ROK Resources, Inc.: ROK Resources Files Financial Results and Management Discussion & Analysis for the Second Quarter of 2024 and Provides Operations Update

NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE OR FOR DISSEMINATION IN THE UNITED STATES

REGINA, SK / ACCESSWIRE / August 21, 2024 / ROK Resources Inc. (" ROK " or the " Company ") (TSXV:ROK)(OTCQB:ROKRF) has filed its interim Financial Results and Management Discussion & Analysis for the six months ended June 30, 2024.

The Company executed on its previously announced post spring-break up drilling program in late Q2 2024, utilizing Funds Flow of $5.0 million towards the drilling of 4 gross (3.44 net) wells in Southeast Saskatchewan. The Company purposefully utilized Q1 2024 to deliver on: (i) debt reduction, (ii) improvement of operational efficiencies, (iii) strategic well optimizations, and (iv) advancement of the lithium project, and began its Southeast Saskatchewan development program in the second quarter.

The Company remains well positioned to continue its 2024 drilling program through year-end, with the flexibility to allocate capital across its light oil prospects in Saskatchewan. Despite operational delays due to abnormally wet weather in Q2 2024, the Company's 2024 guidance remains relatively unchanged.

		1H 2024 Guidance				1H 2024 Actuals				2H 2024 Guidance				2024 Year Guidance
Capital Expenditures (MM)		$	9.50			$	8.00			$	16.00			$	24.00
Exit Production (boepd) 1,2			4,000				3,805				4,500				4,500
Funds from Operations (MM)		$	15.00			$	15.03			$	15.00			$	30.03
Exit Adjusted Net Debt (MM)		$	16.50			$	15.10			$	20.00			$	20.00
Average WTI (US$)		$78/bbl				$80/bbl				$75/bbl				$76.50/bbl

Notes:

1. 63% liquids

2. 300 boepd shut-in on June 15, 2024 at Kaybob due to AECO pricing

3. 2H 2024 production guidance assumes Kaybob volumes are back on-stream before year-end

Q2 2024 HIGHLIGHTS

• Production In-line with Forecast: Production averaged 3,937 boepd (63% liquids), a YoY increase of 19.4%;

• Operating Netback Increase: Operated Netback of $17.87 per boe compared to $16.06 per boe in Q1 2024;

• Successful Frobisher Drill Program: Drilled 4 gross (3.44 net) wells with an average IP30 of 148 boepd;

• Successful Optimization Program: Continued success with casing gas compressor installations on Midale producers, resulting in average capital efficiencies of $3,850/boepd and 4-to-6 month payouts;

• Adjusted Net Debt Reduction: Adjusted Net Debt reduced from $18.7 million at the end of Q4 2023 to $15.1 million at the end Q2 2024; and

• Credit Facility Renewed: The Company maintains a $22.5 million credit facility through June 30 ^th , 2025.

2024 OPERATIONS UPDATE AND OUTLOOK

Year to date, the Company has successfully drilled 5 gross (4.33 net) wells in 2024, currently producing a total of 735 boepd (640 boepd net to ROK). In addition, since beginning casing gas compressor installations on existing Midale wells in Southeast Saskatchewan, the Company has added 280 boepd (IP90) to the base production levels of 15 wells. Management has identified an additional 22 locations for compressor installations over the next 18 months.

Key initiatives for 2024 remain unchanged with the Company focusing on using its current balance sheet to target strategic opportunities in core areas, improving operational efficiencies through targeted well optimizations and undertaking operational cost reduction measures. The remaining drill program aims to add Frobisher drilling inventory while proving up Midale prospects with multi-lateral drilling. The Company anticipates completing its 2024 drilling program by drilling a total of 7 to 9 gross wells in 2H 2024.

KAYBOB, ALBERTA, UPDATE

As previously mentioned, with the current softening of the North American natural gas markets, the Company has continued to shut-in 300 boepd (80% natural gas) in its Kaybob, Alberta area. The strategic shut-ins are expected for the balance of Q3 2024 with reactivation expected by year-end.

Q2 2024 FINANCIALS

Financial			Q2 2024				Q2 2023			YTD 2024				YTD 2023
Net income (loss)			81,503				(326,538	)			(5,530,751	)			(63,747	)
Basic ($/share)			0.00				(0.00	)			(0.03	)			(0.00	)
Diluted ($/share)			0.00				(0.00	)			(0.03	)			(0.00	)
Funds flow			5,000,885				4,955,562				11,343,103				14,639,438
Basic ($/share)			0.02				0.02				0.05				0.07
Diluted ($/share)			0.02				0.02				0.05				0.06
Expenditures on property, plant and equipment			5,275,862				3,559,136				7,094,622				9,004,786
Operating
Oil and Natural Gas Sales			21,742,281				17,737,937				42,673,516				41,875,450
Royalties			(3,782,175	)			(3,788,007	)			(7,737,218	)			(8,559,392	)
Operating Expenses			(11,555,289	)			(9,770,012	)			(22,279,328	)			(19,241,548	)
Operating Income			6,404,817				4,179,918				12,656,970				14,074,510
Realized gain (loss) on commodity contracts			(65,261	)			2,459,098				860,756				5,125,545
Processing and other income			647,195				260,805				1,509,273				995,536
Funds from Operations			6,986,751				6,899,821				15,026,999				20,195,591
Average daily production
Crude oil (bbl/d)			2,074				1,692				2,140				2,077
NGLs (boe/d)			411				340				435				370
Natural gas (mcf/d)			8,715				7,591				9,198				7,613
Total (boe/d)			3,937				3,297				4,107				3,716
Operating Netback per boe
Oil and Natural Gas Sales			60.68				59.13				57.08				62.26
Royalties			(10.56	)			(12.63	)			(10.35	)			(12.73	)
Operating Expenses			(32.25	)			(32.57	)			(29.80	)			(28.61	)
Operating Netbacks ($/boe)			17.87				13.93				16.93				20.92
Funds from Operations ($/boe)			19.50				23.00				20.10				30.03
Operating Income Profit Margin			29.4	%			23.6	%			29.7	%			33.6	%
Funds from Operations Profit Margin			32.1	%			38.9	%			35.2	%			48.2	%

Share information
Common shares outstanding, end of period			218,419,315				214,873,217				218,419,315				214,873,217
Weighted average basic shares outstanding			218,419,315				214,382,652				218,418,831				213,156,298
Weighted average diluted shares outstanding			236,352,197				252,620,714				236,351,713				261,173,477

Q2 2024 FINANCIAL SUMMARY

In Q2 2024, the Company realized average daily production volume of 3,937 boepd (63% liquids), resulting in oil and natural gas sales of $21.7 million and realized hedge loss of $0.1 million. The Company realized Funds from Operations of $7.0 million, after royalties, operating expenses, and processing and other income.

Operating costs, which include expenses incurred to operate wells, gather, treat, and transport production volumes, as well as costs to perform well and facility repairs and maintenance, were consistent with Company expectations for the quarter, averaging $32.25 per boe, with lower maintenance and workover costs for the period when compared to 2023. Operating costs are expected to average $30 per boe in 2024.

Capital expenditures in the first half of 2024 totaled $8.0 million, which included $4.4 million towards the Company's drilling programs, $1.0 million towards well reactivations, $0.8 million towards land and seismic acquisitions, and $0.9 million towards facilities and gathering systems. Compared to the Company's first-half 2024 capital budget of $9.5 million, lower costs were incurred due to delays associated with abnormally wet conditions in Southeast Saskatchewan.

NET DEBT

Net Debt as at June 30, 2024, and December 31, 2023, as outlined below:

		June 30, 2024				December 31, 2023
Accounts receivable			12,439,856				13,021,111
Prepaids and deposits			347,352				364,090
Risk management contracts			(1,634,514	)			4,521,075
Accounts payable			(17,924,739	)			(17,560,130	)
Adjusted working capital (2)			(6,772,045	)			346,146
Credit Facility (8.4%) (1)			9,982,332				14,501,748
Lease obligations (1)			475,173				545,851
Less: adjusted working capital (2)			6,772,045				(346,146	)
Net debt			17,229,550				14,701,453

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.

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.

Complete reports and statements will be made available on SEDAR+ at www.sedarplus.ca and on the Company website www.rokresources.ca .

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:

			Q2 2024				Q2 2023			YTD 2024				YTD 2023
Oil and Natural Gas Sales			21,742,281				17,737,937				42,673,516				41,875,450
Royalties			(3,782,175	)			(3,788,007	)			(7,737,218	)			(8,559,392	)
Operating Expenses			(11,555,289	)			(9,770,012	)			(22,279,328	)			(19,241,548	)
Operating Income			6,404,817				4,179,918				12,656,970				14,074,510
Realized gain (loss) on commodity contracts			(65,261	)			2,459,098				860,756				5,125,545
Processing and other income			647,195				260,805				1,509,273				995,536
Funds from Operations			6,986,751				6,899,821				15,026,999				20,195,591
Sales volume (boe)			358,303				300,006				747,563				672,576
Per boe
Oil and Natural Gas Sales			60.68				59.13				57.08				62.26
Royalties			(10.56	)			(12.63	)			(10.35	)			(12.73	)
Operating Expenses			(32.25	)			(32.57	)			(29.80	)			(28.61	)
Operating Netback			17.87				13.93				16.93				20.92
Funds from Operations			19.50				23.00				20.10				30.03
Operating Income Profit Margin			29.4	%			23.6	%			29.7	%			33.6	%
Funds from Operations Profit Margin			32.1	%			38.9	%			35.2	%			48.2	%

" Net Debt " includes all indebtedness of the Company, such as the Credit Facility and Lease Obligations (each as defined within the Company's interim condensed financial statements for the six months ended June 30, 2024), 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 interim condensed financial statements for the six months ended June 30, 2024. " 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 interim condensed financial statements for the six months ended June 30, 2024) from Net Debt.

The following table reconciles Net Debt to Adjusted Net Debt:

		June 30, 2024				December 31, 2023
Net Debt			17,229,550				14,701,453
Remove: Current portion of risk management contracts			(1,634,514	)			4,521,075
Remove: Lease obligations			(475,173	)			(545,851	)
Adjusted Net Debt			15,119,863				18,676,677

" 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 interim condensed financial statements for the six months ended June 30, 2024. 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:

			Q2 2024				Q2 2023			YTD 2024				YTD 2023
Cash provided by operating activities			6,484,206				9,366,721				10,659,931				14,422,676
Change in non-cash working capital			(1,483,321	)			(4,411,159	)			683,172				216,762
Funds Flow			5,000,885				4,955,562				11,343,103				14,639,438

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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