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Cuda Oil and Gas Inc. Announces Year End Financial and Operating Results

Newsfile Corp.
·7 min read

Calgary, Alberta--(Newsfile Corp. - July 6, 2020) - Cuda Oil and Gas Inc. (TSXV: CUDA) ("Cuda" or the "Company") announces its financial and operational results for the year ended December 31, 2019. Cuda's audited consolidated financial statements, and management's discussion and analysis for the year ended December 31, 2019 and 2018 are available under the Company's profile on the SEDAR website at www.sedar.com.

Significant 2019 Highlights

2019 proved to be another year of significant growth and change for the Company.

  • 43% increase in revenue primarily from the realization of a full-year of production from the Barron Flats Federal (Deep) Unit in the Powder River Basin of Wyoming.

  • An increase of 147% in crude oil deliveries from Wyoming as deliveries were 282 barrels per day ("bbl/d") in 2019 compared to 114 bbl/d in 2018 as the Company continues its primary focus on the acquired Wyoming properties from 2018.

  • The Company completed a 15 well drilling program in late 2019 and early 2020 with 100% success rate on the 8 wells drilled in the fourth quarter and 7 wells in Q1 2020. All wells are now on line with 11 new producers and 4 new injectors.

  • Reported increases of 108% and 54% respectively at December 31, 2019, to its proven developed and non-producing reserves and proved reserves from a year ago.

  • The Company continues to demonstrate ability to raise financing in 2019. The Company issued 14,282,000 common shares on July 30, 2019 for gross proceeds of $7,141,000, (net proceeds $6,675,056) and a new $8 million dollar credit facility was made available in June 2019.

  • The Company realized higher operating netbacks from additional crude oil production from the Wyoming despite lower average realized prices. The Company realized higher operating netback of $3.28 per barrels of oil equivalent ("boe"), an increase of 23% from 2018.

For the year ended December 31, 2019, the Company reported a net loss from continuing operations of $20,394,844 (2018 - $5,416,721), cash flows used in operating activities of $5,726,806 (2018 - $5,171,984) and a working capital deficit of $46,462,202 (2018 - $36,609,132). The Company sold its Quebec assets in July 2019 which resulted in discontinued loss of $21,506,140 (2018 - $2,328,163).

At December 31, 2019, the Company has credit facilities with a principal balance of approximately $41.7 million which mature July 30, 2020, convertible debentures with a principal balance of $1.5 million which are due July 21, 2020, and capital commitments of approximately $9.1 million in Wyoming. These conditions indicate the existence of a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.

Further rationalization of assets and/or funding through share issuances, private placements, restructuring of existing or new credit facilities, non-core property sales, increased production from core properties combined with improvements in realized oil and gas prices received and/or a combination of these alternatives will be required to continue as a going concern.

Financial and Operational Results(1)

Below is a summary table of selected 2019 financial and operational results:

Three months ended December 31

Year ended
December 31

2019

2018

2019

2018

($, except per boe)

PRODUCTION(2)

Crude oil (bbls/d)

261

376

299

169

Natural gas (mcf/d)

2,443

2,911

1,453

2,288

Natural gas liquids ("NGLs")(bbls/d)

35

35

21

23

Total (boe/d)

703

896

563

574

REVENUE(2)

Crude oil

1,644,113

2,355,595

7,568,798

4,425,872

Natural gas

497,133

462,472

1,371,868

1,623,610

NGLs

151,340

195,866

412,054

484,261

Total

2,292,586

3,013,933

9,352,720

6,533,743

NETBACKS(2)

Average realized price

35.44

36.55

45.52

31.20

Royalties and production taxes

(9.84)

(9.41)

(12.51)

(7.21)

Operating and transportation

(9.89)

(11.19)

(15.49)

(9.75)

Operating netback

15.71

15.95

17.52

14.24

COMMODITY PRICES

WTI crude oil (US$/bbl)

56.96

59.08

56.98

64.94

Exchange rate (US$/Cdn$)

1.32

1.32

1.33

1.30

Edmonton light oil (Cdn$/bbl)

68.06

42.48

69.16

69.22

AECO, daily (5A)(Cdn$/GJ)

2.35

1.49

1.66

1.44

Notes:
(1) For further discussion and disclaimers regarding the results above, see the Company's audited consolidated financial statements and management's discussion and analysis for the years ended December 31, 2019 and 2018, available under the Company's profile on SEDAR.
(2) Includes results from the asset acquisitions in Wyoming, United States on August 14, 2018, and October 5, 2018, their respective acquisition dates.

Late Filing of Q1 2020 Financial Statements

As previously announced, the Company does not expect to file its interim financial statements for the three months ended March 31, 2020 and related management's discussion and analysis (collectively, the "Interim Financial Statements") within the 45 day extension period provided by blanket exemptions issued by provincial securities commissions due to the COVID-19 pandemic. The Company's personnel are working diligently to complete the Interim Financial Statements, but due to the interruption to financial reporting activities caused by the COVID-19 pandemic, the Company does not expect to file the Interim Financial Statements before the 45 day extension period expires on July 14, 2020. The Company currently expects to file the Interim Financial Statements on or about July 17, 2020.

The Company is in the process of making an application to the Autorité des Marchés Financiers, as its principal regulator, and other applicable securities regulators under National Policy 12-203 - Management Cease Trade Orders ("NP 12-203") requesting that a management cease trade order (the "MCTO") be imposed in respect of the late filing of the Interim Financial Statements. There is no guarantee that a MCTO will be granted. If the MCTO is granted, the MCTO will prohibit the chief executive officer, the chief financial officer and the directors from trading in securities of the Company for so long as the Interim Financial Statements are not filed. The issuance of a MCTO would not generally affect the ability of persons who are not officers or directors of the Company to trade in the Company's securities.

The Company confirms that it will satisfy the provisions of the alternative information guidelines under NP 12-203 by issuing bi-weekly default status reports in the form of news releases so long as it remains in default of filing the Interim Financial Statements. The Company also confirms that there have not been any material business developments since its most recent report on June 26, 2020 regarding the status of its continuous disclosure filings, other than as disclosed herein.

About Cuda Oil and Gas Inc.

Cuda Oil and Gas Inc. is engaged in the business of exploring for, developing and producing oil and natural gas, and acquiring oil and natural gas properties across North America. The Cuda management team has worked closely together for over 20 years in both private and public company environments and has an established track record of delivering strong shareholder returns. Cuda will continue to implement its proven strategy of exploring, acquiring, and exploiting with a long-term focus on large, light oil resource- based assets across North America including significant operational experience in the United States. The Cuda management team brings a full spectrum of geotechnical, engineering, negotiating and financial experience to its investment decisions.

For further information please contact:
Glenn Dawson
President and Chief Executive Officer
Cuda Oil and Gas Inc.
(403) 454-0862

Non-GAAP Measures

This news release contains the terms "operating netback" and "working capital deficit", which do not have standardized meanings prescribed by IFRS and therefore may not be comparable with the calculation of similar measures presented by other issuers.

  • Operating netback denotes total revenue less royalty and production tax expenses, and operating and transportation costs calculated on a per boe basis. Management uses operating netback on a per boe basis in operational and capital allocation decisions.

  • Working capital deficit is calculated as current assets less current liabilities.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/59135