Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Greenfire Resources Ltd (GFR, Financial) reported a 30% year-over-year increase in consolidated production, reaching 19,125 barrels per day in Q3 2024.
- The company successfully resolved technical issues at the expansion asset, including the failure of downhole temperature sensors, and completed redrilling efforts.
- Regulatory approvals were obtained for operating two disposal wells at the demo asset, enhancing water handling capabilities.
- Greenfire Resources Ltd (GFR) has a strong financial position with CAD87.7 million of available liquidity and a strategic focus on reducing debt.
- The company plans to expand production capacity by 74% to approximately 59,000 barrels per day, subject to board approval and funding.
Negative Points
- Annual production for 2024 is anticipated to be slightly below guidance, averaging approximately 19,500 barrels per day versus the expected 20,000 to 21,000 barrels per day.
- Unplanned outages and maintenance at the expansion asset impacted production levels during the quarter.
- The company's capital expenditure guidance for 2024 has increased to CAD90 million to CAD100 million, up from the previous range of CAD80 million to CAD90 million.
- Greenfire Resources Ltd (GFR) reported a realized loss of CAD6.1 million on commodity risk management contracts for the quarter.
- The strategic review process initiated by the board to maximize shareholder value is ongoing, with no specific updates or outcomes disclosed yet.
Q & A Highlights
Q: With the success of this year's drilling, is the program repeatable for next year, and what are your plans for 2025?
A: Robert Logan, CEO: There are over 15 refill targets left between both sites. We plan to focus on additional refill pairs and prepare for a sustaining pad. Jonathan Kanderka, COO: In 2025, we'll focus on targets in the Koar Reservoir at Demo and finalize refills at Expansion, aiming to prove the asset's potential.
Q: Regarding cash flow and debt, what are your plans for managing finances moving forward?
A: Tony Kraljic, CFO: We aim to deleverage our debt, with potential refinancing available by next October. Our capital program will be funded through cash flows, and once we hit the $150 million debt threshold, we can shift capital allocation to focus more on shareholder returns.
Q: Can you provide more details on production performance post-maintenance and steam generator downtime?
A: Jonathan Kanderka, COO: The new refills at Demo are promising, with initial results showing 1,000 barrels a day. We expect further production increases as more refills contribute. Robert Logan, CEO: At Expansion, production is limited by gas and water handling capabilities, but we expect growth as bottlenecks are addressed.
Q: How should we think about production capacity and targets for next year?
A: Tony Kraljic, CFO: In 2025, we'll focus on refill targets and new sustaining pads. We don't expect to fill the plant in 2025 but aim to reach max capacity by the end of 2026.
Q: Can you clarify the short-term debt figure on your balance sheet?
A: Tony Kraljic, CFO: The current portion of debt reflects what we expect to repay in the next 12 months. We cannot voluntarily prepay more until October 2025, but we are confident in refinancing options given our current metrics.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
