Blackbird Energy Inc. Announces Record Second Quarter 2018 Financial and Operating Results
March 26, 2018 - 6:28 PM EDT
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Blackbird Energy Inc. Announces Record Second Quarter 2018 Financial and Operating Results
CALGARY, Alberta, March 26, 2018 (GLOBE NEWSWIRE) -- 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.
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 Braun Chairman, CEO and President (403) 500-5550 gbraun@blackbirdenergyinc.com
Allan Dixon Business Development Manager (403) 699-9929 Ext 103 adixon@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.
