Cub Energy, a Ukraine-focused upstream oil and gas company, has announced its unaudited financial and operating results for the interim nine months ended September 30, 2020. This update includes results from Kub-Gas LLC (“Kub-Gas”), which Cub has a 35% equity ownership interest, Tysagaz LLC, Cub’s 100% owned subsidiary and CNG LLC (“CNG”), which Cub has a 50% equity ownership interest.

Mikhail Afendikov, Chairman and CEO of Cub said: 
“We are pleased to report the two Jenbacher units have arrived on site on the RK field and currently undergoing the installation, commissioning and ultimately connecting to the power grid. The Company plans to have the units commercially operative in early 2021.” 
 
Operational Highlights

• Achieved average natural gas price of $3.59/Mcf and condensate price of $40.33/bbl during the nine months September 30, 2020 as compared to $5.85/Mcf and $48.43/bbl for 2019. The decrease is due, in large part, to increased volumes of gas stored in Europe, a warmer than expected winter in Europe and the impact of Covid.
• Production averaged 638 boe/d (97% weighted to natural gas and the remaining to condensate) for the nine months September 30, 2020 as compared to 873 boe/d for 2019.
• In April 2020, the Company has signed a contract for the purchase of two Jenbacher gas power generation engines that should convert the natural gas produced from the RK field into power that can be sold in western Ukraine at local market rates. The two units were manufactured and delivered to the RK Field in late October 2020 to begin installation and commissioning. Each power generation unit will have the capacity to produce as much as 1.5 megawatts (“MW”) of power or 3 MW in total. The RK field was materially suspended on April 1, 2016 and this new plan should result in the restart of the RK field.

Financial Highlights 

• The Company reported a net loss of $2,274,000 or $0.01 per share during the nine months September 30, 2020 as compared to net income of $260,000 or $0.00 per share during 2019.
• Netbacks of $9.13/boe or $1.52/Mcfe were achieved for the nine months September 30, 2020 as compared to netback of $18.49/Boe or $3.42/Mcfe for 2019.
• The Company has implemented certain cost-cutting initiatives during the second and third quarters of 2020, including the layoff of eleven team members, salary and director fee reductions, the signing of office leases at lower rent levels and a general decrease in the use of external consultants. 

Transcarpathian Basin

The Transcarpathian basin means the approximate 7,500 km² region located in Western Ukraine bordering Hungary, Slovakia and Romania. The basin is estimated to have 4 Tcf of natural gas which, to date, remains vastly underexplored with only approximately three percent of the region’s hydrocarbon potential discovered. Cub Energy has a 100% working interest in two licences and a 50% working interest in the third licence for a total of 108,000 gross acres (net 70,500 acres).

Cub Energy is well served by transport infrastructure in the area and owns two gas processing facilities, one on the RK field and one on the Stanivske field.

Dnieper-Donets Basin

Located in Eastern Ukraine, the Dnieper-Donets Basin has produced vast amounts of coal, oil and gas. Despite the long history of production, this vast 31,000 km² region still has immense untapped potential. Cub’s application of western drilling technology combined with high domestic natural gas prices has resulted in wells with rapid payback periods and high IRRs for the Company.

Cub Energy is well served by transport infrastructure in the area with five gas processing facilities and a network of flow lines totaling more than 40 km, to enable the production and sale of natural gas. Additional assets include two service rigs, a snubbing unit, inventory of spare parts, support vehicles, land and buildings. The facilities and equipment are held by Kub-Gas LLC, in which Cub Energy holds a 35% interest.

Cub has a 35% interests in six licenses in the Dnieper Donets basin.

KeyFacts Energy: Cub Energy Ukraine country profile