CALGARY, AB, July 31, 2024 /CNW/ - Kiwetinohk Energy Corp. (TSX:KEC) today reported its second quarter 2024 financial and operational results. As companion documents to this news release, please review the second quarter 2024 management discussion and analysis (MD&A) and condensed consolidated interim financial statements (available on kiwetinohk.com or www.sedarplus.ca) for additional financial and operational details. Second Quarter in Review "Kiwetinohk's upstream operations continued to perform strongly across controllable aspects of the business, with production and operating costs ahead of plan, and safe, efficient capital execution across our drilling program. Given robust results in a volatile commodity price environment, and with half the year behind us, we're in a position to make additional positive revisions to our full-year 2024 upstream guidance," said Pat Carlson, Chief Executive Officer. "In our power division, ongoing financial uncertainties arising from political and regulatory dynamics mean we must continue our cautionary approach to spending until the restructuring of Alberta's energy market and other regulations become clear." Second quarter achievements include: Strong production of 26,924 boe/d, ahead of company estimates incorporating a decline in advance of new wells coming on stream in the third quarter. Completing three wells at the 11-24 Duvernay pad in Tony Creek which came on stream mid July with early production rates in-line with expectations in this black oil window. Initial wellhead rates were approximately 1 MMcf/d of natural gas and associated liquids plus between 800-1,200 bbls/d of condensate per well. Strong operating netback1 of $27.81/boe drove adjusted funds flow from operations1 of $60.6 million or $1.39/share, bringing total year-to-date adjusted funds flow from operations to $3.11/share. Operating costs of $6.17/boe continued to trend ahead of plan with higher production rates supporting unit operating cost efficiencies. Capital expenditures (before acquisitions/dispositions)1 of $70.4 million were in-line with budget, and included: Completion of a two-rig, six-well, Duvernay drilling program at Pads 11-24 and 10-29 in the liquids rich Tony Creek region (three wells per pad). Completion and tie-in of the three Duvernay wells (at pad 11-24) noted above, with production brought on stream in early July. Exited with a 0.81x net debt to annualized adjusted funds flow from operations ratio2. As of June 30, 2024, after accounting for current borrowing and outstanding letters of credit, Kiwetinohk had $253 million of available borrowing capacity under its recently renewed and expanded credit facilities. The Company is advancing its Homestead solar project towards a Final Investment Decision. Kiwetinohk has engaged a financial advisor to assist in financing the project. At June 30, 2024, an accounting impairment indicator was identified on early-stage development projects, excluding Homestead, related to government policy and regulatory uncertainty. As a result, the Company has limited its capital allocation and a $29.2 million accounting impairment has been recorded.This represents the book value for the Opal and Little Flipi gas-fired peaking projects; the Granum and Phoenix solar projects and the Black Bear and Flipi natural gas combined-cycle projects. The Company continues to take a cautious approach to advancing its power development portfolio towards final investment decisions, and maintains a positive long-term view of the Alberta electricity market. _____________________________ 1  Operating netback, adjusted funds flow from operations and capital expenditures (before acquisitions/dispositions) are Non-GAAP measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Please refer to the section "Non-GAAP and other financial measures" herein for further information. Second half 2024 plans include: Executing a significant capital program that will see production on stream from 11 new wells in Simonette, including 9 Duvernay wells and 2 Montney wells, with an additional 3 Duvernay wells scheduled to come on stream near year-end. Kiwetinohk commenced a two-rig, six-well drilling program at 8-23 and 9-11 in Simonette (5 Duvernay, 1 Montney) with completions operations ongoing at the 10-29 pad (3 Duvernay) and production expected to come on stream in the coming weeks. Next, the completions crew will return to the 1-27 pad in Simonette to complete two wells drilled in the first quarter of 2024 (1 Duvernay, 1 Montney well) with the initial results from this pad, including Kiwetinohk's first Montney results, expected late in the third quarter. Given positive upstream results, the Company is reviewing opportunities to accelerate additional drilling in the second half of 2024 targeting an increase in projected total returns for 2025. _______________________________ 2  Net debt to annualized adjusted funds flow from operations is a non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Please refer to the section "Non-GAAP and other financial measures" herein for further information. Guidance update Kiwetinohk made the following updates to its full year 2024 guidance last provided on May 27, 2024: Increased the lower end of full-year production guidance from 25.0 - 27.5Mboe/d to a revised range of 26.0 - 27.5Mboe/d. Reduced full-year operating cost projections from $7.75 - $8.25/boe to $7.25 - $7.75/boe. Reduced full-year transportation cost projections from $5.75 - $6.25/boe to $5.50 - $6.00/boe. Kiwetinohk also revised sensitivities for its adjusted funds flow from operations and projected ratio of net debt to adjusted funds flow from operations using realized pricing and US$70/bbl and US$2.00/MMBtu and US$80/bbl and US$3.00/MMBtu flat pricing for the remainder of the year. The sensitivity for the ratio of net debt to adjusted funds flow from operations3 increased to reflect lower realized pricing, minor unplanned production downtime in July, and accelerated capital forecast for 2024. Revised sensitivities, along with a detailed breakdown of current full-year guidance, can be found in the MD&A for this quarter available on SEDAR+ at www.sedarplus.ca. The revised 2024 guidance and related sensitivities provide information relevant to expectations for financial and operational results. This corporate guidance is based on various commodity price scenarios, assumptions and economic conditions and readers are cautioned that guidance estimates may fluctuate and are subject to numerous risks and uncertainties. Kiwetinohk will update guidance if and as required throughout the year. _________________________________________________ 3  Net debt to adjusted funds flow from operations is a non-GAAP measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Please refer to the section "Non-GAAP and other financial measures" herein for further information. Financial and operating results for the quarter For the three months ended June 30, For the six months ended June 30, 2024 2023 2024 2023 Production Oil & condensate (bbl/d) 7,598 6,398 8,025 6,975 NGLs (bbl/d) 3,817 2,275 3,922 2,395 Natural gas (Mcf/d) 89,259 70,552 89,859 77,003 Total (boe/d) 26,292 20,432 26,924 22,204 Oil and condensate % of production 29 % 31 % 30 % 31 % NGL % of production 15 % 11 % 15 % 11 % Natural gas % of production 56 % 58 % 55 % 58 % Realized prices Oil & condensate ($/bbl) 102.71 91.48 97.25 96.21 NGLs ($/bbl) 42.21 47.94 44.49 57.14 Natural gas ($/Mcf)