Thursday, May 18, 2017

Cub Energy reports 1st quarter earnings

Cub Energy:

Production averaged 1,107 boe/d (97% weighted to natural gas and the remaining to
condensate) for the quarter ended March 31, 2017, which decreased 33% as compared to
the 1,644 boe/d in the comparative 2016 quarter and relatively flat as compared to the 1,152
boe/d average for the fourth quarter ended December 31, 2016. The decrease in production
for the quarter ended March 31, 2017 as compared to the same period in 2016 was a result
of the suspension of the RK field.

Achieved average natural gas price of $6.88/Mcf and condensate price of $62.70/bbl during
the quarter ended March 31, 2017 as compared to $6.23/Mcf and $28.29/bbl for the
comparative 2016 period.

 A 118 square kilometer 3D seismic program was recently completed on the Uzhgorod licence
which the Company has a 50% interest. The first 100 square kilometers was funded solely by
the Company’s partner and the balance of the program was paid evenly between the two
partners. The 3D seismic will be interpreted and the Company hopes to identify drill targets.

KUB-Gas recently completed a 150 kilometer 2D seismic survey on the West Olgovskoye
licence in eastern Ukraine. KUB-Gas will utilize the 2D seismic survey to further delineate the
best location for a 3D seismic survey with the goal of identifying drill targets.

Subsequent to the quarter ended March 31, 2017, KUB-Gas spud the Olgovskoye-26 (“O-
26”) well in eastern Ukraine. 

Netbacks of $27.50/boe or $4.58/Mcfe for the quarter ended March 31, 2017 as compared to
netback of $23.13/Boe or $3.86/Mcfe for the comparative 2016 quarter. 

To my mind the catalyst for a higher Cub Energy price will be increases in production. Pursuant to that the company announced that the KUB-Gas partnership began drilling the O-26 well followed on by the o-28 well later in the year.

In addition we are still waiting on the install and commissioning of the Nitrogen Recovery Unit on the RK field which will cause a decent jump in production.

The National Bank of Ukraine is slowly but surely loosening capital controls and transfers of dividends. This affects Cub because the full value of earned dividends from the KUB-Gas partnership have not been fully transmitted because of these controls.

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