ROK Resources Provides Second-Half 2024 Guidance
ROK Resources has announced its strategic direction for the second half of 2024. The company aims to enhance shareholder value through the development of conventional light oil prospects in Southeast Saskatchewan. Key points include a reduction in capital expenditures to $24-$25 million, a target average daily production rate of 4,100-4,200 boepd, and a stable adjusted net debt of $19-$20 million. The drilling program includes 13 gross wells and 2-3 multi-lateral wells in core areas. Despite the softening of the North American natural gas markets, ROK has shut-in 280 boepd in Kaybob, Alberta, with reactivation expected in Q4 2024. The company also maintains a strong natural gas hedge program with an estimated gain of $1.0-$1.5 million CAD.
- Reduction in capital expenditures to $24-$25 million for 2024, a 25% decrease from 2023.
- Projected average daily production rate of 4,100-4,200 boepd, exceeding 2023 levels.
- Stable adjusted net debt projected at $19-$20 million with a debt to cash flow ratio of 0.6x.
- Strong natural gas hedge program with an estimated gain of $1.0-$1.5 million CAD.
- 280 boepd (80% natural gas) shut-in at Kaybob, Alberta due to market softening, impacting production.
REGINA, SK / ACCESSWIRE / June 19, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(OTCQB:ROKRF) is pleased to outline its strategic direction for the second half of 2024, aimed at enhancing shareholder value through the development of conventional light oil prospects in core operating areas of Southeast Saskatchewan.
1H 2024 1 | 2H 2024 | 2024 Year | |
Capital Expenditures (MM) | |||
Daily Average Production (boepd) 2 | 4,000 | 4,300 | 4,150 |
Exit Production (boepd) 2,3 | 4,000 | 4,600 | 4,600 |
Funds from Operations (MM) | |||
Adjusted Net Debt (MM) | |||
Average WTI (US$) |
2024 Guidance Summary
Notes:
- Estimated prior to finalizing interim condensed financial statements for the six months ended June 30, 2024
64% liquids- 1H 2024 exit production reduced by 280 boepd (
80% natural gas) due to Kaybob, Alberta production shut-ins
2024 Guidance Highlights
- Production Growth: Estimated 2024 average daily production rate of 4,100 boepd to 4,200 boepd (
64% liquids) which exceeds 2023 daily average production rate of 3,876 boepd (62% liquids). - Reduction in Capital Expenditures: Total annual capital expenditures of
$24 million to$25 million in 2024, a25% decrease in annual capital expenditures when compared to 2023. - Stable Balance Sheet: 2024 exit Adjusted Net Debt of
$19 million to$20 million , implying a debt to cash flow from operations ratio of 0.6x. - Core Area Drill Program: An estimated 13 gross (11.95 net) wells in Southeast Saskatchewan (
75% -85% Frobisher weighted assets), aimed at growing base reserves and future drilling inventory. - Midale Multi-Lateral Drilling: Drilling of 2 to 3 multi-lateral Midale wells to capitalize on Saskatchewan multi-lateral royalty incentive.
- Strong Natural Gas Hedge Program: Total natural gas hedges of 1,094,563 MMBtu in 2H 2024 at an average price of
$2.09 /MMBtu, equating to an estimated hedge gain of$1.0 million to$1.5 million CAD at current strip pricing over this period.
Outlook
The Company is focused on using its current balance sheet to target strategic growth opportunities in core areas, while improving operational efficiencies through continued cost reduction measures. The drill program aims to add Frobisher drilling inventory in both new and existing areas, in addition to proving up Midale prospects with multi-lateral drilling.
Kaybob, Alberta Update
With the current softening of the North American natural gas markets, the Company has shut-in 280 boepd (
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.
"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.
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 | barrels per day | |
| bopd | barrels per day | |
| boepd | barrels oil equivalent per day | |
| IP | Initial Production | |
| NGLs | Natural Gas Liquids | |
| Mboe | Thousands of barrels of oil equivalent | |
| Mg/l | 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 | West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for the crude oil standard grade | |
| CA$ | Canadian dollars | |
| US$ | 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.sedarplus.ca; 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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FAQ
What is the capital expenditure guidance for ROK Resources in the second half of 2024?
How much daily production does ROK Resources expect in the second half of 2024?
What is ROK Resources' adjusted net debt projection for the end of 2024?
How many wells does ROK Resources plan to drill in Southeast Saskatchewan in the second half of 2024?
What is the expected gain from ROK Resources' natural gas hedge program in the second half of 2024?
Why has ROK Resources shut-in production at Kaybob, Alberta?
