Bengal Energy Announces Fiscal 2023 Second Quarter Results
Calgary, Alberta--(Newsfile Corp. - November 8, 2022) - Bengal Energy Ltd. (TSX: BNG) ("Bengal" or the "Company") today announces its financial and operating results for the second quarter of fiscal 2023 ended September 30, 2022.
SECOND QUARTER FISCAL 2023 HIGHLIGHTS:
The following is an overview of the financial and operational results during the three and six-months ending September 30, 2022. All amounts are in Canadian funds unless otherwise noted:
Sales Revenue - Crude oil sales revenue was $2.1 million in the second quarter of fiscal 2023, which is 13% higher than the $1.9 million recorded in Q2 fiscal 2022. The higher sales revenue is due to increased realized crude oil prices which more than offset production declines during the quarter.
Funds from (used in) Operations1 - Bengal generated funds from operations of $1.8 million during Q2 fiscal 2023 compared to $0.4 million in Q2 fiscal 2022. Bengal generated $1.1 million of cash from operations during Q2 fiscal 2023 compared to $0.6 million of cash from operations in Q2 fiscal 2022. During the quarter, the Company resolved a historic crude oil stock discrepancy with the Cuisinier Joint Venture ("JV") operator, which resulted in a net gain of $1.1 million after accruing associated royalties and is reflected as other income, which contributed to the current quarter's Funds from Operations and Cash from operations. When excluding the impact of the one-time gain, the Company's adjusted funds from operations would have been $0.7 million and $1.1 million for the three and six-month period ended September 30, 2022 respectively.
Net Income - Bengal reported a net income of $1.5 million for the current quarter compared to net income of $0.1 million in Q2 fiscal 2022.
Production Volumes - The Company's share of total Cuisinier production in the current quarter was 15,996 bbls, which is a 13% decrease from the 18,303 bbls produced in the first quarter of fiscal 2023. The current quarter production averaged 174 bbls/d compared to 184 bbls/d produced in the first quarter of fiscal 2022. Suspended production at the Cuisinier 29 and Barta North 1 wells due to workover activities resulted in a loss of approximately 25 bbls/d during fiscal Q2 2023. Unseasonal rain in the Cooper Basin during the quarter hampered the Joint Venture's ability to perform the necessary workover procedures to reinstate production at these wells, which were online for the majority of the comparative period fiscal Q2 2022. The Cuisinier Joint Venture negotiated revised Crude Oil Sale and Purchase Agreements with corresponding transportation agreements effective July 1, 2022, through to December 31, 2023. These new agreements cover the Processing (Crude Oil Processing Services Agreement - COPSA), the Transportation of Crude Oil (Crude Oil Transportation Agreement - COTA), and the Liquids Allocation Agreement ("LAA").
The Cuisinier waterflood pilot, which commenced activity in calendar Q4 2021 has started to demonstrate encouraging results. The JV has observed compelling evidence to suggest that the overall field decline has been arrested with even a general upward trend in oil rate since December 2021.
Capital Expenditures - Bengal continued work on its development projects at Wareena 1 and Wareena 5 and completed activities at Caracal-1. In addition to these development activities, the Company has commenced an operational readiness program in anticipation of commencing 100% Bengal controlled operations during the year.
|($000s except per share, %, volumes and operating netback(1) amounts||Three months ended|
|Six Months ended|
|Cashflow from (used in) operations||$||1,053||$||565||$||2,070||$||(209||)|
|Funds from (used in) operations(1)||$||1,774||$||417||$||2,456||$||536|
|Per share ($) (basic and diluted)||$||0.00||$||0.00||$||0.01||$||0.00|
|Adjusted funds from operations(1)||$||681||$ ||417||$ ||1,363||$||536|
|Per share ($) (basic and diluted)||$||0.00||$ ||0.00||$ ||0.00||$ ||0.00|
|Net income (loss)||$||1,473||$||85||$||1,863||$||(97||)|
|Per share ($) (basic and diluted)||$||0.00||$||0.00||$||0.00||$||(0.00||)|
|Oil volumes (bbls/d)||179||199||147||187|
|Operating netback(1) ($/bbl)||$||77.77||$||51.08||$||83.07||$||46.53|
(1) Non-IFRS and Other Financial Measures: refer to the Non-IFRS and Other Financial Measures section of this Press Release
Bengal has filed its consolidated financial statements and management's discussion and analysis for the year ended March 31, 2022, with the Canadian securities regulators. The documents are available on SEDAR at www.sedar.com or by visiting Bengal's website at www.bengalenergy.ca.
Bengal's producing and non-producing assets are situated in Australia's Cooper Basin, a region featuring large accumulations of very light and high-quality crude oil and natural gas. The Company's core Australian assets, Petroleum Lease ("PL") 303 Cuisinier, ATP 934 Barrolka, ATP 732 Tookoonooka, and four recently acquired petroleum licenses are situated within an area of the Cooper Basin that is well served with production infrastructure and take-away capacity for produced crude oil and natural gas. Still in early stages in terms of appraisal and development, Bengal believes these assets offer attractive upside potential for both oil and gas. Australia presents a stable political, fiscal, and economic environment in which to operate, and a favourable royalty regime for oil and gas production.
Under the State of Queensland Regulatory process, ATPs (Authority to Prospect) are granted by the State generally for a period of twelve years with one third of the original grant area expiring every four years. At the end of the final term of the ATP, an application can be made to continue a portion of the permit in the form of a PCA (Potential Commercial Area). PCAs have a life span of five to fifteen years. PCA applications include a commercial viability report that indicates that the area is likely to be commercially viable within the applied term. This allows for extra time to commercialize the resource. These PCA's remain a part of the ATP until expiry. If a discovery of oil or gas is made, an application for a PL (petroleum lease) is made to allow for production. PLs are granted for up to a thirty-year term.
Bengal has two PLs on the former ATP 752 Barta block, PL 303, and PL 1028, in addition to three PCAs, PCA 206, PCA 207 Barta West and PCA 155 Wompi block-Nubba/Yilgarn. Bengal also holds four PLs including a pipeline license PPL 138 adjacent to the 100% owned ATP 934.
AUSTRALIA - Cooper Basin, Queensland
PL303 and PL 1028 Cuisinier (controlling permit ATP 752) (30.357% WI)
A pilot reservoir pressure maintenance scheme was initiated during the prior fiscal year and after resolving mechanical issues, water injection activities commenced during calendar Q4 2021. This project is located in the southeast quadrant of the Cuisinier pool, with injection of water taking place at the Cuisinier 24 well. The broad nature of the Cuisinier structure combined with variable flank aquifer pressure support has resulted in pressure depletion within the central portion of the Cuisinier pool. The injection of produced formation water is anticipated to both increase production in up to four offsetting wells and reduce water handling charges. On establishing success of the pilot, the Joint Venture ("JV") will begin a multi staged water injection scheme, targeted fracture stimulation and more commercially efficient development drilling. Mechanical issues through commissioning caused periods of downtime; however, the joint venture has observed moderate increases in oil rates at six wells at a cumulative rate of 35 bopd in September 2022. Absent the impact of several wells that were shut-in for various operational reasons, the joint venture has observed compelling evidence to suggest that the overall field decline has been arrested with even a general upward trend in oil rate since December 2021
PL 114 Wareena, PL 157 Ghina, PL 188 Ramses, PL 411 Karnak, PPL 138 pipeline (100% WI)
The Company has a 100% working interest in four PLs and a natural gas pipeline connected to transportation infrastructure into the Eastern Australia Gas Market. These non-productive PLs are highly compatible with and in close proximity to ATP 934. Bengal continues to integrate subsurface data from the PLs to enhance the Company's understanding of ATP 934 and to finalize the selection of exploration and appraisal drilling locations.
Included in this program is the reinstatement of two gas wells and an existing gas pipeline to produce raw gas into existing infrastructure at PL Wareena. The Company expects to commence workover activities at Wareena 1 and Wareena 5 in November 2022 and would commence tie-in to pipeline PPL 138 subject to the success of planned activities and commercial test rates. Commercial negotiations, planning and execution of the project are well advanced with materials being delivered and fabrication starting. The Company is investing in a proprietary proof of concept arrangement to allow commercial gas production prior to a pipeline connection.
The 100% ownership of these assets presents an appraisal and development opportunity that will be operated by the Company and is seen to be not only complementary to our proven producing, non-operated Cuisinier asset, but also as a key steppingstone for Bengal's natural gas platform upon which future development, appraisal at the existing PLs and exploration growth through ATP 934 can be undertaken.
ATP 732 Tookoonooka (100% WI)
In September 2019, the Company applied for an amendment to the LWP for the third term of ATP 732 permit. On October 22, 2019, the Company received approval from the Queensland regulatory authority for an amended LWP for the third, four-year term commencing April 1, 2019, to March 31, 2023. The approved LWP was revised to minimum activities of reprocessing seismic and inversion work with an estimated cost of $0.05 million and geological and geophysical investigation at an estimated cost of $0.05 million during the four-year term, of which $0.2 million has been spent to date.
On the Caracal-1 well, the Company conducted an acid treatment to improve well bore inflow with positive results and moderate inflow of very light 53 degree gravity oil from the Wyandra zone. These results are being evaluated with a plan for fracture stimulation to further enhance productivity being put in place. Following fracture stimulation, the well could commence production using the Company's Early Oil Production System with the addition of storage and load-out infrastructure. The well is currently being evaluated to assess the commerciality of existing production as well as potential future fracture stimulation plans.
ATP 732 reaches the end of its term in March of 2023 and the Company has lodged an application over the northern portion of the ATP for continuation in the form of a Potential Commercial Area for a further 15 years. In addition, the Company is assessing farm-in interest on other 3D defined drilling targets.
ATP 934 Barrolka (100% WI)
ATP 934 is the Company's 100% owned natural gas exploration block. Bengal received a special amendment approved for ATP 934 in March 2021 which relinquished 50% of the existing ATP area and extended the term of the ATP by entering into an outcome based Later Work Program (LWP) for another 6 years to February 28, 2027. The LWP includes the drilling of up to 3 wells and 260 km2 of 3D seismic.
ATP 934 Durham Downs East Farmout Block (40% WI)
Bengal entered into an agreement with Santos in July of 2020 to farm-in on a portion of the ATP 934 block. Santos carried the drilling costs of one well to earn a 60% operated interest in the ATP 934 southern farm-out block, which represents 57.8% of the total block post April 2020 relinquishment. On October 14, 2021, Santos completed the drilling of the Legbar-1 exploration well. Santos paid 100% of the costs to drill, plug and abandon the well and has accordingly earned a 60% working interest in 103,760 km2 of gross exploration land.
While the Legbar-1 well did not indicate commercial quantities of hydrocarbons, thick, high-quality reservoir sands were encountered in the primary Permian Toolachee formation and in the Jurassic Birkhead zone, with evidence of residual hydrocarbon saturation in both zones. In addition, fluorescence shows and elevated gas readings through the Jurassic lower Birkhead Fm/Top Hutton Sandstone indicate oil has passed through the reservoir, supporting the search for a valid closure to test this play. The findings from the Legbar-1 well will help Bengal refine its exploration targets going forward, both with Santos in the Santos Farm-in Block and across the balance of ATP 934 which is 100% owned by Bengal.
The Company is in discussions with potential industry and financial partners to fund some of these oil and gas-related activities.
Non-IFRS and Other Financial Measures
Non-IFRS Financial Measures
Within this MD&A, references are made to terms commonly used in the oil and gas industry. Operating netback, operating netback per barrel, funds from operations, funds from operations per share, adjusted net income, and adjusted net income per share do not have any standardized meaning under IFRS and are referred to as non-IFRS measures. Management believes the presentation of the non-IFRS measures above provides useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.
Bengal utilizes operating netback as a key performance indicator and is utilized by Bengal to better analyze the operating performance of its petroleum and natural gas assets against prior periods. Operating netback is calculated by oil sales deducting royalties and operating expenses. The following table reconciles petroleum and natural gas revenue to netback:
|Three months ended||Six months ended|
|September 30||September 30|
Funds from operations
Management utilized funds from operations a measure to assess the Company's ability to generate cash not subject to short-term movements in non-cash operating working capital. Funds from operations is calculated by adding back all non-cash expense deductions to the net loss for the quarter and year. The following table reconciles cash from operations to funds from (used in) operations, which is used in this MD&A:
|Three months ended||Six months ended|
|($000s)||September 30||September 30|
|Cash from (used in) operating activities||1,053||565||2,070||(209||)|
|Changes in non-cash working capital||721||(148||)||386||745|
|Funds from (used in) operations||1,774||417||2,456||536|
|Less: Other income||(1,093||)||-||(1,093||)||-|| |
|Adjusted funds from operations||681||417||1,363||536|| |
Bengal uses working capital to monitor its capital structure, liquidity, and its ability to fund current operations. Working capital is calculated as current assets less current liabilities but excludes other obligations and the current portion of decommissioning obligations.
Non-IFRS Financial Ratios
Bengal uses operating netback per share to assess the Company's operating performance on a per unit of production basis. Operating netback per barrel equals operating netback divided by the applicable number of barrels.
|Operating netbacks per barrel|
|Three months ended||Six months ended|
|September 30||September 30|
Bengal uses funds from operations per share to assess the ability of the Company to generate the funds necessary for financing, operating, and capital activities on a per-share basis. This is a non-IFRS measure calculated by dividing funds from operations by weighted average basic and diluted shares outstanding for the periods disclosed.
Bengal Energy Ltd. is an international junior oil and gas exploration and production company with assets in Australia. The Company is committed to growing shareholder value through international exploration, production, and acquisitions. Bengal's common shares trade on the TSX under the symbol "BNG". Additional information is available at www.bengalenergy.ca
This news release contains certain forward-looking statements or information ("forward-looking statements") as defined by applicable securities laws that involve substantial known and unknown risks and uncertainties, many of which are beyond Bengal's control. These statements relate to future events or our future performance. All statements other than statements of historical fact may be forward-looking statements. The use of any of the words "plan", "expect", "future", "prospective", "project", "intend", "believe", "should", "would," "anticipate", "estimate", or other similar words or statements that certain events "may" or "will" occur are intended to identify forward-looking statements. The projections, estimates and beliefs contained in such forward-looking statements are based on management's estimates, opinions, and assumptions at the time the statements were made, including assumptions relating to: the impact of economic conditions in North America and Australia and globally; industry conditions; changes in laws and regulations including, without limitation, the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; increased competition; the availability of qualified operating or management personnel; fluctuations in commodity prices, foreign exchange or interest rates; stock market volatility and fluctuations in market valuations of companies with respect to announced transactions and the final valuations thereof; results of exploration and testing activities; and the ability to obtain required approvals and extensions from regulatory authorities. We believe the expectations reflected in those forward-looking statements are reasonable but, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Bengal will derive from them. As such, undue reliance should not be placed on forward-looking statements.
Forward-looking statements contained herein include, but are not limited to, statements regarding:
- Bengal's multi-phase water injection scheme;
- Bengal's development plans for its four PLs at ATP 934.
The forward-looking statements contained herein are subject to numerous known and unknown risks and uncertainties that may cause Bengal's actual financial results, performance or achievement in future periods to differ materially from those expressed in, or implied by, these forward-looking statements, including but not limited to, risks associated with: the failure to obtain required regulatory approvals or extensions; the failure to satisfy the conditions under farm-in and joint venture agreements; the failure to secure required equipment and personnel; changes in general global economic conditions including, without limitations, the economic conditions in North America and Australia; increased competition; the availability of qualified operating or management personnel; fluctuations in commodity prices, foreign exchange or interest rates; changes in laws and regulations including, without limitation, the adoption of new environmental and tax laws and regulations and changes in how they are interpreted and enforced; the results of exploration and development drilling and related activities; the ability to access sufficient capital from internal and external sources; and stock market volatility. Readers are encouraged to review the material risks discussed in Bengal's annual information form for the year ended March 31, 2022, under the heading "Risk Factors" and in Bengal's management's discussion and analysis for the Q2 of the fiscal year ending March 31, 2023, under the heading "Risk Factors". The Company cautions that the foregoing list of assumptions, risks, and uncertainties is not exhaustive. The forward-looking statements contained in this news release speak only as of the date hereof and Bengal does not assume any obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.
The following terms used in this news release have the meanings set forth below:
bbl - barrel
bbls - barrels
bbls/d -barrels per day
$/bbl - dollars per barrel
Q1- three months ended June 30
Q2- three months ended September 30
Q4 - three months ended March 31
Within this news release, references are made to terms commonly used in the oil and gas industry. Funds from (used in) operations, funds from (used in) operations per share, operating netback, netback per bbl, adjusted net income (loss) and adjusted net income (loss) per share do not have any standardized meaning under IFRS and previous GAAP and are referred to as non-IFRS measures. Funds from (used in) operations per share are calculated based on the weighted average number of common shares outstanding consistent with the calculation of net income (loss) per share. Operating netback includes realized losses on financial instruments. Netback per bbl is calculated by dividing revenue (including realized loss on financial instruments) less royalties, and operating expenses by the total production of the Company measured in bbl. Adjusted net income (loss) and adjusted net income (loss) per share are calculated based on Net income (loss) plus unrealized loss (gain) on financial instruments less unrealized foreign exchange loss (gain) and non-cash impairment of non-current assets. The Company's calculation of the non-IFRS measures included herein may differ from the calculation of similar measures by other issuers. Therefore, the Company's non-IFRS measures may not be comparable to other similar measures used by other issuers. Funds from operations is not intended to represent operating profit for the period nor should it be viewed as an alternative to operating profit, net income, cash flow from operations or other measures of financial performance calculated in accordance with IFRS. Non-IFRS measures should only be used in conjunction with the Company's annual audited and interim financial statements. A reconciliation of these measures can be found in the tables on pages 13,14 and 15 of Bengal's management's discussion and analysis for the Q2 of the fiscal year ending March 31, 2023.
Disclosure of Oil and Gas Information
This document discloses test results which are not necessarily indicative of long-term performance or of ultimate recovery.
FOR FURTHER INFORMATION PLEASE CONTACT:
Bengal Energy Ltd.
Chayan Chakrabarty, President & Chief Executive Officer
Jerrad Blanchard, Chief Financial Officer
(1) Non-IFRS and Other Financial Measures are defined in the Non-IFRS and Other Financial Measures section of this press release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/143560