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US NEWS 
Calgary, Alberta – LEUCROTTA EXPLORATION INC. (TSXV: LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three months ended March 31, 2020. All dollar figures are Canadian dollars unless otherwise noted.
HIGHLIGHTS
- Drilled, completed and tied-in a second Montney well at Two Rivers.
- Completed construction of the Two Rivers facility and commenced production of the two Montney wells.
- Subsequent to March 31, 2020, disposed of certain non-core facility assets for proceeds of $2.2 million.
| FINANCIAL RESULTS | |||||||||
| Three Months Ended March 31 | |||||||||
| ($000s, except per share amounts) | 2020 | 2019 | % Change | ||||||
| Oil and natural gas sales | 5,791 | 8,102 | (29 | ) | |||||
| Cash flow from operating activities | 1,405 | 3,729 | (62 | ) | |||||
| Per share – basic and diluted | 0.01 | 0.02 | (50 | ) | |||||
| Adjusted funds flow (1) | 760 | 4,108 | (81 | ) | |||||
| Per share – basic and diluted | – | 0.02 | (100 | ) | |||||
| Net (loss) earnings | (89,444 | ) | 2,674 | (3,445 | ) | ||||
| Per share – basic and diluted | (0.45 | ) | 0.01 | (4,600 | ) | ||||
| Capital expenditures | 12,012 | 4,954 | 142 | ||||||
| Proceeds on sale of equipment (2) | – | 3,142 | (100 | ) | |||||
| Working capital (deficiency) | (5,223 | ) | 2,675 | (295 | ) | ||||
| Common shares outstanding (000s) | |||||||||
| Weighted average – basic | 200,525 | 200,525 | – | ||||||
| Weighted average – diluted | 200,525 | 200,939 | – | ||||||
| End of period – basic | 200,525 | 200,525 | – | ||||||
| End of period – fully diluted | 226,392 | 227,082 | – | ||||||
(1) See “Non-GAAP Measures” section
(2) The sale of equipment for proceeds of $3.1 million in Q1 2019 is exclusive of $2.7 million deposit received in Q4 2018.
| OPERATING RESULTS (1) | Three Months Ended March 31 | ||||||||
| 2020 | 2019 | % Change | |||||||
| Daily production | |||||||||
| Oil and NGLs (bbls/d) | 862 | 824 | 5 | ||||||
| Natural gas (mcf/d) | 12,354 | 14,049 | (12 | ) | |||||
| Oil equivalent (boe/d) | 2,921 | 3,166 | (8 | ) | |||||
| Oil and natural gas sales | |||||||||
| Oil and NGLs ($/bbl) | 39.02 | 51.84 | (25 | ) | |||||
| Natural gas ($/mcf) | 2.43 | 3.37 | (28 | ) | |||||
| Oil equivalent ($/boe) | 21.78 | 28.44 | (23 | ) | |||||
| Royalties | |||||||||
| Oil and NGLs ($/bbl) | 0.87 | – | 100 | ||||||
| Natural gas ($/mcf) | 0.01 | – | 100 | ||||||
| Oil equivalent ($/boe) | 0.31 | – | 100 | ||||||
| Net operating expenses (2) | |||||||||
| Oil and NGLs ($/bbl) | 9.95 | 6.37 | 56 | ||||||
| Natural gas ($/mcf) | 0.87 | 0.75 | 16 | ||||||
| Oil equivalent ($/boe) | 6.60 | 5.00 | 32 | ||||||
| Net transportation and marketing expenses (2) | |||||||||
| Oil and NGLs ($/bbl) | 1.46 | 1.51 | (3 | ) | |||||
| Natural gas ($/mcf) (3) | 1.78 | 0.98 | 82 | ||||||
| Oil equivalent ($/boe) | 7.97 | 4.74 | 68 | ||||||
| Operating netback (2) | |||||||||
| Oil and NGLs ($/bbl) | 26.74 | 43.96 | (39 | ) | |||||
| Natural gas ($/mcf) | (0.23 | ) | 1.64 | (114 | ) | ||||
| Oil equivalent ($/boe) | 6.90 | 18.70 | (63 | ) | |||||
| Depletion and depreciation ($/boe) | (8.40 | ) | (9.58 | ) | (12 | ) | |||
| Asset impairment ($/boe) | (330.59 | ) | – | 100 | |||||
| General and administrative expenses ($/boe) | (3.97 | ) | (4.10 | ) | (3 | ) | |||
| Share based compensation ($/boe) | (0.14 | ) | (0.75 | ) | (81 | ) | |||
| Gain on sale of equipment ($/boe) | – | 5.46 | (100 | ) | |||||
| Finance expense ($/boe) | (0.26 | ) | (0.35 | ) | (26 | ) | |||
| Net (loss) earnings ($/boe) | (336.46 | ) | 9.38 | (3,687) | |||||
(1) See “Frequently Recurring Terms” section.
(2) See “Non-GAAP Measures” section.
(3) Includes $0.59/mcf of unutilized firm transportation expenses for Q1 2020.
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 months ended March 31, 2020, which are available for review at www.sedar.com.
PRESIDENT’S MESSAGE
In Q1 2020, Leucrotta’s capital was spent primarily on the Two Rivers facility and drilling and completing a second Montney well. $6.0 million was reclassified as assets held for sale relating to funds received subsequent to the end of Q1 2020 as part of a prior agreement with our partner at Two Rivers.
Production remained relatively stable at 2,921 boe/d for the quarter as wells continue to outperform expectations. Production increased in late March with the start-up of the Two Rivers facility and is estimated to average approximately 3,000 boe/d for 2020.
Leucrotta had $5.2 million of debt at the end of Q1 2020 and will look to reduce this through 2020 by eliminating all discretionary capital and continuing to sell non-core assets and equipment. In Q2 2020, Leucrotta sold a non-core disposal well for $2.2 million as part of ongoing initiatives to maintain balance sheet strength.
We look forward to reporting on further business developments in the near future.
FREQUENTLY RECURRING TERMS
The Company uses the following frequently recurring industry terms in this news release: “bbls” refers to barrels, “mcf” refers to thousand cubic feet, and “boe” refers to barrel of oil equivalent. 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 this news release. 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.
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