HOUSTON, TX / ACCESSWIRE / March 27, 2019 / Cub Energy Inc. ("Cub" or the "Company") (TSX-V: KUB), a Ukraine-focused upstream oil and gas company, announced today its audited financial and operating results for the year ended December 31, 2018. All dollar amounts are expressed in United States Dollars unless otherwise noted. This update includes results from KUB-Gas LLC ("KUB-Gas"), which Cub has a 35% equity ownership interest, Tysagaz LLC ("Tysagaz"), Cub's 100% owned subsidiary and CNG LLC ("CNG"), which Cub has a 50% equity ownership interest.
Mikhail Afendikov, Chairman and CEO of Cub said: "We wish to report net income $3.1 million or $0.01 per share during the year ended December 31,
Operational Highlights
- In Q4 2018, Kub-Gas successfully
recompleted the Olgovskoye-3 ("O-3") well to a "behind pipe pay" zone designated as the Bashkirian-1b ("B1b"). The well initially tested at higher rates and put into production at a stabilized rate of 1.4 million cubic feet per day ("MMcf/d"). - This followed the other successful
recompletion, the Olgovskoye-9 ("O-9") well to
the zone designated as the Bashkirian-3 ("B3"). During a standard multi-rate test, the zone was tested up to 2.5 million cubic feet per day ("MMcf/d") and was put into production at a stable rate of 1.7 MMcf/d. - The price of natural gas averaged $7.94/Mcf and condensate price of $70.47/bbl during the year ended December 31,
2018 as compared to $6.50/Mcf and $69.56/bbl for 2017. - Production averaged 836
boe /d (97% weighted to natural gas and the remaining to condensate) for the year ended December 31,2018 as compared to 977boe /d for 2017. - On January 1, 2018, royalties on new wells drilled in Ukraine after January 1,
2018 were reduced to 12% from 29% for a minimum period of five years. - On March 1, 2018, a new law was passed in Ukraine intended to simplify regulatory procedures for the oil and gas sector which should increase the speed and efficiency of approvals.
- The new Nitrogen Rejection Unit ("NRU") is planned to be operational in 2019. However, due to continued construction delays, on November 19, 2018, the Company filed a claim with American Arbitration Association ("AAA"), seeking $0.3 million (plus interest and attorney fees) from the NRU manufacturer in contractual delay damages.
- The Company and its partner plan to start a three well exploration program at Uzhgorod in mid-2019. The
well costs are expected to beincurred 100% by our partner.
Financial Highlights
- The Company reported net income of $3.1 million during the year ended December 31,
2018 as compared to a net loss of $14.3 million in 2017 when the Company recorded one-time impairment charges. - Netbacks of $29.33/boe or $4.88/Mcfe for the year ended December 31,
2018 as compared to netback of $25.19/Boe or $4.20/Mcfe for 2017. - During the year ended December 31, 2018, the Company received $5.7 million in dividends from KUB Holdings as compared to $4.1 million in dividends in 2017.
- The Company repaid $1.1 million of its loan to KUB-Gas during the year ended December 31,
2018 in conjunction with its maturity.
(in thousands of US Dollars) |
Three |
Three |
Year |
Year |
Petroleum and natural gas revenue |
74 |
- |
142 |
24 |
Pro-rata petroleum and natural gas revenue(1) |
4,385 |
3,609 |
14,864 |
14,285 |
Revenue from gas trading(2) |
6,831 |
3,957 |
20,428 |
13,099 |
Net income (loss) |
570 |
(15,290) |
3,078 |
(14,342) |
Income per share – basic and diluted |
0.00 |
(0.05) |
0.01 |
(0.05) |
Funds generated from operations(3) |
2,353 |
2,832 |
2,690 |
2,519 |
Capital expenditures(5) |
2 |
637 |
221 |
1,678 |
Pro-rata capital expenditures(5) |
222 |
596 |
1,682 |
4,320 |
Pro-rata netback ($/
|
35.28 |
27.29 |
29.33 |
25.19 |
Pro-rata netback ($Mcfe) |
5.88 |
4.55 |
4.88 |
4.20 |
|
|
|
|
|
|
December 31, 2018 |
December 31, 2017 |
|
|
|
|
|||
Working capital (deficit) |
3,798 |
(478) |
|
|
Cash and cash equivalents |
7,236 |
6,190 |
|
|
Long-term debt |
5,591 |
5,451 |
|
Notes:
- Pro-rata petroleum and natural gas revenue is a non-IFRS measure that adds the Company's petroleum and natural gas revenue earned in the respective periods to the Company's 35% equity share of the KUB-Gas natural gas sales that the Company has an economic interest in.
- During the three months and year ended December 31, 2018, the Company recorded $6,831,000 (2017 - $3,957,000) and $20,428,000 (2017 - $13,099,000) in revenue for gas trading and $6,276,000 (2017 - $3,767,000) and 19,150,000 (2017 - $12,767,000) for the cost of the sales for a net profit from gas trading of $555,000 (2017 - $56,000) and $1,278,000 (2017 - $233,000), respectively.
- Funds from operations is a non-IFRS measure and
is defined as cash flow from operating activities, excluding changes in non-cash working capital. - Pro-rata funds from operations is a non-IFRS measure that adds the Company's funds from operations in the respective periods to the Company's 35% equity share of the KUB-Gas and 50% equity share of CNG Holdings funds from operations that the Company has an economic interest in.
- Capital expenditures
includes the purchase of property, plant and equipment and the purchase of exploration and evaluation assets. Pro-rata capital expenditures are a non-IFRS measure that adds the Company's capital expenditures in the respective periods to the Company's 35% equity share of the KUB-Gas and 50% equity share of CNG Holdings capital expenditures that the Company has an economic interest in.
Outlook
The Company is participating with KUB-Gas to complete additional
In western Ukraine, the Company is purchasing a new NRU with a plan to resume production at the RK field in 2019. The Company and its partner plan to start a three well exploration program in the Uzhgorod license in
Supporting Documents
Cub's complete quarterly reporting package, including the unaudited interim financial statements and associated Management's Discussion and Analysis, have been filed on SEDAR (www.sedar.com) and has been posted on the Company's website at www.cubenergyinc.com.
About Cub Energy Inc.
Cub Energy Inc. (TSX-V: KUB) is an upstream oil and gas company, with a proven track record of exploration and production cost efficiency in Ukraine. The Company's strategy is to implement western technology and capital, combined with local expertise and ownership, to increase value in its undeveloped land base, creating and further building a portfolio of producing oil and gas assets within a high pricing environment.
For further information please contact us or visit our website: www.cubenergyinc.com
Mikhail Afendikov
Chairman and Chief Executive Officer
(713) 677-0439
Patrick McGrath
Chief Financial Officer
(713) 577-1948
Oil and Gas Equivalents
A barrel of oil equivalent ("
The disclosure in this press release is prepared in accordance with NI 51-101 standards. Test results are not necessarily indicative of long-term performance or of ultimate recovery. The test data contained herein is considered preliminary until full pressure transient analysis is complete
Reader Advisory
With the current cash resources, negative working capital, suspension of the RK field, uncertainty surrounding the successful installation of the NRU, dividend restrictions, currency fluctuations, reliance on a limited number of customers, and impact on carrying values, the Company may not have sufficient cash to continue the exploration and development activities. These matters raise significant doubt about the ability of the Company to continue as a going concern and meet its obligations as they become due.
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Cub believes that the expectations reflected in the forward-looking information are reasonable;
Forward-looking information is based on the opinions and estimates of management at the date the statements are
This cautionary statement expressly qualifies the forward-looking information contained in this news release. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.
Neither the TSX Venture Exchange nor
SOURCE: Cub Energy Inc.