Cavvy Energy (CVVY) Q2 2024 earnings summary

Executive summary

• Q2 2024 production averaged 30,861–31,900 BOE/d, with about 25% (9,370 BOE/d) shut-in due to uneconomic conditions and an unscheduled Jumping Pound Gas Plant outage.

• Net operating income was just under CAD 8 million ($7.7 million), supported by nearly CAD 20 million ($19.8 million) in realized hedge gains despite historically low AECO gas prices.

• Strategic milestones included the sale of Goldboro assets and a private placement, with proceeds used to repay a high-interest $24 million bridge loan, reducing net debt by about CAD 17 million.

• Strategic focus has shifted fully to upstream and midstream operations in Western Canada, with ongoing asset optimization and cost improvements.

Financial highlights

• Q2 2024 net loss was $19.2 million, compared to net income of $13.6 million in Q2 2023, reflecting low gas prices and production shut-ins.

• Realized gas price was CAD 2.71/Mcf after hedges, 231% of the AECO benchmark, and only 11% lower year-over-year despite a 51% drop in AECO price.

• Operating expenses were CAD 18.87/BOE (unadjusted) and CAD 16.55/BOE (adjusted), slightly higher per BOE than Q1 due to lower production.

• G&A costs were CAD 1.78/BOE for the second consecutive quarter, the lowest in company history.

• Capital expenditures totaled $5 million, mainly for maintenance and optimization projects.

Outlook and guidance

• About 75% of forecasted natural gas production for the rest of 2024 and 2025 is hedged at CAD 3.32/GJ.

• Production guidance for 2024 has been withdrawn due to uncertainty in gas prices and 9,400 BOE/d of shut-in production.

• Net operating income guidance revised to CAD 55–70 million, reflecting lower gas prices.

• No resumption of development drilling is planned until gas price outlook improves.