Rubellite Energy Corp. Reports First Quarter 2025 Financial And Operating Results
Press Release
Calgary, Alberta – May 7, 2025 (TSX:RBY) – Rubellite Energy Corp. (“Rubellite” or the “Company”), is pleased to report its first quarter 2025 financial and operating results and provide an operations and guidance update.
Select financial and operational information is outlined below and should be read in conjunction with Rubellite’s unaudited condensed consolidated interim financial statements and related Management’s Discussion and Analysis (“MD&A”) for the three months ended March 31, 2025, which are available on the Company’s website at www.rubelliteenergy.com and SEDAR+ at www.sedarplus.ca.
This news release contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Company and its business. Since certain specified financial measures may not have a standardized meaning, securities regulations require that specified financial measures are clearly defined, qualified and, where required, reconciled with their nearest GAAP measure. See “Non GAAP and Other Financial Measures” in this news release and in the MD&A for further information on the definition, calculation and reconciliation of these measures. This news release also contains forward-looking information. See “Forward-Looking Information”. Readers are also referred to the other information under the “Advisories” section in this news release for additional information.
FIRST QUARTER 2025 HIGHLIGHTS
⦁ Rubellite delivered record first quarter conventional heavy oil sales production of 8,339 bbl/d that exceeded the high end of guidance (3% above the mid-point of the guidance range) and was up 8% relative to the fourth quarter of 2024 (Q4 2024 – 7,754 bbl/d) and 85% relative to the first quarter of 2024 (Q1 2024 – 4,514 bbl/d). First quarter total sales production of 12,383 boe/d (70% heavy oil and NGL) was up 19% from the fourth quarter of 2024 (174% relative to Q1 2024) while also exceeding the high end of guidance (2% above the mid-point of the guidance range). Production growth quarter over quarter was driven by the successful drilling program at Figure Lake and Frog Lake and a full quarter impact of the Recombination Transaction which added an average of 3,708 boe/d to sales volumes (20.0 MMcf/d of conventional natural gas and 371 bbl/d of NGL). Ten (8.0 net) new wells were brought on production from the heavy oil drilling program and at Figure Lake the newly constructed gas plant commenced operations on January 23, 2025 and added an average of 2.0 MMcf/d of solution gas sales in the first quarter of 2025.
⦁ Exploration and development capital expenditures(1) totaled $22.3 million for the first quarter of 2025, in line with guidance of $22 to $24 million. First quarter spending included costs to drill, complete, equip and tie-in four (4.0 net) multi-lateral horizontal development wells at Figure Lake, six (4.5 net) multi-lateral horizontal development wells at Frog Lake, one (0.3 net) waterflood injection well at Marten Hills and one (1.0 net) exploratory well. Included in first quarter development capital spending was $1.1 million for the Figure Lake gas conservation project.
⦁ Land and other spending totaled $2.5 million in the first quarter of 2025 to acquire 13.0 net sections of land and included $0.4 million of spending on seismic purchases. An additional $0.8 million (Q1 2024 – $0.1 million) was spent on decommissioning, abandonment and reclamation activities.
⦁ Adjusted funds flow(1) was up 94% to $35.9 million, and up 30% on a per share basis to $0.39 per share, relative to the first quarter of 2024 (Q1 2024 – $18.5 million; $0.30 per share). Quarter-over-quarter, adjusted funds flow, after transaction costs was up 14% and 8% on a per share basis (Q4 2024 – $31.6 million; $0.36 per share), which marks another consecutive quarter of growth in adjusted funds flow per share since the inception of Rubellite.
⦁ Cash costs(1) were $20.9 million or $18.76/boe in the first quarter of 2025 (Q1 2024 – $9.0 million or $21.86/boe; Q4 2024 – $18.6 million or 19.45/boe).
⦁ Net income was $1.2 million ($0.01 per share) in the first quarter of 2025 (Q1 2024 – $4.2 million net loss; Q4 2024 – $26.7 million net income).
⦁ Free funds flow(1) of $11.0 million was driven by adjusted funds flow of $35.9 million exceeding capital expenditures including land and other spending of $24.9 million, and was used to reduce net debt and other balance sheet obligations.
⦁ As at March 31, 2025, net debt(1) was $147.7 million, a reduction in net debt of $6.3 million from $154.0 million as at December 31, 2024.
⦁ Rubellite had available liquidity(1) at March 31, 2025 of $33.1 million, comprised of the $140.0 million borrowing limit of Rubellite’s first lien credit facility, less current bank borrowings of $103.3 million and outstanding letters of credit of $3.6 million. Subsequent to the end of the quarter, outstanding letters of credit were reduced by $2.2 million to $1.4 million, further enhancing available liquidity.
(1) Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See “Non-GAAP and Other Financial Measures” in this news release.
OPERATIONS UPDATE
Greater Figure Lake (Figure Lake and Edwand)
Heavy oil production from the Greater Figure Lake area averaged 5,426 bbl/d (100% heavy oil) in March 2025 and 5,325 bbl/d (100% heavy oil) for the first quarter. Solution gas sales through the newly constructed gas plant and gas gathering system ramped up during the quarter, contributing 3.0 MMcf/d to total production at Figure Lake in March 2025 of 5,922 boe/d (92% liquids).
In the first quarter of 2025, Rubellite drilled and rig released a total of four (4.0 net) horizontal wells in the Greater Figure Lake area, all targeting the Wabiskaw Member of the Clearwater Formation with the 33 meter inter-leg spacing well design adopted in the latter half of 2024. Results from the Q1 2025 capital program across the Greater Figure Lake field achieved an average IP30 of 286 bbl/d (3 wells) and IP60 of 260 bbl/d (2 wells), as compared to the McDaniel Tier 1 Type Curve(2) for the 33 meter spacing well design of IP30 177 bbl/d and IP60 169 bbl/d(1).
Consistent production results continue to support the geologic model and affirm the 243.0 net development drilling inventory locations(3), including 96.2 net proven and probable undeveloped(2)(3) booked locations. Under a one-rig program, which would provide for the drilling of 18 wells per year, the location count at Figure Lake represents over 13 years of low-risk development drilling inventory.
With expected ongoing growth in heavy oil volumes, Rubellite is evaluating options to manage additional gas volumes, including expansion of the gas plant for increased sales volumes as well as temporary gas storage into a depleted reservoir. The Company is also advancing a novel natural gas re-injection pilot at Figure Lake for enhanced oil recovery with an experimental well now configured on the 1-13 plant site.
In addition, during the first quarter Rubellite acquired 3D seismic to advance the evaluation of an exploratory prospect in the Sparky formation to be drill ready later in 2025 or early 2026.
Frog Lake
Production at the Frog Lake property averaged 2,471 bbl/d (100% heavy oil) net to Rubellite in March 2025 and 2,423 bbl/d (100% heavy oil) for the first quarter.
The Company switched its drilling operations at Frog Lake in December 2024 to utilize Oil-Based Mud (“OBM”), and subsequently drilled and rig released six (4.5 net) horizontal wells in the first quarter of 2025 at North Frog Lake, targeting the Waseca Sand of the Mannville Stack. The OBM trial at Frog Lake is expected to confirm the benefits of using OBM fluid consistent with Rubellite’s operations at Figure Lake, where the use of OBM has improved hole cleaning and stability, accelerated the time to stabilized reservoir production, and reduced drill pipe wear, water handling and disposal costs as compared to conventional water-based mud systems.
Results from the Q1 2025 capital program at Frog Lake achieved an average IP30 and IP60 of 154 bbl/d (4 wells(1)) and 140 bbl/d (3 wells) respectively, as compared to the McDaniel Waseca North Type Curve(2) IP30 and IP60 of 107 bbl/d and 104 bbl/d established using historical data obtained from wells drilled with water-based mud systems. Alongside the preliminary production results, drilling costs, fluid losses, and OBM recovery rates for re-use in the drilling of subsequent wells have all been encouraging, and the Company is continuing to utilize OBM in its ongoing drilling operations at Frog Lake.
In addition to continued drilling of the Waseca sand as the primary development zone at Frog Lake, the Company is planning several exploratory evaluation wells in 2025 and 2026 using an alternative well design to test the less consolidated General Petroleum and Sparky sands. Learnings from these wells will confirm type curve assumptions, and inform mapping parameters and appropriate geological cutoffs for future economic development of these additional zones in the Mannville Stack.
Marten Hills
The Company rig released its first water injection well at Marten Hills in late February, and pending routine regulatory approvals, expects to commence waterflood operations during the second quarter. Value is expected to be realized through reduced water handling costs, reduced production declines and enhanced reserve recoveries.
Other Exploration
In addition to exploration activities in the General Petroleum and Sparky zone at Frog Lake and the Sparky prospect at Figure Lake, the Company is continuing to advance multiple additional new venture exploration prospects, pursuing both land capture and play concept de-risking activities while minimizing its risked capital exposure.
(1) No wells were excluded from the calculation of average results except the criteria for producing days.
(2) Type curve assumptions for the 33m spacing well design are based on the Total Proved plus Probable Undeveloped reserves contained in the 2024 McDaniel Reserve Report as disclosed in the Company’s 2024 Annual Information Form available under the Company’s profile on SEDAR+ at www.sedarplus.ca. “McDaniel” means McDaniel & Associates Consultants Ltd. independent qualified reserves evaluators. “McDaniel Reserve Report” means the independent engineering evaluation of the heavy crude oil and conventional natural gas and NGL reserves, prepared by McDaniel with an effective date of December 31, 2024 and a preparation date of March 10, 2025. See “Estimated Drilling Locations.
(3) Of the 243.0 net locations described in the greater Figure Lake area, 65.6 net locations are recognized in the McDaniel Report as proved undeveloped and an additional 30.6 net locations are classified as probable undeveloped. The Company recognizes a total of 316.2 net heavy oil development locations, 93.1 of which are net proved and 45.6 are net probable and included in the 2024 McDaniel Reserve Report.
OUTLOOK AND GUIDANCE
For the remaining three quarters of 2025, Rubellite has budgeted to spend a total of $73 to $88 million primarily on the exploration and development drilling program, excluding expenditures on land and abandonment and reclamation activities, which is unchanged from previous guidance. Planned capital activity at the low end of the spending guidance range includes: drilling an additional fifteen (15.0 net) multi-lateral development / step-out wells in the Greater Figure Lake area; drilling an additional eighteen (9.5 net) multi-lateral wells in the Frog Lake area, including at least one (0.5 net) well to evaluate the General Petroleum zone in the Mannville Stack; capital to expand the Figure Lake gas conservation project including additional plant optimization and pipeline tie-ins; participation in the drilling of four (2.0 net) wells at East Edson; spending to continue to evaluate additional heavy oil exploration prospects and advance enhanced oil recovery.
If market conditions warrant, the Company will consider expanding its planned activity levels to the high end of the spending guidance range which would further grow production levels into 2026. However, with the recent significant decline in oil prices, the Company is monitoring its capital spending plans and evaluating reducing its second half 2025 capital program. The Company will continue to strive for meaningful per well capital cost reductions to drive attractive rates of return and payout periods, and will manage its capital spending to prioritize free funds flow generation over production growth in a weak oil price environment.
Heavy oil sales volumes based on the current budget are expected to grow 44% to 48% year-over-year to average between 8,200 – 8,400 bbl/d in 2025. Total production sales volumes, including natural gas and NGL volumes at East Edson and solution gas sales at Figure Lake, are forecast to average 12,200 – 12,400 boe/d in 2025.
Forecasted activity will be funded from adjusted funds flow(1), with excess free funds flow(1) applied to reduce net debt(1) and other balance sheet obligations. Aided by Rubellite’s extensive commodity price risk management positions, the Company continues to forecast strong adjusted funds flow and free funds flow through the second and third quarters of 2025 based on the forward market for commodity prices as at May 7, 2025.
Rubellite will continue to address end of life ARO, with total abandonment and reclamation expenditures of approximately $1.1 million planned for the final three quarters of 2025. In combination with the $0.8 million of asset retirement obligation spending in the first quarter, the Company is on track to exceed its area-based mandatory spending requirement for 2025 of $1.7 million, as calculated by the Alberta Energy Regulator (“AER”).
IBF4
