Calgary, Alberta--(Newsfile Corp. - August 29, 2024) - New Stratus Energy Inc. (TSXV: NSE) ("New Stratus", "NSE" or the "Corporation") is pleased to announce the consolidated financial and operating results for the three and six months ended June 30, 2024 that have been filed on SEDAR+ (www.sedarplus.ca).
Q2 June 30, 2024 Highlights:
Working Capital (Basic):
$26,592,550 ($0.21 per basic common share)
Adjusted Working Capital(1)(4):
$33,106,553 ($0.23 per common share)
Net Income (Loss) (Basic & Fully Diluted)(2):
($161,500) (($0.00) per common share)
Income from Investment in Joint Venture:
$3,621,733
Adjusted EBITDA(3)(4):
$4,536,266
Notes:
(1) Assumes the exercise of 11,073,450 warrants and 5,890,000 options. (2) In accordance with GAAP, Net income (loss) per basic & fully diluted share are the same in a loss position. (3) Adjusted EBITDA discloses Venezuelan and Mexican operations only. As per certain contractual provisions, GoldPillar is entitled to revenues from procurement, trading, financing as well as operations. See full disclosure in Section 5 "Quarterly Review" of the MD&A. The Soledad acquisition final closing is September 30, 2024, although NSE has 49% economic entitlement as of May 1, 2024. (4) This is a non-GAAP financial measure. Refer to the disclosure under the heading "Non-GAAP Financial Measures" for more information on each non-GAAP financial measure.
Second Quarter Summary:
NSE is pleased to report our second quarter of operations from GoldPillar as well as our first quarter of operations at Soledad, with NSE's economic interest having begun there on May 1, 2024. The Corporation's average production for the second quarter of 2024 was 1,106 boepd (1,031 boepd from Soledad and 75 boepd from GoldPillar), with June 30, 2024 exit combined production of 1,281 boepd.
As evidenced by our strong Adjusted EBITDA of $4,536,266 for Q2 2024, operations at both GoldPillar and Soledad continue their positive momentum from Q1 2024, with continued EBITDA growth expected for both Q3 & Q4 2024.
During Q2 GoldPillar completed the first sale of cargo, whereby pursuant to the terms of the commercialization agreement, all Q2 fees and expenses owing to GoldPillar from Petroleos de Venezuela S.A. ("PDVSA") were paid at such time. Additionally, all expenses for Q3 & Q4 have been paid as well. GoldPillar is entitled to hold the proceeds from the first payment in kind of cargo, in the amount of $53 million, to secure PDVSA's share of funding for operations and development plans for the remainder of 2024. With this expense reserve, GoldPillar is fully financed and self-sufficient with the ability to reach its entire contract production and capital expenditure program commitments.
The Corporation continues to remain in a very strong financial position with adjusted working capital of $33,106,553 and basic working capital of $26,592,550 as at June 30, 2024. Subsequent to the end of Q2, NSE was notified by the Government of Ecuador that it will be receiving a $6.8 million correction factor adjustment dating back to an application made in 2022, which payment is expected before the end of 2024.
Operations Update:
The Corporation announces that Mr. Javier Silva, currently the Financial Manager at Petrolia Ecuador S.A. ("Petrolia"), a subsidiary of the Corporation, has been promoted to Vice President, Finance for Latin America and will report to the CEO and President of the Corporation. In addition to his new role as Vice President, Finance for Latin America, he will continue executing his role as Finance Manager for Petrolia.
The Corporation also announces it intends to grant incentive stock options to acquire a total of 1,800,000 common shares of the Corporation to various directors and officers of the Corporation pursuant to the Corporation's stock option plan and subject to any regulatory approval. Each stock option will vest immediately and will be exercisable for a period of five years from the grant date. The stock options will be granted on September 4, 2024 and will be exercisable at the closing price of the common shares on the TSX Venture Exchange on September 3, 2024.
Finally, as has been stated in previous quarters, the Corporation continues to work with the Government of Ecuador to find a resolution to its dispute and appropriate remedies as is outlined in the notice of arbitration filed in 2022. The Corporation expects this dispute to be resolved positively in 2024.
Contact Information:
Jose Francisco Arata Chairman & Chief Executive Officer [email protected]
Mario Miranda Chief Financial Officer [email protected] - (647) 498-9109
Forward-Looking Information
Certain information set forth in this news release constitutes "forward-looking statements", and "forward-looking information" under applicable securities legislation (collectively, "forward-looking statements"). All statements other than statements of historical fact are forward-looking statements. Forward-looking statements may be identified by the use of conditional or future tenses or by the use of words such as "will", "expects", "intends", "may", "should", "estimates", "anticipates", "believes", "projects", "plans", and similar expressions, including variations thereof and negative forms. Forward-looking statements in this news release include, among others, estimated production amounts, the closing of the Soledad transaction and the impact thereof on financial results, the timing of the new development plan, the financial position of GoldPillar and its funding status, the receipt of the correction factor adjustment from the Government of Ecuador, the stock option grant and the pricing thereof, and the resolution of the arbitration with the Government of Ecuador. Forward-looking statements are based on the Corporation's current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. Forward-looking statements are not guarantees of future performance and undue reliance should not be placed on them.
In respect of the forward-looking statements contained herein, the Corporation has provided them in reliance on certain assumptions that it believes are reasonable at this time, some or all of which may prove to be incorrect. Accordingly, readers should not place undue reliance on the forward-looking statements contained herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the timing for conducting planned operations and the results of such operations, including flow rates and resulting production; the availability of the requisite personnel and equipment to conduct operations; the ability to successfully integrate operations and realize the anticipated benefits of acquisitions; the ability to increase production, and the anticipated cost associated therewith; changes in government regulations; changes in commodity prices and currency exchange rates; interest rate fluctuations; the ability to secure adequate equity and debt financing; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. New Stratus undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. Actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance 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 may be derived therefrom.
Oil and Gas Advisory
References in this news release to production rates or initial performance measures relating to new wells or recompleted wells are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long-term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for the Corporation. Accordingly, the Corporation cautions that the test results should be considered to be preliminary.
Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 thousand cubic feet (Mcf) per 1 barrel (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. As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a 6:1 conversion basis may be misleading as an indication of value.
Non-GAAP Financial Measures
This news release uses the terms "Adjusted EBITDA" which is a non-GAAP financial measure and the term "Adjusted Working Capital" which is a capital management measure. These financial and other measures do not have a standardized prescribed meaning under GAAP and these measures may not be comparable with the calculation of similar measures disclosed by other entities. See "Non-GAAP and Other Financial Measurements" in the most recent Management's Discussion and Analysis for more information on the definition and description of these terms.
"Adjusted EBITDA" (earnings before interest, taxes, depreciation and amortization) is used by management to analyze the Corporation's profitability based on the Corporation's principal business activities prior to how these activities are financed, how assets are depreciated, amortized and impaired, and how the results are taxed. Additionally, revenues that are not currently recorded in the reported period financial statements, to ensure a conservative presentation approach, are added back. The Corporation does not deem these to relate to the performance of its principal business. Adjusted EBITDA is not intended to represent net profit (or loss) as calculated in accordance with IFRS.
"Adjusted Working Capital" is used by management for its own performance measure to provide shareholders and potential investors with a measurement of the Corporation's liquidity. Adjusted Working Capital assumes the exercise of warrants and options which were "in the money", and includes such options and warrants in the calculation weighted average basic common shares outstanding to determine the Adjusted Working Capital per share.
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 release.
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