Blackbird Energy Inc. Announces Record First Quarter 2019 Financial and Operating Results Including Revenue of $7.4 Million and Corporate Production of 1,736 boe/d


CALGARY, Alberta, Dec. 21, 2018 (GLOBE NEWSWIRE) — (TSX-V: BBI) Blackbird Energy Inc. (“Blackbird” or the “Company”) is pleased to announce its record financial and operational results for the quarter ended October 31, 2018. Blackbird’s unaudited condensed consolidated interim financial statements and related management’s discussion and analysis for the quarter ended October 31, 2018 are available on SEDAR at www.sedar.com and are also posted on Blackbird’s website at www.blackbirdenergyinc.com.

Highlights

  • Significant Exposure to High-Quality Liquids Supports Record Revenue: Blackbird achieved record revenue from its Pipestone / Elmworth project during the first quarter of 2019. The Company reported $7.4 million ($46.31/boe) of petroleum and natural gas sales during the three months ended October 31, 2018 which represents a 186% increase from the comparative three months ended October 31, 2017. Blackbird continues to realize the benefit of its significant liquids weighting with revenues being bolstered by realized condensate and oil prices of $76.57/bbl for the quarter. Approximately 72% of total revenues were attributable to the Company’s high-quality liquids production during the quarter.
  • Record Production of 1,736 boe/d: During the three months ended October 31, 2018, the Company achieved a record average total production rate of 1,736 boe/d comprised of 47% liquids. During the quarter, Blackbird produced 5.5 mmcf/d of natural gas, 723 bbls/d of condensate and oil, 98 bbls/d of NGLs and 2 boe/d of non-core production. The Company produced for approximately 84 days during the first quarter of 2019 compared to 92 total calendar days in the quarter (91% run-time) with limited third-party gas processing plant downtime experienced.
  • Strong Operating and Corporate Netbacks: Blackbird’s operating and corporate netbacks* were $23.12/boe and $13.92/boe, respectively, for the first quarter of 2019. Stronger realized sales prices combined with reduced operating and general and administrative expenses on a per boe basis resulted in an improvement to the operating and corporate netbacks* of 61% and 530%, respectively, in the three months ended October 31, 2018 compared to the three months ended October 31, 2017.
  • Adjusted Funds Flow: The Company generated $2.2 million of adjusted funds flow* during the three months ended October 31, 2018.
  • Condensate & Oil Gas Ratio: The Company’s condensate & oil gas ratio (“CGR”) averaged 132 bbls/mmcf during the three months ended October 31, 2018 on its sales.
  • Total Liquids Gas Ratio: The Company’s total liquids gas ratio (“LGR”) averaged 150 bbls/mmcf during the three months ended October 31, 2018.
  • Capital Investment and Successful Drilling Program: Blackbird invested $11.4 million during the three months ended October 31, 2018, drilling 3 gross (3 net) Montney wells and furthering its infrastructure development north of the Wapiti River. All three wells were drilled from Blackbird’s 9-14-71-7W6 northern pad-site and implemented an extended reach lateral program. The Company drilled its 102/2-27-71-7W6 Upper Montney, 103/14-22-71-7W6 Upper Montney and 100/2-27-71-7W6 Middle Montney wells in an average of 24.5 days and with an average horizontal length of 3,031 meters. Subsequent to October 31, 2018, Blackbird moved its drilling rig east to the 12-36-70-6W6 pad to drill the 100/11-12-71-6W6 Middle Montney well. The drilling of the 100/11-12-71-6W6 well allows Blackbird to validate up to 20 sections of land while also delineating the Company’s unexplored northeastern acreage. The Company began ordering its long lead time equipment required for its Pipestone / Elmworth northern infrastructure development during the quarter. Blackbird expects that construction will commence on this project in January 2019.
  • Equity Financings: During the quarter the Company completed a non-brokered private placement consisting of 6,249,181 common shares issued on a “Canadian Development Expenses flow-through” basis (the “CDE Flow-Through Shares”) at a price of $0.37 per CDE Flow-Through Share and 16,000,000 common shares issued on a “Canadian Exploration Expenses flow-through” basis (the “CEE Flow-Through Shares”) at a price of $0.40 per CEE Flow-Through Share for total combined gross proceeds of $8.7 million.
  • Balance Sheet Strength Maintained: At October 31, 2018, Blackbird had working capital of $3.8 million, which included $11.7 million of cash and no bank debt. The working capital surplus combined with the undrawn loan facility provides Blackbird with approximately $23.0 million of future available funding* at October 31, 2018.

* See “Non-IFRS Measures” below.

The following table summarizes certain financial and operational figures, and should be read in conjunction with Blackbird’s unaudited condensed consolidated interim financial statements and related MD&A for the quarter ended October 31, 2018:

(CDN$ thousands, except where otherwise noted) Three months ended October 31
2018 2017 % Change
Financial
Petroleum and natural gas sales 7,397 2,582 186
Cash provided by (used in) operating activities 1,009 (2,114 ) (148 )
Net loss and comprehensive loss (1,132 ) (1,737 ) (35 )
Net loss per share – basic and diluted ($/share) (0.00 ) (0.00 )
Working capital 3,759 21,317 (82 )
Available funding(1) 23,041 22,317 3
Capital expenditures 11,368 29,241 (61 )
Operating
Production
Condensate & oil (bbls/d) 723 328 120
NGLs (bbls/d) 98 30 227
Natural gas (mcf/d) 5,478 2,112 159
Non-core (boe/d) 2 2
Total (boe/d) 1,736 712 144
Liquids ratio (%) 47 50 (6 )
Condensate & oil gas ratio (bbls/mmcf) 132 155 (15 )
Total liquids gas ratio (bbls/mmcf) 150 170 (12 )
Average Montney realized selling prices
Condensate & oil ($/bbl) 76.57 60.50 27
NGLs ($/bbl) 29.28 30.26 (3 )
Natural gas ($/mcf) 4.04 3.44 17
 
Netbacks ($/boe)  
Petroleum and natural gas sales 46.31 39.41 18
Royalties (2.16 ) (2.09 ) 3
Operating expenses (6.27 ) (10.62 ) (41 )
Transportation and processing expenses (14.76 ) (12.33 ) 20
Operating netback(1) 23.12 14.37 61
General and administrative expenses (9.04 ) (14.05 ) (36 )
Financing costs (0.25 )
Interest income 0.09 1.89 (95 )
Corporate netback(1) 13.92 2.21 530

Note:
(1) See the Company’s Q1 2019 interim financial statements and related MD&A filed on SEDAR for further information regarding its calculation of “available funding”, “operating netback” and “corporate netback”.

Outlook

On October 30, 2018, the Company announced that it had entered into an agreement with Pipestone Oil Corp. (“Pipestone Oil”) that provides for the strategic combination of Blackbird and Pipestone Oil (the “Transaction”).

On December 19, 2018, Blackbird held its special meeting of shareholders (the “Blackbird Shareholders”), at which the Transaction was approved by a majority of over 99% of votes cast. The Blackbird Shareholders also approved the continuance of Blackbird from British Columbia into Alberta (the “Continuance”), which is necessary for the Transaction to proceed as proposed.  The Continuance was completed following the meeting, such that Blackbird is now an Alberta corporation governed by the Business Corporations Act (Alberta) (“ABCA”).

The Transaction is structured as a court-approved arrangement under section 193 of the ABCA.  On December 20, 2018, the Alberta Court of Queen’s Bench granted a final order approving the arrangement under the ABCA.  The Transaction has also been conditionally accepted by the TSX Venture Exchange, subject to the filing of customary documentation.  No other regulatory approvals remain outstanding.

In connection with the Transaction, Blackbird and Pipestone Oil also entered into agreements with certain of their existing shareholders who have committed to common equity financings totaling approximately $111.0 million and Pipestone Oil arranged approximately $198.5 million of debt financing (collectively, the “Financings”).

The Transaction will result in the strategic combination of two adjacent and contiguous Pipestone Montney land bases under a single well-capitalized, high growth company that will operate under the name Pipestone Energy Corp. (“Pipestone Energy”).

The Transaction and Financings are expected to close on or about January 4, 2019. For additional information relating to the Transaction and guidance on Pipestone Energy’s future plans please refer to the Company’s website at www.blackbirdenergyinc.com or to SEDAR at www.sedar.com.

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.

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