Vital Energy Inc. Q1 2022 Results. Ending March 31, 2022 (All Information Available On Sedar)
Ticker Symbol: VUX
Price: $0.385
Common Shares: 82,249,971
Warrants: Nil
Options: 1,250,000 @ $0.25
Market Cap: $32 million
Insider Holdings: 55,311,353 or 67.3% of the float
Tax Pools: $51 million (Less Q1 2022 earnings. Available in 2021 audited results)
Financials (Ending March 31, 2022)
ASSETS
Cash: $2,487,862
Short Term Investments: $2,705,022
Trade & Receivables: $2,499,958
Prepaid Expenses: $68,321
Deposits: $564,797
Exploration & Evaluation Assets: $80,013
Right Of Use Assets: $177,419
Property & Equipment: $11,029,479
Total Assets: $19,612,871
LIABILITIES
Accounts Payable: $1,068,494
Contract Liabilities: $848,300
Current Lease Liability: $50,523
Current Decommissioning Liability: $258,574
Bank Loan: $60,000
Lease Liability: $130,339
Decommissioning Liability: $1,538,934
Total Liabilities: $3,955,164
Asset/Debt Ratio – 4.96:1
Q1 2022 Performance
Revenue: $5,854,810
Net Income: $3,521,015
Earnings per share: $0.043
2021 Performance
Revenue: $15,066,687
Net Income: $8,945,770
Earnings per share: $0.11
2021 Reserves (51-101) Available On Sedar – Oil Pricing under $70 & Gas Under $4
Light Oil – 537,400 Barrels NET
Heavy Oil – 306,900 Barrels NET
Natural Gas – 493,700 Barrels NET
Natural Gas Liquids – 2,100 Barrels NET
Total Net Barrels: 1,340,100 (Less Q1 2022 sales)
Q1 2022 Management Discussion Highlights (Available on Sedar)
Overall Performance Highlights
• The Company reported net income of $3,521,015 in Q1 2022 as compared to net income of $136,839 in Q1 2021.
• Revenue was $5,854,810 in Q1 2022 as compared to Q1 2021 revenue of $1,655,257, an increase of $4,199,553.
• The Q1 2022 realized oil price was $97.73 as compared to $54.59 in Q1 2021.
• Production increased to 666 boe/d in Q1 2022 from 337 boe/d in Q1 2021 with the increase being mainly attributable to improvements in operations at Sullivan Lake and the production of three horizontal wells at Lampman
Outlook
The Company plans to continue to acquire crown lands from upcoming crown land sales. The Company will continue to optimize production from the existing properties and plans to drill seven (7) horizontal wells in SE Saskatchewan that are expected to increase production by approximately 500 bbl/d in 2022.
Core Properties
Lampman
The Company purchased a quarter section of crown land in Saskatchewan in Q3 2020. In order to confirm the Frobisher reservoir quality and the potential in the deeper Winnipegosis zone, a vertical pilot hole 1-4- 6-5-W2 was designed and drilled. The results indicated the Frobisher reservoir was promising and the Winnipegosis zone was uneconomic. The pilot hole was abandoned in the deeper section and was plugged back. This existing vertical well bore was utilized to drill Hz C7-4-6-5W2 in the Frobisher zone from 1-4 to 7-4 (second event for the pilot well 1-4). The other two Frobisher horizontal wells were drilled in July 2021 from the same surface pad as the pilot hole and were completed in August 2021. The Company produced 318 bbls/d of sweet light oil (API ranging from 32.5 -36.0) from these multiple well projects in Q1 2022.
Sullivan Lake
The successful appraisal development well, 10-1, was drilled in the Banff limestone reservoir in December 2019 and two additional horizontal wells were drilled in 2020 and all are on production. As the Sullivan Lake desulfurization tower was replaced with a larger desulfurization tower in 2021 with more capacity, the Company believes it has resolved the long-standing production and operating issues. This area produced 102 boe/d in Q1 2022 compared to 99 boe/d in Q4 2021. The Company has built production facilities at Sullivan Lake with a capacity of 300 boe/d
Gull Lake
In one of the Company’s core areas of operations, Gull Lake, Saskatchewan, Vital is the designated operator and maintains a 50% working interest. The property is covered with 3D seismic data and has 9 wells producing, or capable of producing, crude oil from the Roseray , Cantuar and Upper Shaunavon formations. This project has a salt-water disposal facility and a gas collection pipeline system. In the Company’s opinion, future drilling opportunities remain on these lands. At Gull Lake, Vital’s net daily oil and natural gas production in Q1 2022 was 192 boe/d (Q1 2021 – 240 boe/d). The decrease in production was attributable to natural declines in the property. In order to better evaluate the oil development potential, the Company has utilized the 3D seismic survey which covers all of its Gull Lake lands. As of December 31, 2021, the reserves evaluator, Trimble Engineering, assigned 160,400 boe of proven oil and natural gas reserves net to the Company and 79,400 boe of probable oil reserves net to the Company.
Pennant
Vital is the Operator and maintains a 100% working interest in 12 contiguous sections of land. To date one (1) vertical well and six (6) horizontal wells have been drilled. Four of the horizontal wells and the vertical well have had production. The Company has commenced abandonment and reclamation work on some well sites. 3D seismic coverage on about 35% of Vital’s lands indicates the potential for additional drilling locations. The company’s crude oil production was 21 bbls/d in Q1 2022 as compared to 15 bbls/d in Q1 2021 when the property was shut-in for a considerable time period due to depressed oil prices.
Non-core Properties
Baxter Lake
The Company performed remedial work in 2021 to reactivate certain wells in the Baxter Lake area as oil prices have improved. In Q1 2022, this area produced 25 boe/d.
Ante Creek
The Company purchased 2.5 sections of crown land in Alberta in Q1 2021 and is currently working on a detailed geology study and development plan. This may allow the drilling of up to 25 horizontal Montney development wells.
Pembina
The Company purchased a quarter section of crown land in Alberta in Q2 2021 and is currently working on a detailed geology study and development plan. This may allow the drilling of up to 4 horizontal Cardium development wells.
Hume
The Company purchased 2 LDS of crown land in Saskatchewan in Q4 2021 and is currently working on a detailed geology study and development plan. This may allow the drilling of up to 2 horizontal Frobisher development wells.
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