Bengal Energy Ltd. (TSX: BNG) ("Bengal" or the "Company") today announces its financial and operating results for the third quarter of fiscal 2025 ended December 31, 2024.
THIRD-QUARTER FISCAL 2025 HIGHLIGHTS:
The following is an overview of the financial and operational results during the three months ending December 31, 2024. All amounts are in Canadian funds unless otherwise noted:
Financial summary:
Sales revenue - Crude oil sales revenue was $1.4 million in the third quarter of fiscal 2025, 11% lower than $1.6 million in Q3 fiscal 2024. Oil lifted was 22% lower in Q3 fiscal 2025 at 124 bbl/d compared to 174 bbl/d in Q3 fiscal 2024. The decreased volume was partially offset by a 25% increase in realized oil prices. More than half of the volumes in the third quarter of fiscal 2025 were sold in October at US$79.53/bbl., which coupled with a stronger US dollar relative to the Canadian dollar, resulted in higher realized prices.
Funds from operations[1] - Funds from operations was $23 thousand during the third quarter of fiscal 2025 compared to funds used in operations of $143 thousand in Q3 fiscal 2024, helped by lower royalties and operating expenses.
Net loss - Bengal reported a net loss of $0.4 million in the third quarter of fiscal 2025 compared to net loss of $0.5 million in the third quarter of fiscal 2024, the decrease in net loss was due to lower royalties, operating and G&A costs more than offsetting the decline in revenue.
Operational summary:
Production volumes - The Company's share of total Cuisinier production in the current quarter was 11,420 bbls (124 bbl/d), a decrease of 29% compared to production of 16,013 bbls (174 bbl/d) in the third quarter of fiscal 2024. The Company continues to investigate the material change in production allocation provided by the Cuisinier operator. Bengal has requested field support to clarify the nature of the change in allocation and is awaiting further information from the operator.
Capital expenditures - Capital activity was limited as Bengal has delayed its capital programs subject to the availability of financing.
OPERATING SUMMARY
Bengal has filed its consolidated financial statements and management's discussion and analysis for the quarter end December 31, 2024, with the Canadian securities regulators. The documents are available on SEDAR at www.sedarplus.ca or by visiting Bengal's website at www.bengalenergy.ca.
Business Overview
Bengal's producing and non-producing assets are situated in Australia's Cooper Basin, a region featuring large accumulations of very light and high-quality crude oil and natural gas. The Company's core Australian assets, Petroleum Lease ("PL") 303 Cuisinier, Authority to Prospect ("ATP") 934 Barrolka, Potential Commercial Area ("PCA") 332 (formerly ATP 732) Tookoonooka, and four petroleum licenses are situated within an area of the Cooper Basin that is well served with production infrastructure and take-away capacity for produced crude oil and natural gas. Still in early stages in terms of appraisal and development, Bengal believes these assets offer attractive upside potential for both oil and gas. Australia presents a stable political, fiscal, and economic environment in which to operate, and a favourable royalty regime for oil and gas production. In addition, Bengal owns a 26km 6" high pressure gas pipeline (PPL 138) connecting the Wareena field to a large raw gas network passing Bengal's prospects at ATP 934.
Under the State of Queensland Regulatory process, ATPs are granted by the State generally for a period of twelve years with one-third of the original grant area expiring every four years. At the end of the final term of the ATP, an application can be made to continue a portion of the permit in the form of a Potential Commercial Area ("PCA"). PCAs have a life span of five to fifteen years. PCA applications include a commercial viability report that indicates that the area is likely to be commercially viable within the applied term. This allows for extra time to commercialize any identified Resource. These PCAs remain a part of the ATP until expiry. If a discovery of oil or gas is made, an application for a PL is made to allow for production. PLs are granted for up to a thirty-year term.
Bengal has a 30.375% interest in two PLs on the former ATP 752 Barta block, PL 303 and PL 1028. In addition, the Company has three PCAs associated with ATP 752 which are the Barta block, PCA 206 and PCA 207 and PCA 155 in the Wompi block which contains the Nubba well. Bengal also holds a 100% working interest in four PLs including PPL 138 adjacent to the 100% owned ATP 934.
Following extensive public consultation, in late December 2023 the Queensland government released a document outlining its plans for increased restrictions to petroleum activities within the rivers and floodplains area of the Lake Eyre Basin (LEB) catchment. Bengal Energy areas affected by this are the western portion of the Durham Downs block (ATP 934) where Bengal holds a 40% interest and PCA 115 (Nubba)(ATP 752 Wompi) in which Bengal holds a 38% interest. Of these permits, work can continue to develop gas resources under an existing petroleum lease. No additional PL's have been acquired by Bengal since the new Queensland Legislation came into effect.
In the Wompi portion of the Bengal ATP 752 permit (Bengal 38.5% WI) the discovered volumes of natural gas in the Nubba well are deemed too small for commerciality, and Bengal and partners will move to relinquish this block. In the western portion of ATP 934 in the Durham Downs East block (Bengal 40% W.I.) which is the part of ATP 934 which was farmed out, the operator is expected to withdraw from the permit subject to the terms of the Joint Operating Agreement (JOA) leaving Bengal with 100% interest. Bengal anticipates relinquishing this interest and is working with the regulator to secure favourable relinquishment terms. Neither of these assets have any carrying value in the Company's financial statements. Bengal prospects within Barrolka East (ATP 934 - 100% WI), Ghina (PL 1109 - 100% WI), Wareena (PL 1110 - 100% WI), Ramses PL 411, Karnak PL 188 and Tookoonooka (PCA 332 - 100% WI) are unaffected.
PL 303 Barta Block Cuisinier (controlling permit ATP 752) (30.357% WI)
The Company continues to evaluate the results of its water injection program at Cuisinier. The injection of produced water has resulted in both increased production in up to four offsetting wells and reduced water handling charges. Whilst the JV has observed compelling evidence that the overall field decline has been temporarily arrested with a modest upward trend in oil production during periods of operation, the water injection program has suffered from extended shut-in periods due to equipment failure and lack of available replacement parts. The program was intermittently operational during fiscal 2025; however, its impact to the joint venture is not currently measurable given unexplained changes to the Operator's allocation methodology. Bengal continues to challenge the Operator on this performance shortfall; however, despite reservoir response, it is expected that the operator will permanently suspend the pilot due to ongoing mechanical failures. Based on the results of the pilot, despite mechanical failures, the operator is evaluating locations to implement a waterflood in the main part of the resevior.
PL 114 Wareena, PL 157 Ghina, PL 188 Ramses, PL 411 Karnak, PPL 138 pipeline (100% WI)
The Company has a 100% working interest in four PLs and a natural gas pipeline connected to transportation infrastructure into the Eastern Australia Gas Market. These non-productive PLs are highly compatible and near ATP 934. Bengal continues to integrate subsurface data from the PLs to enhance the Company's understanding of ATP 934 and to finalize the selection of exploration and appraisal drilling locations.
Included in this program are two potential recompletions at Ramses; the Wareena 5 well; one recompletion at Ghina; and the redrill or sidetracking opportunity at the Karnak well. The reinstatement of the existing gas pipeline will support the production of raw gas into existing infrastructure. The Company completed workover activities at Wareena 1 and Wareena 5 in November 2022. Initial test results indicate Wareena 1 would require additional stimulation and dewatering to yield commercial production rates. The Company was encouraged by wellhead pressure measured at Wareena 5 and believes that additional testing is justified upon availability of financing and field equipment.
The 100% ownership of these assets presents an appraisal and development opportunity that will be operated by the Company and is seen as a steppingstone for Bengal's natural gas platform upon which future development and appraisal work at the existing PLs and exploration growth through ATP 934 can be undertaken.
PCA 332 Tookoonooka (100% WI; formerly ATP 732)
Bengal conducted an acid treatment in 2022 on the Caracal-1 well to improve well bore inflow with positive results and moderate inflow of very light 53-degree gravity oil from the Wyandra zone. While not immediately commercially viable, these results are being evaluated with the possibility of fracture stimulation being considered to further enhance productivity being put in place. The well is currently suspended with shut-in pressure data being monitored.
ATP 732 reached the end of its term in March of 2023 and the Company lodged an application over the northern portion of the ATP for continuation in the form of PCA 332 for a further 15 years. Based on the positive results from Caracal-1, the application was approved on January 30, 2023. The PCA, granted by the Queensland Government in record time, provides much-needed certainty for Bengal to focus on its hydrocarbon projects in the Talgeberry-Tintaburra corridor. The majority of PCA 332 is covered by 3D seismic which has outlined the prospective targets as described in the Company's press release: "Bengal Energy Announces Independent Oil and Natural Gas Resource Report" dated March 30, 2022. The Company announced the completion of its Field Resource Maturation and Development Plan for its Tookoonooka PCA332 on March 14, 2024.
ATP 934 Barrolka East (100% WI)
ATP 934 is the Company's owned natural gas exploration block. Bengal received approval of a special amendment for ATP 934 in March 2021 which relinquished 50% of the existing ATP area and extended the term of the ATP by entering an outcome based on the Later Work Permit ("LWP") for another 6 years to February 28, 2027. As part of the special amendment, another relinquishment of 118 sub blocks (50% of the remaining sub blocks) (88,972 acres) was required by February 28, 2023. The relinquishment was made and accepted by the regulator during April of 2023. The relinquished area was not considered to be prospective by the Company due to the lack of identified prospects and limited physical access. The current LWP includes the drilling of up to three wells and acquisition of 260 km2 of 3D seismic. The Company has proposed a further swap of non-prospective land in the Durham Downs portion of this ATP in consideration for further extension.
AC/RL 10 Katandra (100% WI)
The Katandra permit is in the offshore Ashmore-Cartier region of the Timor Sea and holds the Katandra 1 oil discovery and the up-dip, Katandra North opportunity. The opportunity is hosted in the prolific Berriasian sandstones of the Upper Vulcan Formation. Bengal has entered into a binding term sheet agreement with an undisclosed party which grants an option to acquire an 80% working interest in the prospect in exchange for assignment of operatorship and carrying out all administrative support activities and possible future financing arrangements on the permit until such time as the applied for five year extension of the permit has been approved by the regulatory authority and the option has been exercised by the option holder. All associated expenses are being carried by the farm-in party.
Business development
Bengal is in ongoing discussions regarding potential farm-out opportunities surrounding its exploration and development portfolio as well as other corporate initiatives aimed at increasing shareholder value. The Company is unable to estimate the chance of success or update status until the culmination of any or all these initiatives.
Non-IFRS and Other Financial Measures
Non-IFRS Financial Measures
Within this Press Release, references are made to terms commonly used in the oil and gas industry. Operating netback, operating netback per barrel, funds from operations, funds from operations per share, adjusted net income, and adjusted net income per share do not have any standardized meaning under IFRS and are referred to as non-IFRS measures. Management believes the presentation of the non-IFRS measures above provides useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.
