Cub Energy Inc, a Ukraine-focused upstream oil and gas company, announced today its unaudited financial and operating results for the interim nine months ended September 30, 2020. All dollar amounts are expressed in United States Dollars unless otherwise noted. This update includes results from Kub-Gas LLC (“Kub-Gas”), which Cub has a 35% equity ownership interest, Tysagaz LLC (“Tysagaz”), Cub’s 100% owned subsidiary and CNG LLC (“CNG”), which Cub has a 50% equity ownership interest.
Mikhail Afendikov, Chairman and CEO of Cub said: “We are pleased to report the two Jenbacher units have arrived on site on the RK field and currently undergoing the installation, commissioning and ultimately connecting to the power grid. The Company plans to have the units commercially operative in early 2021.”
- Achieved average natural gas price of $3.59/Mcf and condensate price of $40.33/bbl during the nine months September 30, 2020 as compared to $5.85/Mcf and $48.43/bbl for 2019. The decrease is due, in large part, to increased volumes of gas stored in Europe, a warmer than expected winter in Europe and the impact of Covid.
- Production averaged 638 boe/d (97% weighted to natural gas and the remaining to condensate) for the nine months September 30, 2020 as compared to 873 boe/d for 2019.
- In April 2020, the Company has signed a contract for the purchase of two Jenbacher gas power generation engines that should convert the natural gas produced from the RK field into power that can be sold in western Ukraine at local market rates. The two units were manufactured and delivered to the RK Field in late October 2020 to begin installation and commissioning. Each power generation unit will have the capacity to produce as much as 1.5 megawatts (“MW”) of power or 3 MW in total. The RK field was materially suspended on April 1, 2016 and this new plan should result in the restart of the RK field.
- The Company reported a net loss of $2,274,000 or $0.01 per share during the nine months September 30, 2020 as compared to net income of $260,000 or $0.00 per share during 2019.
- Netbacks of $9.13/boe or $1.52/Mcfe were achieved for the nine months September 30, 2020 as compared to netback of $18.49/Boe or $3.42/Mcfe for 2019.
The Company has implemented certain cost-cutting initiatives during the second and third quarters of 2020, including the layoff of eleven team members, salary and director fee reductions, the signing of office leases at lower rent levels and a general decrease in the use of external consultants.
With the current cash resources, negative working capital, suspension of the RK field, uncertainty surrounding the successful installation of the NRU, fluctuating commodity prices, dividend uncertainty, currency fluctuations, reliance on a limited number of customers, and impact on carrying values, the Company may not have sufficient cash to continue the exploration and development activities. These matters raise significant doubt about the ability of the Company to continue as a going concern and meet its obligations as they become due.