PetroFrontier Corp.
Climate Impact & Sustainability Data (2019, 2019-03, 2019-06-30)
Reporting Period: 2019
Environmental Metrics
Climate Goals & Targets
Environmental Challenges
- Extraordinary collapse in oil prices due to COVID-19 and OPEC decisions.
- Negative effect of COVID-19 and OPEC actions on 2020 operations, liquidity, and future impairment charges.
- Breach of a condition of Convertible Note #1 (waived in 2019).
Mitigation Strategies
- Further cost reduction (primarily G&A reductions).
- Slowing production rates and storing reduced volumes.
- Monitoring events closely to determine appropriate steps.
- Ongoing cost reduction efforts related to repairs and maintenance, sand handling, and fuel costs.
- Utilizing existing credit facilities.
- Continued support of shareholders.
- Additional actions to protect financial liquidity in response to the collapse in oil prices and global economic instability related to COVID-19 (reducing 2020 exploration and development plans, shutting in low-margin production, reducing salaries).
Supply Chain Management
Climate-Related Risks & Opportunities
Reporting Period: 2019-03
Environmental Metrics
Climate Goals & Targets
Medium-term Goals:
- Drill five test wells in Wabasca area by March 31, 2021
Short-term Goals:
- Drill one well on Cold Lake leases by November 30, 2019
Environmental Challenges
- Working capital deficiency
- Inability to pay debenture and convertible note interest
- Unusually inclement weather delaying well reclamation
- Litigation with Macquarie Capital Markets Canada Ltd.
- Intense competition in oil and gas exploration
- Dependence on key personnel
- Environmental risks and hazards associated with oil and gas operations
- Changes in legislation and regulations
- Potential for additional funding requirements
- Potential for dilution of existing shareholders
Mitigation Strategies
- Cost reduction efforts (reduced sand handling and fuel costs, salary rollback, headcount reduction)
- Negotiated credit facilities ($1.5 million in 2018, $2 million in 2019)
- Seeking continued support of debenture holder
- Awaiting end of spring breakup to recommence well reclamation
- Continuing lawsuit against Macquarie and defense of counterclaim
- Strict compliance with corporate governance, operating, safety, health, and environmental requirements and best practices
- Strong working relationship with joint venture partners
- Adequate insurance for normal risks
- Implementation of policies such as Code of Business Conduct and Ethics, Whistle Blower Policy and Procedures, Insider Trading and Reporting Guidelines, Disclosure Policy and Board Control System
Supply Chain Management
Climate-Related Risks & Opportunities
Reporting Period: 2019-06-30
Environmental Metrics
Climate Goals & Targets
Short-term Goals:
- Drill one well on existing Cold Lake leases by November 30, 2019
Environmental Challenges
- Volatility in the price of oil
- Decrease in oil barrels sold
- Unusually inclement weather in the Cold Lake area impacting reclamation work
- Environmental risks and hazards associated with oil and gas operations
- Changes in legislation concerning the security of industrial facilities
- Competition with other oil and gas companies with substantially greater financial resources
- Liquidity risk due to negative cash flow from operations
Mitigation Strategies
- On-going cost reduction efforts
- Negotiated two credit facilities
- Negotiated a one-year extension on the maturity date of the debenture
- Employing professionals and utilizing consultants and contractors to conduct business in compliance with requirements and best practices
- Maintaining a strong working relationship with partners
- Reducing operational costs