Cub Energy KUB.v C$.03
Posted: Tuesday Oct 9 7:14:55AM 2018
KUB.v C$.03, finally gave up on Cub Energy. The company strategy of using partners to drill their wells is low risk but makes them dependent on partners to initiate drilling. Results in 2016, 2017 and 2018 have been minimal, with several dry wells from their main partner. Recently there was a small victory from a reworked existing well. But overall production has dwindled to below 1,000boepd. After over 2 years, KUB has still not been able to get a Nitrogen Rejection Unit from the US to enable them to produce from their 100% owned ngas field. It would return 150-175boepd of gas production to Kub but they keep sliding the date when the field will be back in production. When/IF they get the field back in production, it will significantly add to profits because of the low cost and 100% ownership of the field. Ngas pricing in Ukraine has improved and royalty rates have been reduced.
Kub is still profitable, from partner production but declining production is the key. Now that I've sold, it will likely take off but can't wait any longer.
Posted: Thursday May 18 6:33:44AM 2017
Cub Energy announced Q1 results. Made C$916K net income or .004eps. That would be a pace of .016eps for 2017 vs current share price of .035. FWD p/e of 2!!!!!
This is less than Q1 2016 because Cub was still producing from the RK field in 2016 but stopped after Q1 2016. They have nitrogen in their gas from that field that the pipeline company would not accept. A previous agreement lapsed that allowed the production so last year, Cub bought a used nitrogen rejection unit from the US and imported it. It had some failed pumps so they had to order new parts. They are still having trouble getting the unit to work so production of about 175boepd is still on hold.
Cub had hoped to rework an old well and significantly boost production but apparently there was a failure in the old well casing and a new bore will have to be drilled. The company spent 1.5 million on that rework. But they still have 3.5 million in cash so should be comfortable. Cub is in a favorable situation with their 35% ownership in Kub-Gas. Kub will drill two new wells in 2017 and not require any capital contribution from Cub. When the wells are completed and producing, Cub will receive 35% of the production.
Very positive qtr due to rising natural gas prices in Ukraine. Ngas prices received during Q1 were over $6/mcf vs 5/mcf last year. This is twice to three times what a gas producer in the US or Canada would receive today.
Posted: Thursday May 4 10:45:36AM 2017
KUB. v -.005 to C$.035 ironic that Cub Energy has slipped to it's lowest price in many months when Small Cap Power article says they have 10 bagger potential. No reasons given but I agree it has that kind of potential. Unfortunately the company has not laid out it's drilling plans for 2017. I always knew that any big production gains would be a 2018 story but it would be nice to see some plans. You can't increase production in 2018 unless you drill in 2017.
Part of the issue is that Cub has used JV partners to take the risk and drill wells. This takes control away from Cub. But the decreased royalty rates and continued excellent ngas prices should stimulate their partners to increase drilling and help Cub grow production.
The big reason for optimism is that Ukraine pays well above North American prices for their ngas($5-6/mcf). They want to be energy independent and stop their dependence on Russia for ngas.
Posted: Sunday Jan 22 11:21:55AM 2017
The latest acreage that Cub added, Stanivske, had a huge discovery in 1990. Yab-2 well tested huge amounts of gas, 15mmcfpd. This sounded so good that I was tempted to buy more. So I emailed the CFO and asked whether the well was ever produced. After all, if the well was no longer producing because the gas was gone, the near term prospects might not be as good. So I emailed the CFO and asked him whether the well had ever been produced. He replied that the well had water issues shortly after testing and was never produced. So not the best response but drilling and completion techniques have improved tremendously since 1990 Soviet ways. So the company is studying all available information to decide how to proceed and whether to JV Stanivske or keep 100% and drill it themselves.
Still think Cub Energy has very good prospects for dramatically increasing production in a high return situation. Ukraine needs domestic ngas so they don't pay out all their hard money to buy ngas for heating and industrial production. The price of ngas in Ukraine is twice US levels and returns are elevated compared to US wells. The reduction in the royalty rates to 29% were crucial to encouraging more drilling. The government is considering reducing the rates further to common ECB levels of 12%.
So Cub has several catalysts. Cub has JV'd several fields and their partners haven't announced all their drilling plans but they all seem likely to dramatically increase drilling in 2017 and beyond. Cub has used JV's to minimize their capital needs and still survive and thrive. They have applied for and received two new fields in 2016 and I think these new fields will lead to big increases in production in 2018.
In addition to higher production and the resulting cashflow, Cub is still way undervalued compared to North American producers. The total market cap is still only C$20million. The huge acreage position they hold in both East and West Ukraine should lead to a revaluation of Cub. Ukraine is working towards a balanced budget and stabilizing their currency. That will lead to more foreign investment and a higher multiple for KUB.v.
Posted: Wednesday Jan 11 12:35:35PM 2017
KUB.v C$.07 Cub Energy stock continues to do well, although not sure when the next catalyst will appear. The stock is undervalued due to the Ukrainian dispute with Russia over Crimea as well as the dispute over payments to Gazprom.
Posted: Wednesday Dec 28 8:24:16AM 2016
KUB.v +.01 to C$.055 Cub Energy is adding more acreage. Total net acreage is now 142K. Company doesn't have the capital to aggressively drill all this land so has done a good job of creating partnerships to get the land explored and drilled and still retain a good percentage of production. They announced a new license today and will look for a JV partner to help them explore the land package.
HOUSTON, TEXAS--(Marketwired - Dec 28, 2016) - Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE:KUB) announces that its wholly-owned subsidiary, Tysagaz LLC, has been granted a new production licence with additional acreage in western Ukraine. The new Stanivske production licence covers approximately 31,000 acres, which is a 41% increase from the original exploration licence which was 22,000 acres.
The expanded Stanivske licence was awarded on December 23, 2016, by way of a Special Permit by the State Service of Geology and Mineral Resources of Ukraine, authorising full industrial production from the Stanivske licence for a 20-year term, during which the Company will be allowed to conduct both exploration and production activities. The new production licence replaces the previously issued five-year Special Permit for exploration, which expired on December 25, 2015 but not before the Company applied for the production licence.
A 45 square kilometre 3D seismic program was acquired by the Company in 2013 on the original Stanivske exploration licence. The geological and geophysical studies of the seismic and previously drilled wells, leads the technical team to believe the licence could hold commercial quantities of hydrocarbons warranting further exploration drilling.
Gas was discovered on the Stanivske licence by a prior operator in 1990 with the drilling of the Yab-2 well. There is currently no production nor any reserves associated with this field. To fund the exploration and development on this production licence, the Company is exploring its alternatives, including potential joint venture partners.
Mikhail Afendikov, Chief Executive Officer of Cub said, "During the last two years, the Company's focus has been to acquire key acreage and convert certain exploration licences to production licences. This has resulted in three new production licences, being the Stanivske and Uzhgorod production licences in Western Ukraine granted in 2016 (WI 100%) and the West Olgovskoye (WI 35%) production licence in Eastern Ukraine granted in 2015. Cub's total acreage in Ukraine (east and west combined) is approximately 311,000 gross acres (142,000 net acres)."
About Cub Energy Inc.
Cub Energy Inc. (TSX VENTURE:KUB) is an upstream oil and gas company, with a proven track record of exploration and production cost efficiency in Ukraine. The Company's strategy is to implement western technology and capital, combined with local expertise and ownership, to increase value in its undeveloped land base, creating and further building a portfolio of producing oil and gas assets within a high pricing environment.
For further information please contact us or visit our website: www.cubenergyinc.com
Posted: Wednesday Dec 21 11:02:55AM 2016
Added KUB.v shares today at C$.045. It took several days of sitting on the bid to get my order filled. No news recently except that Ukraine didn't pass reduction in royalty tax from current 29% to 12% as proposed. That would have really accelerated drilling. Production should still climb at 29% but just won't get big outside investment because 29% is still high compared to other countries. KUB is located exclusively in Ukraine so the reduction in tax is a big positive for them.
Near term catalysts are Q1 installation of nitrogen rejecting equipment that will allow their gas in RK field to pass pipeline standards and resume production. Should add 175boepd by end of Q1. Status of M23 well drilled by jv partner KUB-GAS should be announced in Q1, not expecting much, if anything from M23. KUB-GAS will drill another new well in Q1.
New partner in Western U field should complete seismic in Q1 and announce drill plans. Kub is carried for first three wells and holds 50% working interest so should get a boost in late 2017/early 2018 from activities of new partner.
Ukrainian government has posted some wildly optimistic forecasts for increased ngas production in Ukraine. Doubt they will get them with 29% royalty tax but if they fall well short, they may reconsider royalty tax reductions again.
There is plenty of ngas in Ukraine, they need it for winter heating and Cub Energy has several hundred thousand acres of land to drill and produce from. Horizontal drilling and fracking could dramatically improve results and it's partners are experimenting with these new technologies now.
Posted: Monday Dec 5 8:52:39PM 2016
Posted: Thursday Nov 17 5:46:22PM 2016
Cub Energy reported earnings for Q3 today. Earned C$2.2million or .007eps but 1.6million was a one time sale of 50% of a field so won't be repeated. Cub operates in Ukraine and the share price has suffered since the invasion by Russia and splitting off of Eastern Ukraine. They need to become energy self sufficient and not have to spend precious cash reserves to buy Russian gas.
Cub has significant acreage in both Western and Eastern Ukraine. They have a small field that is currently offline because the gas contains too much nitrogen. They have bought a used nitrogen rejection unit from the US but it needs new compressors so those have been ordered and Cub anticipates getting the equipment working and the field back online by early 2017. Would add about 175boepd of gas to production.
Here is the latest presentation:
Cub has several near term catalysts that could help cashflow and improve profits. Bought some early this week at C$.025. Was hoping to add at the open but got outbid. Will wait a bit and see if price settles. Lots of long term holders who are underwater so could have some tax loss selling this month and next. There is significant country risk in Ukraine but I think it is cheap enough to offset some of the risk.