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Cub Energy Inc
Symbol KUB
Shares Issued 314,215,355
Close 2020-03-27 C$ 0.02
Recent Sedar Documents

Cub Energy loses $11.06-million (U.S.) in 2019

2020-03-27 17:47 ET - News Release

Mr. Mikhail Afendikov reports

CUB ENERGY ANNOUNCES 2019 YEAR-END RESULTS

Cub Energy Inc. has released its audited financial and operating results for the year ended Dec. 31, 2019. All dollar amounts are expressed in U.S. dollars unless otherwise noted. This update includes results from Kub-Gas LLC, in which Cub has a 35-per-cent equity ownership interest, Tysagaz LLC, Cub's 100-per-cent-owned subsidiary, and CNG LLC, in which Cub has a 50-per-cent equity ownership interest.

Mikhail Afendikov, chairman and chief executive officer of Cub, said: "We had a challenging end to 2019, with lower-than-expected natural gas prices that impacted our financial results, as well as a reduction in the long-term gas pricing assumptions in the independent reserves report. Despite the reduction in gas prices, the company received $2.8-million in cash dividends from KUBGAS Holdings during the year ended Dec. 31, 2019, and would have had net income of $300,000 during 2019 excluding the one-time impairments and provisions."

Operational highlights:

  • Achieved average natural gas price of $5.36 per thousand cubic feet and condensate price of $49.51 per barrel during the year ended Dec. 31, 2019, as compared with $7.94 per thousand cubic feet and $70.47 per barrel for 2018;
  • Production averaged 784 barrels of oil equivalent per day (boe/d) (97 per cent weighted to natural gas and the remainder to condensate) for the year Dec. 31, 2019, as compared with 836 boe/d for 2018;
  • During the year ended Dec. 31, 2019, Kub-Gas performed several recompletions that resulted in an increase in initial production followed by natural decline rates. There are approximately 10 other wells with "behind-pipe pays" that may be attractive recompletion opportunities. As the currently producing intervals deplete, the production team can recomplete these additional zones in the existing wells. Kub-Gas uses its own completion equipment and personnel.

Financial highlights:

  • Reported a net loss of $11.1-million or four cents per share during the year Dec. 31, 2019, as compared with net income of $3.1-million or one cent per share during 2018. Excluding the one-time impairment and provision charges in 2019, the company would have had net income of $300,000 or nil per share;
  • Netbacks of $15.88 per boe or $2.65 per thousand cubic feet equivalent were achieved for the year ended Dec. 31, 2019, as compared with netbacks of $29.33 per boe or $4.88 per thousand cubic feet equivalent for 2018;
  • The company received $2.8-million in dividends during the year Dec. 31, 2019, as compared with $5.7-million in dividends in 2018.

Reader advisory

With the current cash resources, negative working capital, the suspension of the RK field, uncertainty surrounding the successful installation of the NRU, fluctuating commodity prices, dividend uncertainty, currency fluctuations, reliance on a limited number of customers and the impact on carrying values, the company may not have sufficient cash to continue its exploration and development activities. These matters raise significant doubt about the ability of the company to continue as a going concern and meet its obligations as they become due.

(in thousands of U.S. dollars)                   Three months ended Dec. 31,           Year ended Dec. 31,
                                                          2019         2018             2019         2018

Petroleum and natural gas revenue                     $     59     $     74         $    247     $    142
Pro rata petroleum and natural gas revenue (1)           1,468        4,385            9,404       14,864
Revenue from gas trading (2)                             1,487        6,831           11,455       20,428
Net income (loss)                                      (11,320)         570          (11,060)       3,078
Income (loss) per share -- basic and diluted             (0.04)        0.00            (0.04)        0.01
Funds generated from (used) in operations               (1,345)       2,353             (995)       2,690
Capital expenditures (3)                                    77            2               86          221
Pro rata capital expenditures (3)                          819          222            2,092        1,682
Pro rata netback ($/boe)                                  6.61        35.28            15.88        29.33
Pro rata netback ($/mcfe)                                 1.10         5.88             2.65         4.88


                                                                                            As at Dec. 31,
                                                                                        2019         2018

Cash and cash equivalents                                                           $  6,206     $  7,236

1. Pro rata petroleum and natural gas revenue is a non-IFRS (international financial reporting standards)
   measure that adds the company's petroleum and natural gas revenue earned in the respective periods to 
   the company's 35-per-cent equity share of the Kub-Gas natural gas sales that the company has an 
   economic interest in.
2. During the three and 12 months ended Dec. 31, 2019, the company recorded $1,487,000 (2018 -- 
   $6,831,000) and $11,455,000 (2018 -- $20,428,000) in revenue for gas trading and $1,342,000 (2018 -- 
   $6,276,000) and $10,632,000 (2018 -- $19.15-million) for the cost of the sales, for a net profit from 
   gas trading of $145,000 (2018 -- $555,000) and $823,000 (2018 -- $1,278,000), respectively.
3. Capital expenditures include the purchase of property, plant and equipment and the purchase of 
   exploration and evaluation assets. Pro rata capital expenditures is a non-IFRS measure that adds the 
   company's capital expenditures in the respective periods to the company's 35-per-cent equity share of 
   the Kub-Gas and 50-per-cent equity share of the CNG Holdings capital expenditures that the company 
   has an economic interest in.

Supporting documents

Cub's complete quarterly reporting package, including the unaudited interim financial statements and associated management's discussion and analysis, has been filed on SEDAR and has been posted on the company's website.

About Cub Energy Inc.

Cub is an upstream oil and gas company with a proven record of exploration and production cost-efficiency in Ukraine. The company's strategy is to implement Western technology and capital, combined with local expertise and ownership, to increase value in its undeveloped land base, creating and further building a portfolio of producing oil and gas assets within a high pricing environment.

We seek Safe Harbor.

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