Canada’s Birchcliff to boost spending in 2022
Canada’s Birchcliff Energy, a gas-weighted producer active in the Montney fairway, said January 19 it had approved a 2022 finding & development (F&D) capital budget of C$240-$260mn (US$192-$208mn), up from its 2021 F&D capital budget of C$210-$230mn.
“We had an excellent year in 2021 which saw us successfully and safely execute our 2021 capital program, significantly reduce our total debt and double our common share dividend,” CEO Jeff Tonken said.
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The approved budget, he said, is expected to yield annual production this year in the 78,000-80,000 barrels of oil equivalent (boe)/day range and C$330-C$350mn of free funds flow, which will be largely allocated to debt reduction. By the end of this year, Birchcliff expects debt of about C$175mn-C$195mn, while its five-year plan holds the potential for debt to be eliminated in 2023.
“We believe that significantly reducing our indebtedness will reduce the risks to our business and create optionality when considering sustainable increases to our common share dividend and common share buybacks over the next five years,” Tonken said.
The five-year plan contemplates production increasing to 90,000 boe/day (82% natural gas) in 2026, with F&D capital expenditures declining modestly, from a peak of C$260mn in 2023 to C$225mn in 2026. Cumulative free funds flow by the end of the period has the potential to reach C$1.9bn.
About 64% of the 2022 capital budget is directed towards drilling and completions, but C$1.5mn has been allocated towards various emissions reduction initiatives, including its methane reduction and retrofit compliance plan, which will see the removal or retrofit of all remaining high-bleed pneumatic devices by the end of this year. Once that is done, the company expects to receive carbon offset credits over the next eight years.