Calgary, Alberta – Cuda Oil and Gas Inc. (“Cuda” or the “Company“) (TSXV: CUDA) announces its financial and operational results for the first quarter ended March 31, 2021. Cuda’s unaudited interim condensed consolidated financial statements and management’s discussion and analysis (“MD&A“) as at and for the three months ended March 31, 2021 and 2020, are available under the Company’s profile on the SEDAR website at www.sedar.com.
Significant First Quarter Highlights
- The Company’s operating netback significantly improved in the first quarter of 2021 to $20.16 per boe from $12.56 per boe in the fourth quarter of 2020 and $16.87 per boe in the first quarter of 2020.
- Realized crude oil prices in the first quarter of 2021 increased 20% to $58.63 per bbl from $48.71 per bbl in the fourth quarter of 2020. For the three months ended March 31, 2021, average realized crude oil prices were 9% higher compared to the first quarter of 2020, reflecting the decreasing impact of COVID-19 on crude oil prices.
- Realized natural gas prices from the Alberta assets increased in the first quarter of 2021 to $3.47 per mcf from $2.94 per mcf in the fourth quarter of 2020 and $2.45 per mcf in the first quarter of 2020. The continuation of stable natural gas prices through the COVID-19 pandemic has allowed the Company to continuously produce during higher price environments.
- First quarter 2021 oil production from Wyoming, United States, decreased 6% to 347 bbls/d, from 370 bbls/d in the fourth quarter of 2020, and increased 3% from 336 bbls/d, when compared to first quarter oil production in 2020. The production decrease from the fourth quarter of 2020 production resulted from lower quantities of gas injection during the first quarter due to rising cost of the gas injections. The Company and its joint venture partners in Wyoming plan to increase gas injection volumes during the second quarter of 2021 as propane prices come off of seasonal highs.
For the quarters ended March 31, 2021 and 2020, the Company reported net (loss) income of approximately ($3.1 million), and $0.9 million, respectively, and cash flows from operating activities of approximately $0.08 million, and $1.0 million, respectively. At March 31, 2021, the Company had a working capital deficiency of approximately $67.8 million including outstanding credit facilities and a convertible debenture to which the Company was in default under the terms and conditions of the applicable loan agreements.
At March 31, 2021, the Company had credit facilities with an outstanding balance of approximately $62.9 million including all unpaid interest and financing fees. The Company also had a convertible debenture outstanding in the amount of $1.7 million including accrued interest at March 31, 2021. During the three months ended March 31, 2021, the credit facilities, the promissory note, and convertible debenture became in default under their applicable agreements, and remain in default currently.
The Company has determined during the three months ended and at March 31, 2021, it was not in compliance with the covenants of the senior credit facility, signed on January 26, 2021, which represents an event of default under each of the credit facilities and the promissory note agreements. An event of default enables each of the lenders to demand immediate payment of all amounts owing for which the Company is incapable of making such payments. The Company has requested and received a waiver from the lender of the senior credit facility for the covenant breaches at March 31, 2021. The Company continues to be in discussions with each of its lenders to attempt to remedy the events of default, as well as the ultimate settlement of finance charges and fees. There can be no guarantee that the Company will be successful in any negotiation, or settlement with the lenders either with respect to the rectification of the events of default, or with respect to an ultimate settlement of finance changes and fees. As such, a material uncertainty exists that casts significant doubt on the Company’s ability to continue as a going concern.
Financial and Operational Results(1)
Summary table of selected March 31, 2021 and 2020 financial and operational results:
|Three months ended
|($, except per boe)|
|Crude oil (bbls/d)||347||344|
|Natural gas (mcf/d)||881||1,207|
|Natural gas liquids (“NGLs”)(bbls/d)||15||25|
|Average realized price||47.64||39.34|
|Royalties and production taxes||(15.38||)||(10.85||)|
|Operating and transportation||(12.10||)||(11.62||)|
|WTI crude oil (US$/bbl)||57.79||45.76|
|Exchange rate (US$/Cdn$)||1.27||1.34|
|AECO, daily (5A)(Cdn$/GJ)||2.99||1.92|
(1) For further discussion and disclaimers regarding the results above, see the Company’s unaudited interim condensed consolidated financial statements and MD&A for the three months ended March 31, 2021 and 2020, available under the Company’s profile on SEDAR.
The Company continued its strategy to focus its resources on exploration and development in the Barron Flats Shannon Unit in Wyoming, United States. The Company’s operating netback increased to $20.16 per boe for the three months ended March 31, 2021 from $16.87 per boe for the three months ended March 31, 2020, reflecting the increases to average realized crude oil prices in Wyoming, United States and AECO natural gas prices in Alberta, Canada.