from ROK Resources, Inc. (isin : CA77544C1041)
ROK Resources Files Financial Results and Management Discussion & Analysis for the Second Quarter of 2024 and Provides Operations Update
NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE OR FOR DISSEMINATION IN THE UNITED STATES
REGINA, SK / ACCESSWIRE / August 21, 2024 / ROK Resources Inc. (" ROK " or the " Company ") (TSXV:ROK)(OTCQB:ROKRF) has filed its interim Financial Results and Management Discussion & Analysis for the six months ended June 30, 2024.
The Company executed on its previously announced post spring-break up drilling program in late Q2 2024, utilizing Funds Flow of $5.0 million towards the drilling of 4 gross (3.44 net) wells in Southeast Saskatchewan. The Company purposefully utilized Q1 2024 to deliver on: (i) debt reduction, (ii) improvement of operational efficiencies, (iii) strategic well optimizations, and (iv) advancement of the lithium project, and began its Southeast Saskatchewan development program in the second quarter.
The Company remains well positioned to continue its 2024 drilling program through year-end, with the flexibility to allocate capital across its light oil prospects in Saskatchewan. Despite operational delays due to abnormally wet weather in Q2 2024, the Company's 2024 guidance remains relatively unchanged.
1H 2024 Guidance | 1H 2024 Actuals | 2H 2024 Guidance | 2024 Year Guidance | |||||||||||||
Capital Expenditures (MM) | $ | 9.50 | $ | 8.00 | $ | 16.00 | $ | 24.00 | ||||||||
Exit Production (boepd) 1,2 | 4,000 | 3,805 | 4,500 | 4,500 | ||||||||||||
Funds from Operations (MM) | $ | 15.00 | $ | 15.03 | $ | 15.00 | $ | 30.03 | ||||||||
Exit Adjusted Net Debt (MM) | $ | 16.50 | $ | 15.10 | $ | 20.00 | $ | 20.00 | ||||||||
Average WTI (US$) | $78/bbl | $80/bbl | $75/bbl | $76.50/bbl | ||||||||||||
Notes:
63% liquids
300 boepd shut-in on June 15, 2024 at Kaybob due to AECO pricing
2H 2024 production guidance assumes Kaybob volumes are back on-stream before year-end
Q2 2024 HIGHLIGHTS
Production In-line with Forecast: Production averaged 3,937 boepd (63% liquids), a YoY increase of 19.4%;
Operating Netback Increase: Operated Netback of $17.87 per boe compared to $16.06 per boe in Q1 2024;
Successful Frobisher Drill Program: Drilled 4 gross (3.44 net) wells with an average IP30 of 148 boepd;
Successful Optimization Program: Continued success with casing gas compressor installations on Midale producers, resulting in average capital efficiencies of $3,850/boepd and 4-to-6 month payouts;
Adjusted Net Debt Reduction: Adjusted Net Debt reduced from $18.7 million at the end of Q4 2023 to $15.1 million at the end Q2 2024; and
Credit Facility Renewed: The Company maintains a $22.5 million credit facility through June 30 th , 2025.
2024 OPERATIONS UPDATE AND OUTLOOK
Year to date, the Company has successfully drilled 5 gross (4.33 net) wells in 2024, currently producing a total of 735 boepd (640 boepd net to ROK). In addition, since beginning casing gas compressor installations on existing Midale wells in Southeast Saskatchewan, the Company has added 280 boepd (IP90) to the base production levels of 15 wells. Management has identified an additional 22 locations for compressor installations over the next 18 months.
Key initiatives for 2024 remain unchanged with the Company focusing on using its current balance sheet to target strategic opportunities in core areas, improving operational efficiencies through targeted well optimizations and undertaking operational cost reduction measures. The remaining drill program aims to add Frobisher drilling inventory while proving up Midale prospects with multi-lateral drilling. The Company anticipates completing its 2024 drilling program by drilling a total of 7 to 9 gross wells in 2H 2024.
KAYBOB, ALBERTA, UPDATE
As previously mentioned, with the current softening of the North American natural gas markets, the Company has continued to shut-in 300 boepd (80% natural gas) in its Kaybob, Alberta area. The strategic shut-ins are expected for the balance of Q3 2024 with reactivation expected by year-end.
Q2 2024 FINANCIALS
Financial | Q2 2024 | Q2 2023 | YTD 2024 | YTD 2023 | ||||||||||||
Net income (loss) | 81,503 | (326,538 | ) | (5,530,751 | ) | (63,747 | ) | |||||||||
Basic ($/share) | 0.00 | (0.00 | ) | (0.03 | ) | (0.00 | ) | |||||||||
Diluted ($/share) | 0.00 | (0.00 | ) | (0.03 | ) | (0.00 | ) | |||||||||
Funds flow | 5,000,885 | 4,955,562 | 11,343,103 | 14,639,438 | ||||||||||||
Basic ($/share) | 0.02 | 0.02 | 0.05 | 0.07 | ||||||||||||
Diluted ($/share) | 0.02 | 0.02 | 0.05 | 0.06 | ||||||||||||
Expenditures on property, plant and equipment | 5,275,862 | 3,559,136 | 7,094,622 | 9,004,786 | ||||||||||||
Operating | ||||||||||||||||
Oil and Natural Gas Sales | 21,742,281 | 17,737,937 | 42,673,516 | 41,875,450 | ||||||||||||
Royalties | (3,782,175 | ) | (3,788,007 | ) | (7,737,218 | ) | (8,559,392 | ) | ||||||||
Operating Expenses | (11,555,289 | ) | (9,770,012 | ) | (22,279,328 | ) | (19,241,548 | ) | ||||||||
Operating Income | 6,404,817 | 4,179,918 | 12,656,970 | 14,074,510 | ||||||||||||
Realized gain (loss) on commodity contracts | (65,261 | ) | 2,459,098 | 860,756 | 5,125,545 | |||||||||||
Processing and other income | 647,195 | 260,805 | 1,509,273 | 995,536 | ||||||||||||
Funds from Operations | 6,986,751 | 6,899,821 | 15,026,999 | 20,195,591 | ||||||||||||
Average daily production | ||||||||||||||||
Crude oil (bbl/d) | 2,074 | 1,692 | 2,140 | 2,077 | ||||||||||||
NGLs (boe/d) | 411 | 340 | 435 | 370 | ||||||||||||
Natural gas (mcf/d) | 8,715 | 7,591 | 9,198 | 7,613 | ||||||||||||
Total (boe/d) | 3,937 | 3,297 | 4,107 | 3,716 | ||||||||||||
Operating Netback per boe | ||||||||||||||||
Oil and Natural Gas Sales | 60.68 | 59.13 | 57.08 | 62.26 | ||||||||||||
Royalties | (10.56 | ) | (12.63 | ) | (10.35 | ) | (12.73 | ) | ||||||||
Operating Expenses | (32.25 | ) | (32.57 | ) | (29.80 | ) | (28.61 | ) | ||||||||
Operating Netbacks ($/boe) | 17.87 | 13.93 | 16.93 | 20.92 | ||||||||||||
Funds from Operations ($/boe) | 19.50 | 23.00 | 20.10 | 30.03 | ||||||||||||
Operating Income Profit Margin | 29.4 | % | 23.6 | % | 29.7 | % | 33.6 | % | ||||||||
Funds from Operations Profit Margin | 32.1 | % | 38.9 | % | 35.2 | % | 48.2 | % | ||||||||
Share information | ||||||||||||||||
Common shares outstanding, end of period | 218,419,315 | 214,873,217 | 218,419,315 | 214,873,217 | ||||||||||||
Weighted average basic shares outstanding | 218,419,315 | 214,382,652 | 218,418,831 | 213,156,298 | ||||||||||||
Weighted average diluted shares outstanding | 236,352,197 | 252,620,714 | 236,351,713 | 261,173,477 | ||||||||||||
Q2 2024 FINANCIAL SUMMARY
In Q2 2024, the Company realized average daily production volume of 3,937 boepd (63% liquids), resulting in oil and natural gas sales of $21.7 million and realized hedge loss of $0.1 million. The Company realized Funds from Operations of $7.0 million, after royalties, operating expenses, and processing and other income.
Operating costs, which include expenses incurred to operate wells, gather, treat, and transport production volumes, as well as costs to perform well and facility repairs and maintenance, were consistent with Company expectations for the quarter, averaging $32.25 per boe, with lower maintenance and workover costs for the period when compared to 2023. Operating costs are expected to average $30 per boe in 2024.
Capital expenditures in the first half of 2024 totaled $8.0 million, which included $4.4 million towards the Company's drilling programs, $1.0 million towards well reactivations, $0.8 million towards land and seismic acquisitions, and $0.9 million towards facilities and gathering systems. Compared to the Company's first-half 2024 capital budget of $9.5 million, lower costs were incurred due to delays associated with abnormally wet conditions in Southeast Saskatchewan.
NET DEBT
Net Debt as at June 30, 2024, and December 31, 2023, as outlined below:
June 30, 2024 | December 31, 2023 | |||||||
Accounts receivable | 12,439,856 | 13,021,111 | ||||||
Prepaids and deposits | 347,352 | 364,090 | ||||||
Risk management contracts | (1,634,514 | ) | 4,521,075 | |||||
Accounts payable | (17,924,739 | ) | (17,560,130 | ) | ||||