Calgary, Alberta – LEUCROTTA EXPLORATION INC. (TSXV: LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three months ended March 31, 2021. All dollar figures are Canadian dollars unless otherwise noted.
- Closed a bought-deal public financing issuing 45.2 million units of the Company (“Units”) at a price of $0.73 per Unit for gross proceeds of $33.0 million. Each Unit is comprised of one common share of the Company and 0.5 common share purchase warrant of the Company. Each whole common share purchase warrant entitles the holder to purchase one common share at an exercise price of $1.00 per common share expiring on March 31, 2023.
- Subsequent to March 31, 2021, the Company disposed of certain natural gas assets located in Doe, BC for gross proceeds of $30.0 million. The disposed assets were comprised of non-strategic lands and four wells and have been transferred to assets held for sale at March 31, 2021. The disposition closed April 1, 2021.
- Increased adjusted funds flow (1) by 399% to $3.8 million in Q1 2021 from $0.8 million in Q1 2020.
- March 31, 2021 adjusted working capital (2) balance of $58.0 million.
|Three Months Ended March 31|
|($000s, except per share amounts)||2021||2020||% Change|
|Oil and natural gas sales||10,474||5,791||81|
|Cash flow from operating activities||4,919||1,405||250|
|Per share – basic and diluted||0.02||0.01||100|
|Adjusted funds flow (1)||3,790||760||399|
|Per share – basic and diluted||0.02||–||100|
|Net earnings (loss)||1,167||(89,444)||(101)|
|Per share – basic and diluted||0.01||(0.45)||(102)|
|Adjusted working capital (deficiency) (1)||58,028||(5,223)||(1,211)|
|Common shares outstanding (000s)|
|Weighted average – basic||201,028||200,525||–|
|Weighted average – diluted||201,062||200,525||–|
|End of period – basic||245,731||200,525||23|
|End of period – fully diluted||285,746||226,392||26|
(1) See “Non-GAAP Measures” section.
|OPERATING RESULTS (1)||Three Months Ended March 31|
|Oil and NGLs (bbls/d)||519||862||(40)|
|Natural gas (mcf/d)||13,053||12,354||6|
|Oil equivalent (boe/d)||2,695||2,921||(8)|
|Oil and natural gas sales|
|Oil and NGLs ($/bbl)||62.85||39.02||61|
|Natural gas ($/mcf)||6.42||2.43||164|
|Oil equivalent ($/boe)||43.19||21.78||98|
|Oil and NGLs ($/bbl)||11.62||0.87||1,236|
|Natural gas ($/mcf)||0.53||0.01||5,200|
|Oil equivalent ($/boe)||4.81||0.31||1,452|
|Net operating expenses (2)|
|Oil and NGLs ($/bbl)||9.39||9.95||(6)|
|Natural gas ($/mcf)||0.88||0.87||1|
|Oil equivalent ($/boe)||6.07||6.60||(8)|
|Transportation and marketing expenses|
|Oil and NGLs ($/bbl)||0.68||1.46||(53)|
|Natural gas ($/mcf)||1.35||1.78||(24)|
|Oil equivalent ($/boe)||6.66||7.97||(16)|
|Operating netback (2)|
|Oil and NGLs ($/bbl)||41.16||26.74||54|
|Natural gas ($/mcf)||3.66||(0.23)||(1,691)|
|Oil equivalent ($/boe)||25.65||6.90||272|
|Depletion and depreciation ($/boe)||(8.52)||(8.40)||1|
|Asset impairment ($/boe)||–||(330.59)||(100)|
|General and administrative expenses ($/boe)||(6.31)||(3.97)||59|
|Share based compensation ($/boe)||(1.56)||(0.14)||1,014|
|Finance expense ($/boe)||(0.70)||(0.26)||169|
|Realized loss on risk management contracts ($/boe)||(1.17)||–||100|
|Unrealized loss on risk management contracts ($/boe)||(2.58)||–||100|
|Net earnings (loss) ($/boe)||4.81||(336.46)||(101)|
(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 months ended March 31, 2021, which are available for review under the Company’s profile on The System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.
With the property sale and financing recently closed (noted below), Leucrotta will now be focused on executing the Mica Project.(1) Planning for the 2021 test pad and the 2022 facility expansion has been underway for some time and field operations will commence shortly. The drilling and completion of the 3-well test pad at Mica, that will utilize longer laterals and materially greater frac intensity, will commence in mid-July. Leucrotta is excited to start the initial phase of the Mica Project.
As a result of the financing and property disposition noted below, Leucrotta has $58 million of working capital and no debt.
On March 31, 2021, the Company closed a bought-deal public financing through a syndicate of underwriters. The Company issued 45.2 million Units at a price of $0.73 per Unit for gross proceeds of $33.0 million. A Unit is comprised of one common share of the Company and 0.5 common share purchase warrant of the Company. Each whole common share purchase warrant entitles the holder to purchase one common share at an exercise price of $1.00 per common share expiring on March 31, 2023. The non-brokered private placement offering of 2.0 million flow-through units at $0.75 per unit previously announced by the Company was not taken up and the Company’s conditional approval with the TSX Venture Exchange will expire on May 29, 2021. The Company intends to consider the private placement at a future date.
New credit facility
Subsequent to March 31, 2021, the Company entered into a credit agreement with a new lender comprised of a $10.0 million revolving operating demand loan credit facility. The new credit agreement fully replaced the previous $6.0 million credit facility.
On April 1, 2021, the Company disposed of natural gas assets located in Doe, BC for gross proceeds of $30.0 million as previously released. The disposed assets were comprised of 10.25 sections of non-strategic land with three wells producing approximately 375 boe/d and one shut-in well. The disposed assets have been transferred to assets held for sale at March 31, 2021.
(1) Full details of the Mica Project are more fully described in the Company’s news release dated March 15, 2021 available under the Company’s profile on SEDAR at www.sedar.com.
FREQUENTLY RECURRING TERMS
The Company uses the following frequently recurring industry terms in this news release: “bbls” refers to barrels, “mcf” refers to thousand cubic feet, and “boe” refers to barrel of oil equivalent. Disclosure provided herein in respect of a boe may be misleading, particularly if used in isolation. A boe conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent has been used for the calculation of boe amounts in this news release. This boe conversion rate is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This news release refers to certain financial measures that are not determined in accordance with IFRS (or “GAAP”). This news release contains the terms “adjusted funds flow”, “adjusted funds flow per share”, “adjusted working capital (deficiency)”, “operating netback” and “net operating expenses” which do not have any standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures used by other companies. The Company uses these measures to help evaluate its performance.
Management uses adjusted funds flow to analyze performance and considers it a key measure as it demonstrates the Company’s ability to generate the cash necessary to fund future capital investments and abandonment obligations and to repay debt, if any. Adjusted funds flow is a non-GAAP measure and has been defined by the Company as cash flow from operating activities excluding the change in non-cash working capital related to operating activities and expenditures on decommissioning obligations. The Company also presents adjusted funds flow per share whereby amounts per share are calculated using weighted average shares outstanding, consistent with the calculation of net earnings (loss) per share. Adjusted funds flow is reconciled from cash flow from operating activities under the heading “Cash Flow from Operations and Adjusted Funds Flow” in the Company’s MD&A for the three months ended March 31, 2021, which is available under the Company’s profile on SEDAR at www.sedar.com.
Management uses adjusted working capital (deficiency) as a measure to assess the Company’s financial position. Adjusted working capital (deficiency) includes current assets less current liabilities excluding the effects of any current portion of risk management contracts.
Management considers operating netback an important measure as it demonstrates its profitability relative to current commodity prices. Operating netback, which is calculated as average unit sales price less royalties, net operating expenses, and transportation and marketing expenses, represents the cash margin for every barrel of oil equivalent sold. Operating netback per boe is reconciled to net earnings (loss) per boe under the heading “Operating Netback”.
Net operating expenses is calculated as operating expenses less processing revenues. Management uses net operating expenses to determine the current periods’ cash cost of operating expenses less processing revenue and net operating expenses per boe is used to measure operating efficiency on a comparative basis. The measure approximates the Company’s operating expenses relative to its produced volumes by excluding third party operating costs.