Mr. George Liszicasz reports
NXT ENERGY SOLUTIONS ANNOUNCES FIRST QUARTER 2019 RESULTS
NXT Energy Solutions Inc. has released financial and operating results for the quarter ended March 31, 2019.
First quarter financial and operating highlights
Key financial and operational highlights for the first quarter include:
The company began the mobilization phase of its Nigerian SFD survey, valued at approximately $8.9-million (U.S.) with PE Energy Ltd., a Nigerian oil and gas service company. PE Energy has a contract with the Nigerian National Petroleum Company (NNPC), to provide 5,000 line kilometres of SFD surveys in Nigeria. Data acquisition operations for this contract were completed in early May, 2019. NXT's recommendations are expected to be delivered during the third quarter of 2019. The contracts have resulted from more than six months of negotiations and the exchange of substantial technical information on the performance of the SFD.
To date, the company has received $1.3-million (U.S.) in payments from PE Energy for the SFD surveys in Nigeria. Further payments under the $8.9-million (U.S.) contract will be made upon completion of each of three project milestones and as per contract payment terms as follows: data acquisition (likely now due in June, 2019), interpretation and delivery of the final report.
In February, 2019, NXT entered into a co-operative agreement with Alberta Green Ventures (AGV), to propose up to three SFD surveys within two years. The co-operative agreement is based on a cost plus formula and a gross overriding royalty interest in oil and gas production arising on lands subject to the surveys. NXT and AGV are currently evaluating potential SFD surveys subject to the logistics of scheduling the NXT's aircraft. The company has received a $100,000 (U.S.) non-refundable deposit in connection with this co-operative agreement.
As the result of the co-operation agreement between AGV and NXT, the company has received conditional approval from the Toronto Stock Exchange to extend the expiry date of the common share warrants held by AGV for an additional 12 months until Feb. 16, 2020, subject to disinterested shareholder approval at the company's annual general meeting on June 25, 2019.
Effective Feb. 26, 2019, NXT has entered into a three-year exclusive sales representative agreement with AGV, in nine jurisdictions in the Middle East and Latin America. This agreement includes an at-market subscription right to purchase treasury shares of NXT in a dollar amount equal to 25 per cent of the contracts introduced by AGV to NXT in the first year of the agreement, subject to approval from the TSX.
The memorandum of understanding entered into between Generation Resource Discoveries (GRD), NXT's regional representative and the government of Aceh, Indonesia, on Feb. 22, 2018, has expired.
No survey revenues were recorded in the first quarter of 2019 ended March 31, 2019.
A net loss of $1.76-million was recorded for first quarter 2019, including amortization expense of $440,000.
Operating activities used $880,000 of cash during first quarter 2019, and net cash used for financing activities was $10,000.
Losses per common share were three cents for first quarter 2019 (basic and diluted).
- General and administrative costs for first quarter 2019 as compared with first quarter 2018 have been reduced by $60,000 or 6 per cent, primarily due to a reduction in head count, partially offset by the Nigerian contract negotiation and legal costs.
- Cash and short-term investments at the end of the first quarter 2019 were $3.35-million.
Message to shareholders
George Liszicasz, president and chief executive officer of NXT, commented: "NXT had a very busy first quarter, planning and finalizing operational details for the Nigerian SFD survey. Since this project was our first in Africa, a number of logistical issues needed to be overcome. The company has delivered more than 10,000 pages of documents to NNPC and the Department of Petroleum Resources (DPR) as part of the qualification process. I would like to thank our partner, PE Energy Ltd. in Nigeria, for their tireless efforts to make this project possible within seven months of initiating discussions. Before receiving approval for the survey, NXT had to complete a test flight onshore. Within days, we presented our preliminary results to NNPC and received approval for the project. From April 17 to early May, NXT completed 5,000 line kilometres of data acquisition and is currently processing the data for interpretation. More importantly, now that the first phase is completed and approved by NNPC, the first milestone payment is to be received in June as per contract payment terms.
"The offshore test, designed by DPR and the Nigerian Petroleum Development Corp., was carried out on April 28, 2019. Final results will be presented in Nigeria in the near future. Our aircraft is back in Calgary and undergoing scheduled maintenance in order to prepare for additional SFD surveys. We continue to pursue opportunities in Nigeria and are building on the momentum within Africa and the Middle East. On behalf of our board of directors and myself as CEO, I want to thank all of our employees and service providers that supported the acquisition phase of the Nigerian SFD survey. We are looking forward to the rest of 2019."
Summary highlights of NXT's first quarter 2019 financial statements (with comparative figures with 2018) are noted in the attached table. All selected and referenced financial information noted herein should be read in conjunction with the company's first quarter 2019 unaudited condensed consolidated interim financial statements and the related management's discussion and analysis.
Three months ended March 31,
Survey revenues $- $-
Survey expenses 377,733 249,762
General and administrative expenses 921,749 981,404
Stock-based compensation expense 3,775 295,284
Amortization and other expenses, net 443,697 447,191
Income (loss) before income taxes (1,763,320) (1,954,650)
Income tax expense
Current - -
Deferred - -
Comprehensive (loss) for the period (1,763,320) (1,954,650)
(Loss) per common share -- basic (0.03) (0.03)
(Loss) per common share -- diluted (0.03) (0.03)
NXT's first quarter 2019 financial and operating results have been filed in Canada on SEDAR and will soon be available in the United States on EDGAR, as well as on NXT's website.
Details of the conference call to discuss the first quarter 2019 financial and operating results are as follows.
Date: May 16, 2019
Time: 4:30 p.m. Eastern Time (2:30 p.m. Mountain Time)
North American participants, call: 1-866-454-4207
Participant passcode: 727625 followed by the number sign
About NXT Energy Solutions Inc.
NXT Energy Solutions is a Calgary-based technology company, whose proprietary SFD survey system utilizes quantum-scale sensors to detect gravity field perturbations in an airborne survey method, which can be used both onshore and offshore to remotely identify areas with exploration potential for traps and reservoirs. The SFD survey system enables clients to focus their hydrocarbon exploration decisions concerning land commitments, data acquisition expenditures and prospect prioritization on areas with the greatest potential. SFD is environmentally friendly and unaffected by ground security issues or difficult terrain, and is the registered trademark of NXT Energy Solutions. NXT Energy Solutions provides its clients with an effective and reliable method to reduce time, costs and risks related to exploration.
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