ROK Resources Files Financial Results and Management Discussion & Analysis for the First Quarter of 2024

REGINA, SK / ACCESSWIRE / May 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 three months ended March 31, 2024.

The Company remained on strategy and budget for Q1 2024. Funds Flow of $6.3 million was used to further reduce Adjusted Net Debt. Despite the inactive quarter, the Company had modest production growth quarter over quarter and is well positioned to commence its drilling program in late Q2 2024, with the flexibility to allocate development capital across some of the most economic plays in North America.

Q1 2024 HIGHLIGHTS

• Production in line with Forecast: Production averaged 4,278 boepd (62% liquids);
• Operating Cost Reduction: realized operating costs of $27.55 per boe which represents an 18% reduction when compared to 2H 2023;
• Adjusted Net Debt Reduced: Adjusted Net Debt reduced from $18.7 million at the end of Q4 2023 to $14.4 million at the end Q1 2024; and
• Successful Reactivation and Optimization Program: Achieved capital efficiencies of $4,815 per boe on 12 reactivation/optimization projects in Southeast Saskatchewan.

OUTLOOK

Key initiatives for 2024 include reducing corporate finding and development costs and expanding core operating areas in Southeast Saskatchewan. The Company anticipates commencing its drilling program in late Q2 2024. The six well program, which will target Frobisher light oil prospects, the Company has allocated a budget of ~$10 million in 1H 2024. The commencement of the drilling program is contingent on various factors, including favorable weather and road conditions following spring break-up. The Company will provide detailed second-half 2024 guidance after its annual bank review process, expected to be completed in June 2024.

Financial			Q1 2024				Q1 2023
Net income (loss)			(5,612,254	)			805,262
Basic ($/share)			(0.03	)			0.00
Diluted ($/share)			(0.03	)			0.00
Funds flow			6,342,218				9,683,876
Basic ($/share)			0.03				0.05
Diluted ($/share)			0.03				0.04
Expenditures on property, plant and equipment			1,818,760				5,445,650
Operating
Oil and Natural Gas Sales			20,931,235				24,137,513
Royalties			(3,955,043	)			(4,771,385	)
Operating Expenses			(10,724,039	)			(9,471,536	)
Operating Income			6,252,153				9,894,592
Realized gain on commodity contracts			926,017				2,666,447
Processing and other income			862,078				734,731
Funds from Operations			8,040,248				13,295,770
Average daily production
Crude oil (bbl/d)			2,206				2,466
NGLs (boe/d)			458				401
Natural gas (mcf/d)			9,681				7,635
Total (boe/d)			4,278				4,140
Operating Netback per boe
Oil and Natural Gas Sales			53.77				64.79
Royalties			(10.16	)			(12.81	)
Operating Expenses			(27.55	)			(25.42	)
Operating Netbacks ($/boe)			16.06				26.56
Funds from Operations ($/boe)			20.66				35.69
Operating Income Profit Margin			29.9	%			41.0	%
Funds from Operations Profit Margin			38.4	%			55.1	%
Share information
Common shares outstanding, end of period			218,418,315				212,613,817
Weighted average basic shares outstanding			218,418,348				211,916,317
Weighted average diluted shares outstanding			218,418,348				265,105,802

Q1 2024 FINANCIAL SUMMARY

In Q1 2024, the Company realized average daily production volume of 4,278 boepd (62% liquids), resulting in oil and natural gas sales of $20.9 million and realized hedge gain of $0.9 million. The Company realized Funds from Operations of $8.0 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 $27.55 per boe, with lower maintenance and workover costs for the period when compared to 2023.

Capital expenditures in the quarter totaled $1.8 million. The Company incurred $1.2 million in capital expenditures towards well reactivations and finalization costs of new wells drilled in Q4 2023 including surface infrastructure, $0.4 million towards land and seismic acquisitions, and $0.2 million towards facilities and equipment. The first-half 2024 capital budget of $10.0 - 10.5 million will include a Q2 2024 six-well drilling program which will target Frobisher light oil prospects, and ongoing well reactivations and recompletions in core operating areas in Southeast Saskatchewan.

NET DEBT

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

		March 31, 2024			December 31, 2023
Accounts receivable			12,420,173				13,021,111
Prepaids and deposits			580,854				364,090
Risk management contracts			(1,134,038	)			4,521,075
Accounts payable			(14,692,423	)			(17,560,130	)
Adjusted working capital (2)			(2,825,434	)			346,146
Credit Facility (8.4%) (1)			12,745,469				14,501,748
Lease obligations (1)			509,740				545,851
Less: adjusted working capital (2)			2,825,434				(346,146	)
Net debt			16,080,643				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 are 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: (306) 522-0011
Email: investor@rokresources.ca
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:

			Q1 2024				Q1 2023
Oil and Natural Gas Sales			20,931,235				24,137,513
Royalties			(3,955,043	)			(4,771,385	)
Operating Expenses			(10,724,039	)			(9,471,536	)
Operating Income			6,252,153				9,894,592
Processing and other income			926,017				2,666,447
Realized gain on commodity contracts			862,078				734,731
Funds from Operations			8,040,248				13,295,770
Sales volume (boe)			389,261				372,570
Per boe
Oil and Natural Gas Sales			53.77				64.79
Royalties			(10.16	)			(12.81	)
Operating Expenses			(27.55	)			(25.42	)
Operating Netback			16.06				26.56
Funds from Operations			20.66				35.69
Operating Income Profit Margin			29.9	%			41.0	%
Funds from Operations Profit Margin			38.4	%			55.1	%

"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 three months ended March 31, 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 three months ended March 31, 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 three months ended March 31, 2024) from Net Debt.

The following table reconciles Net Debt to Adjusted Net Debt:

		March 31, 2024			December 31, 2023
Net Debt			16,080,643				14,701,453
Remove: Current portion of risk management contracts			(1,134,038	)			4,521,075
Remove: Lease obligations			(509,740	)			(545,851	)
Adjusted Net Debt			14,436,865				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 three months ended March 31, 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:

			Q1 2024				Q1 2023
Cash flows provided by operating activities			4,175,725				4,892,003
Change in non-cash working capital			2,166,493				4,791,873
Funds Flow			6,342,218				9,683,876

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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