RUBELLITE ENERGY INC. REPORTS FIRST QUARTER FINANCIAL AND OPERATING RESULTS

CALGARY, AB, May 13, 2024 /CNW/ – (TSX:RBY) – Rubellite Energy Inc. (“Rubellite”, or the “Company”), a pure play Clearwater oil exploration and development company, is pleased to report its first quarter 2024 financial and operating results.

Select financial and operational information is outlined below and should be read in conjunction with Rubellite’s unaudited condensed interim consolidated financial statements and related Management’s Discussion and Analysis (MD&A”) for the three months ended March 31, 2024, which are available through the Company’s website at www.rubelliteenergy.com and Sedar+ at www.sedarplus.ca.

This news release contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Company and its business. Since certain specified financial measures may not have a standardized meaning, securities regulations require that specified financial measures are clearly defined, qualified and, where required, reconciled with their nearest GAAP measure. See “Non GAAP and Other Financial Measures” in this news release and in the MD&A for further information on the definition, calculation and reconciliation of these measures. This news release also contains forward-looking information. See “Forward-Looking Information”. Readers are also referred to the other information under the “Advisories” section in this news release for additional information.

FIRST QUARTER 2024 HIGHLIGHTS

First quarter conventional heavy oil sales production of 4,514 bbl/d was up 7% from the fourth quarter of 2023 (Q4 2023 – 4,209 bbl/d), up 51% from the first quarter of 2023 (Q1 2023 – 2,990 bbl/d), and exceeded the Company’s Q1 2024 guidance range of 4,450 to 4,500 bbl/d.
Exploration and development capital expenditures(1) totaled $12.6 million for the first quarter, in line with guidance of $12 to $13 million, to drill, complete, equip and tie-in six (6.0 net) multi-lateral horizontal development wells at Figure Lake and to drill and core one (1.0 net) vertical stratigraphic evaluation well. Facilities spending included $0.5 million in the quarter for the 2024 Figure Lake gas conservation project.
Adjusted funds flow in the first quarter was $18.5 million ($0.30 per share) (Q1 2023 – $9.7 million and $0.18 per share), driven by the growth in sales production and higher realized oil prices, partially offset by higher cash costs.
Cash costs(1) were $9.0 million or $21.86/boe in the first quarter of 2024 (Q1 2023 – $6.0 million or $22.15/boe).
Net loss was $4.2 million in the first quarter of 2024 (Q1 2023 – $1.7 million net income) driven by a $13.9 million unrealized loss on risk management contracts.
As at March 31, 2024, net debt(1) was $45.5 million, a decrease from $51.0 million as at December 31, 2023 driven by $5.7 million of free funds flow(1).
Rubellite had available liquidity at March 31, 2024 of $12.2 million, comprised of the $52.0 million borrowing limit of Rubellite’s first lien credit facility (“Credit Facility Borrowing Limit”), less current borrowings of $37.1 million and outstanding letters of credit of $2.7 million.

OPERATIONS UPDATE

Rubellite contracted one drilling rig during the first quarter of 2024 to drill a total of six (6.0 net) multi-lateral horizontal wells along with one (1.0 net) vertical stratigraphic evaluation well and has kept this drilling rig running continuously at Figure Lake through break up since late March. One horizontal development well was rig released on the 14-22 Pad in mid-January. Given ungulate restrictions during the winter season, drilling operations shifted to the south end of Figure Lake to drill two wells on lands acquired in the fourth quarter at a pad in Edwand at 3-17-61-17W4 (the “3-17 Pad”), applying an OBM drilling fluid system to this pool to compare to the water-based mud results from wells drilled by the previous operator. Two additional multi-lateral horizontal wells were rig released offsetting the successful step out delineation well drilled in the fourth quarter at 6-19-62-18W4 (the “6-19 Pad”) and four of six additional wells have now been rig released at 5-32-63-17W4 (the “5-32 Pad”) on the Buffalo Lake Métis Settlement (“BLMS”), one of which was rig released and began load oil recovery prior to the end of the first quarter. Results from the ongoing 2024 drilling program have on average performed in line with expectations(1).

In early January, Rubellite re-activated its horizontal multi-lateral Northern Exploration well at Dawson (5-16-81-16W5) which was rig released in late January 2023. Production performance was monitored through the winter operating season and the well was shut-in again in late March.

The contracted rig will continue to drill an additional eighteen to nineteen (18.0 – 19.0 net) wells at Figure Lake over the last nine months of 2024, with a second rig anticipated to arrive in early June to drill up to ten (10.0 net) additional development / step-out delineation multi-lateral horizontal wells at Figure Lake over the balance of the year.

Permitting is underway and equipment has been ordered to construct a sales gas plant at Figure Lake to direct solution gas to sales beginning in the first quarter of 2025. By utilizing existing pipeline infrastructure from legacy shallow gas producers in the area, the solution gas tie-in project will not only significantly reduce emissions from the Figure Lake property where natural gas is currently being incinerated on multiple pad sites, it is also economically attractive, with a forecast rate of return of >75% on the approximately $7 million capital investment, with project payout expected in 2026 based on current forward natural gas prices and anticipated carbon credits.

Rubellite also plans to continue exploration activities to pursue additional prospective land capture and de-risking during 2024.

OUTLOOK AND GUIDANCE

Rubellite’s board of directors has approved exploration and development capital spending for 2024 to be approximately $70 to $75 million to drill, complete, equip and tie-in thirty four to thirty five (34.0 to 35.0 net) multi-lateral development / step-out wells in the greater Figure Lake area and includes $7 million of capital spending required for the Figure Lake gas sales plant and related pipeline tie-ins. Also included is investment in the drilling of one (0.3 net) well to initiate waterflood at Marten Hills and ongoing exploration activities. Forecast drilling activities will be funded from adjusted funds flow, with excess free funds flow applied to reduce net debt. 

Production sales volumes are expected to grow 39% to 48% year-over-year to average 4,600 to 4,900 boe/d and exit the year at 5,000 to 5,200 boe/d, poised for continued growth into 2025 with strong anticipated oil production and the addition of natural gas sales volumes in the first quarter of 2025.

Capital spending, drilling activity and operational guidance for 2024 are largely unchanged as outlined in the table below:

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