, AB T2R 0A8
403-294-1635
www.journeyenergy.ca
ADVISORIES
This press release contains forward-looking statements and forward-looking information (collectively "forward looking information") within the meaning of applicable securities laws relating to the Company's plans and other aspects of the anticipated future operations, management focus, strategies, financial, operating and production results, industry conditions, commodity prices and business opportunities. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding decline rates, anticipated netbacks, drilling inventory, estimated average drill, complete and equip and tie-in costs, anticipated potential of the Assets including, but not limited to, EOR performance and opportunities, capacity of infrastructure, potential reduction in operating costs, production guidance, total payout ratio, capital program and allocation thereof, future production, decline rates, funds flow, net debt, net debt to funds flow, exchange rates, reserve life, development and drilling plans, well economics, future cost reductions, potential growth, and the source of funding Journey's capital spending. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future.
The forward-looking information is based on certain key expectations and assumptions made by management, including expectations and assumptions concerning prevailing commodity prices and differentials, exchange rates, interest rates, applicable royalty rates and tax laws; future production rates and estimates of operating costs; performance of existing and future wells; reserve and resource volumes; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labour and services; the impact of increasing competition; the ability to efficiently integrate assets and employees acquired through acquisitions, including the Acquisition, the ability to market oil and natural gas successfully and the ability to access capital. Although we believe that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Journey can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. The actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that we will derive therefrom. Management has included the above summary of assumptions and risks related to forward-looking information provided in this press release in order to provide security holders with a more complete perspective on future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors are not exhaustive. Additional information on these and other factors that could affect the operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).These forward looking statements are made as of the date of this press release and we disclaim any intent or obligation to update publicly any forward-looking information, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.
This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about Journeys prospective results of operations, funds flow, netbacks, debt, payout ratio well economics and components thereof, all of which are subject to the same assumptions, risk factors, limitations and qualifications as set forth in the above paragraphs. FOFI contained in this press release was made as of the date of this press release and was provided for providing further information about Journey's anticipated future business operations. Journey disclaims any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein. Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, which involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Journey, including, without limitation, those listed under "Risk Factors" and "Forward Looking Statements" in the Annual Information Form filed on www.SEDAR.com on March 31, 2023. Forward-looking information may relate to the future outlook and anticipated events or results and may include statements regarding the business strategy and plans and objectives. Particularly, forward-looking information in this press release includes, but is not limited to, information concerning Journey's drilling and other operational plans, production rates, and long-term objectives. Journey cautions investors in Journey's securities about important factors that could cause Journey's actual results to differ materially from those projected in any forward-looking statements included in this press release. Information in this press release about Journey's prospective funds flows and financial position is based on assumptions about future events, including economic conditions and courses of action, based on management's assessment of the relevant information currently available. Readers are cautioned that information regarding Journey's financial outlook should not be used for purposes other than those disclosed herein. Forward-looking information contained in this press release is based on current estimates, expectations and projections, which we believe are reasonable as of the current date. No assurance can be given that the expectations set out in the Prospectus or herein will prove to be correct and accordingly, you should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do not undertake to update this information at any particular time except as required by applicable securities law.
Non-IFRS Measures
This press release contains certain financial measures and ratios which do not have standardized meanings prescribed by International Financial Reporting Standards ("IFRS Accounting Standards") or Generally Accepted Accounting Principles ("GAAP"). As these non-GAAP financial measures and ratios are commonly used in the oil and gas industry, Journey believes that their inclusion is useful to investors. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used. The non-GAAP measures and ratios used in this press release, represented by the capitalized and defined terms outlined below, are used by Journey as key measures of financial performance, and are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net income or other measures of financial performance calculated in accordance with IFRS Accounting Standards.
(1) "Operating income" and "Operating Netback(s)". The Company uses netbacks to help evaluate its performance, leverage, and liquidity; comparisons with peers; as well as to assess potential acquisitions. Management considers netbacks as a key performance measure as it demonstrates the Company's profitability relative to current commodity prices. Management also uses them in operational and capital allocation decisions. Journey uses netbacks to assess its own performance and performance in relation to its peers. These netbacks are operating, Funds Flow and net income (loss). "Operating income" is calculated as the average sales price of the commodities sold (excluding financial hedging gains and losses), less royalties, transportation costs and operating expenses. There is no GAAP measure that is reasonably comparable to operating income. The Company refers to Operating Netback expressed per unit of sales volume as an "Operating Netback" and reports the Operating Netback before and after hedging, both of which are non-GAAP financial ratios. Journey considers Operating Netback an important measure to evaluate its operational performance as it demonstrates its field level profitability relative to current commodity prices and is also relevant for comparisons to Journey's peers. Below is the reconciliation of the Operating Netback for Journey for 2024 and 2023:
| $000's | $/boe | |||||||||||||||||
| 2024 | 2023 | % | 2024 | 2023 | 3 Year | |||||||||||||
| Revenues | 197,149 | 225,149 | (12 | ) | 47.77 | 49.68 | (4 | ) | ||||||||||
| Royalties | (37,435 | ) | (46,980 | ) | (20 | ) | (9.07 | ) | (10.37 | ) | (13 | ) | ||||||
| Operating expenses | (87,324 | ) | (91,557 | ) | (5 | ) | (21.16 | ) | (20.20 | ) | 5 | |||||||
| Transportation | (4,450 | ) | (5,121 | ) | (13 | ) | (1.08 | ) | (1.13 | ) | (4 | ) | ||||||
| Operating netback | 67,940 | 81,491 | (17 | ) | 16.46 | 17.98 | (8 | ) | ||||||||||
(2) "Net debt" is calculated by taking current assets and then subtracting accounts payable and accrued liabilities; and the principal amount of term debt, convertible debentures, and other loans. Net debt is used to assess the capital efficiency, liquidity and general financial strength of the Company. In addition, it is used as a comparison tool to assess financial strength in relation to Journey's peers.
| Unaudited ($000's) | 2024 | 2023 | ||||
| Principal amount of term debt | 18,248 | 43,763 | ||||
| Principal amount of vendor-take-back debt | - | 17,000 | ||||
| Principal amount of convertible debentures | 38,000 | |||||
| Accounts payable and accrued liabilities | 41,177 | 47,214 | ||||
| Other loans | 417 | 419 | ||||
| Deduct: | ||||||
| Cash in bank | (8,213 | ) | (17,715 | ) | ||
| Accounts receivable | (25,458 | ) | (24,734 | ) | ||
| Prepaid expenses | (3,232 | ) | (4,271 | ) | ||
| Other receivable | (619 | ) | - | |||
| Net debt | 60,320 | 61,676 |
(3) Journey uses "Capital Expenditures (excluding A&D)" and "Capital Expenditures (including A&D)" to measure its capital investment level compared to the Company's annual budgeted capital expenditures for its organic capital program, excluding acquisitions or dispositions ("A&D"). The directly comparable GAAP measure to capital expenditures is cash used in investing activities. Journey then adjusts its capital expenditures for A&D activity to give a more complete analysis of its capital spending used for FD&A purposes. The capital spending for A&D proposes has been adjusted to reflect the non-cash component of the consideration paid (i.e. shares issued). The following table details the composition of capital expenditures and its reconciliation to cash flow used in investing activities:
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||||
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||
| Cash expenditures: | ||||||||||||||||||
| Land and lease rentals | 115 | 179 | (36 | ) | 827 | 1,740 | (53 | ) | ||||||||||
| Geological and geophysical | 45 | 73 | (38 | ) | 181 | 351 | (48 | ) | ||||||||||
| Drilling and completions | 7,342 | 11,152 | (34 | ) | 16,798 | 15,620 | 8 | |||||||||||
| Well equipment and facilities | 3,297 | 3,081 | 7 | 11,445 | 7,758 | 48 | ||||||||||||
| Power generation | 5,461 | 9,277 | (41 | ) | 13,898 | 14,456 | (4 | ) | ||||||||||
| Total capital expenditures | 16,260 | 23,762 | (32 | ) | 43,149 | 39,925 | 8 | |||||||||||
| PP&E acquisitions | 9 | - | - | 32 | 6,467 | (100 | ) | |||||||||||
| PP&E dispositions | (863 | ) | (6,733 | ) | (87 | ) | (2,013 | ) | (5,536 | ) | (64 | ) | ||||||
| Net capital expenditures | 15,406 | 17,029 | (9 | ) | 41,168 | 40,856 | 1 | |||||||||||
| Other expenditures: | ||||||||||||||||||
| Administrative | - | - | - | 11 | - | - | ||||||||||||
| ARO costs incurred | 3,229 | 1,197 | 170 | 7,175 | 4,862 | 48 | ||||||||||||
| Total expenditures | 18,635 | 18,226 | 2 | 48,354 | 45,718 | 6 | ||||||||||||
Measurements
All dollar figures included herein are presented in Canadian dollars, unless otherwise noted.
Where amounts are expressed in a barrel of oil equivalent ("boe"), or barrel of oil equivalent per day ("boe/d"), natural gas volumes have been converted to barrels of oil equivalent at nine (6) thousand cubic feet ("Mcf") to one (1) barrel. Use of the term boe may be misleading particularly if used in isolation. The boe conversion ratio of 6 Mcf to 1 barrel ("Bbl") of oil or natural gas liquids is based on an energy equivalency conversion methodology primarily applicable at the burner tip, and does not represent a value equivalency at the wellhead. This conversion factor is an industry accepted norm and is not based on either energy content or current prices. References to "oil" in this press release include light, medium and heavy crude oil, combined. NI 51-101 includes condensate within the product type of "natural gas liquids". References to "natural gas liquids" or "NGLs" include pentane, butane, propane, and ethane. References to "gas" or "natural gas" relates to conventional natural gas. References to "liquids" includes crude oil, condensate and NGLs.
All volumes in this press release refer to the sales volumes of crude oil, natural gas and associated by-products measured at the point of sale to third-party purchasers. For natural gas, this occurs after the removal of natural gas liquids.
Share Capital
Journey's common shares are listed on the Toronto Stock Exchange ("TSX") and trade under the symbol "JOY". As of December 31, 2024, there were 67.1 million common shares outstanding (61.3 million as at December 31, 2023). The table below summarizes the weighted average number of common shares outstanding (in '000s):
| Three months ended December 31, | Twelve months ended December 31, | |||||||||||
| (000s) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Weighted average shares outstanding, basic | 65,394 | 61,197 | 62,366 | 60,310 | ||||||||
| Dilutive effect of outstanding securities | 472 | 5,758 | 683 | 5,860 | ||||||||
| Weighted average shares outstanding, diluted | 65,866 | 66,955 | 63,049 | 66,170 | ||||||||
| Dilutive instruments excluded from diluted calculations | 11,325 | 1,423 | 14,142 | 2,208 | ||||||||
| Fully diluted shares | 77,191 | 68,378 | 77,191 | 68,378 | ||||||||
For purposes of calculating the NAVPS the dilution impact from the convertible debentures (7,600 thousand) shares have been excluded as the conversion price of $5.00 is out-of-the-money.
Abbreviations
The following abbreviations are used throughout these MD&A and have the ascribed meanings:
| AIMCo | Alberta Investment Management Corporation |
| API | American Petroleum Institute |
| bbl | Barrel |
| bbls | Barrels |
| boe | barrels of oil equivalent (see conversion statement below) |
| boe/d | barrels of oil equivalent per day |
| gj | Gigajoules |
| GAAP | Generally Accepted Accounting Principles |
| IFRS | International Financial Reporting Standards |
| Mbbls | thousand barrels |
| Mboe | thousand boe |
| Mcf | thousand cubic feet |
| Mmcf | million cubic feet |
| Mmcf/d | million cubic feet per day |
| MSW | Mixed sweet Alberta benchmark oil price at Edmonton Alberta |
| MW | One million watts of power |
| NGL's | natural gas liquids (ethane, propane, butane and condensate) |
| VTB | Vendor-take-back term debt issued by Journey to Enerplus Corporation as partial payment of the purchase price for the asset acquisition on October 31, 2022 |
| WCS | Western Canada Select benchmark oil price. This crude oil is heavy/sour with API gravity of 19-22 degrees and sulphur content of 1.8-3.2%. |
| WTI | West Texas Intermediate benchmark Oil price. This crude oil is light/sweet with API gravity of 39.6 degrees and sulfur content of 0.24%. |
All volumes in this press release refer to the sales volumes of crude oil, natural gas and associated by-products measured at the point of sale to third-party purchasers. For natural gas, this occurs after the removal of natural gas liquids.
No securities regulatory authority has either approved or disapproved of the contents of this press release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/244402
