2012 Operational Highlights
-- Exit rate of 1,534 Boe/d, an increase of 107% when compared with 2011;-- Production averaged 1,210 Boe/d (95% natural gas), an increase of 167% over 2011 average production of 453 boe/d;-- Net back of $8.15/Mcfe or $48.90/boe;-- Strong average natural gas price of $11.96/Mcf and condensate price of $98.91/bbl for 2012;-- K-7 well drilled and cased to TD (3,206 metres) and tested 5.9 MMcf/d (30% net: 1.7 MMcf/d);-- The M-16 was drilled to TD (4,300 metres), the deepest well the company has drilled to date and tested 4.3 MMcf/d (30% NET: 1.3 MMcf/d) in the lower S-5 zone with additional zones to test;-- M-20 well commenced commercial production on 1 November and is currently producing at approximately 6.25MMcf/d (30% net: 1.9MMcf/d);-- M-21 well commenced commercial production in early August at a gross production rate of 1.7MMcf/d (30% net: 0.5MMcf/d).-- Six wells were drilled during the period ending December 31, 2012 (NM-1, M-21, M-20, K-7, NM-2, M-16);-- Six wells tied in for commercial production (O-18, O-8, O-12, O-6, M-20 & M-21);-- Gross revenue for Kub-gas increased 186% to $99.6 million (2011 - $34.8 million) of which Cub's 30% share was $29.9 million (2011 - $10.5 million);-- Income from the equity investment in KGHL was $7.8 million (2011 - $2.3 million).
Petroleum and natural gas revenue
Petroleum and natural gas revenues for the Company were $1.7 million for the year; this represents the revenues associated with the Tysagaz properties from the date of acquisition March 29, 2012 through December 31, 2012.
Income from equity investment
Income from the equity investment in Kubgas Holdings Limited ("KGHL") was $7.8 million an increase of 238% from 2011. This is a result of substantial revenue growth for KGHL from the successful drilling program increasing the number of producing wells to 19.
Funds generated from operations
The funds generated from operations increased by $2.7 million to $3.6 million due to the increase in the income from the investment in KGHL, the revenues from the Tysagaz properties offset by the cost of sales of $.8 million and increased general and administrative spending of $3.7 million. The increase in general administrative expenses was due to the Company ramping up the size of its technical and administrative personnel to support the public listing, operate, explore and develop the properties and seek out acquisitions.
Cub's net profits rose by $1.3 million which reflects the increase in the equity income in KGHL, the revenues offset by the initial depreciation, depletion and other costs as well as the increase in general and administrative expenses discussed above.
Capital expenditures for the company (Tysagaz properties) were $1.8 million for the year with $1.5 million of expenditures for oil and gas property exploration and evaluation of assets.
Cub's capital expenditures for KGHL increased to $10.8 million in 2012 (2011: $8.9m). This was used to continue the successful drilling program and to fully develop and exploit the KGHL properties in order to maximize returns.
As at December 31, 2012, the Company had a working capital surplus of $9.56 million, including cash and cash equivalents of $10.12 million. This compares to a working capital deficit of $385,000 as at December 31, 2011.