TORC Oil & Gas Ltd. Announces Third Quarter 2020 Financial & Operational Results

 “Net debt” is calculated as current assets (excluding financial derivative assets) less: i) current liabilities (excluding financial derivative liabilities) and ii) bank debt. Management considers this measure to be useful in determining the Company’s leverage.

“Operating netback” or “netback” represents revenue and realized gain or loss on financial derivatives, less royalties, operating expenses and transportation expenses and has been presented on a per Boe basis. Management believes that in addition to net income, operating netback is a useful measure as it assists in the determination of the Company’s operating performance and profitability.

“Exploration and development expenditures” represents expenditures on property, plant and equipment (“PP&E”) excluding: acquisitions, non-cash PP&E additions and capitalized general and administrative expenses. See Capital Expenditures in the MD&A for further details.

“Property acquisitions, net of dispositions” represents additions to PP&E related to the Company’s asset and/or corporate acquisition and disposition activity.

“Free cash flow” represents adjusted funds flow, excluding transaction related costs, less i) exploration and development expenditures”, and ii) cash dividends paid.  Management considers this measure to be useful in determining its ability to finance capital expenditures and fund its dividend.

“Payout ratio” represents cash dividends paid, plus exploration and development expenditures, divided by adjusted funds flow, excluding transaction related costs. The Company considers this to be a key measure of sustainability.

Oil and Gas Disclosures

The term “boe” or barrels of oil equivalent may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Additionally, given that the value ratio based on the current price of crude oil, as compared to natural gas, is significantly different from the energy equivalency of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an indication of value.

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