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Cub Energy Announces Third Quarter of 2020 Results

[Dragoon]

2020-11-17 15:35 MT - News Release
 
HOUSTON, TX / ACCESSWIRE / November 17, 2020 / Cub Energy Inc. ("Cub" or the "Company") (TSX-V:KUB), a Ukraine-focused upstream oil and gas company, announced today its unaudited financial and operating results for the interim nine months ended September 30, 2020. 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 are pleased to report the two Jenbacher units have arrived on site on the RK field and currently undergoing the installation, commissioning and ultimately connecting to the power grid. The Company plans to have the units commercially operative in early 2021."
Operational Highlights

• Achieved average natural gas price of $3.59/Mcf and condensate price of $40.33/bbl during the nine months September 30, 2020 as compared to $5.85/Mcf and $48.43/bbl for 2019. The decrease is due, in large part, to increased volumes of gas stored in Europe, a warmer than expected winter in Europe and the impact of Covid.
• Production averaged 638 boe/d (97% weighted to natural gas and the remaining to condensate) for the nine months September 30, 2020 as compared to 873 boe/d for 2019.
• In April 2020, the Company has signed a contract for the purchase of two Jenbacher gas power generation engines that should convert the natural gas produced from the RK field into power that can be sold in western Ukraine at local market rates. The two units were manufactured and delivered to the RK Field in late October 2020 to begin installation and commissioning. Each power generation unit will have the capacity to produce as much as 1.5 megawatts ("MW") of power or 3 MW in total. The RK field was materially suspended on April 1, 2016 and this new plan should result in the restart of the RK field.

Financial Highlights

• The Company reported a net loss of $2,274,000 or $0.01 per share during the nine months September 30, 2020 as compared to net income of $260,000 or $0.00 per share during 2019.
• Netbacks of $9.13/boe or $1.52/Mcfe were achieved for the nine months September 30, 2020 as compared to netback of $18.49/Boe or $3.42/Mcfe for 2019.
• The Company has implemented certain cost-cutting initiatives during the second and third quarters of 2020, including the layoff of eleven team members, salary and director fee reductions, the signing of office leases at lower rent levels and a general decrease in the use of external consultants.

Reader Advisory

• With the current cash resources, negative working capital, suspension of the RK field, uncertainty surrounding the successful installation of the Jenbacher power generation units, fluctuating commodity prices, dividend uncertainty, 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.

(in thousands of US Dollars)		Three Months Ended September 30, 2020				Three Months Ended September 30, 2019				Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2019
Petroleum and natural gas revenue			37				62				146				188
Pro-rata petroleum and natural gas revenue(1)			659				1,999				2,713				7,936
Revenue from gas trading			1,255				2,514				4,382				9,968
Net income (loss)			(374	)			(497	)			(2,274	)			260
Income (loss) per share - basic and diluted			(0.00	)			(0.00	)			(0.01	)			0.00
Funds generated from (used in) operations			(232	)			179				(325	)			842
Capital expenditures(2)			-				-				-				9
Pro-rata capital expenditures(2)			-				915				869				1,273
Pro-rata netback ($/boe)(3)			9.11				15.01				9.13				18.49
Pro-rata netback ($Mcfe)(3)			1.52				2.50				1.52				3.08

 

		September 30, 2020				December 31, 2019
Cash and cash equivalents			5,150				6,206

Notes:

1. 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.
2. 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.
3. For purposes of the pro-rata netback calculation, the Company's profit from gas trading is added to the revenue of Kub-Gas to better reflect the true natural gas price achieved and field netback.

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
Contact:
Mikhail Afendikov
Chairman and Chief Executive Officer
[phone]
[e-mail]
Patrick McGrath
Chief Financial Officer
[phone]
[e-mail]