(TSX-V: BBI) Blackbird Energy Inc.
(“
Blackbird” or the “
Company”) is
pleased to announce its financial and operational results for the
year ended July 31, 2018. Blackbird’s audited consolidated
financial statements, management’s discussion and analysis
(
“MD&A”), annual information form, and
statement of reserves data and other oil and gas information, for
the year ended July 31, 2018 are available on SEDAR at
www.sedar.com and are also posted on Blackbird’s website at
www.blackbirdenergyinc.com.
“The twelve months ended July 31, 2018 were
transformative for Blackbird and have positioned the Company for
the most significant phase of anticipated growth in its history.
Through our drilling and completions activity we were able to
successfully delineate the majority of our Pipestone/Elmworth
acreage in both the Upper and Middle Montney intervals. We have
made significant advancements in our development and infrastructure
planning, and have entered into the agreements we consider
necessary for the Company to graduate to an intermediate producer.
We recently concluded drilling operations on our third well north
of the Wapiti River, and Blackbird remains on track to meet its
initial commitment through the Tidewater Facility in mid-2019,”
said Garth Braun, President, CEO and Chairman of Blackbird.
2018 Fourth
Quarter Highlights
- Significant Exposure to Condensate Supports
Revenue: Blackbird reported $5.3 million ($50.43/boe) of
petroleum and natural gas sales for the three months ended July 31,
2018. These results were achieved with the Company producing for
approximately 58% of the quarter due to third-party natural gas
processing facility shut-downs. Blackbird continues to realize the
benefit of its significant liquids weighting, and revenue was
supported by strong realized condensate and oil prices of
$83.47/boe for the quarter.
- Fourth Quarter Average Production of 1,148
boe/d: During the three months ended July 31, 2018, the
Company achieved production of 1,754 boe/d (52% liquids) from
operated wells for the 53 days it was on production. Total
production averaged 1,148 boe/d on a calendar day basis for the
three months, with volumes being impacted by approximately 39 days
of the third-party downtime.
- Strong Operating and Corporate Netbacks:
Blackbird's operating and corporate netbacks* were $29.94/boe and
$20.08/boe, respectively, for the fourth quarter of 2018.
- Adjusted Funds Flow: The Company generated
$2.1 million of adjusted funds flow* during the three months ended
July 31, 2018.
- Condensate & Oil Gas Ratio: The Company’s
condensate & oil gas ratio (“CGR”) averaged
175 bbls/mmcf during the three months ended July 31, 2018.
- Total Liquids Gas Ratio: The Company’s total
liquids gas ratio (“LGR”) averaged 203 bbls/mmcf
during the three months ended July 31, 2018.
* See “Non-IFRS Measures” below.
2018 Year-End
Highlights
- Record Annual Revenue of $20.4 Million:
Blackbird reported $20.4 million ($48.81/boe) of petroleum and
natural gas sales for the year ended July 31, 2018. These results
were achieved with the Company producing for approximately 55% of
the year due to third-party natural gas processing facility
shut-downs.
- 2018 Annual Average Production of 1,143 boe/d:
For the year ended July 31, 2018, the Company achieved production
of 1,991 boe/d (54% liquids) from operated wells for the 200 days
it was on production. Total production averaged 1,143 boe/d on a
calendar day basis for the year, with volumes being impacted by
approximately 165 days of the third-party downtime.
- Operating and Corporate Netbacks: Blackbird's
operating and corporate netbacks* were $26.16/boe and $16.99/boe,
respectively, for the year ended July 31, 2018.
- Adjusted Funds Flow: The Company generated
$7.1 million of adjusted funds flow* during the year ended July 31,
2018.
- Condensate & Oil Gas Ratio: The Company’s
CGR averaged 188 bbls/mmcf during the year ended July 31,
2018.
- Total Liquids Gas Ratio: The Company’s LGR
averaged 206 bbls/mmcf during the year ended July 31, 2018.
- Capital Investment: Blackbird invested $54.4
million during the year ended July 31, 2018, drilling 3 gross (2.2
net) wells, completing 6 gross (4.4 net) wells, recompleting 2
gross (2.0 net) wells and bringing 8 gross (4.8 net) wells on
production. The Company also upgraded its existing 12-14-70-7W6
facility to handle higher pressures, performed minor workovers on
certain wells and further advanced its development north of the
Wapiti River including constructing the 9-14-71-7W6 pad-site which
was subsequently used for drilling activities.
- Balance Sheet Strength Maintained: At July 31,
2018, Blackbird had positive working capital of $4.6 million, which
included $6.2 million of cash and no bank debt.
- Continued Expansion of Montney Footprint:
During the year ended July 31, 2018, Blackbird acquired a total of
11 gross (10.0 net) sections of additional Pipestone/Elmworth
Montney land for cash consideration of $1.6 million.
- Execution of Long Term Natural Gas Processing
Agreement: On November 1, 2017 Blackbird announced it had
executed an agreement with Tidewater Midstream and Infrastructure
Ltd. ("Tidewater") for firm processing of raw gas
from the Company's condensate rich Pipestone/Elmworth Montney play
in the greater Grande Prairie area of Alberta. The companies agreed
to an initial term of five years with firm capacity of 20 mmcf/d
expected to commence in mid-2019, increasing to 25 mmcf/d 12 months
after plant start-up and to 30 mmcf/d 18 months after plant
start-up.
- Successful Development and Delineation
Program: Blackbird drilled 3 (2.2 net) Montney wells
during the year ended July 31, 2018 including 2 (2.0 net) Upper
Montney wells and 1 (0.2 net) Middle Montney well. Pursuant to this
drilling program, Blackbird believes that it has established
approximately 114 of its 133 gross sections of Montney lands as
being situated in the over-pressured liquids-rich Montney corridor
at Pipestone/Elmworth.
* See “Non-IFRS Measures” below.
The following table summarizes certain 2018
financial and operational figures, and should be read in
conjunction with Blackbird's audited annual financial statements
and annual MD&A for the year ended July 31, 2018:
(CDN$ thousands, except where otherwise noted) |
Three months ended July 31 |
Year ended July 31 |
2018 |
|
2017 |
|
% Change |
2018 |
|
2017 |
|
% Change |
Financial |
Petroleum and natural gas sales |
5,331 |
|
2,797 |
|
91 |
|
20,363 |
|
6,234 |
|
227 |
|
Cash provided by (used in) operating activities |
3,868 |
|
1,285 |
|
201 |
|
8,101 |
|
(2,799 |
) |
389 |
|
Net income (loss) and comprehensive income (loss) |
3,038 |
|
(3,164 |
) |
196 |
|
(451 |
) |
(10,600 |
) |
(96 |
) |
Net income (loss) per share – basic and diluted ($/share) |
0.00 |
|
(0.00 |
) |
- |
|
(0.00 |
) |
(0.02 |
) |
(100 |
) |
Working capital |
4,619 |
|
48,759 |
|
(91 |
) |
4,619 |
|
48,759 |
|
(91 |
) |
Available funding(1) |
23,901 |
|
49,059 |
|
(51 |
) |
23,901 |
|
49,059 |
|
(51 |
) |
Capital expenditures |
2,900 |
|
23,855 |
|
(88 |
) |
54,418 |
|
78,294 |
|
(30 |
) |
Operating |
Production |
|
|
|
|
|
|
Condensate & oil (bbls/d) |
544 |
|
291 |
|
87 |
|
576 |
|
170 |
|
239 |
|
NGLs (bbls/d) |
85 |
|
43 |
|
98 |
|
55 |
|
20 |
|
175 |
|
Natural gas (mcf/d) |
3,103 |
|
2,664 |
|
16 |
|
3,060 |
|
1,331 |
|
130 |
|
Non-core (boe/d) |
2 |
|
4 |
|
(50 |
) |
2 |
|
7 |
|
(71 |
) |
Total (boe/d) |
1,148 |
|
782 |
|
47 |
|
1,143 |
|
419 |
|
173 |
|
Liquids ratio (%) |
55 |
|
43 |
|
28 |
|
55 |
|
45 |
|
22 |
|
Condensate & oil gas ratio (bbls/mmcf) |
175 |
|
109 |
|
61 |
|
188 |
|
128 |
|
47 |
|
Total liquids gas ratio (bbls/mmcf) |
203 |
|
125 |
|
62 |
|
206 |
|
143 |
|
44 |
|
|
|
|
|
|
|
|
Average Montney realized selling prices |
|
|
|
|
|
|
Condensate & oil ($/bbl) |
83.47 |
|
55.72 |
|
50 |
|
74.75 |
|
59.57 |
|
25 |
|
NGLs ($/bbl) |
23.16 |
|
23.40 |
|
(1 |
) |
26.98 |
|
25.45 |
|
6 |
|
Natural gas ($/mcf) |
3.38 |
|
4.93 |
|
(31 |
) |
3.67 |
|
4.75 |
|
(23 |
) |
Netbacks ($/boe) |
|
|
|
|
|
|
Petroleum and natural gas sales |
50.43 |
|
38.91 |
|
30 |
|
48.81 |
|
40.79 |
|
20 |
|
Royalties |
(1.27 |
) |
(2.27 |
) |
(44 |
) |
(2.54 |
) |
(2.59 |
) |
(2 |
) |
Operating expenses |
(7.57 |
) |
(8.34 |
) |
(9 |
) |
(7.41 |
) |
(10.19 |
) |
(27 |
) |
Transportation and processing expenses |
(12.35 |
) |
(22.96 |
) |
(46 |
) |
(12.70 |
) |
(19.38 |
) |
(34 |
) |
Operating netback(1) |
29.24 |
|
5.34 |
|
448 |
|
26.16 |
|
8.63 |
|
203 |
|
General and administrative expenses |
(8.84 |
) |
(14.89 |
) |
(41 |
) |
(9.45 |
) |
(26.00 |
) |
(64 |
) |
Financing costs |
(0.40 |
) |
- |
|
- |
|
(0.22 |
) |
(0.08 |
) |
175 |
|
Interest income |
0.08 |
|
2.46 |
|
(97 |
) |
0.50 |
|
2.93 |
|
(83 |
) |
Corporate netback(1) |
20.08 |
|
(7.09 |
) |
383 |
|
16.99 |
|
(14.52 |
) |
217 |
|
Note:(1) See the Company’s 2018 financial
statements and related annual MD&A filed on SEDAR for further
information regarding its calculation of “available funding”,
"operating netback" and "corporate netback".
2018 Year-End Reserves
Highlights
The following reserves data information is based
on the results of the Company's independent year-end reserves
evaluation prepared by McDaniel & Associates Consultants Ltd.
(“McDaniel”) effective July 31, 2018 (the
“McDaniel Report”), and McDaniel's previous
year-end evaluation effective July 31, 2017.
- Increase of 126% in Proved Developed Producing
Reserves: Proved developed producing
(“PDP”) reserves were 3,175.9 mboe at July 31,
2018, a 126% increase from July 31, 2017. The increase in PDP
reserves was primarily attributable to the inclusion of 4.8 net
additional wells in the McDaniel Report, bringing Blackbird’s total
productive well count to 8.8 net wells for the year ended July 31,
2018.
- Increase of 9% in Proved Plus Probable
Reserves: Proved plus probable (“2P”)
reserves were 59,096.7 mboe at July 31, 2018, a 9% increase from
July 31, 2017.
- 2P NPV10 of $411.0 Million: The estimated net
present value of related future net revenue at July 31, 2018
(before taxes, discounted at 10%) was $44.9 million for Blackbird’s
PDP reserves ($15.1 million at July 31, 2017) and $411.0 million
($395.3 million at July 31, 2017) for its 2P reserves,
notwithstanding a lower natural gas price forecast for the July 31,
2018 reserves report.
The following tables summarize the estimates of
Blackbird’s gross reserves at July 31, 2018 and July 31, 2017, as
estimated by McDaniel, Blackbird’s independent qualified reserves
evaluators, using the forecast price and cost assumptions in effect
at the applicable reserves evaluation date:
Summary of Gross Reserves(1) |
|
|
|
|
|
July 31, 2018 |
July 31, 2017 |
Change from July 31,
2017 |
Reserves Category |
|
(Mboe) |
(Mboe) |
Proved Developed Producing |
|
3,175.9 |
1,407.0 |
126% |
|
Total Proved |
|
29,128.2 |
28,577.8 |
2% |
|
Probable |
|
29,968.5 |
25,794.9 |
16% |
|
Total Proved Plus Probable |
|
59,096.7 |
54,372.7 |
9% |
|
(1) Gross
reserves are working interest reserves before royalty
deductions. |
|
|
Summary of Reserves at July 31,
2018(1)(2) |
|
|
|
|
|
|
|
|
Oil |
|
Natural Gas |
|
Natural Gas Liquids(3) |
|
Total Oil Equivalent |
|
Gross |
Net |
|
Gross |
Net |
|
Gross |
Net |
|
Gross |
Net |
Reserves
Category |
(Mbbls) |
(Mbbls) |
|
(MMcf) |
(MMcf) |
|
(Mbbls) |
(Mbbls) |
|
(Mboe) |
(Mboe) |
Proved |
|
|
|
|
|
|
|
|
|
|
|
Developed
Producing |
40.0 |
37.9 |
|
11,344.0 |
10,476.2 |
|
1,245.3 |
998.1 |
|
3,175.9 |
2,782.1 |
|
Developed
Non-Producing |
0.0 |
0.0 |
|
929.6 |
869.9 |
|
123.6 |
106.7 |
|
278.5 |
251.7 |
|
Undeveloped |
0.0 |
0.0 |
|
78,525.7 |
71,833.0 |
|
12,586.2 |
10,409.4 |
|
25,673.8 |
22,381.5 |
|
Total Proved |
40.0 |
37.9 |
|
90,799.3 |
83,179.0 |
|
13,955.0 |
11,514.2 |
|
29,128.2 |
25,415.3 |
|
Total
Probable |
12.6 |
11.1 |
|
92,108.8 |
82,486.0 |
|
14,604.4 |
11,051.9 |
|
29,968.5 |
24,810.7 |
|
Total
Proved Plus Probable |
52.6 |
49.0 |
|
182,908.1 |
165,665.0 |
|
28,559.5 |
22,566.2 |
|
59,096.7 |
50,226.0 |
|
(1)
“Gross” means Blackbird’s working interest (operating or
non-operating) share before the deduction of royalties and without
including any royalty interests of Blackbird. “Net” means
Blackbird’s working interest (operating or non-operating) share
after the deduction of royalty obligations, plus Blackbird’s
royalty interests in reserves. |
Outlook
The twelve months ended July 31, 2018 were
transformational for Blackbird and have positioned the Company to
make the transition to an intermediate producer. Blackbird drilled
3 (2.2 net) Montney wells during the year ended July 31, 2018
including 2 (2.0 net) Upper Montney wells and 1 (0.2 net) Middle
Montney well, and in doing so de-risked the majority of its acreage
in both the Upper and Middle Montney intervals by establishing
productivity and high liquids content across the majority of the
Company’s Pipestone/Elmworth Montney acreage.
Blackbird made significant strides in its
development planning during the 12 months ended July 31, 2018. The
Company remains on track to commence the construction of its gas
management site located at 5-14-071-07-W6M in the Dimsdale area in
the fall of 2018, which will include two water disposal wells and a
compressor facility, and will be tied-in to the planned Tidewater
deep cut sour gas processing facility to be located near Wembley,
Alberta (the “Tidewater Facility”), which remains
on schedule for a mid-2019 on-stream date.
The Company commenced the first phase of its
2018 development drilling north of the Wapiti River on August 15,
2018 with the spudding of its 102/2-27-71-07W6 Upper Montney well.
The 102/2-27-71-07W6 was Blackbird’s first extended reach
horizontal and included a record lateral length of 2,956 meters and
drilled in 22.9 days. The well was drilled with an increased hole
size to accommodate larger production casing, which management
expects will provide for increased liquids rates. The Company
expects to commence completion operations on this well in the fall
of 2018, with the program expected to include approximately 77
stages across the 2,956 meter lateral to be completed at an
intensity of approximately 75 tonnes per stage.
Blackbird is currently drilling its second
extended reach horizontal from its 9-14 pad-site, the
103/14-22-71-07W6 Upper Montney well. The 103/14-22-71-07W6 is
being drilled using the same program as the Company’s first
extended reach horizontal and drilling operations are expected to
conclude in early October.
In total, the Company expects it will need to
drill and complete six Montney wells north of the Wapiti River by
mid-2019 to meet its initial 20 mmcf/d commitment through the
Tidewater Facility. Additionally, Blackbird plans to drill one land
retention well from its 12-36 pad-site prior to December 31,
2018.
Blackbird is pleased to report that for the
period from August 1, 2018 to the date of this filing it has been
able to produce continuously due to no third-party gas processing
facility downtime experienced.
Appointment of Travis Belak as Chief
Financial Officer
Effective October 2, 2018, Karen Minton will be
stepping down from her role as Chief Financial Officer of
Blackbird. Pursuant to her resignation Travis Belak, previously
Controller of the Company, has been promoted to Chief Financial
Officer of Blackbird and will assume responsibility for the
Company’s finance, treasury, accounting, tax and capital markets
functions.
"Working at Blackbird has been an exceptional
experience, and I would like to sincerely thank Garth Braun and the
Blackbird board for the opportunity. For personal reasons, I have
decided to step down from my role as Chief Financial Officer of
Blackbird. Although my resignation does not come without regret, it
gives me comfort to know that I am leaving the Company in strong
financial standing. It also brings me pleasure to be succeeded by
my good friend and colleague Travis Belak. Travis and I have worked
closely together during my tenure at Blackbird and I am certain
that he will excel in his new role as Chief Financial Officer,”
said Karen Minton, Chief Financial Officer of Blackbird.
Mr. Belak is a Chartered Accountant with over 8
years of broad-based accounting and finance experience in the oil
and gas industry. Mr. Belak has been with Blackbird for the past
four years, most recently serving as Controller. He has played an
integral role in the development, maintenance and continuous
improvement of the Company’s financial processes including
regulatory filings, internal reporting, controls and taxation. Mr.
Belak began his career with Ernst & Young LLP and has since
held positions of increasing responsibility with Canadian Natural
Resources Limited and Blackbird. Mr. Belak is an active member of
the Institute of Chartered Accountants of Alberta (ICAA) and
Chartered Professional Accountants of Canada (CPA Alberta).
"We appreciate Karen's contributions to
Blackbird and wish her success in all her future endeavors. At the
same time, we are pleased to announce Travis Belak will be assuming
the role of Chief Financial Officer. Mr. Belak has been a valuable
member of the Blackbird team since joining us in February 2015 and
is the ideal candidate for the role," said Garth Braun, President,
Chief Executive Officer and Chairman of Blackbird.
About Blackbird
Blackbird Energy Inc. is a highly innovative oil
and gas exploration and development company focused on the
condensate and liquids-rich Montney fairway at Pipestone /
Elmworth, near Grande Prairie, Alberta.
For more information, please view our Corporate
Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.
Garth BraunChairman, CEO and President(403)
500-5550gbraun@blackbirdenergyinc.com
Allan DixonBusiness Development Manager(403)
699-9929 Ext 103adixon@blackbirdenergyinc.com
The TSX Venture Exchange Inc. has
neither approved nor disapproved the contents of this press
release. 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 press release.
ADVISORIES REGARDING OIL AND GAS INFORMATION
This news release contains the term barrels of
oil equivalent ("Boe"). Natural gas is converted to a Boe using six
thousand cubic feet of gas to one barrel of oil. Boes may be
misleading, particularly if used in isolation. The foregoing
conversion ratios are based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. 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 conversion ratio on a 6:1 basis may be misleading as
an indication of value.
Other abbreviations used in the news release
include: “Mboe” which means thousand barrels of oil equivalent;
“Mbbl” which means thousand barrels; “MMcf” which means million
cubic feet; and “MMcf/d” which means million cubic feet per
day.
FORWARD-LOOKING INFORMATION AND STATEMENTS
This press release contains forward-looking
statements and forward-looking information (collectively,
"forward-looking statements") within the meaning of applicable
securities laws. The use of any of the words "will", "expects",
"believe", "plans", "potential" and similar expressions are
intended to identify forward-looking statements. More particularly
and without limitation, this press release contains forward looking
statements, including the construction of an eastern gathering
system and timing thereof, the eastern gathering system
facilitating tie-in of Blackbird’s eastern pads located south of
the Wapiti River, the completion of the 6-33-71-7W6 well and timing
thereof, retaining of Montney rights, the commencement and benefits
of the agreement with Tidewater Midstream and Infrastructure Ltd.,
Blackbird’s momentum and building on this momentum through further
development and delineation of its lands during fiscal 2018 and the
Company seeking and/or obtaining additional financing to support a
transition to full development in the future. In addition,
statements relating to “reserves” are deemed to be forward-looking
information as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and can be
profitably produced in the future.
By their nature, forward-looking statements are
based upon certain assumptions and are subject to numerous risks
and uncertainties, some of which are beyond Blackbird’s control,
including the impact of general economic conditions, industry
conditions, current and future commodity prices, currency and
interest rates, anticipated production rates, borrowing, operating
and other costs and funds from operations, the timing, allocation
and amount of capital expenditures and the results therefrom,
anticipated reserves and the imprecision of reserve estimates, the
performance of existing wells, the success obtained in drilling new
wells, the sufficiency of budgeted capital expenditures in carrying
out planned activities, competition from other industry
participants, availability of qualified personnel or services and
drilling and related equipment, stock market volatility, effects of
regulation by governmental agencies including changes in
environmental regulations, tax laws and royalties; the ability to
access sufficient capital from internal sources and bank and equity
markets; and including, without limitation, those risks considered
under "Risk Factors" in our Annual Information Form for the year
ended July 31, 2018 available on SEDAR.
This press release, in particular the
information in respect of estimated revenues and/or production
while flowing, may contain future-oriented financial information or
financial outlook within the meaning of applicable securities laws.
Such future-oriented financial information or financial outlook has
been prepared for the purpose of providing information about
management’s reasonable expectations as to the anticipated results
of its proposed business activities. Readers are cautioned that
reliance on such information may not be appropriate for other
purposes.
NON-IFRS MEASURES
Within this new release, references are made to
a term commonly used in the oil and natural gas industry.
Management uses "operating netback" to analyze operating
performance. This term does not have any standardized meaning
prescribed by International Financial Reporting Standards (“IFRS”)
and therefore may not be comparable with the calculation of a
similar measure for other entities. This term is used by management
to analyze operating performance on a comparable basis with prior
periods of Blackbird. Operating netback equals the total of
revenues less royalties, transportation, processing and operating
expenses calculated on a Boe basis. For further information on
non-IFRS measures, including a reconciliation to IFRS measures
refer to our 2018 annual MD&A available on SEDAR.
RESERVES ADVISORIES
The reserves estimates prepared herein have been
evaluated by an independent qualified reserves evaluator in
accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities and the Canadian Oil and Gas
Evaluation Handbook ("COGE Handbook") and are effective as of July
31, 2018. All reserves information has been presented on a gross
basis, which is the Company's working interest share before
deduction of royalties and without including any royalty interests
of the Company. The reserves have been categorized in accordance
with the reserves definitions as set out in the COGE Handbook. The
discounted and undiscounted net present value of future net
revenues attributable to reserves do not represent the fair market
value of such reserves. For more information on reserves refer to
the Company’s Statement of Reserves Data and Other Oil and Gas
Information effective July 31, 2018 available on SEDAR.
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