|CUB ENERGY ANNOUNCES NET EARNINGS OF US $0.8 MILLION FOR FIRST HALF OF 2019|
Cub Energy Inc. has released its unaudited interim financial and operating results for the three and six months ended June 30, 2019. All dollar amounts are express 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 announce net income $0.8 million during the six months ended June 30, 2019, and receipt of $1.7 million in dividends, plus a further $1.1 million in dividends subsequent to the quarter end. In western Ukraine, the CNG drilling contractor has begun mobilization of the rig for the planned three-well program. All costs for the three wells will be borne 100% by our partner. In addition, in eastern Ukraine, we are pleased to announce that Kub-Gas plans to drill a new well, the M-30 well, in Q4 2019."
Achieved average natural gas price of $6.28/Mcf and condensate price of $45.88/bbl during the six months June 30, 2019 as compared to $7.34/Mcf and $65.18/bbl for the comparative 2018 period. Production averaged 873 boe/d (97% weighted to natural gas and the remaining to condensate) for the six months June 30, 2019 as compared to 819 boe/d for the 2018 comparative period. The CNG drilling contractor has commenced mobilization of its rig for the three-well program on the Uzghorod licence. The costs of drilling will be incurred 100% by our partner.Kub-Gas recompleted the Olgovskoye-7 ("O-7") well to the M6v which increased its production to 0.6 million cubic feet of gas per day ("MMcf/d"). The M6v is a relatively small gas reservoir and the current rate is approximately 0.3 MMcf/d. Kub-Gas also recently recompleted two other wells for a combined additional increase of approximately 0.35 MMcf/d in field production. Kub-Gas uses its own completion equipment and personnel.
The Company reported net income of $0.8 million or $0.00 per share during the six months June 30, 2019 as compared to net income of $1.4 million or $0.00 per share during the same period in 2018.Netbacks of $20.50/boe or $3.42/Mcfe were achieved for the six months June 30, 2019 as compared to netback of $26.45/Boe or $4.41/Mcfe for the comparative 2018 period. The Company received $1.7 million in dividends during the six months June 30, 2019 as compared to $2.4 million in dividends in the comparative 2018 period. Subsequent to the quarter ended June 30, 2019, the Company recorded an additional $1.1 million in dividends from KUBGAS Holdings.
Three Three Six Six Months Ended Months Ended Months Ended Months Ended June 30, 2019 June 30, 2018 June 30, 2019June 30, 2018 (in thousands of US Dollars) Petroleum and natural gas revenue 77 18 126 18 Pro-rata petroleum and natural gas revenue(1) 2,485 3,354 5,937 6,781 Revenue from gas trading(2) 2,975 3,079 7,454 8,749 Net income (loss) (205) 596 757 1,375 Income (loss) per share - basic and diluted (0.00) 0.00 0.00 0.00 Funds generated from operations(3) 678 596 643 993 Capital expenditures(4) 9 77 9 211 Pro-rata capital expenditures(4) 302 526 358 861 Pro-rata netback ($/boe) 16.19 26.98 20.5 26.45 Pro-rata netback ($Mcfe) 2.70 4.50 3.42 4.41 June 30,2019December 31, 2018 Cash and cash equivalents 7,429 7,236
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 and six months ended June 30, 2019, the Company recorded $2,975,000 (2018 - $3,079,000) and $7,454,000 (2018 - $8,749,000) in revenue for gas trading and $2,616,000 (2018 - $2,877,000) and $6,856,000 (2018 - $8,393,000) for the cost of the sales for a net profit from gas trading of $359,000 (2018 - $202,000) and $598,000 (2018 - $356,000), 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.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.
Effective September 1, 2019, subject to regulatory approval, the Company has appointed Sergey Panchuk as Chief Operating Officer, replacing Kerry Kendrick. Mr. Kendrick will remain with the Company as a senior advisor. Mr. Panchuk is a mechanical engineer and previously served as the Chief Executive Officer of Kub-Gas from 2006 to 2017. During Mr. Panchuk's tenure at Kub-Gas, the company grew to be the third largest private oil and gas producer in Ukraine. Since 2017, Mr. Panchuk, a resident of Ukraine, has been overseeing the Company's working interests in Ukraine.
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.
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