(TSX-V:BBI) Blackbird Energy Inc. (“
Blackbird” or
the “
Company”) is pleased to announce its
reserves, financial and operational results for the year ended July
31, 2017. Blackbird’s audited consolidated financial statements,
management’s discussion and analysis, annual information form and
statement of reserves data and other oil and gas information, as
mandated by National Instrument 51-101 – Standards of Disclosure
for Oil and Gas Activities of the Canadian Securities
Administrators, for the year ended July 31, 2017 are available on
SEDAR at www.sedar.com and are also posted on Blackbird’s website
at www.blackbirdenergyinc.com.
Significant 2017 Highlights
- Gas Processing: In November, 2017 Blackbird executed an
agreement for firm processing of raw gas produced from the
Company’s condensate rich Pipestone / Elmworth Montney play. The
agreement has an initial term of five years with firm capacity of
20.0 mmcf/d expected to commence in the second quarter of calendar
2019, increasing to 25.0 mmcf/d twelve months after plant start-up
and to 30.0 mmcf/d eighteen months after plant start-up;
- Equity Financings: Closed an upsized and over-subscribed
marketed public offering for total gross proceeds of $84.8 million
on March 14, 2017, a non-brokered private placement for total gross
proceeds of $5.1 million on November 1, 2016 and a non-brokered
private placement for total gross proceeds of $8.0 million on
October 27, 2016;
- Capital Investment: Blackbird invested $78.3 million during the
year ended July 31, 2017, drilling 10 gross (6.2 net) wells,
completing 7 gross (4.0 net) wells, recompleting 1 gross (1.0 net)
wells, bringing 4 gross (4.0 net) wells on production and
constructing / commissioning its Pipestone / Elmworth facility as
well as associated gathering system;
- Total Assets: $191.9 million at July 31, 2017 compared to $79.6
million at July 31, 2016, representing a 141% increase;
- Balance Sheet: Working capital of $48.8 million at July 31,
2017, which included $60.5 million of cash and no bank debt;
- Reserves: Reported Pipestone / Elmworth Montney proved plus
probable (“2P”) reserves estimated before tax net present value
using a 10% discount rate (“NPV10%”) of $395 million at July 31,
2017, an increase of 858% from July 31, 2016;
- Land: During the year ended July 31, 2017 Blackbird acquired a
total of 46.25 gross (30.2 net) sections of additional Pipestone /
Elmworth Montney lands;
- 2017 Production: While on production during the year, Blackbird
produced 5.2 mmcf/d of natural gas, 665 bbls/d of condensate, and
78 bbls/d of NGLs for total production of 1,609 boe/d. During the
year ended July 31, 2017, Blackbird averaged production of 1.3
mmcf/d of natural gas, 170 bbls/d of condensate, and 20 bbls/d of
NGLs for total production of 419 boe/d despite significant third
party natural gas processing shut-downs, which resulted in
significant increases to operating costs. Blackbird’s four tied-in
wells produced for an average of 94 days during fiscal 2017,
compared to 365 total calendar days in the year;
- 2017 Condensate Gas Ratio: 128 bbls/mmcf during the year ended
July 31, 2017;
- 2017 Total Liquids Gas Ratio: 143 bbls/mmcf during the year
ended July 31, 2017;
- 2017 Revenue: $6.2 million during the year ended July 31,
2017;
- 2017 Operating Netback: $8.63/boe during the year ended July
31, 2017;
- Q4 Production: While on production during the quarter,
Blackbird produced 5.5 mmcf/d of natural gas, 594 bbls/d of
condensate, and 88 bbls/d of NGLs for total production of 1,589
boe/d. During the three months ended July 31, 2017, Blackbird
averaged production of 2.7 mmcf/d of natural gas, 291 bbls/d of
condensate, and 43 bbls/d of NGLs for total production of 782 boe/d
despite significant third party natural gas processing shut-downs,
which resulted in significant increases to operating costs.
Blackbird’s four tied-in wells produced for an average of 45 days
during Q4 2017, compared to 92 total calendar days in the
quarter;
- Q4 Condensate Gas Ratio: 109 bbls/mmcf during the three months
ended July 31, 2017;
- Q4 Total Liquids Gas Ratio: 125 bbls/mmcf during the three
months ended July 31, 2017;
- Q4 Revenue: $2.8 million during the three months ended July 31,
2017; and
- Q4 Operating Netback: $5.34/boe during the three months ended
July 31, 2017.
See below for a summary table containing certain
2017 financial and operational figures:
By the Numbers – 2017 |
|
|
|
(CDN$ thousands, except where otherwise noted) |
Three months ended July 31 |
Year ended July 31 |
2017 |
|
2016 |
|
% Change |
|
2017 |
|
2016 |
|
% Change |
|
Financial (1) |
Petroleum and natural gas revenue |
2,797 |
|
8 |
|
34,863 |
|
6,234 |
|
33 |
|
18,791 |
|
Funds provided by (used in) operating activities |
1,285 |
|
(377 |
) |
(441 |
) |
(2,799 |
) |
(2,856 |
) |
(2 |
) |
Net (loss) income |
(3,164 |
) |
(1,331 |
) |
138 |
|
(10,600 |
) |
69 |
|
(15,462 |
) |
Net (loss) income per share – basic and diluted ($/share) |
(0.00 |
) |
(0.00 |
) |
- |
|
(0.02 |
) |
0.00 |
|
- |
|
Total assets |
191,906 |
|
79,602 |
|
141 |
|
191,906 |
|
79,602 |
|
141 |
|
Working capital |
48,759 |
|
29,454 |
|
66 |
|
48,759 |
|
29,454 |
|
66 |
|
Capital expenditures |
23,855 |
|
2,201 |
|
984 |
|
78,294 |
|
17,673 |
|
343 |
|
Operating (1) |
Production |
|
|
|
|
|
|
Condensate (bbls/d) |
291 |
|
- |
|
- |
|
170 |
|
- |
|
- |
|
NGLs (bbls/d) |
43 |
|
- |
|
- |
|
20 |
|
- |
|
- |
|
Natural gas (mcf/d) |
2,664 |
|
- |
|
- |
|
1,331 |
|
- |
|
- |
|
Non-core (boe/d) |
4 |
|
9 |
|
(56 |
) |
7 |
|
6 |
|
17 |
|
Total (boe/d) |
782 |
|
9 |
|
8,589 |
|
419 |
|
6 |
|
6,883 |
|
Liquids ratio (%) |
43 |
|
- |
|
- |
|
45 |
|
- |
|
- |
|
Condensate gas ratio (bbls/mmcf) |
109 |
|
- |
|
- |
|
128 |
|
- |
|
- |
|
Liquids gas ratio (bbls/mmcf) |
125 |
|
- |
|
- |
|
143 |
|
- |
|
- |
|
|
|
|
|
|
|
|
Average Montney realized selling prices |
|
|
|
|
|
|
Condensate ($/bbl) |
55.72 |
|
- |
|
- |
|
59.57 |
|
- |
|
- |
|
NGLs ($/bbl) |
23.40 |
|
- |
|
- |
|
25.45 |
|
- |
|
- |
|
Natural gas ($/mcf) |
4.93 |
|
- |
|
- |
|
4.75 |
|
- |
|
- |
|
Netbacks ($/boe) |
|
|
|
|
|
|
Petroleum and natural gas revenue |
38.91 |
|
10.61 |
|
267 |
|
40.79 |
|
15.54 |
|
163 |
|
Royalties |
(2.27 |
) |
- |
|
- |
|
(2.59 |
) |
- |
|
- |
|
Operating |
(8.34 |
) |
(131.30 |
) |
(94 |
) |
(10.19 |
) |
(128.55 |
) |
(92 |
) |
Transportation, processing and other |
(22.96 |
) |
- |
|
- |
|
(19.38 |
) |
- |
|
- |
|
Operating netback |
5.34 |
|
(120.69 |
) |
104 |
|
8.63 |
|
(113.01 |
) |
108 |
|
|
|
|
|
|
|
|
Pipestone / Elmworth Montney sections of land (net) |
108.9 |
|
83.75 |
|
30 |
|
108.9 |
|
83.75 |
|
30 |
|
Note:(1) See the Company’s 2017 financial
statements and the accompanying management’s discussion and
analysis (the “2017 Annual MD&A”) filed on SEDAR for further
discussion and disclaimers regarding the figures above.
Summary of Corporate Reserves
Data
Blackbird’s independent reserve evaluator,
McDaniel & Associates Consultants Ltd. (“McDaniel”), completed
their independent reserve evaluations effective July 31, 2017.
The Company’s total gross proved reserves (“1P”)
were 28,578 Mboe at July 31, 2017, an increase of 848% from the
comparative period in 2016. Total gross 2P reserves were 54,373
Mboe at July 31, 2017, an increase of 740% from the comparative
period in 2016.
Blackbird’s total gross 2P reserves at July 31,
2017, were estimated to have a before tax net present value, using
a discount rate of 10%, of $395.3 million compared to $41.3 million
at July 31, 2016, representing a 858% increase.
As at July 31, |
2017 |
2016 |
|
Mboe(1) |
$M(2) |
Mboe(1) |
$M(2) |
Proved Reserves (1P) (3) |
28,578 |
167,210 |
3,014 |
14,014 |
Proved Plus Probable Reserves (2P) (3) |
54,373 |
395,311 |
6,475 |
41,275 |
Notes:(1) Company gross reserves as determined
by McDaniel.(2) NPV10% as determined by McDaniel.(3) See the 2017
Annual MD&A and the Company’s Form 51-101F1 – Statement of
Reserves Data and Other Oil and Gas Information (the “2017
Statement of Reserves Data”) filed on SEDAR for further discussion
and disclaimers regarding the figures above and changes in
reserves.
A breakdown of Blackbird’s reserves reported at
July 31, 2017, is as follows:
|
OIL |
NATURAL GAS |
NATURAL GASLIQUIDS(3) |
TOTAL OILEQUIVALENT |
RESERVES CATEGORY |
Gross(1)Mbbl |
Net(2)Mbbl |
Gross(1)MMcf |
Net(2)MMcf |
Gross(1)Mbbl |
Net(2)Mbbl |
Gross(1)Mboe |
Net(2)Mboe |
Developed Producing |
- |
- |
4,930 |
4,569 |
585 |
474 |
1,407 |
1,236 |
Developed Non-Producing |
- |
- |
326 |
302 |
46 |
41 |
100 |
91 |
Undeveloped |
- |
- |
91,110 |
81,928 |
11,885 |
9,882 |
27,070 |
23,537 |
TOTAL PROVED |
- |
- |
96,366 |
86,799 |
12,517 |
10,396 |
28,578 |
24,863 |
TOTAL PROBABLE |
4,309 |
3,517 |
74,245 |
64,455 |
9,112 |
6,886 |
25,795 |
21,146 |
TOTAL PROVED + PROBABLE |
4,309 |
3,517 |
170,611 |
151,254 |
21,628 |
17,282 |
54,373 |
46,008 |
Notes:(1) Gross reserves are working interest
reserves before royalty deductions.(2) Net reserves are working
interest reserves after royalty deductions plus royalty interest
reserves.(3) Includes field condensate.
Finding & Development
Costs
|
2017(1) |
2016(1) |
|
Proved |
Proved plusprobable |
Proved |
Proved plusprobable |
Finding & development costs ($/boe) |
16.24 |
12.99 |
20.70 |
11.19 |
Note:(1) The calculation of finding and
development costs includes all exploration and development capital
for the year plus the change in future development capital for the
year. This total capital including the change in the future
development capital is divided by the change in reserves for the
year.
Blackbird is encouraged by its finding and
development costs achieved to date. The metrics indicate strong
capital efficiency, particularly with respect to proved reserves
year over year.
Outlook
Blackbird remains well positioned with its
significant, contiguous, multi-interval land block located in an
active corridor of the liquids-rich Montney, a strong balance sheet
highlighted by $48.8 million of working capital surplus at July 31,
2017, and early-stage production which is generating cash flow.
During fiscal 2017 Blackbird drilled 10 gross
(6.2 net) wells, a record number for the Company. The Company
drilled a combination of wells which further developed its western
acreage located south of the Wapiti River while delineating its
eastern acreage south of the Wapiti River. Results from Blackbird’s
eastern lands have encouraged management to proceed with surveying
for its eastern gathering system, to facilitate tie-in of pads in
this area. The Company anticipates construction of the eastern
gathering system to commence and be completed during the second
half of fiscal 2018.
Blackbird has recently drilled and cased the
6-33-71-7W6 (surface location) Upper Montney well, the Company’s
first well located to the north of the Wapiti River. Through
continued drilling optimization Blackbird further reduced its
drilling days on the 6-33-71-7W6 making it the fastest well in the
Company’s history to date. Blackbird expects to complete the well
in December, 2017. This is a significant well for Blackbird and
will delineate the northern extent of Blackbird’s land while also
retaining 14 sections of Montney rights.
The agreement with Tidewater Midstream and
Infrastructure Ltd. signed in November, 2017 sets the stage for
Blackbird’s future growth as it provides a long-term commitment for
gas processing. The agreement allows for firm capacity of 20.0
mmcf/d expected to commence in the second quarter of calendar 2019,
increasing to 25.0 mmcf/d twelve months after plant start-up and to
30.0 mmcf/d eighteen months after plant start-up. The Tidewater gas
processing facility will have the benefits of deep cut capability
which will allow Blackbird to realize premium pricing for NGLs as
well as a solution for gas storage and fuel gas needs. With
material future gas processing volumes now secured for its
Pipestone / Elmworth project Blackbird will continue to build on
its momentum by further developing and delineating its lands
through fiscal 2018. The Company will seek additional financing to
underpin its transition to full development.
About Blackbird
Blackbird Energy Inc. is a highly innovative oil
and gas exploration and development company focused on the
condensate and liquids-rich Montney fairway at Pipestone /
Elmworth, near Grande Prairie, Alberta.
For more information, please view our Corporate
Presentation at www.blackbirdenergyinc.com or contact:
Blackbird Energy Inc.
Garth BraunChairman, CEO and President(403)
500-5550gbraun@blackbirdenergyinc.com
Karen MintonChief Financial Officer(403)
699-9929 Ext 111kminton@blackbirdenergyinc.com
Allan DixonBusiness Development Manager(403)
699-9929 Ext 103adixon@blackbirdenergyinc.com
The TSX Venture Exchange Inc. has
neither approved nor disapproved the contents of this press
release. Neither the TSX Venture Exchange nor its regulation
services provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this press release.
ADVISORIES REGARDING OIL AND GAS INFORMATION
This news release contains the term barrels of
oil equivalent ("Boe"). Natural gas is converted to a Boe using six
thousand cubic feet of gas to one barrel of oil. Boes may be
misleading, particularly if used in isolation. The foregoing
conversion ratios are based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead. As well, given that
the value ratio based on the current price of crude oil to natural
gas is significantly different from the 6:1 energy equivalency
ratio, using a conversion ratio on a 6:1 basis may be misleading as
an indication of value.
Other abbreviations used in the news release
include: “Mboe” which means thousand barrels of oil equivalent;
“Mbbl” which means thousand barrels; “MMcf” which means million
cubic feet; and “MMcf/d” which means million cubic feet per
day.
FORWARD-LOOKING INFORMATION AND STATEMENTS
This press release contains forward-looking
statements and forward-looking information (collectively,
"forward-looking statements") within the meaning of applicable
securities laws. The use of any of the words "will", "expects",
"believe", "plans", "potential" and similar expressions are
intended to identify forward-looking statements. More particularly
and without limitation, this press release contains forward looking
statements, including the construction of an eastern gathering
system and timing thereof, the eastern gathering system
facilitating tie-in of Blackbird’s eastern pads located south of
the Wapiti River, the completion of the 6-33-71-7W6 well and timing
thereof, retaining of Montney rights, the commencement and benefits
of the agreement with Tidewater Midstream and Infrastructure Ltd.,
Blackbird’s momentum and building on this momentum through further
development and delineation of its lands during fiscal 2018 and the
Company seeking and/or obtaining additional financing to support a
transition to full development in the future. In addition,
statements relating to “reserves” are deemed to be forward-looking
information as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves described
exist in the quantities predicted or estimated and can be
profitably produced in the future.
By their nature, forward-looking statements are
based upon certain assumptions and are subject to numerous risks
and uncertainties, some of which are beyond Blackbird’s control,
including the impact of general economic conditions, industry
conditions, current and future commodity prices, currency and
interest rates, anticipated production rates, borrowing, operating
and other costs and funds from operations, the timing, allocation
and amount of capital expenditures and the results therefrom,
anticipated reserves and the imprecision of reserve estimates, the
performance of existing wells, the success obtained in drilling new
wells, the sufficiency of budgeted capital expenditures in carrying
out planned activities, competition from other industry
participants, availability of qualified personnel or services and
drilling and related equipment, stock market volatility, effects of
regulation by governmental agencies including changes in
environmental regulations, tax laws and royalties; the ability to
access sufficient capital from internal sources and bank and equity
markets; and including, without limitation, those risks considered
under "Risk Factors" in our Annual Information Form for the year
ended July 31, 2017 available on SEDAR.
This press release, in particular the
information in respect of estimated revenues and/or production
while flowing, may contain future-oriented financial information or
financial outlook within the meaning of applicable securities laws.
Such future-oriented financial information or financial outlook has
been prepared for the purpose of providing information about
management’s reasonable expectations as to the anticipated results
of its proposed business activities. Readers are cautioned that
reliance on such information may not be appropriate for other
purposes.
NON-IFRS MEASUREMENTS
Within this new release, references are made to
a term commonly used in the oil and natural gas industry.
Management uses "operating netback" to analyze operating
performance. This term does not have any standardized meaning
prescribed by International Financial Reporting Standards (“IFRS”)
and therefore may not be comparable with the calculation of a
similar measure for other entities. This term is used by management
to analyze operating performance on a comparable basis with prior
periods of Blackbird. Operating netback equals the total of
revenues less royalties, transportation, processing and operating
expenses calculated on a Boe basis. For more details on non-IFRS
measures, including a reconciliation to IFRS measures refer to our
2017 Annual MD&A available on SEDAR.
RESERVES ADVISORIES
The reserves estimates prepared herein have been
evaluated by an independent qualified reserves evaluator in
accordance with National Instrument 51-101 - Standards of
Disclosure for Oil and Gas Activities and the Canadian Oil and Gas
Evaluation Handbook ("COGE Handbook") and are effective as of July
31, 2017. All reserves information has been presented on a gross
basis, which is the Company's working interest share before
deduction of royalties and without including any royalty interests
of the Company. The reserves have been categorized accordance with
the reserves definitions as set out in the COGE Handbook. The
discounted and undiscounted net present value of future net
revenues attributable to reserves do not represent the fair market
value of such reserves. For more information on reserves refer to
the Company’s Statement of Reserves Data and Other Oil and Gas
Information effective July 31, 2017 available on SEDAR.
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