NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE OR FOR DISSEMINATION IN THE UNITED STATES
REGINA, SK / ACCESSWIRE / February 15, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(OTCQB:ROKRF) is pleased to provide: (i) 2023 operations update highlighted by record December 2023 daily average production of approximately 4,650 boepd, (ii) 2023 year-end reserve and core area drilling inventory growth, and (iii) first-half 2024 guidance focused on disciplined capital allocation.
2023 Operational Highlights
2023 Corporate Reserves
The Company is pleased to announce the results of its independent reserves evaluation. The evaluation for the Company as at December 31, 2023 was conducted by McDaniel & Associates ("McDaniel") of Calgary and was conducted in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluators Handbook ("COGEH") and National Instrument 51-101 - Standards for Disclosure of Oil and Gas Activities ("NI 51-101").
Reserves Evaluation Highlights
Summary of Oil & Gas Reserves6 as of Dec 31, 2023 | ||||||||
Reserves - Total Company Interest | Light and Medium Oil | Conventional Natural Gas | Natural Gas Liquids | Total | ||||
Mbbl | MMcf | Mbbl | Mboe | |||||
Total Proved Developed Producing | 2,722 | 14,345 | 658.7 | 5,772 | ||||
Total Proved | 7,275 | 27,196 | 1,591 | 13,399 | ||||
Total Probable | 3,654 | 18,257 | 958 | 7,655 | ||||
Total Proved plus Probable | 10,930 | 45,453 | 2,549 | 21,054 | ||||
Summary of Net Present Values as of Dec 31, 2023 (Before Income Tax)2,3,4,5 | ||||||||
Before Tax Present Value (M$) | Undiscounted | 5% | 10% | 15% | ||||
Total Proved Developed Producing | -7,381 | 35,472 | 44,271 | 44,954 | ||||
Total Proved | 151,004 | 150,724 | 129,815 | 109,449 | ||||
Total Probable | 202,109 | 144,143 | 107,712 | 83,459 | ||||
Total Proved plus Probable | 353,113 | 294,867 | 237,527 | 192,907 | ||||
Price Forecast2 (Sproule, GLJ, McDaniel Average), Jan 1, 2024 | ||||||||
Year | F/X | WTI | Cromer Medium | Alberta AECO | ||||
USD/CAD | USD/bbl | CAD/bbl | CAD/Mmbtu | |||||
2024 | 0.75 | 73.67 | 88.03 | 2.20 | ||||
2025 | 0.75 | 74.98 | 90.02 | 3.37 | ||||
2026 | 0.76 | 76.14 | 90.95 | 4.05 | ||||
2027 | 0.76 | 77.66 | 92.77 | 4.13 | ||||
2028 | 0.76 | 79.22 | 94.63 | 4.21 | ||||
2029 | 0.76 | 80.80 | 96.52 | 4.30 | ||||
2030 | 0.76 | 82.42 | 98.45 | 4.38 | ||||
2031 | 0.76 | 84.06 | 100.42 | 4.47 | ||||
2032 | 0.76 | 85.74 | 102.43 | 4.56 | ||||
2033 | 0.76 | 87.46 | 104.48 | 4.65 | ||||
Reconciliation of Total Company Reserves
Total Light & Medium Crude | Total Natural Gas | Total Natural Gas Liquids | BOE | |||||||||
FACTORS | Proved | Probable | Proved + Probable | Proved | Probable | Proved + Probable | Proved | Probable | Proved + Probable | Proved | Probable | Proved + Probable |
Mbbl | Mbbl | Mbbl | MMcf | MMcf | MMcf | Mbbl | Mbbl | Mbbl | Mboe | Mboe | Mboe | |
Open Dec 31, 2022 | 6,480 | 3,460 | 9,940 | 16,157 | 14,126 | 30,283 | 554 | 503 | 1,057 | 9,727 | 6,317 | 16,044 |
Acquisitions | 3,768 | 1,704 | 5,472 | 11,792 | 5,406 | 17,198 | 1,084 | 498 | 1,582 | 6,816 | 3,104 | 9,920 |
Dispositions | -2,946 | -874 | -3,820 | 0 | -70 | -16 | -86 | -3,016 | -890 | -3,906 | ||
Economic Factors | 57 | 28 | 84 | 170 | -24 | 146 | 6 | -2 | 4 | 91 | 21 | 112 |
Extensions/Improved Rec. | 521 | 169 | 689 | 1,365 | 243 | 1,608 | 94 | 16 | 110 | 842 | 225 | 1,067 |
Technical Revisions | 258 | -777 | -519 | 655 | -1,612 | -958 | 80 | -56 | 25 | 449 | -1,101 | -652 |
Transfer to PDP | -111 | -51 | -162 | 34 | 124 | 158 | -8 | 16 | 8 | -112 | -14 | -127 |
Production | -751 | -3 | -754 | -2,975 | -8 | -2,983 | -150 | -1 | -151 | -1,399 | -5 | -1,404 |
Close Dec 31, 2023 | 7,275 | 3,655 | 10,930 | 27,196 | 18,257 | 45,453 | 1,591 | 958 | 2,549 | 13,399 | 7,655 | 21,054 |
Notes:
First-Half 2024 Guidance
With the current softening of the North American oil and natural gas markets, the Company will utilize the first six months of 2024 to focus on: (i) debt reduction, (ii) improving operational efficiencies, (iii) strategic well reactivations and optimizations, and (iv) advancement of the lithium project. The 1H 2024 capital budget is comprised of $4.0 - $4.5 million, approximately 60% of which is dedicated to well reactivations and recompletions in core operating areas in Southeast Saskatchewan.
The Company will provide second half 2024 guidance in the second quarter of 2024. Subject to a less volatile commodity price environment, the second half of 2024 is expected to include an active drilling program aimed at expediting growth and reducing F&D costs in core operating areas, with a continued emphasis on Frobisher drilling. Strategic Midale development may also occur, however pressure maintenance will become a focus in the Company's more mature Midale pools. Within the Kaybob area, the Company will remain positioned to deploy capital on its Cardium oil and Montney gas development, should economics justify an investment.
Highlights of First-Half 2024 Guidance
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".
By way of update, the National Instrument 43-101 Preliminary Economic Assessment, previously outlined in the Company's January 9th, 2024 press release, has been filed on SEDAR+ (www.sedarplus.ca).
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 International Financial Reporting 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 nine months ended September 30, 2023), 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 nine months ended September 30, 2023. "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 nine months ended September 30, 2023) from Net Debt.
"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. 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.
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.
Reserve Disclosure
All reserves information in this press release was prepared by an independent reserve evaluator, effective December 31, 2023, using the reserve evaluators December 31, 2023 forecast prices and costs in accordance with National Instrument 51-101 - Standards of Disclosure of Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook"). All reserve references in this press release are "Company gross reserves". Company gross reserves are the Company's total working interest reserves before the deduction of any royalties payable by the Company and before the consideration of the Company's royalty interests. It should not be assumed that the present worth of estimated future cash flow of net revenue presented herein represents the fair market value of the reserves. There is no assurance that the forecast prices and costs assumptions will be attained, and variances could be material. The recovery and reserve estimates of the Assets and ROK's crude oil, NGLs and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and NGLs reserves may be greater than or less than the estimates provided herein.
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.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.