ROK Resources Inc.: ROK Resources Announces Revised First-Half 2024 Guidance & Files 2023 Financial Results & Management Discussion & Analysis

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REGINA, SK / ACCESSWIRE / April 18, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(OTCQB:ROKRF) announces revised first-half 2024 guidance, and has filed its Annual Financial Results and Management Discussion & Analysis for the year ended December 31, 2023.

First-Half 2024 Revised Guidance

With the recent stability of WTI pricing, the Company anticipates commencing its drilling program after spring break-up in late Q2 2024. Key initiatives for 2024 include reducing corporate finding and development costs and expanding core operating areas in Southeast Saskatchewan. The six well program, which will target Frobisher light oil prospects, will begin with prospects offsetting the best oil well³ in Saskatchewan in December 2023. To support these endeavors, the first-half 2024 capital budget has been revised from $4.0 - $4.5 million to $10.0 - 10.5 million. This acceleration of development is contingent on various factors, including favorable weather and road conditions following spring break-up.

The Company intends to provide second-half 2024 guidance in late Q2 2024.

Highlights of Revised First-Half 2024 Guidance

• Stability in WTI: Company will increase its capital budget in first-half 2024 to $10.0 - $10.5 million, with an expected benefit to Net Operating income through second-half 2024 as new unhedged production comes on-stream. The Company expects to average ~4,000 boepd in first-half 2024 (61% liquids);
• Net Debt: Estimated $16.0 - $16.5 million in Adjusted Net Debt at the end of first-half 2024;
• Expedited Drill Program: Addition of 6 gross (5.4 net) Frobisher wells in late Q2, weather permitting; and
• Efficient Use of Capital: $1.0 million allocated to reactivations and recompletions, expected to yield average capital efficiencies of $5,000 to $10,000 per boepd.

2023 Financial and Operating Highlights

• Record Average Production: Daily average production in 2023 of 3,876 boepd (62% liquids), a 40% increase compared to prior year;
• Organically Increased Production by 55%: In second-half 2023 the Company drilled 13 gross (11.6 net) wells, adding 1,650 boepd, which represents a 55% increase in production over the period;
• Exceeded 2023 Funds from Operations Forecast: Funds from Operations of $37.2 million in 2023, exceeding the Company's forecast by 3.5% despite weaker commodity pricing;
• Net Debt: The Company exited 2023 with Net Debt of $14.7 million (or Adjusted Net Debt of $18.7 million). This represents a 58%, or $20.6 million, reduction in Net Debt year over year; and
• Hedge Gain: realized an annual hedge gain on commodity contracts of $6.7 million.

Financial			Q4 2023				Q4 2022			Year 2023				Year 2022
Net income (loss)			(3,713,389	)			(5,556,994	)			(10,986,934	)			80,002,750
Basic ($/share)			(0.02	)			(0.03	)			(0.05	)			0.46
Diluted ($/share)			(0.02	)			(0.03	)			(0.05	)			0.40
Funds flow			6,163,667				12,496,785				25,790,378				39,007,318
Basic ($/share)			0.03				0.06				0.12				0.24
Diluted ($/share)			0.03				0.06				0.12				0.23
Expenditures on property, plant and equipment			12,348,404				11,960,612				28,933,947				28,402,308
Operating
Operating Income
Oil and Natural Gas Sales			23,207,066				23,925,141				87,226,620				87,311,542
Royalties			(3,902,500	)			(4,135,298	)			(15,392,995	)			(14,321,258	)
Operating Expenses			(11,501,149	)			(7,804,463	)			(44,095,957	)			(25,356,246	)
Operating Income			7,803,417				11,985,380				27,737,668				47,634,038
Realized gain on commodity contracts			1,021,804				2,336,149				6,710,873				4,124,648
Processing and other income			1,074,743				574,624				2,778,326				1,787,246
Funds from Operations			9,899,964				14,896,153				37,226,867				53,545,932
Average daily production
Crude oil (bbl/d)			2,116				2,453				2,064				1,848
NGLs (boe/d)			495				219				417				177
Natural gas (mcf/d)			9,591				5,263				8,372				4,473
Total (boe/d)			4,210				3,549				3,876				2,770
Operating Netback per boe
Oil and Natural Gas Sales			59.91				73.28				61.65				86.36
Royalties			(10.08	)			(12.67	)			(10.88	)			(14.17	)
Operating Expenses			(29.69	)			(23.91	)			(31.17	)			(25.08	)
Operating Netbacks ($/boe)			20.14				36.70				19.60				47.11
Funds from Operations ($/boe)			25.56				45.63				26.31				52.96
Operating Income Profit Margin			33.6	%			50.1	%			31.8	%			54.6	%
Funds from Operations Profit Margin			42.7	%			62.3	%			42.7	%			61.3	%
Share information
Common shares outstanding, end of period			218,418,315				211,580,484				218,418,315				211,580,484
Weighted average basic shares outstanding			217,267,463				199,711,392				214,720,034				164,762,938
Weighted average diluted shares outstanding			217,267,463				222,398,843				214,720,034				170,622,352

Net Debt

The continued reduction of Net Debt quarter over quarter is a result of organically generated funds flows utilized to reduce Company indebtedness. ROK uses "Net Debt" as a measure of the Company's financial position and liquidity, however it is not intended to be viewed as an alternative to other measures calculated in accordance with IFRS.

		December 31, 2023				December 31, 2022
Cash and cash equivalents			-				5,258,881
Accounts receivable			13,021,111				10,862,673
Prepaid expenses and deposits			364,090				1,144,672
Current portion of risk management contracts			4,521,075				4,418,471
Accounts payable and accrued liabilities			(17,560,130	)			(13,678,677	)
Adjusted working capital (2)			346,146				8,006,020
Credit Facility (8.2%) (1)			14,501,748				-
Lease obligations (1)			545,851				-
Senior Loan Facility (15%) (1)			-				43,347,566
Less: adjusted working capital (2)			(346,146	)			(8,006,020	)
Net debt			14,701,453				35,341,546

1. Represents undiscounted face value of debt balances and lease obligations outstanding as of each respective date presented.
2. Calculation of adjusted working capital excludes current portion of debt as presented on the statement of financial position. The mark-to-market fair value of the current portion of risk management contracts is included within adjusted working capital.
3. Published by ATB Capital Markets Institutional Research: Energy Producers on January 28, 2024.

Complete reports and statements are available on SEDAR at www.sedar.com

About ROK

ROK is primarily engaged in exploring for petroleum and natural gas development activities in Alberta and Saskatchewan. It has offices located in both Regina, Saskatchewan, Canada and Calgary, Alberta, Canada. ROK's common shares are traded on the TSX Venture Exchange under the trading symbol "ROK".

For further information, please contact:

Cameron Taylor, Chairman and Chief Executive Officer
Bryden Wright, President and Chief Operating Officer
Jared Lukomski, Senior Vice President, Land & Business Development
Lynn Chapman, Chief Financial Officer
Phone: [phone]
Email: [e-mail]
Website: www.rokresources.ca

Non-IFRS Measures

The non-IFRS measures referred to above do not have any standardized meaning prescribed by IFRS Accounting Standards ("IFRS") and, therefore, may not be comparable to similar measures used by other companies. Management uses this non-IFRS measurement to provide its shareholders and investors with a measurement of the Company's financial performance and are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net income or other measures of financial performance calculated in accordance with IFRS. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used.

"Operating Income" is calculated by deducting royalties and operating expense from total sales revenue. Total sales revenue is comprised of oil and gas sales. The Company refers to Operating Income expressed per unit of production as an "Operating Netback". "Operating Income Profit Margin" is calculated by the Company as Operating Income as a percentage of oil and natural gas sales. "Funds from Operations" is calculated by adding other income and realized gains/losses on commodity contracts ("hedging") to Operating Income.

The following table reconciles the aforementioned non-IFRS measures:

			Q4 2023				Q4 2022			Year 2023				Year 2022
Oil and Natural Gas Sales			23,207,066				23,925,141				87,226,620				87,311,542
Royalties			(3,902,500	)			(4,135,298	)			(15,392,995	)			(14,321,258	)
Operating Expenses			(11,501,149	)			(7,804,463	)			(44,095,957	)			(25,356,246	)
Operating Income			7,803,417				11,985,380				27,737,668				47,634,038
Processing and other income			1,074,743				574,624				2,778,326				1,787,246
Realized gain on commodity contracts			1,021,804				2,336,149				6,710,873				4,124,648
Funds from Operations			9,899,964				14,896,153				37,226,867				53,545,932
Sales volume (boe)			387,339				326,469				1,414,890				1,010,981
Per boe
Oil and Natural Gas Sales			59.91				73.29				61.65				86.36
Royalties			(10.08	)			(12.67	)			(10.88	)			(14.17	)
Operating Expenses			(29.69	)			(23.91	)			(31.17	)			(25.08	)
Operating Netback			20.14				36.70				19.60				47.11
Funds from Operations			25.56				45.63				26.31				52.96
Operating Income Profit Margin			33.6	%			50.1	%			31.8	%			54.6	%
Funds from Operations Profit Margin			42.7	%			62.3	%			42.7	%			61.3	%

"Net Debt" includes all indebtedness of the Company, such as the Credit Facility and Lease Obligations (each as defined within the Company's annual financial statements for the year ended December 31, 2023), net of Adjusted Working Capital. "Adjusted Working Capital" is calculated as current assets less current liabilities, excluding current portion of debt and lease liability as defined on the Company's statement of financial position within the Company's annual financial statements for the year ended December 31, 2023. "Adjusted Net Debt" is calculated by removing the "mark-to-market fair value of the current portion of risk management contracts" and "lease obligations" (each as defined within the Company's annual financial statements for the year ended December 31, 2023) from Net Debt.

The following table reconciles Net Debt to Adjusted Net Debt:

		December 31, 2023				December 31, 2022
Net Debt			14,701,453				35,341,546
Remove: Current portion of risk management contracts			4,521,075				4,418,471
Remove: Lease obligations			(545,851	)			-
Adjusted Net Debt			18,676,677				39,760,017

"Funds Flow" includes all cash from (used in) operating activities and is calculated before the change in non-cash working capital. "Funds Flow Basic ($/share)" and "Funds Flow Diluted ($/share)" are calculated by dividing Funds Flow by the weighted average number of basic shares and weighted average number of diluted shares outstanding, respectively, for the relevant period, as presented within the Company's annual financial statements for the year ended December 31, 2023. These are considered key measures of operating performance and capital management as they demonstrate the Company's ability to generate the cash necessary to repay debt and fund capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, each of these provide useful measures of ROK's ability to generate cash that are not subject to short-term movements in non-cash operating working capital.

The following table reconciles cash flow from operating activities to Funds Flow:

			Q4 2023				Q4 2022			Year 2023				Year 2022
Cash flows provided by operating activities			9,451,293				14,425,693				29,158,741				38,558,851
Change in non-cash working capital			(3,287,626	)			(1,928,908	)			(3,368,363	)			448,467
Funds Flow			6,163,667				12,496,785				25,790,378				39,007,318

Conversion Measures

Production volumes and reserves are commonly expressed on a barrel of oil equivalent ("boe") basis whereby natural gas volumes are converted at the ratio of 6 thousand cubic feet ("Mcf") to 1 barrel of oil ("bbl"). Although the intention is to sum oil and natural gas measurement units into one basis for improved analysis of results and comparisons with other industry participants, boe's may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf to 1 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. In recent years, the value ratio based on the price of crude oil as compared to natural gas has been significantly higher than the energy equivalency of 6:1 and utilizing a conversion of natural gas volumes on a 6:1 basis may be misleading as an indication of value.

Abbreviations

bbls/d bopd		barrels per day barrels per day
boepd		barrels oil equivalent per day
IP		Initial Production
NGLs		Natural Gas Liquids
Mboe Mg/l		Thousands of barrels of oil equivalent Milligrams per Litre
MMboe		Millions of barrels of oil equivalent
PDP		Proved Developed Producing
TP		Total Proved Reserves
TPP		Total Proved and Probable Reserves
WTI CA$ US$		West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for the crude oil standard grade Canadian dollars U.S. dollars

Cautionary Statement Regarding Forward-Looking Information

This news release includes certain "forward-looking statements" under applicable Canadian securities legislation that are not historical facts. Forward-looking statements involve risks, uncertainties, and other factors that could cause actual results, performance, prospects, and opportunities to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements in this news release include, but are not limited to, statements with respect to the Company's objectives, goals, or future plans and the expected results thereof. Forward-looking statements are necessarily based on several estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include but are not limited to general business, economic and social uncertainties; litigation, legislative, environmental, and other judicial, regulatory, political and competitive developments; delay or failure to receive board, shareholder or regulatory approvals; those additional risks set out in ROK's public documents filed on SEDAR at www.sedar.com; and other matters discussed in this news release. Although the Company believes that the assumptions and factors used in preparing the forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this news release, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the Company disclaims any intention or obligation to update or revise any forward-looking statement, whether because of new information, future events, or otherwise.

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility of the adequacy or accuracy of this release.

SOURCE: ROK Resources Inc.

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