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Cabot Energy PLC (CAB)

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Tuesday 20 August, 2019

Cabot Energy PLC

Q2 2019 Financial, Operational and Trading Update

RNS Number : 5533J
Cabot Energy PLC
20 August 2019


Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. With the publication of this announcement, this information is now considered to be in the public domain.


20 August 2019


Cabot Energy plc

("Cabot", the "Group" or the "Company")


Q2 2019 Financial, Operational and Trading Update


Cabot Energy plc (AIM: CAB), the AIM quoted oil and gas company focussed on creating predictable production growth in Canada, provides an update on its financial position, operations and trading for the quarter and six months ended 30 June 2019.


Group Production and Sales



·    Gross production in H1 2019 averaged 485 barrels of oil per day ("bopd") (H1 2018: 761 bopd), reflecting the fact that, since June 2018, expenditure has only been made on critical items resulting in deferred production, in addition to the normal wells and field declines

Q2 2019 gross production averaged 459 bopd (Q2 2018: 781 bopd)


Sales Volumes & Prices

·    Sales volume in H1 2019 totalled 87,555 bbls (H1 2018: 139,632 bbls)

Q2 2019 sales volume of 41,284 bbls (Q2 2018: 73,021 bbls)

·    Average H1 2019 Edmonton Light Oil ("Edmonton") sales price (after transportation costs and crude oil marketing fees) of US$46/bbl (H1: 2018: US$52.83/bbl)

Q2 2019 average Edmonton sales price of US$48/bbl (Q1 2019: US$44/bbl), representing a 9% quarter-on-quarter increase in 2019

·    Edmonton average price discount to West Texas Intermediate in H1 was approximately 8%, reflecting the restoration of the historic price differential in 2019

·    Based on crude oil sales prices for June 2019 of CAD$64.13 (pre-tariff) and CAD$56.03 (net), Cabot's Canadian operations are currently cash flow break-even, excluding the continuing settlement of legacy Canadian trade creditors with whom the Group secured voluntary binding agreements in January 2019 (the outstanding payable balance being US$0.4 million)


Financial Update


Canadian Work Programme - Asset-Level Debt Financing

Cabot continues to engage with a specialist financial advisory firm to source Canada asset-level debt financing to fund the Company's proposed winter work programme comprising new wells. To date, detailed proposals have been received from two potential lenders, both of whom require production to be increased through a summer workover programme comprising well reinstatements and production stimulation prior to any debt drawdown. The Company is considering the proposals, in particular how to fund the summer workover programme in order to access the development debt financing. At present, no assurances can be given that either of the detailed proposals will progress to formal funding agreements so the Company will also consider the option of seeking further equity funding to support the Group's growth prospects.


Group Financial Position

As stated on 10 July 2019, the Group received US$0.5 million gross (£401,123), before expenses, through a subscription by its supportive majority shareholder, High Power Petroleum LLC ("H2P"). The Group's cash balance was US$213,000 as at 16 August 2019 and the Group currently has sufficient working capital through to the end of August 2019. As such, management continues to implement disciplined cost controls across the business. Additionally, in accordance with its strategy, the Company continues to assess the benefits of divesting its interest in certain non-core assets to generate funds for ongoing working capital requirements. A further announcement regarding the Group's financial position will be made as soon as practicable.


Italy Update

As announced previously, the Italian government signed a decree on 12 February 2019 enacting the suspension of work on oil and gas exploration permits or applications for new exploration permits in Italy whilst a national review is undertaken. Whilst Cabot's licences are in suspension the Company is reviewing the Italian portfolio with a view to prioritising the Company's significant off-shore opportunities in The Adriatic and The Sicily Channel. Divestment of non-core assets will enable Cabot to focus management time on fundraising activities and advancing the rest of the Group's assets.



Scott Aitken, Chief Executive Officer, said: "Having successfully reduced production costs to less than US$20/bbl, we are seeing average sales prices rising quarter-on-quarter this year. Our key focus now is to finalise the crucial asset-level debt financing and, if necessary, any further equity funding required to fund our work programmes in Canada. Provided that a positive outcome is reached, we look forward to executing our plans for these scheduled work programmes."





Cabot Energy Plc

+44 (0)20 7469 2900

Scott Aitken, CEO

Petro Mychalkiw, CFO




SP Angel Corporate Finance LLP

+44 (0)20 3470 0470

Nominated Adviser and Joint Broker


David Hignell, Richard Hail, Richard Redmayne




Luther Pendragon

+44 (0)20 7618 9100 

Financial PR


Harry Chathli, Alexis Gore, Joe Quinlan




In Accordance with AIM Rules - Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and signed off by the CTO of Cabot Energy, Mr Campbell Airlie, who has over 35 years' experience as a petroleum engineer. He has read and approved the technical disclosure in this regulatory announcement.


Note to Editors:

Cabot Energy plc (AIM: CAB) is an oil and gas company focussed on creating predictable production growth in Canada. Comprehensive information on Cabot and its oil and gas operations, including press releases, annual reports and interim reports are available from Cabot's website:


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