TSX-V: CWV: Crown Point Energy Inc. (“Crown
Point”, the
“Company” or
"
we"
) today announced its
financial and operating results for the three months and year ended
December 31, 2023.
Selected information is outlined below and
should be read in conjunction with the Company’s December 31, 2023
audited consolidated financial statements and management’s
discussion and analysis (“MD&A”) that are
being filed with Canadian securities regulatory authorities and
will be made available under the Company’s profile at
www.sedarplus.ca and on the Company’s website at
www.crownpointenergy.com. All dollar figures are expressed
in United States dollars ("USD") unless otherwise
stated.
In the following discussion, the three months
and the year ended December 31, 2023 may be referred to as “Q4
2023” and “2023”, respectively. The comparative three months and
year ended December 31, 2022 may be referred to as “Q4 2022” and
“2022”, respectively.
Q4 2023 SUMMARY
During Q4 2023, the Company:
- Reported net cash
provided by operating activities of $1.3 million and funds flow
provided by operating activities of $2.1 million as compared to Q4
2022 when the Company reported $0.2 million of net cash provided by
operating activities and $0.1 million of funds flow provided by
operating activities;
- Earned $5.5 million
of oil and natural gas sales revenue on total average daily sales
volumes of 1,275 BOE per day, lower than $8.6 million of oil and
natural gas sales revenue earned on total average daily sales
volumes of 1,737 BOE per day in Q4 2022 due to lower gas sales
volumes in TDF Concessions in Q4 2023 combined with lower oil sales
in both the TDF Concessions and the Mendoza Concessions;
- Received an average
of $4.47 per mcf for natural gas and $57.70 per bbl for oil
compared to $4.23 per mcf for natural gas and $67.11 per bbl for
oil received in Q4 2022;
- Reported an
operating netback of $9.27 per BOE 1, down from $10.29 per BOE in
Q4 2022;
- Obtained and repaid
$4.2 million and $3.6 million of working capital and overdraft
loans, respectively, and issued an additional $6 million principal
amount of unsecured fixed-rate Series IV Notes for $6.74 million
cash consideration;
- Reported a loss
before taxes of $2.4 million and a net loss of $2.1 million as
compared to Q4 2022 when the Company reported a loss before taxes
of $3.9 million and a net loss of $2.7 million;
- Reported a working
capital deficit2 of $11.8 million.
SUBSEQUENT EVENTS
Subsequent to December 31, 2023 the Company:
- Obtained three
export financing loans for a total amount of $0.63 million and
repaid $0.26 million on working capital and export financing
loans.
- Repaid the first
$2.1 million installment on the Series III Notes.
- As disclosed by
press release issued on February 9, 2024, the Company entered into
an agreement with a seller ("Seller") to acquire a
100% working interest in the Piedra Clavada and Koluel Kaike
hydrocarbon exploitation concessions ("Santa Cruz
Concessions"). The purchase price is comprised of $12
million cash, subject to closing adjustments, plus contingent
in-kind consideration payable over a 15-year period from the
closing date whereby the Company will deliver to the Seller a
monthly quantity of oil produced from the Santa Cruz Concessions
ranging from 0 to 600 barrels of oil per day, subject to the market
price of oil determined for each month. On February 7, 2024, the
Company made a $2.4 million advance payment to the Seller.
Completion of the acquisition is subject to the receipt of all
necessary regulatory and Provincial approvals, including the
approval of the TSX Venture Exchange and other customary closing
conditions. The effective date of the acquisition will be January
1, 2024. The Company's common shares have been halted by the TSXV
until the Company has provided the TSXV with applicable
documentation, including a reserve report in respect of the Santa
Cruz Concessions that is prepared by an independent third party and
complies with National Instrument 51-101. The Company is currently
in the process of having the reserves report prepared, obtaining
the approval of the Province of Santa Cruz, and arranging the
necessary financing to fund the balance of the cash portion of the
purchase price. The acquisition is expected to close in April
2024.
OPERATIONAL UPDATE
Tierra del Fuego Concession ("TDF" or
"TDF Concessions")
- During Q4 2023, San
Martin oil production averaged 424 (net 147) bbls of oil per day
and natural gas production from the Las Violetas concession
averaged 9,568 (net 3,323) mcf per day and oil production averaged
261 (net 91) bbls of oil per day.
Mendoza Concessions ("Mendoza
Concessions")
- During Q4 2023,
several wells stopped producing due to mechanical failures. The UTE
carried out workovers on ten oil wells in the Chañares Herrados
concession (the "CH Concession") and on one oil
well and one water disposal well the Puesto Pozo Cercado Oriental
concession (the "PPCO Concession"). Oil production
for Q4 2023 averaged 868 (net 434) bbls of oil per day from the CH
Concession and 169 (net 85) bbls of oil per day from the PPCO
Concession.
Cerro de Los Leones Evaluation Permit
("CLL" or “CLL Permit”)
- The Company is in
conversations with the Province of Mendoza for the extension of the
CLL Permit or other alternatives for the CLL Permit, including the
potential compensation of the Company's only outstanding
commitment, consisting of a well repair, with working units
performed by the Company in excess of what was otherwise required
during the exploration period of the CLL Permit.
OUTLOOK
- The Company’s
capital spending on developed and producing assets for fiscal 2024
is budgeted at approximately $13.4 million of which $1.5 million is
for a well workover and improvements to facilities in the TDF
Concessions and $11.9 million is for drilling three vertical wells,
well workovers, and facilities improvements and optimization in the
Mendoza Concessions. The Company also plans to spend $0.5 million
on the testing of the gas bearing sandstone layers of the Neuquén
Group at CLL.
SUMMARY OF FINANCIAL
INFORMATION
(expressed in $, except shares outstanding) |
December 312023 |
December 312022 |
Current assets |
7,636,408 |
|
9,852,182 |
|
Current liabilities |
(19,422,342 |
) |
(11,125,229 |
) |
Working capital (1) |
(11,785,934 |
) |
(1,273,047 |
) |
Exploration and evaluation
assets |
14,103,353 |
|
14,115,555 |
|
Property and equipment |
45,834,731 |
|
43,963,610 |
|
Total assets |
67,785,665 |
|
68,183,547 |
|
Non-current financial
liabilities (1) |
18,317,856 |
|
16,055,005 |
|
Share capital |
56,456,328 |
|
56,456,328 |
|
Total
common shares outstanding |
72,903,038 |
|
72,903,038 |
|
|
|
|
|
|
(expressed in $, except shares outstanding) |
Three months ended |
Year ended |
|
December 31 |
December 31 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Oil and natural gas sales revenue |
5,530,896 |
|
8,586,742 |
|
26,766,228 |
|
33,040,620 |
|
Gain on acquisition of working
interest |
– |
|
1,046,626 |
|
– |
|
– |
|
(Reversal) Impairment of
property and equipment |
(3,050,000 |
) |
2,047,000 |
|
(3,050,000 |
) |
2,047,000 |
|
Loss before taxes |
(2,379,953 |
) |
(3,908,877 |
) |
(10,130,991 |
) |
(6,513,789 |
) |
Net loss |
(2,096,083 |
) |
(2,712,553 |
) |
(8,127,632 |
) |
(5,906,799 |
) |
Net loss per
share (2) |
(0.03 |
) |
(0.04 |
) |
(0.11 |
) |
(0.08 |
) |
Net cash (used) provided by
operating activities |
1,339,967 |
|
170,378 |
|
3,793,538 |
|
1,334,815 |
|
Net cash per share – operating
activities (1)(2) |
0.02 |
|
0.00 |
|
0.05 |
|
0.02 |
|
Funds flow (used) provided by
operating activities |
2,109,498 |
|
146,773 |
|
1,608,310 |
|
3,022,382 |
|
Funds flow per share –
operating activities (1)(2) |
0.03 |
|
0.00 |
|
0.02 |
|
0.04 |
|
Weighted average number of
shares – basic and diluted |
72,903,038 |
|
72,903,038 |
|
72,903,038 |
|
72,903,038 |
|
|
|
|
|
|
|
|
|
|
(1) |
We adhere to
International Financial Reporting Standards
(“IFRS”), however the Company also employs certain
non-IFRS measures to analyze financial performance, financial
position, and cash flow. Additionally, other financial measures are
also used to analyze performance. These non-IFRS and other
financial measures do not have any standardized meaning prescribed
by IFRS and therefore may not be comparable to similar measures
provided by other issuers. “Working capital” is a capital
management measure. “Non-current financial liabilities” is a
supplemental financial measure. "Net cash per share – operating
activities" is a supplemental financial measure. "Funds flow per
share – operating activities" is a supplemental financial measure.
See "Non-IFRS and Other Financial Measures". |
(2) |
All per share figures are the same for the basic and diluted
weighted average number of shares outstanding in the periods. The
effect of options is anti-dilutive in loss periods. Per share
amounts may not add due to rounding. |
|
|
Sales Volumes
|
Three months ended |
Year ended |
|
December 31 |
December 31 |
|
2023 |
2022 |
2023 |
2022 |
Total sales volumes (BOE) |
117,252 |
159,777 |
525,115 |
593,540 |
Light oil bbls per day |
840 |
1,181 |
915 |
1,045 |
NGL bbls per day |
25 |
16 |
19 |
12 |
Natural gas mcf per day |
2,458 |
3,238 |
3,023 |
3,418 |
Total BOE per day |
1,275 |
1,737 |
1,438 |
1,627 |
|
|
|
|
|
Operating Netback (1)
|
Three months ended |
Year ended |
|
December 31 |
December 31 |
|
2023 |
2022 |
2023 |
2022 |
|
|
Per BOE |
|
Per BOE |
|
Per BOE |
|
Per BOE |
Oil and natural gas sales revenue ($) |
5,530,896 |
|
47.17 |
|
8,586,742 |
|
53.74 |
|
26,766,228 |
|
50.97 |
|
33,040,620 |
|
55.67 |
|
Export tax ($) |
(125,304 |
) |
(1.07 |
) |
(179,346 |
) |
(1.85 |
) |
(503,268 |
) |
(0.96 |
) |
(1,071,563 |
) |
(2.89 |
) |
Royalties and turnover tax ($) |
(961,852 |
) |
(8.20 |
) |
(1,470,529 |
) |
(9.20 |
) |
(4,519,702 |
) |
(8.61 |
) |
(5,677,638 |
) |
(9.57 |
) |
Operating costs ($) |
(3,356,776 |
) |
(28.63 |
) |
(5,176,715 |
) |
(32.40 |
) |
(18,405,512 |
) |
(35.05 |
) |
(16,650,447 |
) |
(28.05 |
) |
Operating netback (1) ($) |
1,086,964 |
|
9.27 |
|
1,760,152 |
|
10.29 |
|
3,337,746 |
|
6.35 |
|
9,640,972 |
|
15.16 |
|
|
|
|
|
|
|
|
|
|
(1) "Operating netback" is a non-IFRS measure.
“Operating netback per BOE” is a non-IFRS ratio. See "Non-IFRS and
Other Financial Measures".
For inquiries please contact:
Gabriel
Obrador |
Marisa
Tormakh |
President & CEO |
Vice-President, Finance & CFO |
Ph: (403) 232-1150 |
Ph: (403) 232-1150 |
Crown Point Energy Inc. |
Crown Point Energy Inc. |
gobrador@crownpointenergy.com |
mtormakh@crownpointenergy.com |
|
|
About Crown PointCrown Point
Energy Inc. is an international oil and gas exploration and
development company headquartered in Calgary, Canada, incorporated
in Canada, trading on the TSX Venture Exchange and operating in
Argentina. Crown Point’s exploration and development activities are
focused in three producing basins in Argentina, the Austral basin
in the province of Tierra del Fuego, and the Neuquén and Cuyo (or
Cuyana) basins in the province of Mendoza. Crown Point has a
strategy that focuses on establishing a portfolio of producing
properties, plus production enhancement and exploration
opportunities to provide a basis for future growth.
Advisory
Non-IFRS and Other Financial Measures:
Throughout this press release and in other materials disclosed by
the Company, we employ certain measures to analyze financial
performance, financial position, and cash flow. These non-IFRS and
other financial measures do not have any standardized meaning
prescribed by IFRS and therefore may not be comparable to similar
measures provided by other issuers. The non-IFRS and other
financial measures should not be considered to be more meaningful
than financial measures which are determined in accordance with
IFRS, such as net income (loss), oil and natural gas sales revenue
and net cash (used) provided by operating activities as indicators
of our performance.
"Funds flow per share – operating activities" is
a supplemental financial measure. Funds flow per share – operating
activities is comprised of funds flow provided (used) by operating
activities divided by the basic and diluted weighted average number
of common shares outstanding for the period. See “Summary of
Financial Information”.
"Net cash per share – operating activities" is a
supplemental financial measure. Net cash per share – operating
activities is comprised of net cash provided (used) by operating
activities divided by the basic and diluted weighted average number
of common shares outstanding for the period. See “Summary of
Financial Information”.
"Non-current financial liabilities" is a
supplemental financial measure. Non-current financial liabilities
is comprised of the non-current portions of trade and other
payables, notes payable and lease liabilities as presented in the
Company’s consolidated statements of financial position. See
“Summary of Financial Information”.
"Operating Netback" is a non-IFRS measure.
Operating netback is comprised of oil and natural gas sales revenue
less export tax, royalties and turnover tax and operating costs.
Management believes this measure is a useful supplemental measure
of the Company’s profitability relative to commodity prices. See
“Operating Netback” for a reconciliation of operating netback to
oil and natural gas sales revenue, being our nearest measure
prescribed by IFRS.
"Operating netback per BOE" is a non-IFRS ratio.
Operating netback per BOE is comprised of operating netback divided
by total BOE sales volumes in the period. Management believes this
measure is a useful supplemental measure of the Company’s
profitability relative to commodity prices. In addition, management
believes that operating netback per BOE is a key industry
performance measure of operational efficiency and provide investors
with information that is also commonly presented by other crude oil
and natural gas producers. Operating netback is a non-IFRS measure.
See "Operating Netback" for the calculation of operating netback
per BOE.
"Working capital" is a capital management
measure. Working capital is comprised of current assets less
current liabilities. Management believes that working capital is a
useful measure to assess the Company's capital position and its
ability to execute its existing exploration commitments and its
share of any development programs. See “Summary of Financial
Information” for a reconciliation of working capital to current
assets and current liabilities, being our nearest measures
prescribed by IFRS.
Abbreviations and BOE Presentation: "bbl" means
barrel; "bbls" means barrels; "BOE" means barrels of oil
equivalent; "km" means kilometers; "km2" means square kilometers;
"m" means meters; “"mm" means millimeters; "mcf” means thousand
cubic feet, "mmcf" means million cubic feet, "NGL" means natural
gas liquids; "UTE" means Union Transitoria de Empresas, which is a
registered joint venture contract established under the laws of
Argentina; "WI" means working interest; and "YPF" means Yacimientos
Petrolíferos Fiscales S.A. All BOE conversions in this press
release are derived by converting natural gas to oil in the ratio
of six mcf of gas to one bbl of oil. BOE may be misleading,
particularly if used in isolation. A BOE conversion ratio of six
mcf of gas to one bbl of oil (6 mcf: 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.
Given that the value ratio based on the price of crude oil as
compared to natural gas in Argentina from time to time may be
different from the energy equivalency conversion ratio of 6:1,
utilizing a conversion on a 6:1 basis may be misleading as an
indication of value.
Forward-looking Information: This document
contains forward-looking information. This information relates to
future events and the Company’s future performance. All information
and statements contained herein that are not clearly historical in
nature constitute forward-looking information. Such information
represents the Company’s internal projections, estimates,
expectations, beliefs, plans, objectives, assumptions, intentions
or statements about future events or performance. This information
involves known or unknown risks, uncertainties and other factors
that may cause actual results or events to differ materially from
those anticipated in such forward-looking information.
In addition, this document may contain forward-looking
information attributed to third party industry sources. Crown Point
believes that the expectations reflected in this forward-looking
information are reasonable; however, undue reliance should not be
placed on this forward-looking information, as there can be no
assurance that the plans, intentions or expectations upon which
they are based will occur. This press release contains
forward-looking information concerning, among other things, the
following: under "Subsequent Events", our expectations regarding
the terms, conditions and timing for closing the proposed
acquisition of the Santa Cruz Concessions; under "Operational
Update", the Company's plans for future operations on its TDF
Concessions, Mendoza Concessions and CLL Permit and the anticipated
benefits to be derived therefrom and timing thereof, including the
Company's expectations for the potential extension of the CLL
Permit; under "Outlook", our estimated capital expenditure budgets
for fiscal 2024, and the capital expenditures that we intend to
make in our TDF Concessions, Mendoza Concessions and CLL Permit
during such period; under "About Crown Point", all elements of the
Company’s business strategy and focus. In addition, note that
information relating to reserves and resources is deemed to be
forward-looking information, as it involves the implied assessment,
based on certain estimates and assumptions that the reserves and
resources described can be economically produced in the future. The
reader is cautioned that such information, although considered
reasonable by the Company, may prove to be incorrect. Actual
results achieved during the forecast period will vary from the
information provided in this document as a result of numerous known
and unknown risks and uncertainties and other factors. A number of
risks and other factors could cause actual results to differ
materially from those expressed in the forward-looking information
contained in this document including, but not limited to, the
following: that the Company experiences delays building the
pipeline to the Rio Cullen marine terminal or is unable to complete
the pipeline; that the Company is unable to truck oil to the Enap
refinery and/or the Rio Cullen marine terminal and/or that the cost
to do so rises and/or becomes uneconomic; that the price received
by the Company for its oil is at a substantial discount to the
Brent oil price; that the Company is not able to meet its
obligations as they become due and continue as a going concern;
that the Company is unable to complete the proposed acquisition of
the Santa Cruz Concessions on the terms described herein or at all,
whether due to the inability of the Company to obtain financing to
fund the cash portion of the purchase price, obtain requisite
regulatory approvals, satisfy applicable conditions precedent, or
otherwise; and the risks and other factors described under
“Business Risks and Uncertainties” in our MD&A for the three
months and year ended December 31, 2023 and under “Risk Factors” in
the Company’s most recently filed Annual Information Form, which is
available for viewing on SEDAR+ at www.sedarplus.ca. With respect
to forward-looking information contained in this document, the
Company has made assumptions regarding, among other things: that
the Company will complete the proposed acquisition of the Santa
Cruz Concessions on the terms described herein on a timely basis,
including the ability of the Company to obtain the requisite
financing to fund the cash portion of the purchase price on
acceptable terms, obtain all requisite regulatory approvals and
satisfy all applicable conditions precedent; the cost to build the
aforementioned pipeline and the timing thereof; trucking costs;
that the COVID-19 (coronavirus) pandemic (or any other pandemic or
global or regional health related event) will not have a material
impact on the Company and our operations going forward; the ability
and willingness of OPEC+ nations and other major producers of crude
oil to balance crude oil production levels and thereby sustain
higher global crude oil prices; the impact of inflation rates in
Argentina and the devaluation of the Argentine peso against the USD
on the Company; the impact of increasing competition; the general
stability of the economic and political environment in which the
Company operates (including in relation to the newly elected
President and Vice-President of Argentina and their
administration), including operating under a consistent regulatory
and legal framework in Argentina; future oil, natural gas and NGL
prices (including the effects of governmental incentive programs
and government price controls thereon); the timely receipt of any
required regulatory approvals; the ability of the Company to obtain
qualified staff, equipment and services in a timely and cost
efficient manner; drilling results; the costs of obtaining
equipment and personnel to complete the Company’s capital
expenditure program; the ability of the operators of the projects
which the Company has an interest in to operate the fields in a
safe, efficient and effective manner; that the Company will not pay
dividends for the foreseeable future; the ability of the Company to
obtain financing on acceptable terms when and if needed and
continue as a going concern; the ability of the Company to service
its debt repayments when required; field production rates and
decline rates; the ability to replace and expand oil and natural
gas reserves through acquisition, development and exploration
activities; the timing and costs of pipeline, storage and facility
construction and expansion and the ability of the Company to secure
adequate product transportation; currency, exchange, inflation and
interest rates; the regulatory framework regarding royalties, taxes
and environmental matters in Argentina; and the ability of the
Company to successfully market its oil and natural gas products.
Management of Crown Point has included the above summary of
assumptions and risks related to forward-looking information
included in this document in order to provide investors with a more
complete perspective on the Company’s future operations. Readers
are cautioned that this information may not be appropriate for
other purposes. Readers are cautioned that the foregoing lists of
factors are not exhaustive. The forward-looking information
contained in this document are expressly qualified by this
cautionary statement. The forward-looking information contained
herein is made as of the date of this document and the Company
disclaims any intent or obligation to update publicly any such
forward-looking information, whether as a result of new
information, future events or results or otherwise, other than as
required by applicable Canadian securities laws.
Neither 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 news release.
_____________________________
1 Non-IFRS financial ratio. See "Non-IFRS and
Other Financial Measures".2 Capital management measure. See
"Non-IFRS and Other Financial Measures".
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