TSX-V: CWV: Crown Point Energy Inc.
(“
Crown Point”, the “
Company” or
“
we”) today announced its operating and financial
results for the three months ended March 31, 2020.
Copies of the Company’s unaudited condensed
interim consolidated financial statements and management’s
discussion and analysis (“MD&A”) filings for
the three months ended March 31, 2020 are being filed with Canadian
securities regulatory authorities and will be made available under
the Company’s profile at www.sedar.com and on the Company’s website
at www.crownpointenergy.com. All dollar figures are
expressed in United States dollars (“USD”) unless otherwise
stated. References to “ARS” are
to Argentina Pesos.
In the following discussion, the three months
ended March 31, 2020 may be referred to as “Q1 2020” and the
comparative three months ended March 31, 2019 may be referred to as
“Q1 2019”.
Q1 2020 SUMMARY
During Q1 2020, the Company:
- Reported net cash used by operating
activities of $0.5 million and funds flow from operating activities
of $0.5 million;
- Earned $4.3 million of oil and
natural gas sales revenue on average daily sales volumes of 1,714
BOE per day, down from $12.0 million of revenue earned on average
daily sales volumes of 3,470 BOE per day in Q1 2019 due to the
disposition of a 16.83% participating interest in the Company's
Tierra del Fuego concessions in April 2019 and delivery
restrictions at the Cruz del Sur terminal;
- Received an average of $43.83 per
bbl for its oil and $2.01 per mcf for natural gas compared to
$54.91 per bbl of oil and $4.05 per mcf of natural gas received in
Q1 2019.
- Reported an operating netback of
$5.75 per BOE, down from $20.76 per BOE in Q1 2019 due to the drop
in both oil and natural gas prices in Argentina combined with
higher delivery expenses charged at the Cruz del Sur terminal and
trucking costs for oil sales to Chile and overall higher per BOE
operating costs due to the decrease in sales volumes;
- Recognized $8.3 million of property
and equipment impairment and $1.7 million of goodwill impairment as
a result of lower forecasted commodity prices. Impairment related
to property and equipment may be reversed in future periods if
there are indicators of reversal such as an improvement in
commodity price forecasts; and
- Reduced the 2020 capital spending
budget by an additional $0.5 million after determining that the San
Martin plant expansion was unnecessary.
Subsequent to Q1 2020, the Company:
- Repaid ARS 8.8 million ($0.13
million) of bank debt and renewed the remaining ARS 35.2 million
($0.54 million) at an interest rate of 30% per annum (reduced from
49% per annum), calculated and payable at maturity on August 12,
2020.
OPERATIONAL UPDATE
Tierra del Fuego Concession ("TDF")
- La Angostura Concession
Oil production has been shut-in since March 24,
2020 due to the September 23, 2019 closure of the offshore loading
facilities at Cruz del Sur for repairs, the March 23, 2020
announcement by Enap, the Chilean state oil company, of the
suspension of all oil deliveries at its terminal located at San
Gregorio, Magallanes Province, Chile due to an outbreak of
COVID-19, and the subsequent closure of the Argentina-Chile border
(which remains closed). The San Martin field will remain shut-in
until the Company is able to access the Enap terminal and/or
maintenance and repair work by YPF at Cruz del Sur have been
completed, provided that the resumption of operations would also
depend on it being economic to do so. Due to the uncertainty and
volatility created by COVID-19, the Company is unable to predict
when international borders will open or when the repair work at
Cruz del Sur will be completed. For an update on operations
conducted on the SM x-1001 well during Q1 2020, see our press
releases issued on April 23, 2020 and March 27, 2020.
Cerro de Los Leones (“CLL”) Exploration
Permit
For an update on operations conducted at CLL
during Q1 2020, see our press release issued on April 23, 2020.
OUTLOOK
The Company’s capital spending for fiscal 2020
is budgeted at $0.9 million in TDF based on expenditures for five
well workovers and other improvements to facilities in TDF.
Investment in TDF has been significantly reduced
and investment in CLL has been postponed due to a sharp decline in
capital investment in Argentina as a consequence of the impact of
the COVID-19 virus on both the Argentina and the global
economy.
ARGENTINA – COVID-19 AND ECONOMIC
SUMMARY
In response to COVID-19, the Government has
closed the country’s borders to non-residents. The mandatory
quarantine period was extended to June 7, 2020 for Buenos Aires and
its outskirts but has been relaxed elsewhere in the country. During
this time, economic activity has slowed substantially and inflation
rates remain high.
COVID-19 continues to have the potential to
further disrupt the Company’s operations, projects and financial
condition through, among other things, the disruption of the local
or global supply chain and transportation services, or the loss of
manpower resulting from quarantines that affect the Company’s
labour pools in local communities or operating sites which may
require the Company to temporarily reduce or shutdown its
operations depending on their extent and severity. The current
situation is dynamic and the ultimate duration and magnitude of the
impact on the economy and the financial effect on the Company is
not known at this time.
On May 18, 2020, the Government signed a decree
to set the price for 34°API Medanito light sweet crude oil at $45
per bbl, establishing a benchmark for the country's other crude
grades such as heavy sweet Escalante. The $45 per bbl price will be
adjusted for each type of crude oil by quality and other inputs
such as loading port and local market factors. The measure, which
is not retroactive and will remain in place until the end of the
year, is subject to quarterly revisions as long as the Brent price
does not exceed $45 per bbl for 10 straight days.
SUMMARY OF FINANCIAL
INFORMATION
(expressed in $, except shares outstanding) |
|
March 312020 |
|
December 312019 |
|
December 312018 |
|
Working capital (deficit) |
|
1,692,977 |
|
1,831,197 |
|
(1,562,992 |
) |
Exploration and evaluation
assets |
|
11,148,166 |
|
10,920,359 |
|
9,032,994 |
|
Property and equipment |
|
21,071,540 |
|
31,151,688 |
|
54,750,958 |
|
Non-current contingent
consideration receivable |
|
– |
|
1,634,740 |
|
– |
|
Total assets |
|
41,099,119 |
|
55,638,052 |
|
85,128,625 |
|
Non-current financial
liabilities |
|
759,409 |
|
3,283,943 |
|
4,744,616 |
|
Share capital |
|
56,456,328 |
|
56,456,328 |
|
131,745,215 |
|
Total
common shares outstanding |
|
72,903,038 |
|
72,903,038 |
|
72,903,038 |
|
(expressed in $, except shares outstanding) |
|
Three months ended |
|
|
March 31 |
|
|
2020 |
|
2019 |
|
Oil and natural gas sales revenue |
|
4,320,239 |
|
12,012,185 |
|
Impairment of property and
equipment and goodwill |
|
9,985,549 |
|
– |
|
(Loss) income before
taxes |
|
(10,811,643 |
) |
3,317,053 |
|
Net (loss) income |
|
(8,676,550 |
) |
2,978,175 |
|
Net (loss) income per share
(1) |
|
(0.12 |
) |
0.04 |
|
Net cash (used by) from
operating activities |
|
(478,934 |
) |
6,050,373 |
|
Net cash per share – operating
activities (1) |
|
(0.01 |
) |
0.08 |
|
Funds flow from operating
activities (2) |
|
489,957 |
|
3,735,080 |
|
Funds flow per share –
operating activities (1)(2) |
|
0.01 |
|
0.05 |
|
Weighted average number of shares |
|
72,903,038 |
|
72,903,038 |
|
(1) All per share figures are based on the
basic weighted average number of shares outstanding in the period.
The effect of options is anti-dilutive. Per share amounts may not
add due to rounding.(2) "Funds flow from operating activities"
and "Funds flow per share – operating activities" are non-IFRS
measures. See "Non-IFRS Measures" in the "Advisory" section of this
press release and in the Company’s March 31, 2020 MD&A for a
reconciliation of these measures to the nearest comparable IFRS
measures.
TDF Sales Volumes
|
|
Three months ended |
|
|
March 31 |
|
|
2020 |
|
2019 |
|
Light oil bbls per day |
|
844 |
|
1,612 |
|
NGL bbls per day |
|
3 |
|
18 |
|
Natural
gas mcf per day |
|
5,202 |
|
11,036 |
|
Total
BOE per day |
|
1,714 |
|
3,470 |
|
TDF Operating Netback
|
|
Three months ended |
|
|
March 31 |
Per BOE |
|
2020 |
|
2019 |
|
Oil and gas revenue ($) |
|
27.70 |
|
38.46 |
|
Export tax ($) |
|
(1.68 |
) |
(2.68 |
) |
Royalties ($) |
|
(4.11 |
) |
(5.65 |
) |
Operating costs ($) |
|
(16.16 |
) |
(9.37 |
) |
Operating netback (1) ($) |
|
5.75 |
|
20.76 |
|
(1) "Operating netback" is a non-IFRS measure.
See "Non-IFRS Measures" in the "Advisory" section of this press
release.
About Crown Point
Crown Point Energy Inc. is an international oil
and gas exploration and development company headquartered in
Calgary, Canada, incorporated in Canada, trading on the TSX Venture
Exchange and operating in South America. Crown Point’s exploration
and development activities are focused in two of the largest
producing basins in Argentina, the Austral basin in the province of
Tierra del Fuego and the Neuquén basin, in the province of Mendoza.
Crown Point has a strategy that focuses on establishing a portfolio
of producing properties, plus production enhancement and
exploration opportunities to provide a basis for future growth.
Advisory
Non-IFRS Measures: Non-IFRS measures do not have
any standardized meanings prescribed by IFRS and may not be
comparable with the calculation of similar measures used by other
entities. Non-IFRS measures should not be considered alternatives
to, or more meaningful than, measures determined in accordance with
IFRS as indicators of the Company’s performance.
This press release contains the terms “funds
flow from (used by) operating activities” and "funds flow per share
– operating activities" which should not be considered alternatives
to, or more meaningful than, net cash (used by) from operating
activities and net cash per share – operating activities as
determined in accordance with IFRS as an indicator of the Company’s
performance. Management uses funds flow from (used by) operating
activities to analyze operating performance and considers funds
flow from (used by) operating activities to be a key measure as it
demonstrates the Company’s ability to generate cash necessary to
fund future capital investment. Funds flow per share – operating
activities is calculated using the basic and diluted weighted
average number of shares for the period consistent with the
calculations of earnings per share. For a reconciliation of funds
flow from (used by) operating activities to net cash (used by) from
operating activities, which is the most directly comparable measure
calculated in accordance with IFRS, see the Company's MD&A.
This press release also contains other industry
benchmarks and terms, including “operating netbacks” (calculated on
a per unit basis as oil, natural gas and NGL revenues less
royalties, export tax and operating costs), which is a non-IFRS
measure. See "TDF Operating Netback" for the calculation of
operating netback. Management believes this measure is a useful
supplemental measure of the Company’s profitability relative to
commodity prices. Readers are cautioned, however, that operating
netbacks should not be construed as an alternative to other terms
such as net (loss) income as determined in accordance with IFRS as
measures of performance. Crown Point’s method of calculating this
measure may differ from other companies, and accordingly, may not
be comparable to similar measures used by other companies.
Abbreviations and BOE Presentation: "API" means
American Petroleum Institute gravity, being an indication of the
specific gravity of crude oil measured on the API gravity scale;
"bbl" means barrel; "bbls" means barrels; "BOE" means barrels of
oil equivalent; mcf” means thousand cubic feet; "NGL" means natural
gas liquids; "Q1" means the three months ended March 31; and "YPF"
means Yacimientos Petrolíferos Fiscales S.A. All BOE conversions in
this press release are derived by converting natural gas to oil in
the ratio of six mcf of gas to one bbl of oil. BOE may be
misleading, particularly if used in isolation. A BOE conversion
ratio of six mcf of gas to one bbl of oil (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. Given that the value ratio based on the price of crude
oil as compared to natural gas in Argentina from time to time may
be different from the energy equivalency conversion ratio of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Forward-looking Information: This document
contains forward-looking information. This information relates to
future events and the Company’s future performance. All information
and statements contained herein that are not clearly historical in
nature constitute forward-looking information, and the words “may”,
“will”, “should”, “could”, “expect”, “plan”, “intend”,
“anticipate”, “believe”, “estimate”, “propose”, “predict”,
“potential”, “continue”, “aim”, "budget" or the negative of these
terms or other comparable terminology are generally intended to
identify forward-looking information. Such information represents
the Company’s internal projections, estimates, expectations,
beliefs, plans, objectives, assumptions, intentions or statements
about future events or performance. This information involves known
or unknown risks, uncertainties and other factors that may cause
actual results or events to differ materially from those
anticipated in such forward-looking information. In addition,
this document may contain forward-looking information attributed to
third party industry sources. Crown Point believes that the
expectations reflected in this forward-looking information are
reasonable; however, undue reliance should not be placed on this
forward-looking information, as there can be no assurance that the
plans, intentions or expectations upon which they are based will
occur. This press release contains forward-looking information
concerning, among other things, the following: under "Highlights",
the possibility that impairments related to property and equipment
may be reversed in future periods if there are indicators of
reversal such as an improvement in commodity price forecasts and
the maturity date of our bank debt; under "Operational Update –
Tierra del Fuego Concession", the conditions that would need to
change before production resumes from the San Martin field; under
"Outlook", our estimated capital spending for fiscal 2020 and the
operational activities that we expect to complete during fiscal
2020; under "Argentina – COVID-19 and Economic Summary", COVID-19's
potential to further disrupt our operations, projects and financial
condition and the ways in which that might occur and the expected
terms and duration of the Argentine government's recent decree
establishing price controls for crude oil in Argentina; under
"About Crown Point", all elements of the Company’s business
strategy and focus. The reader is cautioned that such information,
although considered reasonable by the Company, may prove to be
incorrect. Actual results achieved during the forecast period will
vary from the information provided in this document as a result of
numerous known and unknown risks and uncertainties and other
factors. A number of risks and other factors could cause actual
results to differ materially from those expressed in the
forward-looking information contained in this document including,
but not limited to, the following: the risks and other factors
described under “Business Risks and Uncertainties” in our MD&A
for the three months ended March 31, 2020 and under “Risk Factors”
in the Company’s most recently filed Annual Information Form, which
is available for viewing on SEDAR at www.sedar.com. In addition,
note that information relating to reserves and resources is deemed
to be forward-looking information, as it involves the implied
assessment, based on certain estimates and assumptions that the
reserves and resources described can be economically produced in
the future. With respect to forward-looking information contained
in this document, the Company has made assumptions regarding, among
other things: the impact (and the duration thereof) that the
COVID-19 (coronavirus) pandemic will have on (i) the demand for
crude oil, NGLs and natural gas, (ii) our supply chain, including
our ability to obtain the equipment and services we require, and
(iii) our ability to produce, transport and/or sell our crude oil,
NGLs and natural gas; the ability of OPEC+ nations and other major
producers of crude oil to reduce crude oil production and thereby
arrest and reverse the steep decline in world crude oil prices;
when the Company will be able to resume shipments of crude oil via
the offshore loading facilities at Cruz del Sur and via truck to
Enap and as a result restart production at the San Martin field;
the impact of inflation rates in Argentina and the devaluation of
the Argentine peso against the USD on the Company; the impact of
increasing competition; the general stability of the economic and
political environment in which the Company operates, including
operating under a consistent regulatory and legal framework in
Argentina; future oil, natural gas and NGL prices (including the
effects of governmental incentive programs thereon such as the
recent decree establishing price controls for crude oil in
Argentina); the timely receipt of any required regulatory
approvals; the ability of the Company to obtain qualified staff,
equipment and services in a timely and cost efficient manner;
drilling results; the costs of obtaining equipment and personnel to
complete the Company’s capital expenditure program; the ability of
the operator of the projects which the Company has an interest in
to operate the field in a safe, efficient and effective manner; the
continued suspension of the Company's quarterly dividend for the
foreseeable future; the ability of the Company to obtain financing
on acceptable terms when and if needed; the ability of the Company
to service its debt repayments when required; field production
rates and decline rates; the ability to replace and expand oil and
natural gas reserves through acquisition, development and
exploration activities; the timing and costs of pipeline, storage
and facility construction and expansion and the ability of the
Company to secure adequate product transportation; currency,
exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in Argentina; and the
ability of the Company to successfully market its oil and natural
gas products. Management of Crown Point has included the above
summary of assumptions and risks related to forward-looking
information included in this document in order to provide investors
with a more complete perspective on the Company’s future
operations. Readers are cautioned that this information may not be
appropriate for other purposes. Readers are cautioned that the
foregoing lists of factors are not exhaustive. The forward-looking
information contained in this document are expressly qualified by
this cautionary statement. The forward-looking information
contained herein is made as of the date of this document and the
Company disclaims any intent or obligation to update publicly any
such forward-looking information, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable Canadian securities laws.
Neither 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 news release.
For inquiries please contact:
Brian Moss
President & CEO
Ph: (403) 232-1150
Crown Point Energy Inc.
bmoss@crownpointenergy.com
Marisa Tormakh
Vice-President, Finance & CFO
Ph: (403) 232-1150
Crown Point Energy Inc.
mtormakh@crownpointenergy.com
Crown Point Energy (TSXV:CWV)
Historical Stock Chart
From Jul 2024 to Aug 2024
Crown Point Energy (TSXV:CWV)
Historical Stock Chart
From Aug 2023 to Aug 2024