Calgary, Alberta – LEUCROTTA EXPLORATION INC. (TSXV: LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three and nine months ended September 30, 2019. All dollar figures are Canadian dollars unless otherwise noted.
HIGHLIGHTS
- Achieved adjusted funds flow of $1.8 million in Q3 2019.
- Maintained production at 3,065 boe/d in Q3 2019 from 3,119 boe/d in Q2 2019.
- Maintained working capital of $2.2 million at September 30, 2019.
FINANCIAL RESULTS | Three Months Ended September 30 | Nine Months Ended September 30 | ||||
($000s, except per share amounts) | 2019 | 2018 | % Change | 2019 | 2018 | % Change |
Oil and natural gas sales | 6,113 | 7,182 | (15) | 20,775 | 24,935 | (17) |
Cash flow from operating activities | 950 | 1,975 | (52) | 8,367 | 12,485 | (33) |
Per share – basic and diluted | – | 0.01 | (100) | 0.04 | 0.06 | (33) |
Adjusted funds flow (1) | 1,825 | 3,339 | (45) | 7,950 | 13,074 | (39) |
Per share – basic | 0.01 | 0.02 | (50) | 0.04 | 0.07 | (43) |
Per share – diluted | 0.01 | 0.02 | (50) | 0.04 | 0.06 | (33) |
Net (loss) earnings | (1,181) | (148) | 698 | 611 | 118 | 418 |
Per share – basic and diluted | (0.01) | (-) | 100 | – | – | – |
Capital expenditures and acquisitions | 2,841 | 12,155 | (77) | 10,837 | 26,015 | (58) |
Proceeds on sale of equipment (2) | 1,625 | – | 100 | 4,767 | – | 100 |
Working capital | 2,153 | 5,578 | (61) | |||
Common shares outstanding (000s) | ||||||
Weighted average – basic | 200,525 | 200,522 | – | 200,525 | 200,518 | – |
Weighted average – diluted | 200,525 | 200,522 | – | 200,710 | 204,101 | (2) |
End of period – basic | 200,525 | 200,525 | – | |||
End of period – fully diluted | 226,646 | 227,082 | (-) |
(1) See “Non-GAAP Measures” section.
(2) The sale of equipment for proceeds of $4.8 million is exclusive of $2.7 million deposit received in Q4 2018.
OPERATING RESULTS (1) | Three Months Ended September 30 | Nine Months Ended September 30 | ||||
2019 | 2018 | % Change | 2019 | 2018 | % Change | |
Daily production | ||||||
Oil and NGLs (bbls/d) | 829 | 888 | (7) | 838 | 989 | (15) |
Natural gas (mcf/d) | 13,414 | 14,724 | (9) | 13,669 | 16,066 | (15) |
Oil equivalent (boe/d) | 3,065 | 3,342 | (8) | 3,116 | 3,667 | (15) |
Revenue | ||||||
Oil and NGLs ($/bbl) | 47.81 | 64.32 | (26) | 51.96 | 63.71 | (18) |
Natural gas ($/mcf) | 2.00 | 1.42 | 41 | 2.38 | 1.76 | 35 |
Oil equivalent ($/boe) | 21.68 | 23.36 | (7) | 24.42 | 24.91 | (2) |
Royalties | ||||||
Oil and NGLs ($/bbl) | – | 5.97 | (100) | – | 2.05 | (100) |
Natural gas ($/mcf) | – | – | – | – | – | – |
Oil equivalent ($/boe) | – | 1.59 | (100) | – | 0.55 | (100) |
Net operating expenses (2) | ||||||
Oil and NGLs ($/bbl) | 8.55 | 6.11 | 40 | 8.31 | 6.87 | 21 |
Natural gas ($/mcf) | 0.88 | 0.80 | 10 | 0.86 | 0.84 | 2 |
Oil equivalent ($/boe) | 6.17 | 5.13 | 20 | 6.01 | 5.52 | 9 |
Net transportation and marketing expenses (2) | ||||||
Oil and NGLs ($/bbl) | 1.23 | 1.05 | 17 | 1.33 | 1.65 | (19) |
Natural gas ($/mcf) | 1.07 | 0.47 | 128 | 1.01 | 0.43 | 135 |
Oil equivalent ($/boe) | 4.99 | 2.36 | 111 | 4.79 | 2.32 | 106 |
Operating netback (2) | ||||||
Oil and NGLs ($/bbl) | 38.03 | 51.19 | (26) | 42.32 | 53.14 | (20) |
Natural gas ($/mcf) | 0.05 | 0.15 | (67) | 0.51 | 0.49 | 4 |
Oil equivalent ($/boe) | 10.52 | 14.28 | (26) | 13.62 | 16.52 | (18) |
Depletion and depreciation ($/boe) | (9.69) | (9.60) | 1 | (9.53) | (9.40) | 1 |
General and administrative expenses ($/boe) | (3.88) | (3.56) | 9 | (4.16) | (3.63) | 15 |
Share based compensation ($/boe) | (0.34) | (1.58) | (78) | (0.61) | (3.39) | (82) |
Gain (loss) on sale of equipment ($/boe) | (0.41) | – | 100 | 1.69 | – | 100 |
Finance expense ($/boe) | (0.40) | (0.25) | 60 | (0.33) | (0.22) | 50 |
Finance income ($/boe) | 0.03 | 0.23 | (87) | 0.03 | 0.25 | (88) |
Net (loss) earnings ($/boe) | (4.17) | (0.48) | 769 | 0.71 | 0.13 | 446 |
(1) See “Frequently Recurring Terms” section.
(2) See “Non-GAAP Measures” section.
Selected financial and operational information outlined in this news release should be read in conjunction with Leucrotta’s unaudited condensed interim financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2019, which are available for review at www.sedar.com.
PRESIDENT’S MESSAGE
In Q3 2019, Leucrotta’s capital was spent predominantly on the initial upgrades of the recently acquired Two Rivers Facility. By early Q4 2019, all approvals were received to continue the expansion of the facility to accommodate the previously completed 10-08 Upper Montney well with an anticipated on-stream date of early February 2020. The 10-08 well is expected to add 800-1,000 boe/d (approximately 40% light oil) of initial production.
Production remained relatively stable at 3,065 boe/d for the quarter as wells continue to outperform expectations. Production is estimated to remain fairly flat throughout Q4 2019 with an increase in early 2020 when the 10-08 well is placed on production. Leucrotta’s product mix was 27% liquids for Q3 2019 with an estimated increase to over 40% liquids with focus on the volatile oil window combined with the installation of a gas plant capable of increased liquids extraction. Light oil and condensate ultimate recoveries (1) within the volatile light oil window are estimated at over 200 thousand barrels per well based on one-mile laterals. The substantial amount of oil recovered per well combined with low drilling cost yield a competitive finding and development (less than $20 per barrel) even when excluding all the associated gas and liquids.
Leucrotta maintained a strong balance sheet with $2.2 million net positive working capital and a $20 million credit facility at the end of Q3 2019. For the remainder of 2019 and into 2020, Leucrotta will remain conservative and protect the balance sheet given significant volatility seen in both the oil and gas markets. Leucrotta estimates it will continue to have positive working capital at year-end.
During Q4 2019, Leucrotta acquired additional gas transport at stated tolls that will allow the Company to deliver approximately 15 mmcf/d of gas into the Chicago market for 5 years. The delivery to this larger market will reduce the volatility previously experienced in the AECO market.
Leucrotta has been able to materially de-risk a large light oil resource in the Lower Montney over a minimum of 140 net sections of land and is working to de-risk additional Lower Montney lands as well as the Upper Montney and Basal Montney (Below Lower Montney) on Leucrotta’s land base. Infrastructure currently in place combined with up to 1,000 de-risked locations (2) will allow for Leucrotta to rapidly and materially increase production once the decision is made to move to the development phase.
We look forward to reporting on the results of the new wells and other business developments in the near future.
(1) See “Oil and Gas Metrics” section
(2) See “Potential Drilling Locations” section