Greenfire Resources Q1 2025 Earnings Results & Report

Greenfire Resources EPS Results

• Actual EPS: $0.16
• Consensus EPS: $0.32
• Beat/Miss: Missed by -$0.16
• One Year Ago EPS: N/A
• EPS Beat Rate: 2 of last 5 quarters

Greenfire Resources Revenue Results

• Actual Revenue: $123.16 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Greenfire Resources (NYSE:GFR) is a Canadian energy company focused on the development and production of bitumen from the Athabasca oil sands in Alberta. The company uses thermal recovery methods, including steam-assisted gravity drainage (SAGD), to produce heavy oil that can be processed into marketable crude oil products.

Greenfire’s principal assets are the Hangingstone Expansion and Hangingstone Demonstration oil sands projects, located south of Fort McMurray, Alberta. These facilities are designed to recover bitumen from the company’s resource leases, with production supported by steam generation, extraction, and related oil sands infrastructure.

Headquartered in Calgary, Alberta, Greenfire serves energy markets through the production and sale of bitumen and heavy crude oil. The company became publicly traded on the New York Stock Exchange in 2023 following a business combination with M3-Brigade Acquisition III Corp.

Greenfire Resources Q1 2025 Earnings Call Transcript

Key Takeaways

• Greenfire's expansion asset production declined due to accelerated base decline, a boiler outage and excessive sulfur leading to regulatory issues.
• The company withheld 2025 capital and production guidance citing ongoing operational challenges and regulatory remediation efforts.
• Greenfire plans a multiyear development program targeting new long-cycle well pairs NE and SE of its Central Processing Facility, starting Q4 2025 to tap undeveloped 2P reserves.
• An ongoing cultural overhaul emphasizes integrity, energy, intelligence and a safety-first mindset, supported by hiring seasoned SAGD professionals.
• Management is evaluating capital structure optimization, including reducing bond debt viewed as excessive for the company’s current scale.

Presentation

[Operator]

Morning, ladies and gentlemen. Welcome to the Greenfire Resources First Quarter Results Conference Call. As a reminder, this conference call is being recorded. I would now like to turn the meeting over to Mr. Robert Loebach, Vice President of Capital Markets. Please go ahead, Robert.

[Robert Loebach, VP of Capital Markets at Greenfire Resources]

Thank you, Operator. Good morning and welcome to Greenfire Resources' conference call for our Q1 2025 results. Please note that today's call includes forward-looking statements and references non-GAAP and other financial measures. We encourage you to review the associated risks detailed in our latest MD&A. Unless specified otherwise, all monetary figures discussed today are in CAD. Capital expenditures and production figures presented today are based on our working interest, net to Greenfire Resources, unless noted otherwise. Joining us on today's call are key members of Greenfire Resources' leadership team, including Adam Waterous, Executive Chairman; Colin Germaniuk, President; Tony Kraljic, Chief Financial Officer; and Jonathan Kanderka, Chief Operating Officer. Upon the conclusion of our prepared remarks, I will open the floor to questions from participants. I will now hand over the call to Adam.

[Adam Waterous, Executive Chairman at Greenfire Resources]

Thank you, Robert, and welcome everyone to Greenfire's Q1 2025 conference call. Prior to opening up the call to questions, we just have a few brief comments on the business. Let's touch on the bad news first. The punchline is that the current production at Greenfire's expansion asset has been poor and is primarily attributable to three factors. First, Greenfire's 2023 and 2024 refill program has accelerated the base decline profile at the expansion asset. Second, one of four boilers at our expansion asset has been offline due to wear from sulfur production at the central processing facility. We believe the root cause of the excess sulfur production is due to operating the reservoir at a high pressure and temperature during late life recovery. Third, and related to the second challenge, Greenfire's sulfur emissions are currently exceeding the Alberta Energy Regulator's maximum limit.

[Adam Waterous, Executive Chairman at Greenfire Resources]

Upon learning of the exceedance, Greenfire immediately reported the breach to the AER and has been in active dialogue with the AER ever since. Greenfire takes its regulatory obligations very seriously and has ordered sulfur removal facilities at the expansion asset with installation and commissioning targeted for Q4 2025. Given these challenges, it would be premature to provide 2025 capital or production guidance at this time. That is a snapshot of the current challenges, which, of course, we are laser-focused on addressing. Now, let's turn to some brighter news, which is the high-quality work we have progressed on Greenfire's future development plan. I will now turn it over to Colin to touch on this.

[Colin Germaniuk, President at Greenfire Resources]

Thanks, Adam. Before I touch on our future development plans, I want to highlight that an integral part of Greenfire's strategy since I joined has been a cultural overhaul, which is gaining momentum. At Greenfire, we are focused on attracting top-performing individuals with a constant focus on our IEI mantra. That is integrity, energy, and intelligence, and in that order of importance. We have introduced initiatives to embed a safety-first mindset and elevate performance across all levels of the organization. Following the recent organizational restructuring, we have added professionals with proven track records in SAGD to support Greenfire's development. Now, I'd like to provide a small preview on our future development plans, which we're very excited about. We're going to be focusing on drilling new long-cycle wells in undeveloped reservoir at the expansion asset. Our near-term priority is to drill wells just northeast of the Greenfire central processing facility.

[Colin Germaniuk, President at Greenfire Resources]

The region contains well-delineated reservoir directly offsetting existing production, and we plan to start drilling as soon as Q4 2025. As we look to the medium term, our next priority will be to develop reservoir that is just southeast of Greenfire's CPF and contains the largest amount of undeveloped 2P reserves in the company. Our governing approach with this multi-year development plan is to ensure that capital decisions align with our goal of maximizing net asset value per share and deliver strong returns for Greenfire shareholders. We will provide the details of the new development plan once it's finalized. We'll now open it up for Q&A.

[Operator]

Thank you. We will now take questions from the telephone lines. If you have a question, please press star one. You may cancel your question at any time by pressing star two. Please press star one at this time if you have a question. There will be a brief pause while participants register for questions. We thank you for your patience. Our first question is from Jason Wenglar from Imperial Capital. Please go ahead.

[Jason Wangler, Analyst at Imperial Capital]

Good morning. Just understand, obviously, what you're talking about as far as kind of going forward with the development program. Can you just talk about this year, kind of obviously the production drop? Are we kind of at a level that you think we're stabilizing, or where do you think the production kind of goes until you start to ramp back up on the drilling side?

[Robert Loebach, VP of Capital Markets at Greenfire Resources]

Yeah, it's a good question. Through the first quarter and into April, we've seen some declines. Our base production has a high recovery factor, and we drilled some refills over the last couple of years. So we have pretty steep declines in Q1. We do expect those declines to shallow out a bit, but we do expect production to decline a little bit throughout the year. But we can't really provide any specific numbers or guidance until we finalize our plans.

[Jason Wangler, Analyst at Imperial Capital]

Okay. Maybe just on the financial side, I saw on the slide you guys kind of mentioned the bonds specifically, maybe something that I think you guys are looking at talking about, I guess, the entire capital structure. Can you talk about what you're thinking about, how you optimize that part of the business as you kind of also are working on the production side as well?

[Adam Waterous, Executive Chairman at Greenfire Resources]

Sure. This is Adam Waterous. I'll take that. We think that, generally speaking, the business, the amount of bonds, is not appropriate for the size of the business today. We look at those as being transitory. We haven't made a decision yet on what we're going to do, but we don't think that those bonds are an appropriate part of the long-term capital structure of the business.

[Jason Wangler, Analyst at Imperial Capital]

I appreciate it. Thank you.

[Operator]

Thank you. Once again, please press star one at this time for any questions or comments. We have no further questions registered at this time, so I would now like to turn the meeting back over to Mr. Loebach.

[Robert Loebach, VP of Capital Markets at Greenfire Resources]

Thank you, Operator. On behalf of Greenfire Resources, we appreciate you joining us on our Q1 2025 results conference call. Have a great day.

[Operator]

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.

Participants

Executives

• Robert Loebach, VP of Capital Markets
• Adam Waterous, Executive Chairman
• Colin Germaniuk, President

Analysts

• Jason Wangler, Analyst at Imperial Capital