Cub Energy Inc, a Ukraine-focused upstream oil and gas company, announced today its unaudited financial and operating results for the interim six months ended June 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: “The second quarter was challenging due to the volatile global oil and gas prices and related cost cutting measures taken by the Company. The Company is pleased that its timeline for the purchase of the two Jenbacher power generation units is intact and delivery is expected later in 2020.”
- Achieved average natural gas price of $2.77/Mcf and condensate price of $33.01/bbl during the six months June 30, 2020 as compared to $6.28/Mcf and $45.88/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 648 boe/d (97% weighted to natural gas and the remaining to condensate) for the six months June 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. 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 $1,900,000 or $0.01 per share during the six months June 30, 2020 as compared to net income of $757,000 or $0.00 per share during 2019.
- Netbacks of $3.77/boe or $0.63/Mcfe were achieved for the six months June 30, 2020 as compared to netback of $20.50/Boe or $3.42/Mcfe for 2019.
The Company has implemented certain cost-cutting initiatives during the second quarter 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.