(TSX-V:BBI) Blackbird Energy Inc. (“
Blackbird” or
the “
Company”) is pleased to announce its
financial and operational results for the quarter ended October 31,
2017. Blackbird’s unaudited condensed consolidated interim
financial statements and related management’s discussion and
analysis for the quarter ended October 31, 2017 are available on
SEDAR at www.sedar.com and are also posted on Blackbird’s website
at www.blackbirdenergyinc.com.
Q1 2018 Highlights
- Q1 2018 Production: While on production during the quarter,
Blackbird produced 5.6 mmcf/d of natural gas, 863 bbls/d of
condensate and 80 bbls/d of NGLs for total production of 1,876
boe/d. During the three months ended October 31, 2017, Blackbird
averaged production of 2.1 mmcf/d of natural gas, 328 bbls/d of
condensate and 30 bbls/d of NGLs for total production of 712 boe/d
(including non-core production) despite significant third party
natural gas processing plant shut-downs, which resulted in
significant increases to per boe operating costs. Blackbird was
only able to produce for approximately 35 days during the first
quarter of 2018 compared to 92 total calendar days in the quarter
which resulted in $2.6 million of revenue.
- Third Party Processing: Post the first quarter of 2018, run
times at the third party natural gas processing facility have
improved significantly. A number of repairs were performed while
the facility was down from November 1st to November 14th, and as a
result from November 15th to December 26th, Blackbird has been able
to produce for a total of 38 days or at 90% run time, already
exceeding the prior quarters days on production;
- Q1 2018 Condensate Gas Ratio: 155 bbls/mmcf during the three
months ended October 31, 2017;
- Q1 2018 Total Liquids Gas Ratio: 170 bbls/mmcf during the three
months ended October 31, 2017;
- Q1 2018 Revenue: $2.6 million during the three months ended
October 31, 2017;
- Q1 2018 Operating Netback: $14.37/boe during the three months
ended October 31, 2017;
- Gas Processing: In November, 2017 Blackbird executed an
agreement for firm processing of raw gas produced from the
Company’s condensate rich Pipestone / Elmworth Montney play. The
agreement has an initial term of five years with firm capacity of
20.0 mmcf/d expected to commence in the second quarter of calendar
2019, increasing to 25.0 mmcf/d twelve months after plant start-up
and to 30.0 mmcf/d eighteen months after plant start-up;
- Capital Investment: Blackbird invested $29.2 million during the
three months ended October 31, 2017, drilling 2 gross (1.2 net)
wells, completing 4 gross (2.4 net) wells, recompleting 1 gross
(1.0 net) well and bringing 2 gross (2.0 net) wells on production.
At October 31, 2017, the Company also had the 6-33-71-7W6 drilling
and 2-20-70-6W6 recompletion operations in progress which were
subsequently completed in November;
- Total Assets: $194.6 million at October 31, 2017 compared to
$90.9 million at October 31, 2016, representing a 114%
increase;
- Balance Sheet: Working capital of $21.3 million at October 31,
2017, which included $33.8 million of cash and no bank debt;
and
- Land: During the three months ended October 31, 2017 Blackbird
acquired 8 gross (8 net) sections of additional Montney lands for
cash consideration of $1.4 million, increasing its total Pipestone
/ Elmworth Montney land position to 131 gross (114.9 net) sections
at October 31, 2017.
See below for a summary table containing certain
financial and operational figures:
|
By the Numbers – Q1 2018 |
(CDN$ thousands, except where otherwise noted) |
Three months ended October 31 |
2017 |
|
2016 |
|
% Change |
|
|
|
|
|
|
Financial |
|
|
|
Petroleum and natural gas revenue |
2,582 |
|
15 |
|
17,113 |
|
Funds used in operating activities |
(2,114 |
) |
(1,235 |
) |
71 |
|
Net loss and comprehensive loss |
(1,737 |
) |
(1,059 |
) |
64 |
|
Net loss per share – basic and diluted ($/share) |
(0.00 |
) |
(0.00 |
) |
- |
|
Total assets |
194,587 |
|
90,858 |
|
114 |
|
Working capital |
21,317 |
|
30,064 |
|
(29 |
) |
Capital expenditures |
29,241 |
|
7,350 |
|
298 |
|
|
|
|
|
Operating |
|
|
|
Production |
|
|
|
Condensate (bbls/d) |
328 |
|
- |
|
- |
|
NGLs (bbls/d) |
30 |
|
- |
|
- |
|
Natural gas (mcf/d) |
2,112 |
|
- |
|
- |
|
Non-core (boe/d) |
2 |
|
14 |
|
(86 |
) |
Total (boe/d) |
712 |
|
14 |
|
4,986 |
|
Liquids ratio (%) |
50 |
|
- |
|
- |
|
Condensate gas ratio (bbls/mmcf) |
155 |
|
- |
|
- |
|
Total liquids gas ratio (bbls/mmcf) |
170 |
|
- |
|
- |
|
|
|
|
|
Average Montney realized selling prices |
|
|
|
Condensate ($/bbl) |
60.50 |
|
- |
|
- |
|
NGLs ($/bbl) |
30.26 |
|
- |
|
- |
|
Natural gas ($/mcf) |
3.44 |
|
- |
|
- |
|
|
|
|
|
Netbacks ($/boe) |
|
|
|
Petroleum and natural gas revenue |
39.41 |
|
11.65 |
|
238 |
|
Royalties |
(2.09 |
) |
- |
|
- |
|
Operating expenses |
(10.62 |
) |
(82.30 |
) |
(87 |
) |
Transportation and processing expenses |
(12.33 |
) |
- |
|
- |
|
Operating netback(1) |
14.37 |
|
(70.65 |
) |
120 |
|
|
|
|
|
Pipestone / Elmworth Montney sections of land (net) |
114.9 |
|
87.25 |
|
32 |
|
|
|
|
|
|
|
|
Notes:(1) See the Company’s Q1 2018 financial
statements and related management’s discussion and analysis filed
on SEDAR for further discussion and cautionary statements regarding
the figures above.(2) See “Non-IFRS Measures” below.
Operations Update and
Outlook
Subsequent to October 31, 2017, Blackbird has
continued to execute on its planned drilling and completion
program. The company will continue its momentum into calendar 2018
with production / test results expected from a number of wells
before the end of March, as detailed below. Blackbird expects that
these results will showcase the productivity of the Company’s
resource on the western development block of its Pipestone /
Elmworth land base, as well as delineate the acreage to the north
and east.
Upcoming well results include:
- 02/6-26-70-7W6 Upper Montney Development Well: Completed using
a combination of the Stage Completions Inc. (“Stage”) Generation
Four Sleeve System and plug and perf technology. The well is
currently producing with preliminary production results expected in
early 2018.
- 15-21-70-7W6 Upper Montney Development Well: Recompleted in
late September utilizing plug and perf technology. The well is
currently producing with preliminary production results expected in
early 2018.
- 2-28-70-7W6 Upper Montney Development Well: Completed using the
Stage Generation Four Sleeve System exclusively. The well is
currently producing with preliminary production results expected in
early 2018.
- 2-20-70-6W6 Middle Montney Development Well: Recompleted in
November utilizing plug and perf technology. This well is expected
to confirm the presence of and extend the “Volatile Oil” window
more than 5 km eastward from Blackbird’s previous wells. Test
results from this well are expected in February or March of
2018.
- 1-20-70-7W6 Upper Montney Development Well: Completed in
November using a combination of the Stage Generation Four Sleeve
System and plug and perf technology. Test results from this well
are expected in February or March of 2018.
- 6-33-71-7W6 Upper Montney Delineation Well: Completed in
December using the Stage Generation Four Sleeve System exclusively.
This is a significant well for Blackbird and will delineate
the northern extent of Blackbird's land while also retaining 14
sections of Montney rights. Test results from this well are
expected in February or March of 2018.
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
Karen MintonChief Financial Officer(403)
699-9929 Ext 111kminton@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 discloses certain production
information on a barrels of oil equivalent ("boe") basis with
natural gas converted to barrels of oil equivalent using a
conversion factor of six thousand cubic feet of gas to one barrel
of oil (6:1). Boes may be misleading, particularly if used in
isolation. The 6:1 conversion ratio is based on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead or
at the plant gate. Although the 6:1 conversion ratio is an industry
accepted norm, it is not reflective of price or market value
differentials between product types. Based on current commodity
prices, the value ratio between crude oil and natural gas is
significantly different from the 6:1 energy equivalency ratio.
Accordingly, using a conversion ratio of 6:1 may be misleading as
an indication of value.
Other abbreviations used in the news release
include: “bbl” which mean barrel; “bbls/d” which means barrels per
day; “mcf” which means thousand cubic feet; “mcf/d” which means
thousand cubic feet per day; “boe/d” which means barrel of oil
equivalent per day; “mmcf” which means million cubic feet;
“bbls/mmcf” which means barrels per 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. Forward-looking statements relate to future
performance, events or circumstances, and are based upon internal
assumptions, plans, intentions, expectations and beliefs. All
statements other than statements of current or historical fact
constitute forward-looking statements. Forward-looking statements
are typically, but not always, identified by words such as "will",
"expect", "believe", “anticipate”, “estimate”, "plan", “forecast”,
"potential", “continue” and similar expressions. More particularly
and without limitation, this press release contains forward looking
statements regarding: the initial term, timing and volumes
associated with the gas processing agreement signed in November
2017; Blackbird continuing its momentum into calendar 2018; the
timing production / test results from a number of wells, production
/ test results confirming the productivity of the Company’s
resource on the western development block of its Pipestone /
Elmworth land base, as well as delineating the acreage to the north
and east; and the validation of Blackbird’s northern acreage
through production / test results.
By their nature, forward-looking statements are
based upon certain assumptions and are subject to numerous risks
and uncertainties, many 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, and the ability
to access sufficient capital from internal sources and bank and
equity markets; and also including, without limitation, those risks
and uncertainties discussed under "Risk Factors" in our Annual
Information Form for the year ended July 31, 2017 available on
SEDAR. This list is not exhaustive.
The forward-looking statements contained in this
press release are made as of the date hereof and Blackbird assumes
no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise,
unless required by applicable securities laws. All forward-looking
statements contained in this press release are expressly qualified
by this cautionary statement.
NON-IFRS MEASURES
This press release contains references to
“operating netback”, which is a term commonly used in the oil and
natural gas industry but without any standardized meaning or method
of calculation prescribed by International Financial Reporting
Standards (“IFRS”) or applicable law. Accordingly, the Company’s
determination of operating netback may not be comparable to similar
measures presented by other issuers. This term is used by
management to analyze operating performance on a comparable basis
with prior periods of Blackbird. Blackbird calculates operating
netback as the total production revenues less royalties,
transportation, processing and operating expenses, calculated on a
boe basis. Management considers operating netback to provide a
useful measure for evaluating operational performance at the oil
and gas lease level, as an indicator of field-level profitability
relative to current commodity prices. For more details on
non-IFRS measures, including a reconciliation to IFRS measures,
refer to our management’s discussion and analysis for the three
months ended October 31, 2017 available on SEDAR.
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