ROK Resources Files Financial Results and Management Discussion & Analysis for the First Quarter of 2024
ROK Resources (TSXV:ROK)(OTCQB:ROKRF) released its financial results for Q1 2024, highlighting an average daily production of 4,278 boepd, a 62% increase in liquids. Operating costs per boe were reduced by 18% to $27.55. The company reported a net income loss of $5.6 million, down from a net income of $0.8 million in Q1 2023. Funds from operations dropped from $13.3 million to $8.0 million. The company reduced its adjusted net debt from $18.7 million to $14.4 million. Capital expenditures totaled $1.8 million, focusing on well reactivations and infrastructure. Key initiatives for 2024 include a $10 million drilling program targeting Frobisher light oil and a focus on reducing corporate costs.
- Production growth: Daily production increased to 4,278 boepd, 62% of which were liquids.
- Operating cost reduction: Reduced operating costs by 18% to $27.55 per boe.
- Debt reduction: Adjusted net debt decreased from $18.7 million in Q4 2023 to $14.4 million in Q1 2024.
- Capital efficiency: Achieved $4,815 per boe on reactivation/optimization projects.
- Flexibility in capital allocation: Positioned to allocate development capital across economic plays.
- Net income loss: Reported a net income loss of $5.6 million compared to a net income of $0.8 million in Q1 2023.
- Funds from operations decline: Dropped from $13.3 million in Q1 2023 to $8.0 million in Q1 2024.
- Decreased oil and natural gas sales: Sales dropped from $24.1 million in Q1 2023 to $20.9 million in Q1 2024.
- Increased operating expenses: Operating expenses increased to $10.7 million from $9.5 million in Q1 2023.
- Reduced profit margins: Operating income profit margin fell to 29.9% from 41.0%, and funds from operations profit margin declined to 38.4% from 55.1%.
REGINA, SK / ACCESSWIRE / May 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 three months ended March 31, 2024.
The Company remained on strategy and budget for Q1 2024. Funds Flow of
Q1 2024 HIGHLIGHTS
- Production in line with Forecast: Production averaged 4,278 boepd (
62% liquids); - Operating Cost Reduction: realized operating costs of
$27.55 per boe which represents an18% reduction when compared to 2H 2023; - Adjusted Net Debt Reduced: Adjusted Net Debt reduced from
$18.7 million at the end of Q4 2023 to$14.4 million at the end Q1 2024; and - Successful Reactivation and Optimization Program: Achieved capital efficiencies of
$4,815 per boe on 12 reactivation/optimization projects in Southeast Saskatchewan.
OUTLOOK
Key initiatives for 2024 include reducing corporate finding and development costs and expanding core operating areas in Southeast Saskatchewan. The Company anticipates commencing its drilling program in late Q2 2024. The six well program, which will target Frobisher light oil prospects, the Company has allocated a budget of ~
Financial | Q1 2024 | Q1 2023 | ||||||
Net income (loss) | (5,612,254 | ) | 805,262 | |||||
Basic ($/share) | (0.03 | ) | 0.00 | |||||
Diluted ($/share) | (0.03 | ) | 0.00 | |||||
Funds flow | 6,342,218 | 9,683,876 | ||||||
Basic ($/share) | 0.03 | 0.05 | ||||||
Diluted ($/share) | 0.03 | 0.04 | ||||||
Expenditures on property, plant and equipment | 1,818,760 | 5,445,650 | ||||||
Operating | ||||||||
Oil and Natural Gas Sales | 20,931,235 | 24,137,513 | ||||||
Royalties | (3,955,043 | ) | (4,771,385 | ) | ||||
Operating Expenses | (10,724,039 | ) | (9,471,536 | ) | ||||
Operating Income | 6,252,153 | 9,894,592 | ||||||
Realized gain on commodity contracts | 926,017 | 2,666,447 | ||||||
Processing and other income | 862,078 | 734,731 | ||||||
Funds from Operations | 8,040,248 | 13,295,770 | ||||||
Average daily production | ||||||||
Crude oil (bbl/d) | 2,206 | 2,466 | ||||||
NGLs (boe/d) | 458 | 401 | ||||||
Natural gas (mcf/d) | 9,681 | 7,635 | ||||||
Total (boe/d) | 4,278 | 4,140 | ||||||
Operating Netback per boe | ||||||||
Oil and Natural Gas Sales | 53.77 | 64.79 | ||||||
Royalties | (10.16 | ) | (12.81 | ) | ||||
Operating Expenses | (27.55 | ) | (25.42 | ) | ||||
Operating Netbacks ($/boe) | 16.06 | 26.56 | ||||||
Funds from Operations ($/boe) | 20.66 | 35.69 | ||||||
Operating Income Profit Margin | 29.9 | % | 41.0 | % | ||||
Funds from Operations Profit Margin | 38.4 | % | 55.1 | % | ||||
Share information | ||||||||
Common shares outstanding, end of period | 218,418,315 | 212,613,817 | ||||||
Weighted average basic shares outstanding | 218,418,348 | 211,916,317 | ||||||
Weighted average diluted shares outstanding | 218,418,348 | 265,105,802 |
Q1 2024 FINANCIAL SUMMARY
In Q1 2024, the Company realized average daily production volume of 4,278 boepd (
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
Capital expenditures in the quarter totaled
NET DEBT
Net Debt as at March 31, 2024, and December 31, 2023, as outlined below:
| March 31, 2024 | December 31, 2023 | |||||||
Accounts receivable | 12,420,173 | 13,021,111 | ||||||
Prepaids and deposits | 580,854 | 364,090 | ||||||
Risk management contracts | (1,134,038 | ) | 4,521,075 | |||||
Accounts payable | (14,692,423 | ) | (17,560,130 | ) | ||||
Adjusted working capital (2) | (2,825,434 | ) | 346,146 | |||||
Credit Facility ( | 12,745,469 | 14,501,748 | ||||||
Lease obligations (1) | 509,740 | 545,851 | ||||||
Less: adjusted working capital (2) | 2,825,434 | (346,146 | ) | |||||
Net debt | 16,080,643 | 14,701,453 | ||||||
- Represents undiscounted face value of debt balances and lease obligations outstanding as of each respective date presented.
- Calculation of adjusted working capital excludes current portion of debt as presented on the statement of financial position. The mark-to-market fair value of the current portion of risk management contracts is included within adjusted working capital.
ROK uses "Net Debt" as a measure of the Company's financial position and liquidity, however it is not intended to be viewed as an alternative to other measures calculated in accordance with IFRS.
Complete reports and statements are available on SEDAR+ at www.sedarplus.ca and on the Company website www.rokresources.ca.
About ROK
ROK is primarily engaged in exploring for petroleum and natural gas development activities in Alberta and Saskatchewan. It has offices located in both Regina, Saskatchewan, Canada and Calgary, Alberta, Canada. ROK's common shares are traded on the TSX Venture Exchange under the trading symbol "ROK".
For further information, please contact:
Cameron Taylor, Chairman and Chief Executive Officer
Bryden Wright, President and Chief Operating Officer
Jared Lukomski, Senior Vice President, Land & Business Development
Lynn Chapman, Chief Financial Officer
Phone: (306) 522-0011
Email: investor@rokresources.ca
Website: www.rokresources.ca
Non-IFRS Measures
The non-IFRS measures referred to above do not have any standardized meaning prescribed by IFRS Accounting Standards ("IFRS") and, therefore, may not be comparable to similar measures used by other companies. Management uses this non-IFRS measurement to provide its shareholders and investors with a measurement of the Company's financial performance and are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net income or other measures of financial performance calculated in accordance with IFRS. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used.
"Operating Income" is calculated by deducting royalties and operating expense from total sales revenue. Total sales revenue is comprised of oil and gas sales. The Company refers to Operating Income expressed per unit of production as an "Operating Netback". "Operating Income Profit Margin" is calculated by the Company as Operating Income as a percentage of oil and natural gas sales. "Funds from Operations" is calculated by adding other income and realized gains/losses on commodity contracts ("hedging") to Operating Income.
The following table reconciles the aforementioned non-IFRS measures:
| Q1 2024 | Q1 2023 | |||||||
Oil and Natural Gas Sales | 20,931,235 | 24,137,513 | ||||||
Royalties | (3,955,043 | ) | (4,771,385 | ) | ||||
Operating Expenses | (10,724,039 | ) | (9,471,536 | ) | ||||
Operating Income | 6,252,153 | 9,894,592 | ||||||
Processing and other income | 926,017 | 2,666,447 | ||||||
Realized gain on commodity contracts | 862,078 | 734,731 | ||||||
Funds from Operations | 8,040,248 | 13,295,770 | ||||||
Sales volume (boe) | 389,261 | 372,570 | ||||||
Per boe | ||||||||
Oil and Natural Gas Sales | 53.77 | 64.79 | ||||||
Royalties | (10.16 | ) | (12.81 | ) | ||||
Operating Expenses | (27.55 | ) | (25.42 | ) | ||||
Operating Netback | 16.06 | 26.56 | ||||||
Funds from Operations | 20.66 | 35.69 | ||||||
Operating Income Profit Margin | 29.9 | % | 41.0 | % | ||||
Funds from Operations Profit Margin | 38.4 | % | 55.1 | % |
"Net Debt" includes all indebtedness of the Company, such as the Credit Facility and Lease Obligations (each as defined within the Company's interim condensed financial statements for the three months ended March 31, 2024), net of Adjusted Working Capital. "Adjusted Working Capital" is calculated as current assets less current liabilities, excluding current portion of debt and lease liability as defined on the Company's statement of financial position within the Company's interim condensed financial statements for the three months ended March 31, 2024. "Adjusted Net Debt" is calculated by removing the "mark-to-market fair value of the current portion of risk management contracts" and "lease obligations" (each as defined within the Company's interim condensed financial statements for the three months ended March 31, 2024) from Net Debt.
The following table reconciles Net Debt to Adjusted Net Debt:
| March 31, 2024 | December 31, 2023 | |||||||
Net Debt | 16,080,643 | 14,701,453 | ||||||
Remove: Current portion of risk management contracts | (1,134,038 | ) | 4,521,075 | |||||
Remove: Lease obligations | (509,740 | ) | (545,851 | ) | ||||
Adjusted Net Debt | 14,436,865 | 18,676,677 | ||||||
"Funds Flow" includes all cash from (used in) operating activities and is calculated before the change in non-cash working capital. "Funds Flow Basic ($/share)" and "Funds Flow Diluted ($/share)" are calculated by dividing Funds Flow by the weighted average number of basic shares and weighted average number of diluted shares outstanding, respectively, for the relevant period, as presented within the Company's interim condensed financial statements for the three months ended March 31, 2024. These are considered key measures of operating performance and capital management as they demonstrate the Company's ability to generate the cash necessary to repay debt and fund capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, each of these provide useful measures of ROK's ability to generate cash that are not subject to short-term movements in non-cash operating working capital.
The following table reconciles cash flow from operating activities to Funds Flow:
| Q1 2024 | Q1 2023 | |||||||
Cash flows provided by operating activities | 4,175,725 | 4,892,003 | ||||||
Change in non-cash working capital | 2,166,493 | 4,791,873 | ||||||
Funds Flow | 6,342,218 | 9,683,876 |
Conversion Measures
Production volumes and reserves are commonly expressed on a barrel of oil equivalent ("boe") basis whereby natural gas volumes are converted at the ratio of 6 thousand cubic feet ("Mcf") to 1 barrel of oil ("bbl"). Although the intention is to sum oil and natural gas measurement units into one basis for improved analysis of results and comparisons with other industry participants, boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf to 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. In recent years, the value ratio based on the price of crude oil as compared to natural gas has been significantly higher than the energy equivalency of 6:1 and utilizing a conversion of natural gas volumes on a 6:1 basis may be misleading as an indication of value.
Abbreviations
bbls/d bopd | barrels per day barrels per day | |
| boepd | barrels oil equivalent per day | |
| IP | Initial Production | |
| NGLs | Natural Gas Liquids | |
Mboe Mg/l | Thousands of barrels of oil equivalent Milligrams per Litre | |
| MMboe | Millions of barrels of oil equivalent | |
| PDP | Proved Developed Producing | |
| TP | Total Proved Reserves | |
| TPP | Total Proved and Probable Reserves | |
WTI CA$ US$ | West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for the crude oil standard grade Canadian dollars U.S. dollars |
Cautionary Statement Regarding Forward-Looking Information
This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Company's objectives, goals, or future plans and the expected results thereof. Forward-looking statements are necessarily based on several estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include but are not limited to general business, economic and social uncertainties; litigation, legislative, environmental, and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in ROK's public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether because of new information, future events, or otherwise.
Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility of the adequacy or accuracy of this release.
SOURCE: ROK Resources Inc.
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