Tenaz Energy (TNZ) Q3 2024 earnings summary

Executive summary

• Announced Q3 2024 results and a $140 million private placement of Senior Unsecured Notes due 2029, replacing a $90 million term loan to fund the NOBV acquisition and future M&A.

• Signed a definitive agreement to acquire NAM Offshore B.V. (NOBV), with closing targeted for mid-2025; free cash flow between Jan 1, 2024 and closing will reduce the purchase price.

• Achieved 189% year-to-date total shareholder return, ranking at the top among TSX oil and gas companies.

Financial highlights

• Q3 2024 petroleum and natural gas sales were $14.8 million, up 6% sequentially but down 1.5% year-over-year.

• Funds flow from operations (FFO) was $3.4 million, down 42% from Q2 2024 and 30% from Q3 2023, impacted by higher G&A and M&A transaction costs.

• Net loss of $2.5 million in Q3 2024, compared to net income of $1.3 million in Q2 2024 and $20.9 million in Q3 2023, due to transaction expenses and absence of prior-period gains.

• Adjusted working capital was $9.0 million at Q3 2024, down from $44.3 million at Q2 2024, reflecting NOBV deposit and acquisition-related costs.

• Capital expenditures in Q3 2024 were $6.9 million; free cash flow was negative $3.6 million.

Outlook and guidance

• 2024 drilling and development CAPEX guidance reduced to $16–18 million from $23–25 million, reflecting a shift from a four-well Rex program to a two-well Ellerslie program.

• Annual production expected within 2,700–2,900 boe/d guidance, but near the lower end due to later Ellerslie drilling.

• Continued pursuit of international M&A opportunities, with the Notes Offering providing liquidity for future deals.