(TSX-V:BBI) Blackbird Energy Inc. (“
Blackbird” or
the “
Company”) is pleased to announce record
financial and operational results for the quarter ended April 30,
2018. Blackbird’s unaudited condensed consolidated interim
financial statements and related management’s discussion and
analysis for the quarter ended April 30, 2018 are available on
SEDAR at www.sedar.com and are also posted on Blackbird’s website
at www.blackbirdenergyinc.com.
“This was another exceptional quarter for
Blackbird. We achieved record quarterly revenue of $6.4 million on
the back of strong condensate pricing and a corporate liquids
weighting of 56%. Our development north of the Wapiti River is
expected to commence in August. This next leg of development will
allow Blackbird to graduate to an intermediate producer, and will
continue to unlock the value of our significant condensate rich
resource in the Pipestone / Elmworth Montney Corridor,” said Garth
Braun, President, CEO and Chairman of Blackbird.
Highlights
- Record Revenue: Blackbird is pleased to report
a record $6.4 million ($49.81/boe) of petroleum and natural gas
sales for the three months ended April 30, 2018. These results were
achieved with the Company producing for approximately 70% of the
quarter due to third-party natural gas processing shut-downs.
- Corporate Production: During the three months
ended April 30, 2018, the Company achieved corporate production of
2,081 boe/d (56% liquids) for the 62 days it was on production.
Total production averaged 1,447 boe/d on a calendar day basis for
the three months, with volumes being impacted by approximately 27
days of unscheduled third-party downtime.
- Operating and Corporate Netback: Blackbird’s
operating and corporate netback was $27.28/boe and $18.80/boe,
respectively, for the third quarter of 2018, which Management
believes compares favorably with industry leaders in the
basin.
- Adjusted Funds Flow: The Company generated
$2.4 million of adjusted funds flow during the three months ended
April 30, 2018.
- Balance Sheet Strength Maintained: Blackbird
remains well capitalized, and between its credit facility capacity
(which was expanded during the quarter from $1.0 million to $20.0
million) and working capital surplus the Company had approximately
$24.6 million of available funding at April 30, 2018.
See below for a summary table containing certain
financial and operational figures:
By the Numbers – Q3 2018 |
(CDN$ thousands, except where otherwise noted) |
Three months ended April 30 |
Nine months ended April 30 |
2018 |
|
2017 |
|
% Change |
|
2018 |
|
2017 |
|
% Change |
|
Financial(1) |
Petroleum and natural gas sales |
6,414 |
|
3,312 |
|
94 |
|
15,032 |
|
3,437 |
|
337 |
|
Cash provided by (used in) operating activities |
2,811 |
|
(1,122 |
) |
351 |
|
4,233 |
|
(4,084 |
) |
204 |
|
Net loss and comprehensive loss |
(47 |
) |
(1,500 |
) |
(97 |
) |
(3,489 |
) |
(7,436 |
) |
(53 |
) |
Net loss per share – basic and diluted ($/share) |
(0.00 |
) |
(0.00 |
) |
- |
|
(0.00 |
) |
(0.01 |
) |
(100 |
) |
Working capital |
5,336 |
|
71,823 |
|
(93 |
) |
5,336 |
|
71,823 |
|
(93 |
) |
Available funding(2) |
24,618 |
|
72,123 |
|
(66 |
) |
24,618 |
|
72,123 |
|
(66 |
) |
Capital expenditures |
4,786 |
|
16,259 |
|
(71 |
) |
51,518 |
|
54,439 |
|
(5 |
) |
Operating(1) |
Production |
|
|
|
|
|
|
Condensate & oil (bbls/d) |
753 |
|
384 |
|
96 |
|
586 |
|
130 |
|
351 |
|
NGLs (bbls/d) |
58 |
|
37 |
|
57 |
|
45 |
|
12 |
|
275 |
|
Natural gas (mcf/d) |
3,802 |
|
2,663 |
|
43 |
|
3,046 |
|
882 |
|
245 |
|
Non-core (boe/d) |
2 |
|
3 |
|
(33 |
) |
2 |
|
8 |
|
(75 |
) |
Total (boe/d) |
1,447 |
|
868 |
|
67 |
|
1,141 |
|
297 |
|
284 |
|
Liquids ratio (%) |
56 |
|
49 |
|
14 |
|
55 |
|
48 |
|
15 |
|
Condensate & oil gas ratio (bbls/mmcf) |
198 |
|
144 |
|
38 |
|
192 |
|
147 |
|
31 |
|
Total liquids gas ratio (bbls/mmcf) |
213 |
|
158 |
|
35 |
|
207 |
|
161 |
|
29 |
|
|
|
|
|
|
|
|
Average Montney realized selling prices |
|
|
|
|
|
|
Condensate & oil ($/bbl) |
76.77 |
|
62.35 |
|
23 |
|
72.02 |
|
62.47 |
|
15 |
|
NGLs ($/bbl) |
26.63 |
|
27.81 |
|
(4 |
) |
29.39 |
|
27.83 |
|
6 |
|
Natural gas ($/mcf) |
3.33 |
|
4.57 |
|
(27 |
) |
3.77 |
|
4.57 |
|
(18 |
) |
|
|
|
|
|
|
|
Netbacks ($/boe) |
|
|
|
|
|
|
Petroleum and natural gas sales |
49.81 |
|
42.87 |
|
16 |
|
48.27 |
|
42.45 |
|
14 |
|
Royalties |
(3.28 |
) |
(2.93 |
) |
12 |
|
(2.97 |
) |
(2.88 |
) |
3 |
|
Operating expenses |
(6.96 |
) |
(10.34 |
) |
(33 |
) |
(7.36 |
) |
(11.84 |
) |
(38 |
) |
Transportation and processing expenses |
(12.29 |
) |
(14.75 |
) |
(17 |
) |
(12.83 |
) |
(16.21 |
) |
(21 |
) |
Operating netback(2) |
27.28 |
|
14.85 |
|
84 |
|
25.11 |
|
11.52 |
|
118 |
|
General and administrative expenses |
(8.24 |
) |
(15.30 |
) |
(46 |
) |
(9.66 |
) |
(35.86 |
) |
(73 |
) |
Financing costs |
(0.38 |
) |
(0.03 |
) |
1,167 |
|
(0.16 |
) |
(0.15 |
) |
7 |
|
Interest income |
0.14 |
|
1.54 |
|
(91 |
) |
0.64 |
|
3.35 |
|
(81 |
) |
Corporate netback(2) |
18.80 |
|
1.06 |
|
1,674 |
|
15.93 |
|
(21.14 |
) |
175 |
|
Notes:(1) See the Company’s Q3 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.
Q3 2018 Summary
- Record Revenue: Blackbird achieved record
revenue from its Pipestone / Elmworth project during the third
quarter of 2018. The Company reported $6.4 million of petroleum and
natural gas sales during the three months ended April 30, 2018.
These results were achieved with the Company producing for
approximately 70% of the quarter due to third-party natural gas
processing shut-downs;
- Corporate Production: While on production
during the quarter, Blackbird produced 5.5 mmcf/d of natural gas,
1,081 bbls/d of condensate and oil and 83 bbls/d of NGLs for total
production of 2,081 boe/d from its Pipestone / Elmworth project.
The Company produced for approximately 62 days during the third
quarter of 2018 compared to 89 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 April 30, 2018, the Company achieved an
average total production rate of 1,447 boe/d (including 2 boe/d of
non-core production) comprised of 56% liquids;
- Q3 2018 Condensate & Oil Gas Ratio: 198
bbls/mmcf during the three months ended April 30, 2018;
- Q3 2018 Total Liquids Gas Ratio: 213 bbls/mmcf
during the three months ended April 30, 2018;
- Operating Netback and Corporate Netback:
Blackbird’s operating and corporate netback was $27.28/boe and
$18.80/boe, respectively, for the third quarter of 2018. Improved
commodity pricing combined with a larger production base led to
increased netbacks over comparative periods;
- Adjusted Funds Flow: The Company generated
$2.4 million of adjusted funds flow during the three months ended
April 30, 2018 as a result of the increased production rates;
- Capital Investment: Blackbird invested $4.8
million during the three months ended April 30, 2018 on production
testing, furthering infrastructure development and bringing 5 gross
(1.8 net) wells on production. During the third quarter of 2018
Blackbird incurred production testing costs related to its
2-20-70-6W6 Middle Montney and 3-27-71-7W6 Upper Montney
delineation wells, which were both completed in previous quarters.
Following the production testing operations at its 11-9 pad site,
which were completed by mid-February 2018, Blackbird moved the
production testing equipment north of the Wapiti River to its 6-33
pad to flow the 3-27-71-7W6 well. The Company also progressed its
infrastructure development during the quarter with the tie-in of
its 100% owned and operated 1-20-70-7W6 Upper Montney well in late
February 2018 in addition to its non-operated 3-17-70-5W6 Middle
Montney, 9-20-70-5W6 Middle Montney, 1-06-70-5W6 Middle Montney and
13-13-70-6W6 Middle Montney wells; and
- Working Capital Surplus and Available Funding:
At April 30, 2018 the Company had positive working capital of
approximately $5.3 million, which included $5.6 million of cash and
no bank debt. The positive working capital and Blackbird’s credit
facility capacity provided the Company with $24.6 million of future
available funding at April 30, 2018. During the third quarter of
2018 Blackbird expanded its existing 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.
The available funding and adjusted funds flow will be utilized by
Blackbird to fund its future development plans north of the Wapiti
River.
Outlook
Blackbird is highly encouraged by its
early-stage results to date from its Pipestone / Elmworth lands.
With a liquids weighting of 56% achieved from its production this
past quarter, the Company is well positioned to take advantage of
condensate prices in Alberta resulting from the supply / demand
imbalance that currently exists, and is expected to continue.
Global oil prices have also seen a recovery from the lows
experienced in 2016 due to the rebalancing efforts of OPEC and
non-OPEC producers combined with increased global demand. The
Company continued delivering its natural gas to Chicago at
favourable prices relative to AECO during the quarter. With natural
gas prices in western Canada continuing to falter due to the lack
of sufficient take away capacity, Blackbird remains focused on
diversifying its transportation for future and long-term production
so it can target markets with higher returns and create value from
its gas production.
With a strong test result from the Company’s
3-27-71-7W6 Upper Montney delineation well to the north of the
Wapiti River management is confident in the long-term development
potential of its northern acreage. Blackbird has continued to
progress its developments plans for north of the Wapiti River with
the acquisition of surface land sites, surveying and well
licensing. Blackbird anticipates that it will begin its drilling
program in August 2018. The Company will provide additional details
as the program is finalized in the coming months. The Company has
minimal capital expenditures budgeted for the fourth quarter of
2018.
Blackbird estimates that its exit production for
fiscal 2018 will approximate current year to date levels. From May
1, 2018 to the date of this news release, the Company has produced
for approximately 48 days. There is currently a planned outage at
the Company’s third-party gas processing plant scheduled for the
beginning of July 2018 which is expected to cause a service
disruption of approximately 14 days. The timing and / or length of
this planned outage may change and Blackbird may experience further
production interruptions due to unexpected downtimes.
For more information, please view our 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: Blackbird being well positioned to take
advantage of condensate pricing in Alberta, the supply / demand
imbalance that exists in Alberta continuing into the future, the
Company diversifying its transportation and being able to utilize
higher return markets for its natural gas production in the future
and in the long-term, projected exit production rates for fiscal
2018, budgeted capital expenditures for the fourth quarter of
fiscal 2018, the Company’s planned development program north of the
Wapiti River, the potential productivity of Blackbird’s northern
Pipestone / Elmworth Montney lands, anticipated timing for
commencement of Blackbird’s drilling program in August 2018, the
utilization of available funding and adjusted funds flow to fund
the Company’s future development plans north of the Wapiti River,
the timing and duration of the planned outage, scheduled for the
beginning of July 2018 and expected to last approximately 14 days,
at Blackbird’s third-party gas processing plant, Blackbird
graduating to an intermediate producer and the Company continuing
to unlock value from its Pipestone / Elmworth project.
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 adjusted funds flow, the timing, allocation and
amount of capital expenditures and the results therefrom,
anticipated reserves and the imprecision of reserves 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”, “corporate netback”, “adjusted funds flow” 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.
“Operating netback” equals the total of
petroleum and natural gas sales less royalties, operating expenses
and transportation and processing expenses calculated on a per boe
basis. Operating netback is utilized by Blackbird to analyze the
performance of its oil and natural gas assets at the field-level by
isolating the impact of changes in production volumes.
“Corporate netback” is calculated as the
operating netback further adjusted for corporate overhead by
deducting G&A expenses and financing costs and adding back
interest income earned on a per boe basis to determine overall
corporate performance.
“Adjusted funds flow” is defined as cash
provided by (used in) operating activities adjusted for changes in
non-cash working capital. Management of Blackbird considers
adjusted funds flow to be a useful supplemental cash flow measure
for assessing the Company’s ability to generate cash necessary to
finance operating activities and capital expenditures on a
continuing basis by eliminating non-cash charges. Adjusted funds
flow as presented does not and is not intended to represent, and
should not be considered an alternative to or more meaningful than,
cash provided by (used in) operating activities or other measures
of cash flow calculated in accordance with IFRS. Readers should
refer to Blackbird’s Q3 2018 management’s discussion and analysis
filed on SEDAR for a reconciliation of adjusted funds flow to cash
provided by (used in) operating activities, the most comparable
measure calculated in accordance with IFRS.
“Available funding” is calculated as the
Company’s working capital plus the undrawn capacity of its
operating loan facility. Working capital is comprised of current
assets less current liabilities. The available funding measure
allows management and other users to evaluate Blackbird’s
short-term liquidity and ability to fund future capital
expenditures.
For more details on non-IFRS measures, refer to
our management’s discussion and analysis for the three and nine
months ended April 30, 2018 available on SEDAR.
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