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Cuda Oil and Gas Inc. Announces First Quarter Financial and Operating Results


Calgary, Alberta–(Newsfile Corp. – May 28, 2021) –  Cuda Oil and Gas Inc. (“Cuda” or the “Company“) (TSXV: CUDA) announces its financial and operational results for the first quarter ended March 31, 2021. Cuda’s unaudited interim condensed consolidated financial statements and management’s discussion and analysis (“MD&A“) as at and for the three months ended March 31, 2021 and 2020, are available under the Company’s profile on the SEDAR website at www.sedar.com.

Significant First Quarter Highlights

  • The Company’s operating netback significantly improved in the first quarter of 2021 to $20.16 per boe from $12.56 per boe in the fourth quarter of 2020 and $16.87 per boe in the first quarter of 2020.
  • Realized crude oil prices in the first quarter of 2021 increased 20% to $58.63 per bbl from $48.71 per bbl in the fourth quarter of 2020. For the three months ended March 31, 2021, average realized crude oil prices were 9% higher compared to the first quarter of 2020, reflecting the decreasing impact of COVID-19 on crude oil prices.
  • Realized natural gas prices from the Alberta assets increased in the first quarter of 2021 to $3.47 per mcf from $2.94 per mcf in the fourth quarter of 2020 and $2.45 per mcf in the first quarter of 2020. The continuation of stable natural gas prices through the COVID-19 pandemic has allowed the Company to continuously produce during higher price environments.
  • First quarter 2021 oil production from Wyoming, United States, decreased 6% to 347 bbls/d, from 370 bbls/d in the fourth quarter of 2020, and increased 3% from 336 bbls/d, when compared to first quarter oil production in 2020. The production decrease from the fourth quarter of 2020 production resulted from lower quantities of gas injection during the first quarter due to rising cost of the gas injections. The Company and its joint venture partners in Wyoming plan to increase gas injection volumes during the second quarter of 2021 as propane prices come off of seasonal highs.

For the quarters ended March 31, 2021 and 2020, the Company reported net (loss) income of approximately ($3.1 million), and $0.9 million, respectively, and cash flows from operating activities of approximately $0.08 million, and $1.0 million, respectively. At March 31, 2021, the Company had a working capital deficiency of approximately $67.8 million including outstanding credit facilities and a convertible debenture to which the Company was in default under the terms and conditions of the applicable loan agreements.

At March 31, 2021, the Company had credit facilities with an outstanding balance of approximately $62.9 million including all unpaid interest and financing fees. The Company also had a convertible debenture outstanding in the amount of $1.7 million including accrued interest at March 31, 2021. During the three months ended March 31, 2021, the credit facilities, the promissory note, and convertible debenture became in default under their applicable agreements, and remain in default currently.

The Company has determined during the three months ended and at March 31, 2021, it was not in compliance with the covenants of the senior credit facility, signed on January 26, 2021, which represents an event of default under each of the credit facilities and the promissory note agreements. An event of default enables each of the lenders to demand immediate payment of all amounts owing for which the Company is incapable of making such payments. The Company has requested and received a waiver from the lender of the senior credit facility for the covenant breaches at March 31, 2021. The Company continues to be in discussions with each of its lenders to attempt to remedy the events of default, as well as the ultimate settlement of finance charges and fees. There can be no guarantee that the Company will be successful in any negotiation, or settlement with the lenders either with respect to the rectification of the events of default, or with respect to an ultimate settlement of finance changes and fees. As such, a material uncertainty exists that casts significant doubt on the Company’s ability to continue as a going concern.

Financial and Operational Results(1)

Summary table of selected March 31, 2021 and 2020 financial and operational results:

Three months ended
March 31
2021 2020
($, except per boe)
PRODUCTION
Crude oil (bbls/d) 347 344
Natural gas (mcf/d) 881 1,207
Natural gas liquids (“NGLs”)(bbls/d) 15 25
Total (boe/d) 509 569
   
   
REVENUE    
Crude oil 1,830,968 1,672,623
Natural gas 275,355 269,506
NGLs 77,381 96,340
Total 2,183,704 2,038,469
   
   
OPERATING NETBACKS    
Average realized price 47.64 39.34
Royalties and production taxes (15.38 ) (10.85 )
Operating and transportation (12.10 ) (11.62 )
Operating netback 20.16 16.87
   
   
COMMODITY PRICES    
WTI crude oil (US$/bbl) 57.79 45.76
Exchange rate (US$/Cdn$) 1.27 1.34
AECO, daily (5A)(Cdn$/GJ) 2.99 1.92

 

Note:
(1) For further discussion and disclaimers regarding the results above, see the Company’s unaudited interim condensed consolidated financial statements and MD&A for the three months ended March 31, 2021 and 2020, available under the Company’s profile on SEDAR.

The Company continued its strategy to focus its resources on exploration and development in the Barron Flats Shannon Unit in Wyoming, United States. The Company’s operating netback increased to $20.16 per boe for the three months ended March 31, 2021 from $16.87 per boe for the three months ended March 31, 2020, reflecting the increases to average realized crude oil prices in Wyoming, United States and AECO natural gas prices in Alberta, Canada.

About Cuda Oil and Gas Inc.
Cuda Oil and Gas Inc. is engaged in the business of exploring for, developing and producing oil and natural gas, and acquiring oil and natural gas properties across North America. The Cuda management team has worked closely together for over 20 years in both private and public company environments and has an established track record of delivering strong shareholder returns. Cuda will continue to implement its proven strategy of exploring, acquiring, and exploiting with a long-term focus on large, light oil resource- based assets across North America including significant operational experience in the United States. The Cuda management team brings a full spectrum of geotechnical, engineering, negotiating and financial experience to its investment decisions.

For further information please contact:
Glenn Dawson
President and Chief Executive Officer
Cuda Oil and Gas Inc.
(403) 454-0862

Non-GAAP Measures
This news release contains the terms “operating netback” and “working capital deficit”, which do not have standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures presented by other issuers.

  • Operating netback denotes total revenue less royalty and production tax expenses, and operating and transportation costs calculated on a per boe basis. Management uses operating netback on a per boe basis in operational and capital allocation decisions.
  • Working capital deficit is calculated as current assets less current liabilities.

Glossary

 bbl  barrel
 bbl/d  barrels per day
 boe  barrels of oil equivalent
 boe/d  barrels of oil equivalent per day
 Mcf  thousand cubic feet
 Mcf/d  thousand cubic feet per day
 GJ  Gigajoule
 WTI  West Texas Intermediate, a grade of light sweet crude oil used as benchmark pricing in the United States

 

Forward-Looking Information
This news release contains forward-looking statements. All statements other than statements of historical fact included in this news release are forward-looking statements that involve various risks and uncertainties and are based on forecasts of future operational or financial results, estimates of amounts not yet determinable and assumptions of management. Risk factors that could prevent forward looking statements relating to Cuda and its operating activities from being realized include ongoing permitting requirements, the actual results of current exploration and development activities, operational risks, risks associated with drilling and completions, uncertainty of geological and technical data, market conditions, the availability and nature of alternative sources of energy, conclusions of economic evaluations and changes in project parameters as plans continue to be refined as well as future prices of oil and natural gas. Although Cuda has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Oil and Gas Advisories
This news release contains metrics commonly used in the oil and natural gas industry. These oil and gas metrics have been prepared by management and do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies and should not be used to make comparisons. Such metrics have been included in this news release to provide readers with additional measures to evaluate Cuda’s performance and to compare Cuda’s operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be unduly relied upon.

“boes” may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Estimates by engineering and geotechnical practitioners may vary and the differences may be significant. Cuda believes that the provision of this analogous information is relevant to its activities and forecasting, given its interest in properties in the area; however, readers are cautioned that there is no certainty that any forecasts provided herein based on analogous information will be accurate.

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

 



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