Calgary, Alberta – LEUCROTTA EXPLORATION INC. (TSXV: LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three and six months ended June 30, 2021. All dollar figures are Canadian dollars unless otherwise noted.
- Increased adjusted funds flow (1) by 209% to $0.9 million in Q2 2021 from negative $0.8 million in Q2 2020.
- Closed the sale of certain natural gas assets located in Doe, BC for gross proceeds of $30.0 million (recognized as assets held for sale at March 31, 2021).
- June 30, 2021 adjusted working capital (1) balance of $57.0 million.
|Three Months Ended June 30||Six Months Ended June 30|
|($000s, except per share amounts)||2021||2020||% Change||2021||2020||% Change|
|Oil and natural gas sales||6,426||5,439||18||16,900||11,230||50|
|Cash flow from (used in) operating activities||(744)||(798)||(7)||4,175||607||588|
|Per share – basic and diluted||(-)||(-)||–||0.02||–||100|
|Adjusted funds flow (used) (1)||866||(798)||(209)||4,656||(38)||(12,353)|
|Per share – basic and diluted||–||(-)||–||0.02||(-)||(100)|
|Per share – basic and diluted||(0.01)||(0.01)||–||(-)||(0.46)||(100)|
|Proceeds on sale of properties|
|Adjusted working capital (deficiency) (1)||57,029||(4,309)||(1,423)|
|Common shares outstanding (000s)|
|Weighted average – basic||245,899||200,525||23||223,588||200,525||12|
|Weighted average – diluted||245,899||200,525||23||223,588||200,525||12|
|End of period – basic||247,641||200,525||23|
|End of period – fully diluted||289,711||226,392||28|
(1) See “Non-GAAP Measures” section.
|OPERATING RESULTS (1)||Three Months Ended June 30||Six Months Ended June 30|
|2021||2020||% Change||2021||2020||% Change|
|Oil and NGLs (bbls/d)||431||1,128||(62)||475||995||(52)|
|Natural gas (mcf/d)||10,559||16,019||(34)||11,799||14,186||(17)|
|Oil equivalent (boe/d)||2,191||3,797||(42)||2,441||3,359||(27)|
|Oil and NGLs ($/bbl)||70.66||21.75||225||66.41||29.24||127|
|Natural gas ($/mcf)||3.80||2.20||73||5.24||2.30||128|
|Oil equivalent ($/boe)||32.23||15.74||105||38.25||18.37||108|
|Oil and NGLs ($/bbl)||3.94||1.64||140||8.12||1.31||520|
|Natural gas ($/mcf)||0.17||0.07||143||0.37||0.04||825|
|Oil equivalent ($/boe)||1.60||0.77||108||3.36||0.57||489|
|Net operating expenses (2)|
|Oil and NGLs ($/bbl)||9.18||9.58||(4)||9.29||9.74||(5)|
|Natural gas ($/mcf)||0.87||1.04||(16)||0.88||0.97||(9)|
|Oil equivalent ($/boe)||6.00||7.24||(17)||6.04||6.96||(13)|
|Transportation and marketing expenses|
|Oil and NGLs ($/bbl)||0.98||0.74||32||0.81||1.05||(23)|
|Natural gas ($/mcf)||1.59||1.49||7||1.46||1.62||(10)|
|Oil equivalent ($/boe)||7.87||6.49||21||7.21||7.14||1|
|Operating netback (2)|
|Oil and NGLs ($/bbl)||56.56||9.79||478||48.19||17.14||181|
|Natural gas ($/mcf)||1.17||(0.40)||(393)||2.53||(0.33)||(867)|
|Oil equivalent ($/boe)||16.76||1.24||1,252||21.64||3.70||485|
|Depletion and depreciation ($/boe)||(7.45)||(8.11)||(8)||(8.04)||(8.24)||(2)|
|Asset impairment ($/boe)||–||–||–||–||(143.74)||(100)|
|General and administrative expenses ($/boe)||(7.89)||(3.47)||127||(7.02)||(3.69)||90|
|Share based compensation ($/boe)||(4.12)||(0.17)||2,324||(2.72)||(0.16)||1,600|
|Gain on sale of equipment ($/boe)||–||4.36||(100)||–||2.47||(100)|
|Finance expense ($/boe)||(0.37)||(0.18)||106||(0.55)||(0.22)||150|
|Finance income ($/boe)||0.56||–||100||0.25||–||100|
|Realized loss on risk management contracts ($/boe)||(2.62)||–||100||(1.83)||–||100|
|Unrealized loss on risk management contracts ($/boe)||(2.86)||–||100||(2.71)||–||100|
|Net loss ($/boe)||(7.99)||(6.33)||26||(0.98)||(149.88)||(99)|
(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 six months ended June 30, 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.
In Q2 2021, Leucrotta successfully completed and tested its first Basal Montney well at Mica. The results (previously released June 15, 2021) were favourable and Leucrotta has now incorporated a Basal Montney well into its first pad.
Drilling of the four wells on the Mica pad commenced in late July with the wells expected to be completed and on-stream by mid Q4 2021. The Mica pad wells will be drilled with approximately 2,400 metre horizontal laterals and completed with approximately 130 frac stages per well. This compares to 1,500 metre horizontal lengths and 28-41 frac stages utilized during the delineation phase. Map outlining the four-well test pad in the Mica Development Area and related infrastructure is included below.
Engineering for the facility expansion to accommodate Leucrotta’s growth plans into 2022 and 2023 is well underway with initial design plans and cost estimates to be completed in Q4 2021.
Leucrotta will also perform an extended test of the Upper Montney at Mica in the next couple months to further prove out the large Montney resource in place by adding additional productive benches in the Montney.
Leucrotta ended Q2 2021 with $57.0 million of adjusted working capital and no debt. It has commenced the four-well pad at Mica as noted above and will proceed through its plans to produce >30,000 boe/d within its five-year time horizon. In Q4 2021 we anticipate releasing a full financial plan to achieve our goals in conjunction with finalizing initial cost estimates and confirming pad well results.
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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 (used)”, “adjusted funds flow (used) 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. Please refer to the MD&A for additional information relating to Non-GAAP Measures.
Management uses adjusted funds flow (used) 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 (used) is a non-GAAP measure and has been defined by the Company as cash flow from (used in) operating activities excluding the change in non-cash working capital related to operating activities, expenditures on decommissioning obligations, and transaction costs on property dispositions. The Company also presents adjusted funds flow (used) per share whereby amounts per share are calculated using weighted average shares outstanding, consistent with the calculation of net loss per share. Adjusted funds flow (used) is reconciled from cash flow from (used in) operating activities under the heading “Cash Flow From (Used In) Operations and Adjusted Funds Flow (Used)”.
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 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.