Blackbird Energy Inc. (TSX-V:BBI)
(“
Blackbird” or the “
Company”) is
pleased to announce record financial and operational results for
the quarter ended January 31, 2018. Blackbird’s unaudited condensed
consolidated interim financial statements and related management’s
discussion and analysis for the quarter ended January 31, 2018 are
available on SEDAR at www.sedar.com and are also posted on
Blackbird’s website at www.blackbirdenergyinc.com.
Highlights
- Record Corporate Production: Blackbird is
pleased to announce that for the three months ended January 31,
2018, the Company achieved record corporate production of 2,082
boe/d (57% liquids) for the 55 days it was on production. Total
production averaged 1,273 boe/d on a calendar day basis for the
three months, with volumes being impacted by approximately 37 days
of unscheduled third party downtime.
- Record Revenue, Operating Netback and Funds from
Operations: Blackbird reported a record $6.0 million
($51.53/boe) of petroleum and natural gas revenue, $3.4 million
($28.75/boe) of operating netback and $2.4 million ($20.51/boe) of
funds from operations during the three months ended January 31,
2018. These results were achieved with the Company producing for
approximately two-thirds of the quarter due to third party natural
gas processing shut-downs. Management of the Company is very
pleased with the operating netback per boe and how it compares with
industry leaders.
- Balance Sheet Strength Maintained: Blackbird
remains well capitalized, and between its current credit facility
and working capital surplus the Company has approximately $27.0
million of available funding in addition to its positive operating
cash flow.
- Advancing Northern Development Program:
Blackbird continues to advance its development plans, and has
successfully acquired 4 pad sites for near-term development and
licensed 11 further wells north of the Wapiti River and to the west
of Grande Prairie.
See below for a summary table containing certain
financial and operational figures:
By the Numbers – Q2 2018 |
(CDN$ thousands, except where otherwise noted) |
Three months ended January 31 |
Six months ended January 31 |
2018 |
|
2017 |
|
% Change |
2018 |
|
2017 |
|
% Change |
|
Financial(1) |
Petroleum and natural gas revenue |
6,036 |
|
110 |
|
5,387 |
|
8,618 |
|
125 |
|
6,794 |
|
Cash provided by (used in) operating activities |
3,536 |
|
(1,727 |
) |
305 |
|
1,422 |
|
(2,962 |
) |
148 |
|
Net loss and comprehensive loss |
(1,705 |
) |
(4,877 |
) |
(65 |
) |
(3,442 |
) |
(5,936 |
) |
(42 |
) |
Net loss per share – basic and diluted ($/share) |
(0.00 |
) |
(0.01 |
) |
(100 |
) |
(0.00 |
) |
(0.01 |
) |
(100 |
) |
Total assets |
192,184 |
|
110,215 |
|
74 |
|
192,184 |
|
110,215 |
|
74 |
|
Working capital |
6,969 |
|
2,262 |
|
208 |
|
6,969 |
|
2,262 |
|
208 |
|
Capital expenditures |
17,491 |
|
30,830 |
|
(43 |
) |
46,732 |
|
38,180 |
|
22 |
|
|
Operating(1) |
Production |
|
|
|
|
|
|
Condensate & oil (bbls/d) |
682 |
|
14 |
|
4,771 |
|
505 |
|
7 |
|
7,114 |
|
NGLs (bbls/d) |
49 |
|
1 |
|
4,800 |
|
39 |
|
- |
|
100 |
|
Natural gas (mcf/d) |
3,248 |
|
42 |
|
7,633 |
|
2,680 |
|
21 |
|
12,662 |
|
Non-core (boe/d) |
1 |
|
6 |
|
(83 |
) |
1 |
|
10 |
|
(90 |
) |
Total (boe/d) |
1,273 |
|
28 |
|
4,446 |
|
992 |
|
21 |
|
4,624 |
|
Liquids ratio (%) |
57 |
|
54 |
|
6 |
|
55 |
|
33 |
|
67 |
|
Condensate gas ratio (bbls/mmcf) |
210 |
|
333 |
|
(36 |
) |
188 |
|
333 |
|
(43 |
) |
Total liquids gas ratio (bbls/mmcf) |
225 |
|
357 |
|
(36 |
) |
203 |
|
333 |
|
(39 |
) |
|
|
|
|
|
|
|
Average Montney realized selling prices |
|
|
|
|
|
|
Condensate & oil ($/bbl) |
72.50 |
|
65.80 |
|
10 |
|
68.60 |
|
65.80 |
|
4 |
|
NGLs ($/bbl) |
31.72 |
|
29.35 |
|
8 |
|
31.63 |
|
29.35 |
|
8 |
|
Natural gas ($/mcf) |
4.49 |
|
4.23 |
|
6 |
|
4.08 |
|
4.23 |
|
(3 |
) |
|
|
|
|
|
|
|
Netbacks ($/boe) |
|
|
|
|
|
|
Petroleum and natural gas revenue |
51.53 |
|
44.33 |
|
16 |
|
47.18 |
|
33.63 |
|
40 |
|
Royalties |
(3.12 |
) |
(2.61 |
) |
19 |
|
(2.75 |
) |
(1.75 |
) |
57 |
|
Operating expenses |
(5.97 |
) |
(21.76 |
) |
(73 |
) |
(7.64 |
) |
(43.04 |
) |
(83 |
) |
Transportation and processing expenses |
(13.69 |
) |
(69.72 |
) |
(80 |
) |
(13.20 |
) |
(46.54 |
) |
(71 |
) |
Operating netback(2) |
28.75 |
|
(49.76 |
) |
158 |
|
23.59 |
|
(57.70 |
) |
140 |
|
|
|
|
|
|
|
|
Pipestone / Elmworth Montney sections of land (net) |
114.5 |
|
94.0 |
|
21 |
|
114.5 |
|
94.0 |
|
21 |
|
Notes:(1) See the Company’s Q2 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.
Q2 2018 Summary
- Record Production: While on production during
the quarter, Blackbird produced 5.4 mmcf/d of natural gas, 1,101
bbls/d of condensate and 81 bbls/d of NGLs for total production of
2,082 boe/d from its Pipestone / Elmworth project. The Company
produced for approximately 55 days during the second quarter of
2018 compared to 92 total calendar days in the quarter. Improved
run times at Blackbird’s third party natural gas processing
facility during the quarter contributed to more consistent
production rates and stronger operating results. During the three
months ended January 31, 2018, the Company achieved an average
total production rate of 1,273 boe/d (including 1 boe/d of non-core
production) comprised of 57% liquids;
- Q2 2018 Condensate Gas Ratio: 210 bbls/mmcf
during the three months ended January 31, 2018;
- Q2 2018 Total Liquids Gas Ratio: 225 bbls/mmcf
during the three months ended January 31, 2018;
- Record Revenue and Operating Netback:
Blackbird achieved record revenue and operating netback from its
Pipestone / Elmworth project during the second quarter of 2018. The
Company reported $6.0 million of petroleum and natural gas revenue
and $3.4 million of operating netback during the three months ended
January 31, 2018. These results were achieved with the Company
producing for approximately two-thirds of the quarter due to third
party natural gas processing shut-downs;
- Record Funds from Operations: The Company
generated $2.4 million of funds from operations during the three
months ended January 31, 2018;
- Capital Investment: Blackbird invested $17.5
million during the three months ended January 31, 2018, drilling 1
gross (1.0 net) well, completing 2 gross (2.0 net) wells,
recompleting 1 gross (1.0 net) well and bringing 1 gross (1.0 net)
well on production. The Company incurred higher drilling and
completions capital costs during the period due to a number of
factors including: recompleting the 2-20-70-6W6 Middle Montney well
utilizing high-intensity Plug and Perf technology, step out
drilling and completion operations for exploration wells and
production testing costs associated with wells completed. Blackbird
expects to continue to reduce its drilling and completions costs in
the future as it moves towards pad site development north of the
Wapiti River, normalizes completions by deploying the STAGE System
in its wells and applies further innovation in its operations;
- Land: During the three months ended January
31, 2018, the Company acquired 3 gross (2.0 net) additional
sections of undeveloped Pipestone / Elmworth Montney land for cash
consideration of $0.2 million; and
- Available Funding and Working Capital Surplus:
Blackbird remains well capitalized, and between its current credit
facility and working capital surplus has approximately $27.0
million of available funding in addition to its positive operating
cash flow. As at January 31, 2018 the Company had positive working
capital of approximately $7.0 million, which included $15.7 million
of cash and no bank debt. Subsequent to January 31, 2018, Blackbird
expanded its existing undrawn operating loan facility with ATB
Financial from $1.0 million to $20.0 million. The terms of the
facility are unchanged, and Blackbird may, at its option, elect to
submit an updated engineering report in advance of its required
annual review for the purposes of a borrowing base redetermination.
ATB Financial is a premier lender and the largest Alberta-based
financial institution. The companies’ core values are very
synergistic and Blackbird is pleased to have been able to expand
its working relationship with this exceptional company.
Outlook
Subsequent to January 31, 2018, Blackbird
completed production testing on its 3-27-71-7W6 Upper Montney
delineation well. The 3-27-71-7W6 is the Company’s first operated
delineation well north of the Wapiti River and is approximately 14
kilometers north of Blackbird’s previous operated development
drilling.
The short-term test results from the Company’s
3-27-71-7W6 well were very encouraging as it exhibited both natural
gas rates and casing pressures that exceeded management’s
expectations. Details from the production test results can be found
in the Company’s press release dated March 13, 2018. Based on
internal productivity forecasts, Blackbird now anticipates it will
be able to meet its initial 20.0 mmcf/d commitment at the Tidewater
Midstream and Infrastructure Ltd. (“Tidewater”)
proposed deep cut sour gas processing facility, located near
Wembley, Alberta, through the drilling, completion and tie-in of 5
gross (5.0 net) additional wells north of the Wapiti River. This
compares to previous internal estimates for up to 10 gross (10.0
net) wells being required to meet the initial gas processing
commitments associated with the Tidewater agreement, which was
entered in November, 2017.
With the successful test result from the
3-27-71-7W6 Upper Montney well proving the productivity of
Blackbird’s northern lands, the Company is ready to move forward
with its development program north of the Wapiti River. The Company
has already secured a compressor site and has made significant
progress toward obtaining authorization to commence surveying right
of ways for future pipelines. Blackbird has successfully acquired 4
pad sites for near-term development, and has identified, mapped and
surveyed an additional 6 pad sites as a part of its ongoing
development planning. The Company has licensed 11 additional wells
north of the Wapiti River. Further licenses are planned in the near
term. Blackbird expects to commence its drilling program in the
summer of 2018.
The expansion of the Company’s operating loan
facility to $20.0 million is a key step for Blackbird in moving
towards this next leg of development. The undrawn loan facility
combined with Blackbird’s working capital surplus at January 31,
2018 of $7.0 million provides the Company with approximately $27.0
million of future available funding in addition to its positive
operating cash flow. The Company generated $3.4 million of
operating netback and $2.4 million of funds from operations during
the three months ended January 31, 2018. These results were
achieved with the Company producing for approximately two-thirds of
the quarter due to third party natural gas processing shut-downs.
Blackbird expects to continue its conservative approach to debt,
and is currently evaluating a number of non-dilutive options for
additional capital liquidity to complement its increased credit
facility and prepare for future development.
Appointment of Travis Belak as
Controller
Blackbird is pleased to announce the appointment
of Travis Belak to the position of Controller. Prior to his
appointment as Controller, Mr. Belak held the position of Senior
Financial Accountant with the Company.
Mr. Belak is a Chartered Professional Accountant
with over eight years of broad finance experience in financial
reporting, internal controls, taxation and audit. Mr. Belak began
his career with an international big four public accounting firm
and has since held positions of increasing responsibility with
Canadian Natural Resources Limited and Blackbird.
“I am very pleased to promote Travis to the
position of Controller. He has been a long-standing member of the
Blackbird team and has been a critical component of the finance
team during Blackbird’s transition from an early-stage exploration
company to the producer it has become today. I look forward to
working with Travis as Blackbird continues to develop our asset and
convey results to our shareholders”, says Garth Braun, President
and CEO.
For more information, please view our updated
Corporate Presentation at www.blackbirdenergyinc.com.
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 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 press 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 press 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 Company’s planned development program
north of the Wapiti River and timing for commencement of related
drilling activities, the potential productivity of Blackbird’s
northern Pipestone / Elmworth lands, continuation of the Company’s
conservative approach to debt levels, prospective options for
additional capital liquidity, internal estimates as to the number
of wells needed to meet the Company’s initial 20.0 mmcf/d
commitment at the proposed Tidewater facility, the proposed
facility itself and the associated commitments, anticipated timing
for commencement of Blackbird’s northern development program, and
reduction of drilling and completions costs in the future through
efficiencies of pad site development north of the Wapiti River,
normalized completions utilizing the STAGE System and application
of further innovation in its operations.
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 “funds
from operations”, “operating netback” and “available funding” which
are terms 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
these metrics may not be comparable to similar measures presented
by other issuers. Management believes that funds from
operations, operating netback and available funding are relevant
indicators of Blackbird's ability to fund future capital
expenditures and its financial performance. The Company
calculates funds from operations based on cash flow from operating
activities determined under IFRS before changes in non-cash working
capital. Management considers funds from operations to be a useful
supplemental measure for assessing Blackbird’s operational
performance on a continuing basis by eliminating non-cash charges,
and utilizes the measure to assess the Company's ability to
generate the cash necessary to finance operating activities and
capital expenditures. Blackbird calculates operating netback
as the total production revenues less royalties, transportation,
processing and operating expenses, calculated on a boe basis.
Operating netback is used by management to analyze operating
performance on a comparable basis with prior periods of Blackbird.
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. Available funding is calculated as the
Company’s working capital plus the undrawn capacity of its
operating loan facility. For more details on non-IFRS measures,
including a reconciliation of funds from operations to IFRS
measures, refer to our management’s discussion and analysis for the
three and six months ended January 31, 2018 available on SEDAR.
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