|2020-11-17 15:45 MT - News Release|
Mr. Mikhail Afendikov reports
CUB ENERGY ANNOUNCES THIRD QUARTER OF 2020 RESULTS
Cub Energy Inc. has released its unaudited financial and operating results for the interim nine months ended Sept. 30, 2020. All dollar amounts are expressed in United States Dollars unless otherwise noted. This update includes results from Kub-Gas LLC, which Cub has a 35-per-cent equity ownership interest, Tysagaz LLC, Cub's 100-per-cent-owned subsidiary, and CNG LLC, which Cub has a 50-per-cent equity ownership interest in.
Mikhail Afendikov, chairman and chief executive officer 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."
Achieved average natural gas price of $3.59/thousand cubic feet (Mcf) and condensate price of $40.33/barrel (bbl) during the nine months Sept. 30, 2020, as compared with $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 per cent weighted to natural gas and the remaining to condensate) for the nine months Sept. 30, 2020, as compared with 873 barrels of oil equivalent per day (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 three 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.
The company reported a net loss of $2,274,000 or one cent per share during the nine months Sept. 30, 2020, as compared with net income of $260,000 or zero cents per share during 2019.Netbacks of $9.13/boe or $1.52/Mcfe were achieved for the nine months Sept. 30, 2020, as compared with 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 11 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.
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.
Cub's complete quarterly reporting package, including the unaudited interim financial statements and associated management's discussion and analysis, has been filed on SEDAR and has been posted on the company's website.
About Cub Energy Inc.
Cub Energy is an upstream oil and gas company with a proven 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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