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Calgary, Alberta – LEUCROTTA EXPLORATION INC. (TSXV: LXE) (“Leucrotta” or the “Company”) is pleased to announce its financial and operating results for the three and six months ended June 30, 2020. All dollar figures are Canadian dollars unless otherwise noted.
HIGHLIGHTS
- Increased production to 3,797 boe/d in Q2 2020 from 3,119 boe/d in Q2 2019 (2,921 boe/d in Q1 2020).
- Disposed of certain non-core facility assets for cash proceeds of $2.2 million and reduced working capital deficiency to $4.3 million at June 30, 2020 from $5.2 million at March 31, 2020.
| FINANCIAL RESULTS | ||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||
| ($000s, except per share amounts) | 2020 | 2019 | % Change | 2020 | 2019 | % Change |
| Oil and natural gas sales | 5,439 | 6,560 | (17) | 11,230 | 14,662 | (23) |
| Cash flow (used in) from operating activities | (798) | 3,688 | (122) | 607 | 7,417 | (92) |
| Per share – basic and diluted | (-) | 0.02 | (100) | – | 0.04 | (100) |
| Adjusted funds flow (used) (1) | (798) | 2,017 | (140) | (38) | 6,125 | (101) |
| Per share – basic and diluted | (-) | 0.01 | (100) | (-) | 0.03 | (100) |
| Net (loss) earnings | (2,189) | (882) | 148 | (91,633) | 1,792 | (5,213) |
| Per share – basic and diluted | (0.01) | (-) | 100 | (0.46) | 0.01 | (4,700) |
| Capital expenditures | 662 | 3,042 | (78) | 12,674 | 7,996 | 59 |
| Proceeds on sale of properties | ||||||
| and equipment (2) | 8,206 | – | 100 | 8,206 | 3,142 | 161 |
| Working capital (deficiency) | (4,309) | 1,622 | (366) | |||
| Common shares outstanding (000s) | ||||||
| Weighted average – basic | 200,525 | 200,525 | – | 200,525 | 200,525 | – |
| Weighted average – diluted | 200,525 | 200,525 | – | 200,525 | 200,817 | (-) |
| 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 $2.7 million deposit received in Q4 2018.
| OPERATING RESULTS (1) | Three Months Ended June 30 | Six Months Ended June 30 | ||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | |
| Daily production | ||||||
| Oil and NGLs (bbls/d) | 1,128 | 861 | 31 | 995 | 843 | 18 |
| Natural gas (mcf/d) | 16,019 | 13,550 | 18 | 14,186 | 13,798 | 3 |
| Oil equivalent (boe/d) | 3,797 | 3,119 | 22 | 3,359 | 3,142 | 7 |
| Revenue | ||||||
| Oil and NGLs ($/bbl) | 21.75 | 56.12 | (61) | 29.24 | 54.04 | (46) |
| Natural gas ($/mcf) | 2.20 | 1.75 | 26 | 2.30 | 2.57 | (11) |
| Oil equivalent ($/boe) | 15.74 | 23.11 | (32) | 18.37 | 25.78 | (29) |
| Royalties | ||||||
| Oil and NGLs ($/bbl) | 1.64 | – | 100 | 1.31 | – | 100 |
| Natural gas ($/mcf) | 0.07 | – | 100 | 0.04 | – | 100 |
| Oil equivalent ($/boe) | 0.77 | – | 100 | 0.57 | – | 100 |
| Net operating expenses (2) | ||||||
| Oil and NGLs ($/bbl) | 9.58 | 9.91 | (3) | 9.74 | 8.19 | 19 |
| Natural gas ($/mcf) | 1.04 | 0.95 | 9 | 0.97 | 0.85 | 14 |
| Oil equivalent ($/boe) | 7.24 | 6.86 | 6 | 6.96 | 5.93 | 17 |
| Net transportation and marketing expenses (2) | ||||||
| Oil and NGLs ($/bbl) | 0.74 | 1.27 | (42) | 1.05 | 1.39 | (24) |
| Natural gas ($/mcf) (3) | 1.49 | 0.99 | 51 | 1.62 | 0.98 | 65 |
| Oil equivalent ($/boe) | 6.49 | 4.63 | 40 | 7.14 | 4.69 | 52 |
| Operating netback (2) | ||||||
| Oil and NGLs ($/bbl) | 9.79 | 44.94 | (78) | 17.14 | 44.46 | (61) |
| Natural gas ($/mcf) | (0.40) | (0.19) | 111 | (0.33) | 0.74 | (145) |
| Oil equivalent ($/boe) | 1.24 | 11.62 | (89) | 3.70 | 15.16 | (76) |
| Depletion and depreciation ($/boe) | (8.11) | (9.32) | (13) | (8.24) | (9.45) | (13) |
| Asset impairment ($/boe) | – | – | – | (143.74) | – | 100 |
| General and administrative expenses ($/boe) | (3.47) | (4.49) | (23) | (3.69) | (4.29) | (14) |
| Share based compensation ($/boe) | (0.17) | (0.73) | (77) | (0.16) | (0.74) | (78) |
| Gain on sale of equipment ($/boe) | 4.36 | – | 100 | 2.47 | 2.74 | (10) |
| Finance expense ($/boe) | (0.18) | (0.23) | (22) | (0.22) | (0.29) | (24) |
| Finance income ($/boe) | – | 0.04 | (100) | – | 0.02 | (100) |
| Net (loss) earnings ($/boe) | (6.33) | (3.11) | 104 | (149.88) | 3.15 | (4,858) |
(1) See “Frequently Recurring Terms” section.
(2) See “Non-GAAP Measures” section.
(3) Includes $0.39/mcf and $0.48/mcf of unutilized firm transportation expenses for the three and six months ended June 30, 2020, respectively.
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 six months ended June 30, 2020, which are available for review at www.sedar.com.
PRESIDENT’S MESSAGE
In Q2 2020, Leucrotta reduced capital spending to a minimum in response to the collapse in commodity prices and uncertainties around COVID-19 and the world economies. Leucrotta closed transactions related to a previously booked asset sale for $6.0 million plus an additional non-core asset sale for cash proceeds of $2.2 million. Net debt at the end of Q2 2020 was $4.3 million. Leucrotta will continue to minimize capital expenditures and reduce debt throughout the remainder of the year.
Production increased to 3,797 boe/d from 2,921 boe/d in Q1 2020 as a result of the completion of the Two Rivers facility and placing two Montney wells on production. Production has stabilized at approximately 3,300 boe/d after factoring in the initial flush production at Two Rivers. Start-up costs at Two Rivers, significant unutilized transportation costs and lower commodity pricing resulted in materially reduced operating netbacks and negative corporate cash flow for the quarter.
Q3 2020 is projected to return to positive cash flow with increasing cash flow into Q4 2020. Leucrotta has mitigated some of its excess transport commitments for Q3 2020 and will continue to look for opportunities to mitigate excess transport until its end of term in Q3 2021. Pricing and operating costs are also expected be more favourable on a go forward basis.
We look forward to reporting on further business developments in the near future.
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