Pieridae Energy Limited

Good day, ladies and gentlemen, and welcome to the Pear Day Energy Q4 2021 and year-end financial results conference call. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the meeting over to James Miller, Director, External Relations. Please go ahead, Mr. Miller.

James Miller Thanks, Justin, and thank you, everyone. Good morning. I'd like to welcome you to Parity Energy's Q4 2021 and year-end results conference call. With me today are Chief Executive Officer Alfred Sorensen, President and Chief Operating Officer Darcy Redding, and Chief Financial Officer Adam Gray. Alfred, Darcy, and Adam will begin today with some opening comments on our financial results and certain other company developments. Please note that a slide presentation will accompany their remarks. Following their prepared remarks, we will turn the call over to the conference coordinator for your questions. In order to provide everyone with an equal opportunity to participate, we ask that you limit yourself to two questions. If you have additional questions, please re-enter the queue. Also, we ask that you focus your questions on our industry, recent developments, and key elements of our financial performance. Before Alfred begins, Let's get to my cautionary statement slide. I'd like to remind you that our remarks today will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please see the reports filed by PARADATE with Canadian securities regulators on cdar.com. With that, I will turn things over to our Chief Executive Officer, Alfred Sorensen. Alfred?

Thank you, James, and good morning to everyone, and thank you for taking the time to listen to what we have to say today. We recognize it's been a while since we had one of these calls, and a lot has happened since our last call probably close to six or seven months ago. I'd like to first start on behalf of the Board of Directors of Parity Energy to congratulate both Darcy and Adam for our recent promotion to Darcy to our President and Chief Operating Officer, and Adam to our Chief Financial Officer. Adam was the interim CFO since last summer and over the period of the last six months has done an extraordinary job of helping us get through a very difficult period of time. And on behalf of myself and our board, we'd like to thank both of them for all their efforts during the last six to eight months. We look forward to their contributions that they will hopefully make over the next couple of years as we begin to move our company forward. We'll talk a little bit about how we see our next 18 to 24 months unfolding. We believe we have an opportunity to show the marketplace that the foothills remains an important part of the natural gas industry within the Western Sedimentary Basin, and certainly that is our goal over the next year is to bring volumes back into our plants over time. Our business itself has been very positively impacted by the changes of commodity prices, and we'll talk a little bit about how we think that the go-forward view on pricing has on the impact of our business as a whole. I'd like to talk a little bit about the strategic process that was commenced in the summer of 21 and concluded just back here in January. The goal of the process was to find strategic alternatives to enhance shareholder value. We hired Peterson Company to aid the company in finding alternatives that did not involve a continuing operation of the company. By the time we came to the end of that process, the decision was that the best alternative for the company was to go forward as an operating entity. We'd like to thank the work that Peter's did for us. I think it highlighted the quality of the assets that we have and that at the time we were looking at doing a review of our assets that the most important lesson that came out of that is that we can build a future around our existing asset base. So where do we go from here? Parity originally built a business around its view of its LNG project that was going to be a 10 metric ton facility based in the province of Nova Scotia. All of our transactions that we completed after that were very much to support that project. In June of last year, when we decided that the 10 metric ton facility was not economically feasible for a company our size, We have spent the last six months looking at an alternative to our LNG project, but in the meantime, have decided that the best foot forward for the company is to very much focus on its upstream business, which we highlight some of the important parts of our business that Darcy is going to spend his time making more profitable than they have been to date. So our main focus for 2022 is going to be around refinancing our debt. We recognize that the cost structure that we currently have is unsustainable over a longer period of time. Our original goal of taking on the debt to acquire the assets from Shell was that our LNG project would allow us to refinance that debt in a relatively short period of time. Without the larger LNG project, the original goal was not achievable, but it is now a priority of the company that now that we have changed significantly our operating status to refinance our debt as soon as we can, and looking at that as a goal for the first half of this year. Our assets have continued to operate at a very high level of efficiency, and we believe that Our results between now and the mid-year will allow us to find a good solution to ensure that the cost structure of our debt comes down substantially from where we are today. We recognize that the foothills have not been an area of significant economic activity over the last 10 years and certainly very much displaced by the Montney and other jurisdictions in North America. Our primary goal this next year is going to be to show the marketplace that the foothills remain and can become a competitive supply of gas supply in the western sedimentary basin and throughout North America. I'll leave that to Darcy to talk about how we see drilling into the future. A little bit about where we're sitting with the AER. On January 31st, we withdrew, along with Shell, our application to transfer the the licenses from Shell to Paraday. That request was approved by the AER and where we sit today is Shell and Paraday are committed to coming up with a solution. We think that it will take the better part of this year to actually enact that solution, but we are confident that with the improving economic situation of the company, how we are looking at utilizing those assets over the next year, that we will find a solution that works for Shell, for ourselves, and for the AER. We continue to own and operate the Foothills assets and remind our investors that we are the beneficial interest owners of those assets, and we will continue to be so for the foreseeable future. Only talk a little bit about COVID for a little bit. This will probably be the last time we hopefully have to speak of it. COVID did not have a significant impact on our overall business operations, but it obviously had a very significant impact on our business plan. It was primarily the results of COVID that created an environment where attempting to finance a $10 billion project became very difficult. And that is how we've ended up, one of the reasons where we ended up where we are today. On the positive side, we have run two very large turnarounds. We have kept our staff relatively safe and healthy, and we have not run into any significant operational issues as a result of COVID, and we continue to work in an environment that remains healthy and safe. All of our employees return to work the office during the month of March, and we hope that that will be the scenario from this point forward. I will talk a little bit now about where we see our LNG project going from this point forward. As I've already mentioned, our primary goal is going to be to re-establish the foothills as a prime area of exploration and development. But we also recognize that our LNG project is a part of a changing environment on a worldwide basis. The developments in the Ukraine and Russia have significantly changed the environment under which we see our project today. The government of Canada has made it very clear that they wish to see Canada play a role in removing Russia as a primary supplier of energy into the European Union and the United Kingdom. We believe that Canada can and should play a major role and we are working very hard right now to figure out how we can revitalize our project such that we have an opportunity to be part of the solution as our allies in Western Europe look for alternative supply sources that currently are unavailable and are only being served by Russia. are cognizant that there might be individuals out there or organizations that may see us as being an opportunistic company given the situation in the Ukraine today. And my response to that is that we always believe that Canada should be a part of the security supply situation. And the unfortunate situation the Ukrainian people find them in is not the reason why we feel this is an important project for Canada. We still believe we can produce an LNG project that has net zero impact on the environment over the lifetime of the LNG project. Our goal is still to be carbon neutral. We continue to work on our CO2 project here in the province of Alberta, which will be an important part of how we become carbon neutral. And we also believe that our project has the opportunity to be an important part of Canada's desire to reconcile with its First Nations. We have always, from the beginning of the project, had a positive and important relationship with the Mi'kmaq of Nova Scotia, and we believe in any new form of the LNG project that they will play a major and important role. So what does it take to get this project to be successful where we weren't in the first go-round. I think the most important thing that we were not successful in the first instance was the fact that the project was very large and we needed to have an investment partner. That will be the critical part of our go-forward plan, that we will first look for a partner to ensure that the project can reach the finish line. We are actively involved in that over the last three or four months, and we believe that we will have an announcement to make before the end of the second quarter on how we will go forward with a partner. As I already mentioned, our relationship with the Mi'kmaq First Nation is an important part of our business. It's an important part of the goals of our company in general to increase the participation of First Nations from Western Canada to Eastern Canada. One of the important parts of our project is finding a way to make their role in our project economically meaningful to their peoples themselves. The key issue on carbon emissions remains an important part of our project. As I said, our goal is to become carbon neutral by 2050 and sooner if we are able to get our carbon sequestration project up and running in that period of time. There are still issues in regards to how carbon is going to be measured and priced in Nova Scotia. That was an issue that was never resolved, and it will still need to be resolved for us to go forward. And lastly, and most importantly, to get the gas from Western Canada to Eastern Canada, we have to resolve several of the issues that remain on the pipeline. Although the whole issue behind using Western Canadian gas was the fact that TC Energy had a significant amount of capacity on its western side of its pipeline system. There are issues on the eastern side. Those issues must be resolved before the project can move forward, and we look forward to talking with TC Energy over the next month once we have an investment partner in place. So with that, I will now turn the meeting over to Darcy to talk a little bit about our fourth quarter and our annual results, and we'll take questions when we come to the end of the meeting.