Calgary, Alberta--(Newsfile Corp. - June 13, 2024) - Bengal Energy Ltd. (TSX: BNG) ("Bengal" or the "Company") today announces its financial and operating results for the fourth quarter of fiscal 2024 ended March 31, 2024.
FOURTH-QUARTER FISCAL 2024 HIGHLIGHTS:
The following is an overview of the financial and operational results during the three-and twelve-months ending March 31, 2024. All amounts are in Canadian funds unless otherwise noted:
Financial Summary:
Reserves - Bengal's independently evaluated Proved Plus Probable ("2P") Reserves for the fiscal year ended March 31, 2024, are 1,857 thousand barrels of oil ("Mbbls") compared to 5,477 Mbbls at March 31, 2023. 1P Reserves are 872 Mbbls compared to 2,005 Mbbls at March 31, 2023. The lower Reserves volumes result from a significant reduction in the number of proved and probable undeveloped future drilling locations marginally offset by upward technical revisions associated with slower than expected natural declines. Bengal elected not to participate in calendar 2023 drilling activities at the Cuisinier field given that the locations selected by the operator were sub-optimal and the expected economic returns did not meet the Company's investment hurdles. Ultimately, the results from the 2023 drilling campaign did not meet the Operator's expectations either, which has delayed plans for a calendar 2024 drilling campaign. The Company is fully committed to future drilling activities at the Cuisinier field and recognizes the accretive upside to further development. Any future activity will be subject to the completion of a field development plan incorporating the results of Cuisinier water-injection program and equity or debt financing. The remaining future development capital is subject to both internal approval and availability of capital. There are material uncertainties concerning timing of future development activities that would meet the Company's investment hurdles, and as a result the proved and proved plus probable future development activities have been reduced by 75% for fiscal 2025 compared to fiscal 2024. The net present value (NPV 10, before tax) of Bengal's 2P Reserves, net of future development costs, at March 31, 2024 is $42 million, or $0.09 per share compared to $121 million or $0.25 per share at March 31, 2023. The lower NPV is primarily due to decreased Reserve volumes that were reclassified as Contingent Resources as described above.
Impairment - Management measured the value in use of the Cuisinier field based on expected future cashflows discounted at rates between 9% and 40% depending on inherent development risks. It was determined that the value in use exceeds the carrying value of the Company's Petroleum and Natural Gas Properties as at March 31, 2024, resulting in an impairment charge of $11.6 million.
Sales revenue - Crude oil sales revenue was $1.8 million in the fourth quarter of fiscal 2024 and $2.0 million in the fourth quarter of fiscal 2023. Production decreased by 10% in Q4 fiscal 2024 compared to Q4 fiscal 2023, which was partially offset by a 2% increase in realized price at US$83.00/bbl in Q4 fiscal 2024 compared to US$81.17/bbl in Q4 fiscal 2023.
Funds from (used in) operations1 - Funds from operations were $0.3 million during Q4 fiscal 2024 compared to funds used in operations of $0.4 million in Q4 fiscal 2023. During Q4 fiscal 2023, the Cuisinier Joint Venture operator, Santos, undertook a self-review with the Queensland Revenue Office relative to its royalty payments for the calendar years of 2015 through 2020. The result was a $3.0 million additional royalty liability ($0.9 million net to Bengal) assessed to the Cuisinier Joint Venture. The net amount was recorded as an "other expense" in Q4 fiscal 2023.
Net income - Bengal reported a net loss of $12.7 million for the current quarter compared to net loss of $0.8 million in Q4 fiscal 2023 due to an impairment charged taken as described above. Net income for the prior fiscal year was impacted by a $0.9 million increase to other income related to the Cuisinier royalty adjustment described above.
Operational Summary:
Production volumes - The Company's share of total Cuisinier production in the current quarter was 14,713 bbls (162 bbl/d), a decrease of 10% compared to production of 16,395 bbls (182 bbl/d) in the fourth quarter of fiscal 2023. During Q4 fiscal 2024 the Cuisinier-1 and Cuisinier-7 wells were offline for pump optimization accounting for a loss of approximately 12 bbl/d of production during the quarter.
Capital expenditures - There was limited capital activity during the current quarter compared to Q4 fiscal 2023 when the Company was actively working on its development projects at Wareena-1 and Wareena-5 and completed activities at Caracal-1. Bengal has delayed its Wareena testing program until further capital funding is available.
OPERATING SUMMARY
| ($000s except per share, %, volumes and operating netback(1) amounts) | Three months ended March 31 | Year ended March 31, | | |||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||
| Oil sales ($) | 1,815 | 1,954 | 7,033 | 8,149 | ||||||||
| Operating netback(1) ($) | 993 | 1,078 | 3,377 | 4,452 | ||||||||
| Cashflow (used in) from operations ($) | (287 | ) | (704 | ) | (273 | ) | 2,111 | |||||
| Funds from (used in) operations(1) ($) | 329 | (431 | ) | 301 | 1,988 | |||||||
| -Per share ($) (basic and diluted) | (0.00 | ) | (0.00 | ) | (0.00 | ) | 0.00 | |||||
| Net (loss) income | (11,647 | ) | (804 | ) | (12,728 | ) | 703 | |||||
| -Per share ($) (basic and diluted) | (0.02 | ) | (0.00 | ) | (0.03 | ) | 0.00 | |||||
| Capital expenditures ($) | 75 | 395 | 474 | 7,715 | ||||||||
| Oil production (bbl/d) | 162 | 182 | 172 | 180 | ||||||||
| Operating netback(1) ($/bbl) | 67.49 | 65.75 | 53.64 | 67.79 | ||||||||
| (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, 2024, with the Canadian securities regulators. The documents are available on SEDAR+ at www.sedarplus.com or by visiting Bengal's website at www.bengalenergy.ca.
BUSINESS OVERVIEW
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, Authority to Prospect ("ATP") 934 Barrolka, Potential Commercial Area ("PCA") 332 (Formerly ATP 732) Tookoonooka, and four 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. In addition, Bengal owns a 26km 6" high pressure gas pipeline (PPL 138) connecting the Wareena field to a large raw gas network passing Bengal's prospects at ATP 934.
Under the State of Queensland Regulatory process, ATPs 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 Potential Commercial Area ("PCA"). 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 PCAs remain a part of the ATP until expiry. If a discovery of oil or gas is made, an application for a PL 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 (30.3057%) and PL 1028, in addition to three PCAs, PCA 206, PCA 207 Barta West, and PCA 155 Wompi block-Nubba/Yilgarn. Bengal also holds a 100% working interest in four PLs including a producing pipeline license 138 ("PPL 138") adjacent to the 100% owned ATP 934.
Following extensive public consultation, the Queensland government released in late December 2023, a document outlining its plans for increased restrictions to petroleum activities within the rivers and floodplains area of the Lake Eyre Basin (LEB) catchment. Bengal Energy areas affected by this are the western portion of the Durham Downs block (ATP 934) where Bengal holds a 40% interest, PCA 115 (Nubba) in which Bengal holds a 38% interest, and the petroleum leases of Karnak and Ramses (PL 411 and PL188 respectively). Of these permits, work can continue to develop gas Resources under a petroleum lease, all other permits will have until August 30, 2024, to obtain a petroleum lease before all activities will need to cease. Volumes at Nubba are too small for commerciality, and Bengal will move to relinquish this block. For Durham Downs East, the operator Santos has been approached for their views and a way forward. Santos are currently formulating a response to the government as their exposure is much larger. Neither of these assets have any carrying value in the Company's financial statements. Prospects within Barrolka East (ATP 934 - 100% WI), Ghina (PL 1109 - 100% WI), Wareena (PL1110-100% WI) and Tookoonooka (PCA 332 - 100% WI) are unaffected.
AUSTRALIA - Cooper Basin, Queensland
PL303 and PL 1028 Cuisinier (controlling permit ATP 752) (30.357% WI)
The Company continues to evaluate the results of its water injection program at Cuisinier. The injection of produced formation water has resulted in both increased production in up to four offsetting wells and reduced water handling charges. Whilst the JV has observed compelling evidence that the overall field decline has been temporarily arrested with a modest upward trend in oil production during periods of operation, the program has suffered from extended shut-in periods due to equipment failure and lack of available replacement parts. The program was not operational during Q4 fiscal 2024.
Bengal's JV partner and operator of the Cuisinier pool drilled four wells in the Cuisinier field during calendar 2023. The Company did not participate in this program based on its internal assessment of well locations and economic hurdles. In the absence of a suitable field development plan and low operating time of the water injection program, the drilling program was not economically attractive.
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 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 114 Wareena. The Company completed workover activities at Wareena 1 and Wareena 5 in November 2022. Initial test results indicate Wareena 1 would require additional stimulation and dewatering to yield commercial production rates. The Company is encouraged by wellhead pressure measured at Wareena 5 and therefore additional testing is justified If this testing yields commercial rates, Bengal will tie-in the producing well to pipeline PPL 138.
The 100% ownership of these assets presents an appraisal and development opportunity that will be operated by the Company and is seen as a key steppingstone for Bengal's natural gas platform upon which future development and appraisal work at the existing PLs and exploration growth through ATP 934 can be undertaken.
ATP 732 Tookoonooka (100% WI)
Bengal conducted an acid treatment in 2022 on the Caracal-1 well to improve well bore inflow with positive results and moderate inflow of very light 53-degree gravity oil from the Wyandra zone. While not immediately commercially viable, these results are being evaluated with the possibility of 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 suspended with shut-in pressure data being monitored.
ATP 732 reached the end of its term in March of 2023 and the Company lodged an application over the northern portion of the ATP for continuation in the form of PCA 332 for a further 15 years. Based on the positive results from Caracal-1, the application was approved on January 30, 2023. In addition, the Company is assessing farm-in interest on other 3D defined drilling targets on PCA 332. The PCA, granted by the Queensland Government in record time, provides much-needed certainty for Bengal to focus on its hydrocarbon projects in the Talgeberry-Tintaburra corridor. The majority of PCA 332 is covered by 3D seismic which has outlined the prospective targets as described in the Company's press release: "Bengal Energy Announces Independent Oil and Natural Gas Resource Report" dated March 30, 2022. The Company has announced the completion of its Field Resource Maturation and Development Plan for its Tookoonooka PCA332 on March 14, 2024.
ATP 934 Barrolka East (100% WI)
ATP 934 is the Company's 100% owned natural gas exploration block. Bengal received approval of a special amendment for ATP 934 in March 2021 which relinquished 50% of the existing ATP area and extended the term of the ATP by entering an outcome based the Later Work Permit ("LWP") for another 6 years to February 28, 2027. As part of the special amendment, another relinquishment of 118 sub blocks (50% of the remaining sub blocks) (88,972 acres) was required by February 28, 2023. The relinquishment was accepted by the regulator during April of 2023.The relinquished area was not considered to be prospective by the Company due to the lack of identified prospects and limited physical access. The LWP includes the drilling of up to three wells and 260 km2 of 3D seismic.
AC/RL 10 Katandra (100% WI)
The Katandra permit is located in the offshore Ashmore-Cartier region of the Timor Sea and holds the Katandra-1 oil discovery and the up-dip, Katandra North opportunity. The opportunity is hosted in the prolific Berriasian sandstones of the Upper Vulcan Formation. Bengal has entered into a binding term sheet agreement with an undisclosed party which grants an option to acquire an 80% working interest in the prospect in exchange for assignment of operatorship and carrying out of all administrative support activities and possible future financing arrangements on the permit until such time as the applied for five year extension of the permit has been approved by the regulatory authority and the option has been exercised by the option holder.
Business Development
Bengal is in ongoing discussions regarding the potential farm-out opportunities surrounding its exploration portfolio as well as other corporate initiatives aimed at increasing shareholder value. The Company is unable to estimate the chance of success or update status until the culmination of any or all of these initiatives.
Non-IFRS and Other Financial Measures
Non-IFRS Financial Measures
Within this Press Release, 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.
Operating Netback
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 oil sales deducting royalties and operating expenses. The following table reconciles petroleum and natural gas revenue to netback:
| Operating netback | Three months ended | Year ended | | |||||||||
| March 31 | March 31 | |||||||||||
| ($/bbl) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Oil sales | 1,815 | 1,954 | 7,033 | 8,149 | ||||||||
| Royalties | (133 | ) | (155 | ) | (552 | ) | (596 | ) | ||||
| Operating expense | (689 | ) | (721 | ) | (3,104 | ) | (3,101 | ) | ||||
| Operating netback | 993 | 1,078 | 3,377 | 4,452 | ||||||||
Funds from operations
Management utilized funds from operations as 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:
| Funds from operations | Three months ended | Year ended | | |||||||||
| March 31 | March 31 | |||||||||||
| ($000s) | 2024 | 2023 | 2024 | 2023 | ||||||||
| Cash flow (used in) from operations | (287 | ) | (704 | ) | (273 | ) | 2,111 | |||||
| Add back (deduct): | ||||||||||||
| Changes in non-cash working capital | 616 | 273 | 574 | (123 | ) | |||||||
| Funds from (used in) operations | 329 | (431 | ) | 301 | 1,988 | |||||||
Working capital
Bengal uses working capital to monitor its capital structure, liquidity, and its ability to fund current operations. Working capital is calculated as current assets less current liabilities but excludes other obligations and the current portion of decommissioning obligations.
Non-IFRS Financial Ratios
Bengal uses operating netback per share to assess the Company's operating performance on a per unit of production basis. Operating netback per barrel equals operating netback divided by the applicable number of barrels.
| Operating netback | Three months ended | Year ended | | ||||||||||
| March 31 | March 31 | ||||||||||||
| ($/bbl) | 2024 | 2023 | 2024 | 2023 | |||||||||
| Oil sales | 123.36 | 119.18 | 111.71 | 124.07 | |||||||||
| Royalties | (9.04 | ) | (9.45 | ) | (8.77 | ) | (9.07 | ) | |||||
| Operating expense | (46.83 | ) | (43.98 | ) | (49.30 | ) | (47.21 | ) | |||||
| Operating netback | 67.49 | 65.75 | 53.64 | 67.79 | |||||||||
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.
About Bengal
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
CAUTIONARY STATEMENTS:
Forward-Looking Statements
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, targeted fracture stimulation and the results thereof at ATP 752;
Bengal's targeted fracture stimulation, commencement of production and the results thereof at ATP 732;
Bengal's timing of future financing arrangements on the offshore permit AC/RL 10 Katandra; and
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, 2023, under the heading "Risk Factors" and in Bengal's management's discussion and analysis for the Q4 of the fiscal year ending March 31, 2024, 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.
Selected Definitions
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
Q 1- three months ended June 30
Q2 - three months ended September 30
Q3 - three months ended December 31
Q4 - three months ended March 31
Non-IFRS Measurements
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 12 and 13 of Bengal's management's discussion and analysis for the fiscal year ending March 31, 2024.
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
(403) 205-2526
Email: investor.relations@bengalenergy.ca
Website: www.bengalenergy.ca
________________________
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/212985
SOURCE: Bengal Energy Ltd.
