(TSX-V: BBI) Blackbird Energy Inc.
(“
Blackbird” or the “
Company”) is
pleased to announce its record financial and operational results
for the quarter ended October 31, 2018. Blackbird’s unaudited
condensed consolidated interim financial statements and related
management’s discussion and analysis for the quarter ended October
31, 2018 are available on SEDAR at www.sedar.com and are also
posted on Blackbird’s website at www.blackbirdenergyinc.com.
Highlights
- Significant Exposure to
High-Quality Liquids Supports Record Revenue: Blackbird
achieved record revenue from its Pipestone / Elmworth project
during the first quarter of 2019. The Company reported $7.4 million
($46.31/boe) of petroleum and natural gas sales during the three
months ended October 31, 2018 which represents a 186% increase from
the comparative three months ended October 31, 2017. Blackbird
continues to realize the benefit of its significant liquids
weighting with revenues being bolstered by realized condensate and
oil prices of $76.57/bbl for the quarter. Approximately 72% of
total revenues were attributable to the Company’s high-quality
liquids production during the quarter.
- Record Production of 1,736
boe/d: During the three months ended October 31, 2018, the
Company achieved a record average total production rate of 1,736
boe/d comprised of 47% liquids. During the quarter, Blackbird
produced 5.5 mmcf/d of natural gas, 723 bbls/d of condensate and
oil, 98 bbls/d of NGLs and 2 boe/d of non-core production. The
Company produced for approximately 84 days during the first quarter
of 2019 compared to 92 total calendar days in the quarter (91%
run-time) with limited third-party gas processing plant downtime
experienced.
- Strong Operating and
Corporate Netbacks: Blackbird's operating and corporate
netbacks* were $23.12/boe and $13.92/boe, respectively, for the
first quarter of 2019. Stronger realized sales prices combined with
reduced operating and general and administrative expenses on a per
boe basis resulted in an improvement to the operating and corporate
netbacks* of 61% and 530%, respectively, in the three months ended
October 31, 2018 compared to the three months ended October 31,
2017.
- Adjusted Funds
Flow: The Company generated $2.2 million of adjusted funds
flow* during the three months ended October 31, 2018.
- Condensate & Oil Gas
Ratio: The Company’s condensate & oil gas ratio
(“CGR”) averaged 132 bbls/mmcf during the three
months ended October 31, 2018 on its sales.
- Total Liquids Gas
Ratio: The Company’s total liquids gas ratio
(“LGR”) averaged 150 bbls/mmcf during the three
months ended October 31, 2018.
- Capital Investment and
Successful Drilling Program: Blackbird invested $11.4
million during the three months ended October 31, 2018, drilling 3
gross (3 net) Montney wells and furthering its infrastructure
development north of the Wapiti River. All three wells were drilled
from Blackbird’s 9-14-71-7W6 northern pad-site and implemented an
extended reach lateral program. The Company drilled its
102/2-27-71-7W6 Upper Montney, 103/14-22-71-7W6 Upper Montney and
100/2-27-71-7W6 Middle Montney wells in an average of 24.5 days and
with an average horizontal length of 3,031 meters. Subsequent to
October 31, 2018, Blackbird moved its drilling rig east to the
12-36-70-6W6 pad to drill the 100/11-12-71-6W6 Middle Montney well.
The drilling of the 100/11-12-71-6W6 well allows Blackbird to
validate up to 20 sections of land while also delineating the
Company’s unexplored northeastern acreage. The Company began
ordering its long lead time equipment required for its Pipestone /
Elmworth northern infrastructure development during the quarter.
Blackbird expects that construction will commence on this project
in January 2019.
- Equity Financings:
During the quarter the Company completed a non-brokered private
placement consisting of 6,249,181 common shares issued on a
“Canadian Development Expenses flow-through” basis (the “CDE
Flow-Through Shares”) at a price of $0.37 per CDE Flow-Through
Share and 16,000,000 common shares issued on a “Canadian
Exploration Expenses flow-through” basis (the “CEE Flow-Through
Shares”) at a price of $0.40 per CEE Flow-Through Share for total
combined gross proceeds of $8.7 million.
- Balance Sheet Strength
Maintained: At October 31, 2018, Blackbird had working
capital of $3.8 million, which included $11.7 million of cash and
no bank debt. The working capital surplus combined with the undrawn
loan facility provides Blackbird with approximately $23.0 million
of future available funding* at October 31, 2018.
* See “Non-IFRS Measures” below.
The following table summarizes certain financial
and operational figures, and should be read in conjunction with
Blackbird's unaudited condensed consolidated interim financial
statements and related MD&A for the quarter ended October 31,
2018:
(CDN$ thousands, except where otherwise noted) |
Three months ended October 31 |
2018 |
|
2017 |
|
% Change |
|
Financial |
Petroleum and natural gas sales |
7,397 |
|
2,582 |
|
186 |
|
Cash provided by (used in) operating activities |
1,009 |
|
(2,114 |
) |
(148 |
) |
Net loss and comprehensive loss |
(1,132 |
) |
(1,737 |
) |
(35 |
) |
Net loss per share – basic and diluted ($/share) |
(0.00 |
) |
(0.00 |
) |
- |
|
Working capital |
3,759 |
|
21,317 |
|
(82 |
) |
Available funding(1) |
23,041 |
|
22,317 |
|
3 |
|
Capital expenditures |
11,368 |
|
29,241 |
|
(61 |
) |
Operating |
Production |
|
|
|
Condensate & oil (bbls/d) |
723 |
|
328 |
|
120 |
|
NGLs (bbls/d) |
98 |
|
30 |
|
227 |
|
Natural gas (mcf/d) |
5,478 |
|
2,112 |
|
159 |
|
Non-core (boe/d) |
2 |
|
2 |
|
- |
|
Total (boe/d) |
1,736 |
|
712 |
|
144 |
|
Liquids ratio (%) |
47 |
|
50 |
|
(6 |
) |
Condensate & oil gas ratio (bbls/mmcf) |
132 |
|
155 |
|
(15 |
) |
Total liquids gas ratio (bbls/mmcf) |
150 |
|
170 |
|
(12 |
) |
|
|
|
|
Average Montney realized selling prices |
|
|
|
Condensate & oil ($/bbl) |
76.57 |
|
60.50 |
|
27 |
|
NGLs ($/bbl) |
29.28 |
|
30.26 |
|
(3 |
) |
Natural gas ($/mcf) |
4.04 |
|
3.44 |
|
17 |
|
|
|
|
|
Netbacks ($/boe) |
|
|
|
Petroleum and natural gas sales |
46.31 |
|
39.41 |
|
18 |
|
Royalties |
(2.16 |
) |
(2.09 |
) |
3 |
|
Operating expenses |
(6.27 |
) |
(10.62 |
) |
(41 |
) |
Transportation and processing expenses |
(14.76 |
) |
(12.33 |
) |
20 |
|
Operating netback(1) |
23.12 |
|
14.37 |
|
61 |
|
General and administrative expenses |
(9.04 |
) |
(14.05 |
) |
(36 |
) |
Financing costs |
(0.25 |
) |
- |
|
- |
|
Interest income |
0.09 |
|
1.89 |
|
(95 |
) |
Corporate netback(1) |
13.92 |
|
2.21 |
|
530 |
|
Note:(1) See the Company’s Q1 2019 interim
financial statements and related MD&A filed on SEDAR for
further information regarding its calculation of “available
funding”, "operating netback" and "corporate netback".
Outlook
On October 30, 2018, the Company announced that
it had entered into an agreement with Pipestone Oil Corp.
(“Pipestone Oil”) that provides for the strategic combination of
Blackbird and Pipestone Oil (the “Transaction”).
On December 19, 2018, Blackbird held its special
meeting of shareholders (the “Blackbird Shareholders”), at which
the Transaction was approved by a majority of over 99% of votes
cast. The Blackbird Shareholders also approved the continuance of
Blackbird from British Columbia into Alberta (the “Continuance”),
which is necessary for the Transaction to proceed as proposed.
The Continuance was completed following the meeting, such
that Blackbird is now an Alberta corporation governed by the
Business Corporations Act (Alberta) ("ABCA").
The Transaction is structured as a
court-approved arrangement under section 193 of the ABCA. On
December 20, 2018, the Alberta Court of Queen's Bench granted a
final order approving the arrangement under the ABCA. The
Transaction has also been conditionally accepted by the TSX Venture
Exchange, subject to the filing of customary documentation.
No other regulatory approvals remain outstanding.
In connection with the Transaction, Blackbird
and Pipestone Oil also entered into agreements with certain of
their existing shareholders who have committed to common equity
financings totaling approximately $111.0 million and Pipestone Oil
arranged approximately $198.5 million of debt financing
(collectively, the “Financings”).
The Transaction will result in the strategic
combination of two adjacent and contiguous Pipestone Montney land
bases under a single well-capitalized, high growth company that
will operate under the name Pipestone Energy Corp. (“Pipestone
Energy”).
The Transaction and Financings are expected to
close on or about January 4, 2019. For additional information
relating to the Transaction and guidance on Pipestone Energy’s
future plans please refer to the Company’s website at
www.blackbirdenergyinc.com or to SEDAR at www.sedar.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 view our Corporate
Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.
Garth BraunChairman, CEO and President(403)
500-5550gbraun@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 news release contains the term barrels of
oil equivalent ("Boe"). Natural gas is converted to a Boe using six
thousand cubic feet of gas to one barrel of oil. Boes may be
misleading, particularly if used in isolation. The foregoing
conversion ratios are based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. As well, given that
the value ratio based on the current price of crude oil to natural
gas is significantly different from the 6:1 energy equivalency
ratio, using a conversion ratio on a 6:1 basis may be misleading as
an indication of value.
Other abbreviations used in the news release
include: “MMcf” which means million cubic feet; “MMcf/d” which
means million cubic feet per day; bbls/MMcf which means barrels per
million cubic feet; and Boe/d which means barrels of oil equivalent
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. The use of any of the words "will", "expects",
"believe", "plans", "potential" and similar expressions are
intended to identify forward-looking statements. More particularly
and without limitation, this press release contains forward looking
statements including, the validation of up to 20 sections of
Montney land through current drilling activity, the construction of
Blackbird’s infrastructure located to the north of the Wapiti River
and timing thereof, the strategic combination of two adjacent and
contiguous Pipestone Montney land bases under a single
well-capitalized, high growth company that will operate under the
name Pipestone Energy, the Financings and amounts to be received,
and the expected closing date of the Transaction and
Financings.
By their nature, forward-looking statements are
based upon certain assumptions and are subject to numerous risks
and uncertainties, some 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; the ability to
access sufficient capital from internal sources and bank and equity
markets; and the likelihood of satisfying all conditions to
completion of the Transaction and Financings as provided in the
definitive agreements providing therefor; and also including,
without limitation, those risks considered under "Risk Factors" in
our Annual Information Form for the year ended July 31, 2018
available on SEDAR.
This press release may contain future-oriented
financial information or financial outlook within the meaning of
applicable securities laws. Such future-oriented financial
information or financial outlook has been prepared for the purpose
of providing information about management’s reasonable expectations
as to the anticipated results of its proposed business activities.
Readers are cautioned that reliance on such information may not be
appropriate for other purposes.
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.
“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 months ended
October 31, 2018 available on SEDAR.
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