CALGARY, AB – Rubellite Energy Inc. (“Rubellite” or the “Company”), a pure play Clearwater oil exploration and development company, is pleased to provide a capitalization, governance and operations update and release 2022 guidance following the completion on September 3, 2021 of the plan of arrangement (the “Plan of Arrangement”) involving Perpetual Energy Inc. (“Perpetual”), Rubellite and the shareholders of Perpetual.
Capitalization Update
The common shares (“Common Shares”) and warrants (“Warrants”) of Rubellite issued in connection with the Plan of Arrangement are expected to commence trading on the Toronto Stock Exchange (the “TSX”) on or about Thursday, September 9, 2021 under the symbol “RBY” and “RBY.WT”, respectively.
In connection with the Plan of Arrangement, Rubellite expects to raise a minimum of $73.9 million through a combination of equity financings expected to close concurrently in early October 2021 (the “Financings”). Upon completion of the Financings and based on the minimum $10.5 million non-brokered private placement, Rubellite is expected to have approximately 39.0 million Common Shares outstanding, no debt and a working capital surplus of approximately $13 million. If the maximum $20.0 million non-brokered private placement is completed, Rubellite will have approximately 43.8 million Common Shares outstanding and a working capital surplus of approximately $22.5 million.
Rubellite has entered into a commitment with its lead bank to establish a new $3 million revolving credit facility (subject to the closing of the Financings and other customary conditions precedent) with an initial term to May 31, 2022 and which may be extended for a further twelve months subject to lender approval.
Governance Update
Rubellite’s Board of Directors (the “Board”) has been fully constituted and is comprised of a majority of independent directors, each of whom is unique from Perpetual’s board, establishing a strong and diverse governance model and clear shareholder and management alignment.
The majority-independent Board, as described below, has extensive technical and managerial experience in oil and gas exploration and development, with strengths in mergers and acquisitions, corporate finance, capital markets and environmental, social and governance (ESG) matters. In addition to Sue Riddell Rose, Rubellite’s President and Chief Executive Officer, and Ryan Shay, Rubellite’s Vice President Finance and Chief Financial Officer, the Board is comprised of the following non-executive independent members:
Holly Benson Chair of the Audit Committee |
Ms. Benson, a Chartered Accountant, was appointed Vice President, Finance & Chief Financial Officer of Peters & Co. Limited in 1999 and held that position until December 31, 2020. Ms. Benson has been involved in various industry committees, working groups and councils throughout her career. She has been a member of the Financial and Operations Advisory Section (FOAS) of the Industry Regulatory Organization of Canada (IIROC) and the FOAS Executive, including a term as its Chair. Ms. Benson has been serving on the board of directors of IIROC since January 2015 and is a member of IIROC’s Finance, Audit and Risk Committee. |
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Tamara MacDonald Chair of the Compensation and Corporate Governance Committee |
Ms. MacDonald was most recently the Senior Vice President, Corporate and Business Development of Crescent Point Energy Corp., a position she held from October 2004 to July 2018. Ms. MacDonald has over 28 years of oil and gas industry experience and has been involved in more than 530 transactions totaling over $14.5 billion. Prior to Crescent Point, Ms. MacDonald worked with NCE Petrofund Corp., Merit Energy Ltd., Tarragon Oil & Gas Ltd. and Northstar Energy Corp. Ms. MacDonald holds an Institute of Corporate Directors (ICD.D) designation and currently sits on the board of directors of Spartan Delta Corp. and Southern Energy Corp. |
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Bruce Shultz |
Mr. Shultz was most recently President and Chief Executive Officer of Huron Resources Corp., a private junior oil and gas exploration company with drilling success in a newly defined Wabamun oil play in Southern Alberta. Previously, he was the President and Chief Executive Officer of Huron Energy Corporation which experienced success in the Montney of NEBC and prior to that, Rubicon Energy Corp. which made a significant Nisku oil discovery in the Pembina Area of Alberta. He is a professional geologist and has over 40 years of oil and gas exploration experience beginning his career with Gulf Canada in 1980. |
Operations Update
Rubellite is exclusively focused on Clearwater oil exploration and development utilizing multi-lateral horizontal drilling technology. The Clearwater is a high rate of return play with compelling economics at current forward market prices for Western Canadian Select crude oil. Rubellite’s assets (the “Clearwater Assets”) comprise 104.5 net sections of acreage highly prospective for conventional heavy crude oil in the Clearwater formation with over 370 identified multi-lateral drilling locations. The Clearwater Assets also include proprietary 2D and 3D seismic and an extensive road network of approximately 40 km. There are no decommissioning obligations except those associated with producing wells. Based on an independent reserve report prepared by McDaniel and Associates Consultants Ltd. effective June 1, 2021, the Clearwater Assets have booked proved and probable heavy crude oil reserves of 3.6 MMbbls with 25 booked undeveloped drilling locations. The remaining 345 identified drilling locations are unbooked. Rubellite will control and operate 100% of the Clearwater Assets.
Currently, there are eleven (10.0 net) producing multi-lateral wells, including the six (6.0 net) original producing wells at Ukalta, two (1.0 net) wells at Marten Hills which were rig released in early July and three (3.0 net) producing wells at Figure Lake, two of which were just recently rig released in mid-August. Sales production at Marten Hills commenced in late August after fully recovering load oil from drilling operations and the wells on average are performing at Rubellite’s Marten Hills IP30 type curve production level of approximately 120 bbl/d of 20o API crude oil each. The two new Figure Lake wells were brought onstream August 26, 2021 and are currently recovering load oil from the drilling operation. One additional exploration well over 10 miles north of the producing Figure Lake pad site has been drilled and is awaiting completion while the fourth and final well (1.0 net) in the 2021 Figure Lake drilling program is anticipated to be rig-released next week. Both Figure Lake wells on this two-well pad are expected to be equipped to begin pumping by mid-September.
Rubellite’s drilling program for the remainder of 2021 will consist of eight (8.0 net) multi-lateral wells at Ukalta. Plans for 2022 include a 20 net well drilling program across the three development areas while preliminary plans for 2023 include the drilling of 24 net wells. The planned drilling activity is forecast to drive rapid production growth from production levels of approximately 350 bbl/d of conventional heavy crude oil at Rubellite’s inception in mid-July to estimated average production in excess of 2,000 bbl/d in 2022. In the context of current strip pricing, Rubellite’s organic growth business plan is expected to be fully funded, drive material adjusted funds flow growth over the next two years and has the potential to generate significant free funds flow by 2022.
Rubellite also plans to continue exploration activities to pursue additional prospective land and de-risk existing acreage, including the delineation of exploratory lands that have been secured in the West Dawson and Cadotte areas.
Rubellite Guidance
The Board has approved second half 2021 capital expenditures of $18 to $22 million, with expenditures largely directed to the drilling, completion and equipping of four (4.0 net) wells at Figure Lake, which are anticipated to be 100% funded by the previously announced Figure Lake GORR financing, and the planned eight (8.0 net) well drilling program at Ukalta as well as preparatory work for first quarter 2022 activities.
The table below summarizes Rubellite’s anticipated capital spending and drilling activities for the second half of 2021 and 2022.
Second Half (“H2”) 2021 and 2022 Exploration and Development Forecast Capital Expenditures
H2 2021 ($ millions) |
# of wells (gross/net) |
2022 ($ millions) |
# of wells (gross/net) |
|
Marten Hills |
–/– |
4/2.0 |
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Figure Lake(1) |
4/4.0 |
12/12.0 |
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Ukalta |
8/8.0 |
6/6.0 |
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Total(2) |
$18 – $22 |
12/12.0 |
$25 – $30 |
22/20.0 |
(1) |
The Figure Lake GORR financing is forecast to contribute $5.4 million in 2021 and $2.5 million in 2022 to fund Figure Lake drilling activities. |
(2) |
Excludes undeveloped land purchases and acquisitions, if any. |
Rubellite expects production to ramp up significantly through the fourth quarter of 2021 as the four recently drilled Figure Lake wells and the eight new wells at Ukalta are placed on production. Rubellite expects 2022 production to average in excess of 2,000 boe/d, composed of 100% conventional heavy crude oil.
2022 guidance assumptions are as follows:
Guidance Assumptions
2022 |
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Exploration and development expenditures ($ millions) |
$25 – $30 |
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Royalties |
11% – 12% |
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Operating costs ($/boe) |
$5.50 – $6.50 |
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Transportation costs ($/boe) |
$5.50 – $6.50 |
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G&A ($/boe) |
$4.00 – $4.50 |
No securities regulatory authority has either approved or disapproved of the contents of this news release. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.