The head of Birchcliff Energy Ltd. says that despite reporting a loss in the third quarter, the company is poised to increase its production and take advantage of higher natural gas prices in the colder months ahead.
Chris Carlsen, Birchcliff’s president and CEO, told BNN Bloomberg in a Friday interview that the company posted a “strong” third quarter, but noted that its main focus was on increasing future production capacity as natural gas prices were soft during the period.
“Strategically, at the beginning of the year we came out and deferred about 11 wells into Q4 as we realized summer pricing and specifically Q3 pricing was quite weak,” he said.
“So, we’re just in the midst now of bringing on these 11 wells into what we feel is going to be some strong winter pricing.”
The company said in its earnings release on Thursday that it swung to a net loss to common shareholders of $10.5 million, or $0.04 per basic common share in the third quarter.
Carlsen said the hit to Birchcliff’s bottom line came partly from the costs associated with drilling and equipping the 11 wells it intends to bring online in the fourth quarter.
“When we have an operational quarter where we’re focused on drilling and completing wells, and that production’s coming on subsequent to that, generally you’ll outspend your cash flow,” he explained.
The company said it produced an average of 75,403 barrels of oil equivalent per day in the third quarter, 83 per cent of which was natural gas.
Its quarterly adjusted funds flow was $45.2 million, or $0.17 per common share, while cash flow from operating activities came in at $65.9 million.
Carlsen said that in addition to an expected pick-up in natural gas prices in the coming months, Birchcliff is set to take advantage of a strengthening U.S. dollar.
“About 80 per cent of our production is sold in U.S. dollars in U.S. markets, so we’re getting the benefit of the (higher U.S. dollar) today,” he said.
“The narrative for 2025 still looks quite compelling and quite strong.”