News Feed Item

Cub Energy Inc. Announces 2014 First Quarter Financial and Operational Results

HOUSTON, TEXAS -- (Marketwired) -- 05/15/14 -- Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB), a Black Sea region-focused upstream oil and gas company, announced today its unaudited interim financial and operating results for the three months ended March 31, 2014. All dollar amounts are expressed in United States dollars.

In the first quarter of 2014, Cub achieved several key accomplishments including its eighth consecutive quarter of production growth and operational success on the Company's 100% working interest Rusko-Komarovske-21 ("RK-21") well which was drilled during the first quarter and subsequently tied-in.

Operational Highlights

--  Production averaged 1,857 boe/d (95% natural gas) for the three months
    ended March 31, 2014 for an increase of 22% over 1,528 boe/d in the same
    period in 2013; 
--  Exit rate of 1,952 boe/d at March 31, 2014 for a 6% decrease over exit
    rate of 2,070 boe/d at December 31, 2013; 
--  Current production of approximately 1,900 boe/d; 
--  Achieved average natural gas price of $8.63/Mcf and condensate price of
    $78.19/bbl for the three months ended March 31, 2014; 
--  On March 14, 2014, the RK-21 well was spud and subsequently cased to TD,
    tested 2.6 MMcf/d and tied-in; 
--  Completed the expansion of the Kub-Gas (30% WI) Makeevskoye and
    Olgovskoye production and processing facility in 2013. Gas began flowing
    on March 6, 2014 resulting in increased capacity to 68 MMcf/d from the
    previous 30 MMcf/d. While this work was completed by the end of the
    first quarter of 2014, full production gains are pending re-routing of
    gas production and permitting which is expected in the next couple of
--  The M-17 well (30% WI) was drilled to its total depth of 3,445 metres
    and the S7 zone tested gas at a rate of over 0.9 MMcf/d through a seven
    millimetre choke; and 
--  Cub also announced the O-24 well (30% WI) tested and flowed gas at low
    rates in the R30c zone. The Company plans to fracture stimulate this
    zone later this year.

Financial Highlights

--  Netback of $30.28/Boe or $5.05/Mcfe for the quarter ended March 31,
--  Revenue from hydrocarbon sales for the three months ended March 31, 2014
    increased 55% to $1.7 million (2013 - $1.1 million) which was driven by
    the recent success of RK-22; 
--  Revenue from hydrocarbon sales by KUB-Gas for the three months ended
    March 31, 2014 were $23.4 million (2013 - $28.7 million) for a decrease
    of 18% of which the Company's 30% share was $7.0 million (2013 - $8.6
    million). The decrease was due to lower gas prices and the devaluation
    of the Ukrainian Hrynvia; 
--  The total pro-rata revenue from hydrocarbon sales, a non-IFRS measure
    combining the Company's revenue and 30% of the allocated KUB-Gas
    revenue, totaled $8.7 million (2013 - $9.7 million) for the three months
    ended March 31, 2014; 
--  During the three months ended March 31, 2014, the Company received $1.0
    (2013 - $3.0) in the form of dividends from KUB-Gas representing the
    distribution of excess cash flow; 
--  Income from the Company's 30% equity investment in KUB-Gas for the three
    months ended March 31, 2014 was $1.1 million (2013 - $2.2 million); 
--  The net loss for the three months ended March 31, 2014 was $0.9 million
    or $0.00 per share (2013 - net income of $0.3 million or $0.00 per
--  Capital expenditures of $1.1 million (2013 $0.3 million) for the three
    months ended March 31, 2014 and the pro-rata capital expenditures, a
    non-IFRS measure combining the Company's capital expenditures and 30% of
    the allocated KUB-Gas capital expenditures, totaled $3.2 million (2013 -
    $1.9 million) for the three month ended March 31, 2014. 
--  The Company utilized $1.0 million of the available $5.0 million
    unsecured line of credit with Pelicourt during the three months ended
    March 31, 2014

                                      Three Months Ended  Three Months Ended
(in thousands of US dollars)              March 31, 2014      March 31, 2013
Petroleum and natural gas revenue                1,701                 1,055
Pro-rata petroleum and natural gas                                          
 revenue(1)                                      8,734                 9,668
Net profit (loss)                                 (915)                  276
Earnings (loss) per share - basic                                           
 and diluted                                     (0.00)                 0.00
Funds generated from (used in)                                              
 operations(2)                                    (126)                1,583
Pro-rata funds generated from                                               
 operations(3)                                   2,391                 2,692
Capital expenditures(4)                          1,074                   323
Pro-rata capital expenditures(4)                 3,222                 1,871
Pro-rata netback ($/boe)                         30.28                 43.84
Pro-rata netback ($Mcfe)                          5.05                  7.31
                                          March 31, 2014   December 31, 2013
Working capital (deficit)                         (306)                  942
Cash and cash equivalents                        1,908                 1,617
Long-term debt                                   1,000                     -
(1)   Pro-rata petroleum and natural gas revenue is a non-IFRS measure that 
      adds the Company's petroleum and natural revenue earned in the        
      respective periods to the Company's 30% equity share of the KUB-Gas   
      petroleum and natural gas sales that the Company has an economic      
      interest in.                                                          
(2)   Funds from operations is a non-IFRS measure and is defined as cash    
      flow from operating activities, excluding changes in non-cash working 
(3)   Pro-rata funds from operations is a non-IFRS measure that adds the    
      Company's funds from operations in the respective periods to the      
      Company's 30% equity share of the KUB-Gas funds from operations that  
      the Company has an economic interest in. The KUB-Gas funds from       
      operations is calculated as the income from equity investment less the
      KUB-Gas depletion and depreciation.                                   
(4)   Capital expenditures includes 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 30% equity share of the KUB-Gas capital expenditures that   
      the Company has an economic interest in.                              

Mikhail Afendikov, Chief Executive Officer of Cub Energy, commented, "During the first quarter we continued our production growth with a particular emphasis on our western 100% owned Ukrainian assets. The RK-22 well was brought on production in late 2013 and improved our production and cashflow. We recently announced the success of the follow up RK-21 well with plans to drill the RK-1 re-entry, RK-23 and RK-24 wells in the next two quarters. Gas prices realised during the first quarter were negatively impacted by the temporary agreement between Russia and Ukraine and the devaluation of the Ukrainian currency. The gas price agreement between Russian and Ukraine was terminated at the end of March 2014 and gas prices have improved materially in April and May of 2014 which we anticipate will improve income and cashflow in our upcoming quarter."


For the remainder of 2014, the Company will continue it's previously announced work program on its 100% owned Tysagaz assets in western Ukraine. The Company plans to drill the RK-23 and RK-24 development wells, re-enter the RK-1 well for completion in a deeper zone and plans to drill up to two wells on the Stanivske licence.

Operations expected in the remainder of 2014 for KUB-Gas include the drilling of four wells including the current O-11 well, four fracture stimulations and a workover of the O-6 well and construction of pipeline to tie-in wells as needed. The Makeevskoye and Olgovskoye production and processing facilities is expected to be optimized in the next couple of months.

Supporting Documents

Cub's complete quarterly reporting package, including the unaudited interim financial statements and associated Management's Discussion and Analysis, have been filed on SEDAR (www.sedar.com) and has been posted on the Company's website at www.cubenergyinc.com.

About Cub Energy Inc.

Cub Energy Inc. (TSX VENTURE:KUB) is an upstream oil and gas company, with a proven track record of exploration and production cost efficiency in the Black Sea region. 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.

Oil and Gas Equivalents

A barrel of oil equivalent ("boe") or units of natural gas equivalents ("Mcfe") is calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. A boe conversion ratio of 6 Mcf: 1 bbl (barrel) or a Mcfe conversion of 1bbl: 6 Mcf is, based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and is not based on either energy content or current prices. While the boe ratio is useful for comparative measures, it does not accurately reflect individual product values and might be misleading, particularly if used in isolation. As well, given that the value ratio, based on the current price of crude oil to natural gas, is significantly different from the 6:1 energy equivalency ratio, using a 6:1 conversion ratio may be misleading as an indication of value.

Reader Advisory

Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Cub believes that the expectations reflected in the forward-looking information are reasonable; however there can be no assurance those expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.

Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in the region and globally; industry conditions, including fluctuations in the prices of natural gas; governmental regulation of the natural gas industry, including environmental regulation; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure to obtain industry partner and other third party consents and approvals, if and when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for natural gas; liabilities inherent in natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the natural gas industry; failure to realize the anticipated benefits of acquisitions and dispositions; and the other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

This cautionary statement expressly qualifies the forward-looking information contained in this news release. We undertake no duty to update any of the forward-looking information to conform such information to actual results or to changes in our expectations except as otherwise required by applicable securities legislation. Readers are cautioned not to place undue reliance on forward-looking information.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Qosmos, the market leader for IP traffic classification and network intelligence technology, has announced that it will launch the Launch L7 Viewer at CloudExpo | @ThingsExpo Silicon Valley, being held November 1 – 3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. The L7 Viewer is a traffic analysis tool that provides complete visibility of all network traffic that crosses a virtualized infrastructure, up to Layer 7. It facilitates and accelerates common IT tasks such as VM migra...
WebRTC adoption has generated a wave of creative uses of communications and collaboration through websites, sales apps, customer care and business applications. As WebRTC has become more mainstream it has evolved to use cases beyond the original peer-to-peer case, which has led to a repeating requirement for interoperability with existing infrastructures. In his session at @ThingsExpo, Graham Holt, Executive Vice President of Daitan Group, will cover implementation examples that have enabled ea...
SYS-CON Events announced today that Coalfire will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Coalfire is the trusted leader in cybersecurity risk management and compliance services. Coalfire integrates advisory and technical assessments and recommendations to the corporate directors, executives, boards, and IT organizations for global brands and organizations in the technology, cloud, health...
In past @ThingsExpo presentations, Joseph di Paolantonio has explored how various Internet of Things (IoT) and data management and analytics (DMA) solution spaces will come together as sensor analytics ecosystems. This year, in his session at @ThingsExpo, Joseph di Paolantonio from DataArchon, will be adding the numerous Transportation areas, from autonomous vehicles to “Uber for containers.” While IoT data in any one area of Transportation will have a huge impact in that area, combining sensor...
November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Penta Security is a leading vendor for data security solutions, including its encryption solution, D’Amo. By using FPE technology, D’Amo allows for the implementation of encryption technology to sensitive data fields without modification to schema in the database environment. With businesses having their data become increasingly more complicated in their mission-critical applications (such as ERP, CRM, HRM), continued ...
In his session at 19th Cloud Expo, Claude Remillard, Principal Program Manager in Developer Division at Microsoft, will contrast how his team used config as code and immutable patterns for continuous delivery of microservices and apps to the cloud. He will show the immutable patterns helps developers do away with most of the complexity of config as code-enabling scenarios such as rollback, zero downtime upgrades with far greater simplicity. He will also have live demos of building immutable pipe...
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
SYS-CON Events announced today that Cloudbric, a leading website security provider, will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Cloudbric is an elite full service website protection solution specifically designed for IT novices, entrepreneurs, and small and medium businesses. First launched in 2015, Cloudbric is based on the enterprise level Web Application Firewall by Penta Security Sys...
WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
"Matrix is an ambitious open standard and implementation that's set up to break down the fragmentation problems that exist in IP messaging and VoIP communication," explained John Woolf, Technical Evangelist at Matrix, in this SYS-CON.tv interview at @ThingsExpo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Rapid innovation, changing business landscapes, and new IT demands force businesses to make changes quickly. In the eyes of many, containers are at the brink of becoming a pervasive technology in enterprise IT to accelerate application delivery. In this presentation, you'll learn about the: The transformation of IT to a DevOps, microservices, and container-based architecture What are containers and how DevOps practices can operate in a container-based environment A demonstration of how Docke...
Enterprises have been using both Big Data and virtualization for years. Until recently, however, most enterprises have not combined the two. Big Data's demands for higher levels of performance, the ability to control quality-of-service (QoS), and the ability to adhere to SLAs have kept it on bare metal, apart from the modern data center cloud. With recent technology innovations, we've seen the advantages of bare metal erode to such a degree that the enhanced flexibility and reduced costs that ...
In his general session at 18th Cloud Expo, Lee Atchison, Principal Cloud Architect and Advocate at New Relic, discussed cloud as a ‘better data center’ and how it adds new capacity (faster) and improves application availability (redundancy). The cloud is a ‘Dynamic Tool for Dynamic Apps’ and resource allocation is an integral part of your application architecture, so use only the resources you need and allocate /de-allocate resources on the fly.
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Governments around the world are adopting Safe Harbor privacy provisions to protect customer data from leaving sovereign territories. Increasingly, global companies are required to create new instances of their server clusters in multiple countries to keep abreast of these new Safe Harbor laws. Is it worth it? In his session at 19th Cloud Expo, Adam Rogers, Managing Director of Anexia, Inc., will discuss how to keep your data legal and still stay in business.