ROK's Debt Down Over Four Times at $8.3MM

ROK Resources Inc. has reported a $27-million decrease in net debt to over $8.3 million as of the end of the first quarter, more than four times lower than its yearend balance, while signaling recovery after ending 2022 at a loss.

The Canadian oil and gas company logged just about $300,000 in net income, a dwarf figure compared to a net profit of over $76.2 million in the corresponding quarter of 2022 but a bounceback from a loss of nearly $5.56 million for October-December 2022.

However, its operating income of nearly $9.9 almost doubled that of the prior year’s opening quarter with an earnings margin of 41 percent driven by petroleum and natural gas sales of $24.14 million.

“The continued reduction of Net Debt quarter over quarter is a result of organically generated funds flows utilized to reduce Company indebtedness”, ROK said in a press release Friday.

It added it will clear the remaining balance in a $52.5-million term loan this month having paid $7.1 million in the January-March 2023 quarter.

“As a result of the early Term Loan repayment, the Company made the strategic decision to unwind certain commodity swap hedges placed in 2023, 2024 and 2025”, ROK announced May 2.

Hit by Alberta province’s wildfires ROK averaged 372,570 oil-equivalent in realized production during the first three months of 2023.

“The Alberta wildfires have affected ROK's Kaybob, Alberta operations, resulting in production shut-ins of ~300 Boepd (80% natural gas)”, it said in Friday’s results announcement. “It is expected that some production will remain shut-in through Q2 2023 and potentially into Q3 2023, however ROK will provide additional guidance, as further details emerge”.

A state of emergency remains in Alberta due to the bushfires. The local government said in the latest update on its website, published Saturday, there were 50 active wildfires in the province’s Forest Protection Area with 22 under control.

“The fire danger is very high in the northern regions of the province, moderate to high in the central and southern regions, and low from the central region to the northern slopes of the Rocky Mountains”, the provincial government said.

Despite the downside risk from the fires ROK maintained its production target of 4,500 oil-equivalent barrels a day by yearend. It said it had successfully drilled two wells in the opening quarter.

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