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, 2021. All dollar figures are Canadian dollars unless otherwise noted.
- Drilled 4-well pad at Mica, BC expected to be completed in Q4 2021.
- September 30, 2021 adjusted working capital (1) balance of $45.5 million.
- Increased adjusted funds flow(1) by 231% to $1.9 million in Q3 2021 from $0.6 million in Q3 2020.
|FINANCIAL RESULTS||Three Months Ended||Nine Months Ended|
|September 30||September 30|
|($000s, except per share amounts)||2021||2020||% Change||2021||2020||% Change|
|Oil and natural gas sales||6,954||5,841||19||23,854||17,071||40|
|Cash flow from operating activities||967||368||163||5,142||975||427|
|Per share – basic and diluted||–||–||–||0.02||–||100|
|Adjusted funds flow (1)||1,939||586||231||6,595||548||1,103|
|Per share – basic and diluted||0.01||–||100||0.03||–||100|
|Net earnings (loss)||66,545||(2,525)||(2,735)||66,120||(94,158)||(170)|
|Per share – basic and diluted||0.27||(0.01)||(2,800)||0.29||(0.47)||(162)|
|Proceeds on sale of properties|
|Adjusted working capital (deficiency) (1)||45,503||(4,421)||(1,129)|
|Common shares outstanding (000s)|
|Weighted average – basic||247,641||200,525||23||231,694||200,525||16|
|Weighted average – diluted||247,952||200,525||24||231,737||200,525||16|
|End of period – basic||247,641||200,525||23|
|End of period – fully diluted||290,111||218,527||33|
(1) See “Non-GAAP Measures” section.
|Three Months Ended||Nine Months Ended|
|OPERATING RESULTS (1)||September 30||September 30|
|2021||2020||% Change||2021||2020||% Change|
|Daily production (2)|
|Oil and condensate (bbls/d)||299||542||(45)||390||648||(40)|
|Other NGLs (bbls/d)||26||248||(90)||34||278||(88)|
|Oil and NGLs (bbls/d)||325||790||(59)||424||926||(54)|
|Natural gas (mcf/d)||8,953||13,739||(35)||10,840||14,036||(23)|
|Oil equivalent (boe/d)||1,817||3,080||(41)||2,231||3,266||(32)|
|Oil and natural gas sales|
|Oil and condensate ($/bbl)||81.52||45.19||80||72.70||36.87||97|
|Other NGLs ($/bbl)||34.91||22.95||52||30.68||20.04||53|
|Oil and NGLs ($/bbl)||77.74||38.21||103||69.34||31.81||118|
|Natural gas ($/mcf)||5.62||2.42||132||5.35||2.34||129|
|Oil equivalent ($/boe)||41.59||20.62||102||39.16||19.08||105|
|Oil and NGLs ($/bbl)||11.61||1.93||502||9.02||1.49||505|
|Natural gas ($/mcf)||0.50||0.06||733||0.41||0.05||720|
|Oil equivalent ($/boe)||4.55||0.76||499||3.69||0.63||486|
|Net operating expenses (3)|
|Oil and NGLs ($/bbl)||9.17||10.19||(10)||9.26||9.87||(6)|
|Natural gas ($/mcf)||0.86||1.04||(17)||0.87||0.99||(12)|
|Oil equivalent ($/boe)||5.89||7.24||(19)||6.00||7.05||(15)|
|Transportation and marketing expenses|
|Oil and NGLs ($/bbl)||0.74||0.32||131||0.80||0.84||(5)|
|Natural gas ($/mcf)||1.23||1.45||(15)||1.40||1.56||(10)|
|Oil equivalent ($/boe)||6.20||6.53||(5)||6.93||6.95||(-)|
|Operating netback (3)|
|Oil and NGLs ($/bbl)||56.22||25.77||118||50.26||19.61||156|
|Natural gas ($/mcf)||3.03||(0.13)||(2,431)||2.67||(0.26)||(1,127)|
|Oil equivalent ($/boe)||24.95||6.09||310||22.54||4.45||407|
|Depletion and depreciation ($/boe)||(7.67)||(10.08)||(24)||(7.94)||(8.82)||(10)|
|Asset (impairment) reversal ($/boe)||397.21||–||100||109.04||(98.22)||(211)|
|General and administrative expenses ($/boe)||(6.78)||(3.94)||72||(6.96)||(3.77)||85|
|Share based compensation ($/boe)||(2.26)||(0.64)||253||(2.59)||(0.31)||735|
|Gain on sale of equipment ($/boe)||–||–||–||–||1.68||(100)|
|Finance expense ($/boe)||(0.63)||(0.33)||91||(0.57)||(0.25)||128|
|Finance income ($/boe)||0.38||–||100||0.29||–||100|
|Realized loss on risk management contracts ($/boe)||(3.72)||–||100||(2.35)||–||100|
|Unrealized loss on risk management contracts ($/boe)||(3.67)||–||100||(2.97)||–||100|
|Deferred income tax recovery ($/boe)||0.20||–||100||0.06||–||100|
|Net earnings (loss) ($/boe)||398.01||(8.90)||(4,572)||108.55||(105.24)||(203)|
- See “Oil and Gas Terms” section.
- See “Product Types” section.
- 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, 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 Q3 2021, Leucrotta successfully drilled its 4-well Montney test pad at Mica and commenced completing these wells in early Q4 2021. The Mica pad wells were 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. Testing of the wells will be completed in November and wells will start producing soon thereafter.
The drilling of the initial pad is the first step in our long-term plan to develop our existing land base, with an intermediate goal of achieving production of 30,000 boe/d within the next 5 years.
Leucrotta ended Q3 2021 with $45.5 million of adjusted working capital and no debt. We anticipate that Leucrotta will end 2022 with no debt and >$25 million of adjusted working capital.
OIL AND GAS TERMS
The Company uses the following frequently recurring oil and gas industry terms in the MD&A:
|Bbl/d||Barrels per day|
|NGLs||Natural gas liquids (includes condensate, pentane, butane, propane, and ethane)|
|Condensate||Pentane and heavier hydrocarbons|
|Mcf||Thousands of cubic feet|
|Mcf/d||Thousands of cubic feet per day|
|MMbtu||Million of British thermal units|
|MMbtu/d||Million of British thermal units per day|
|Boe||Barrels of oil equivalent|
|Boe/d||Barrels of oil equivalent per day|
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 the MD&A. 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. For additional information relating to Non-GAAP Measures please refer to the Company’s MD&A for the three and nine months ended September 30, 2021, which is available under the Company’s profile on SEDAR at www.sedar.com.
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 earnings (loss) per share. Adjusted funds flow (used) is reconciled from cash flow from (used in) operating activities under the heading “Cash Flow From Operations and Adjusted Funds Flow” in the MD&A.
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. Adjusted working capital (deficiency) is reconciled to working capital (deficiency) under the heading “Liquidity and Capital Resources” in the MD&A.
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” in the MD&A.
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.
The Company uses the following references to sales volumes in this news release:
Natural gas refers to shale gas
Oil and condensate refers to condensate, light and medium crude oil, and tight oil combined
Other NGLs refers to butane, propane and ethane combined
Oil and NGLs refers to light and medium crude oil, tight oil, and NGLs combined
Oil equivalent refers to the total oil equivalent of shale gas, light and medium crude oil, tight oil, and NGLs combined, using the conversion rate of six thousand cubic feet of shale gas to one barrel of oil equivalent as described above.
The following is a complete breakdown of sales volumes for applicable periods by specific product types of shale gas, light and medium crude oil, tight oil, and NGLs:
|Sales Volumes by Product Type||Q1 2021||Q2 2021||Q3 2021||YTD Q3 2021|
|Other NGLs (bbls/d)||41||34||26||34|
|Light and medium crude oil (bbls/d)||–||–||–||–|
|Tight oil (bbls/d)||354||318||231||300|
|Oil and condensate (bbls/d)||478||397||299||390|
|Other NGLs (bbls/d)||41||34||26||34|
|Oil and NGLs (bbls/d)||519||431||325||424|
|Shale gas (mcf/d)||13,053||10,559||8,953||10,840|
|Natural gas (mcf/d)||13,053||10,559||8,953||10,840|
|Oil equivalent (boe/d)||2,695||2,191||1,817||2,231|
|Sales Volumes by Product Type||Q1 2020||Q2 2020||Q3 2020||YTD Q3 2020|
|Other NGLs (bbls/d)||271||317||248||278|
|Light and medium crude oil (bbls/d)||41||–||–||14|
|Tight oil (bbls/d)||406||645||397||481|
|Oil and condensate (bbls/d)||591||811||542||648|
|Other NGLs (bbls/d)||271||317||248||278|
|Oil and NGLs (bbls/d)||862||1,128||790||926|
|Shale gas (mcf/d)||12,354||16,019||13,739||14,036|
|Natural gas (mcf/d)||12,354||16,019||13,739||14,036|
|Oil equivalent (boe/d)||2,921||3,797||3,080||3,266|