Investor Resources

Information, reports and resources to help investors better understand ROK Resources.

Important Dates

Year-end 2024 Reserve Report – February 2025
First-half 2025 Guidance – February 2025
Year-end 2024 Financial Results – April 2025

ROK Resources Files Financial Results and Management Discussion & Analysis for the First Quarter of 2023

May 26, 2023

ROK Resources Inc. (“ROK” or the “Company“) (TSXV:ROK)(TSXV:ROK.WT)(OTCQB:ROKRF), has filed its interim Financial Results and Management Discussion and Analysis for the three months ended March 31, 2023.

Financial and Operating Highlights

In Q1 2023, the Company realized production volume of 372,570 total boe (4,140 boe/d), resulting in crude and natural gas sales of $24.1 million and funds from operations of $13.3 million. This equates to an operating netback, after hedging, per boe of $33.71 and an operating income profit margin, after hedging, of 52.0%. For Q1 2022, a gain on acquisition of $66.8 million significantly contributed to the resulting net income of $76.2 million for the quarter.

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.

1. Represents undiscounted face value of debt balances and lease obligations outstanding as of each respective date presented.
2. Calculation of working capital excludes current portion of debt as presented on the statement of financial position.

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

First Quarter Highlights

• Record production of 4,140 boe/d (70% liquids);
• Net Debt of $8.3 million as of March 31, 2023. A decrease of $27 million from Q4 2022, after Q1 2023 capital expenditures of $5.4 million;
• Successfully drilled 2 gross (1.6 net) wells: 1 vertical test well in Southeast, Saskatchewan and 1 horizontal Cardium well in Kaybob, Alberta;
• Realized a quarterly hedge gain on commodity contracts of $2.7 million;

Early Repayment of Term Loan and Hedge Strategy

Through a combination of monthly cash flow and strategic non-operated asset dispositions the Company was able to pay down the term loan from the initial balance of $52.5 million to $7.1 million in Q1 2023, with the full repayment of the remaining balance in May 2023. As a result of the early term loan repayment, the Company made the strategic decision to unwind certain commodity swap hedges placed in 2023, 2024 and 2025, as more particularly described in its May 2, 2023 press release.

Impact of Alberta Wildfires

The Alberta wildfires have affected ROK’s Kaybob, Alberta operations, resulting in production shut-ins of ~300 Boepd (80% natural gas). It is expected that some production will remain shut-in through Q2 2023 and potentially into Q3 2023, however ROK will provide additional guidance, as further details emerge. The Company’s corporate 2023 year-end production target of 4,500 Boepd remains unchanged with the 2H 2023 drilling program scheduled to begin in July 2023.

About ROK

ROK is primarily engaged in exploring for petroleum and natural gas development activities in Alberta and Saskatchewan. Its head office is located in Regina, Saskatchewan, Canada and ROK’s common shares are traded on the Exchange under the trading symbol “ROK”.

For further information, please contact:

Cameron Taylor, Chairman and Chief Executive Officer
Bryden Wright, Chief Operating Officer
Jared Lukomski, Senior Vice President, Land & Business Development
Lynn Chapman, Chief Financial Officer
Phone: (306) 522-0011
Email: investor@rokresources.ca

Non-IFRS Measures

The non-IFRS measures referred to above do not have any standardized meaning prescribed by International Financial Reporting 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. “Net Debt” includes all indebtedness of the Company, such as the Term Loan, Credit Facility, and Senior Loan Facility (as defined within the Company’s interim condensed financial statements for the three months ended March 31, 2023), net of Adjusted Working Capital. “Adjusted Working Capital” is calculated as current assets less current liabilities, excluding current portion of debt as presented on the Company’s statement of financial position within the Company’s interim condensed financial statements for the three months ended March 31, 2023.

“Funds Flow” includes all cash for (used in) operating activities and is calculated before the change in non-cash working capital. “Funds flow”, “funds flow basic ($/share)” and “funds flow diluted ($/share)” are capital management measures and are key measures of operating performance 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, funds flow, funds flow basic ($/share) and funds flow diluted ($/share) provide useful measures of ROK’s ability to generate cash that are not subject to short-term movements in non-cash operating working capital. Funds flow on a per share basis (basic and diluted) is calculated by dividing funds flow by the weighted average number of basic shares and weighted average number of diluted shares outstanding for the relevant period.

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

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

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.