Pieridae Energy Limited

Good day, ladies and gentlemen, and welcome to the Para Day Energy Q4 and Full Year 2024 Financial Results Conference Call. Please be advised that today's conference is being recorded, and at this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session. If you have a question and you are viewing on webcast, please use the Ask a Question button in the top right-hand corner to type your question at any time during the presentation. If you are participating via telephone and would like to ask a question, please dial star 11 at any time. You will then be in the queue for the question and answer session at the end of the call. I would now like to turn the meeting over to Mr. Dallas McConnell, Vice President, Corporate Finance. Please go ahead, Mr. McConnell.

Thank you very much, Gigi, and good morning, everyone on the line. I would like to welcome you to Pear Day Energy's fourth quarter and full year 2024 investor conference call. With me today are President and Chief Executive Officer Darcy Redding, Chief Financial Officer Adam Gray, and Chief Commercial Officer Paul Kunkel. Darcy and Adam will begin today with the review of our operating and financial results and certain other company developments. Following their prepared remarks, we will turn the call over to the conference coordinator for questions. Before Darcy begins, I would 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 Paraday with the Canadian Securities Regulators on cdarplus.ca. With that, I will now turn the call over to President and CEO Darcy Redding, who will provide more detail on our performance in Q4 along with recent corporate developments.

Thank you, Dallas. Good morning and thank you for joining us. Our comments today are supported by the short slide deck that, as usual, can be followed along by those tuning in through the webcast. 2024 was a year of significant achievement for the company despite facing stiff headwinds caused by low natural gas prices that were stubbornly persistent for most of the year. Although our strong natural gas financial hedge position in 2024 helped protect the company's cash flow from these low gas prices, we made the difficult but prudent decision to shut in a large portion of our dry natural gas, mostly in the second half of the year. The vast majority of this shut-in production was tied into third-party-owned facilities, where Paraday was contractually burdened by uncompetitive operating costs as compared to our own infrastructure, rendering the production uneconomic. These shut-ins impacted our full year and fourth quarter results. We are maintaining our focus in 2025 on consolidating third-party facilities in central Alberta to our own, a strategic forward-looking milestone that we will further elaborate on later in this call. In July, we formally achieved the first of our 2024 strategic milestones by wrapping up our efforts to establish a Canadian East Coast LNG facility in Nova Scotia, which was the founding goal of Parity Energy. Although management's communication to the market since early 2023 indicated our strategic priority was to pivot our focus into our Western Canadian upstream and midstream assets, the Goldboro sale nevertheless formally closed a chapter on Paradise history. The Goldboro sale helped the company to fully repay the remaining $20 million principal amount on the bridge loan, our second completed strategic objective in 2024. This high-interest loan had been in place since 2019, and extinguishing it not only decreased debt servicing costs, but simplified the business delivering new efficiency improvements. The third strategic milestone accomplishment was the successful completion of our $33.5 million equity raise through two phases consisting of a private placement and an equity rights offering to existing shareholders. These equity proceeds were partially allocated towards existing debt and working capital liabilities, with nearly 50% of the proceeds earmarked for investment into short-term, high-return optimization opportunities. Our fourth strategic 2024 milestone was the successful completion of Phase 2 of the Waterton Gas Plant maintenance turnaround in Q4, after Phase 1 was completed in 2023. With this milestone, the next turnaround at this, our highest net back major gas plant, is not scheduled until 2029. Net operating income of $13.7 million was generated in the fourth quarter, while just under $65 million was generated full year 2024, bolstered by a healthy full-year hedge gain of $74 million. Adam will speak in more detail about our cash flow, hedge book, and forward-looking expectations in the next few minutes. Full year 2024 production was approximately 27,800 BOE per day, while lower fourth quarter production of approximately 22,600 BOE per day was realized as the quarter experienced more fulsome effects of the previously mentioned shut-in of dry gas tied into third-party processing facilities. Capital expenditures of approximately $6 million in the fourth quarter and $26 million full year were directed primarily towards the Waterton gas plant turnaround and optimization investments, including de-bottlenecking of the Caroline de-methanizer tower. This de-bottlenecking aids our strategic objective to grow third party processing revenue and volumes. Third parties delivered nearly 72 million cubic feet per day of raw gas to our gas plants in the fourth quarter, a new quarterly benchmark for the company. Turning now to our net asset value summary, on the left-hand side of the current slide, Faraday's current share price of approximately 26 cents yields a market capitalization of approximately $75 million. and an enterprise value of $273 million based on our current net debt of $198 million. Our NI-51-101 compliant 2024 year-end reserves report evaluated by Deloitte shows the corporate PDP of $621 million on a PV 10% basis and a PV 10% of $1.25 billion on a 2P basis. both using consensus pricing after applying the appropriate abandonment and reclamation burden and other applicable financial liabilities the company's pdp net asset value is 312 million dollars and almost 940 and and 941 million dollars on a 2p basis based on our 290 million outstanding common shares GDP net asset value calculates to $1.07 per share, while 2P NAV is a robust $3.24 per share. I have obviously summarized a lot of numbers here, but suffice to say the appropriate conclusion is that Paradise shares currently trade at a deep discount as compared to our net asset value, clearly evidenced by the data, with share price to NAV ratios well below those of our peers. To the right-hand side of the slide, our 2024 2P reserves, PV 10%, shows a modest decrease of 9% year-over-year. Perhaps more importantly, 2P condensate and gas liquids reserves of 40 million barrels are complementary to our 1.2 TCF of sales gas reserves. Note our PDP annual base production decline is only 7%. amongst the lowest of all Western Canadian producers, with a corresponding reserve life index exceeding 25 years. Paraday has historically been successful in further mitigating its base decline to approximately 5% annually, with the implementation of low-cost, high-impact well and facility optimization. We expect this trend to continue in 2025 and beyond. Not to be overlooked, our 9 million metric tons of sulfur reserves are of further interest, particularly given our pending exposure to market pricing of 100% of our sulfur production beginning in January 2026. It is noteworthy that sulfur prices are currently fetching approximately $200 US per metric ton prior to transportation and other customary fees. Note that the incremental net operating income that can be generated in 2026 at this pricing is approximately 50 million Canadian dollars annually net of Crown royalty. I would caution that sulfur pricing is historically volatile and current sulfur pricing may not be representative of sulfur prices in 2026. However, capturing this upside sulfur revenue opportunity represents yet another forward-looking strategic objective for the company. You will find our current MD&A contains additional information pertaining to historical sulfur pricing and revenue, which provides further insight to justify our eager anticipation of gaining full market price exposure on our sulfur sales in 2026. We are optimistic that sulfur sales will generate new sustained cash flow increments for Pear Day starting in 2026. Focusing on fourth quarter operating results specifically now, production was negatively impacted by nearly 9,400 BOE per day of dry gas production shut in for the entire quarter, as previously discussed. Recently, most dry gas production in Equine, British Columbia and Northern Alberta that was shut in during Q4, totaling approximately 2,500 BOEs per day, was restarted given marginally stronger recent ACO gas pricing. However, we expect gas price volatility will continue as we approach the summer months, and Paraday does not expect these production volumes will be continuously sustained over the longer term. Operating cost reduction remains a primary focus for the company. Fourth quarter operating costs of $43 million were equivalent to $20.61 per BOE, with the per BOE cost experiencing upwards pressure largely as a result of lower production volumes realized over the period, as has already been extensively discussed. Faraday continues to compare our per barrel operating expense to our adjusted operating expense. The adjusted expense is simply our operating cost offset by both our realized third party revenue and sell for sales revenue. We believe the adjusted operating expense is a more accurate representation of the net cost to run our sulfur recovery and midstream processing businesses, neither of which are possible without our ownership in these sour gas facilities and their excess processing capacity that is available to grow our midstreaming business. In the fourth quarter, adjusted operating costs were $17.52 per BOE 15% improvement over our unadjusted operating expense. We expect to continue to deliver operating expense reductions over time, building on the 15% year-over-year actual reduction in 2024. We also anticipate third-party revenue growth and, starting in 2026, sulfur revenue growth as I explained a moment ago when our current sulfur sales contract that applies to most of our sulfur production expires at the end of 2025. Similarly, full year 2024 production was impacted by our dry gas production shut in with the annual impact being less severe than in the fourth quarter since the majority of the dry gas was only shut in for less than half of the calendar year starting in July. Operating expense for 2024 was $186 million, as mentioned, a 15% year-over-year decrease. Significant operating expense reductions are expected to continue as our strategic priorities remain laser focused on meaningfully reducing operating expenses to improve corporate net back while sustaining a safe and regulatory compliant business. As with my review of the fourth quarter operating results, Third party processing and sulfur sales revenue streams were meaningful in 2024, and the adjusted operating expense was $14.95 per BOE, or 18% lower than the unadjusted operating expense. The improvement in the adjusted operating expense in 2024 was slightly less in comparison to prior years, primarily due to some third party producers also making decisions to shut in lower margin gas production that went to our facilities. We expect to restore and grow third party revenue with improving natural gas prices and through attracting new sources of raw gas production to our midstream business, which remains a strategic priority in 2025. At this time, I'd like to hand things over to Adam Gray for additional information on our financial results, along with our guidance