Cub Energy (TSX-V: KUB) Inc. Announces 2014 First Quarter Financial and Operational Results


Houston, Texas – May 15, 2014 – Cub Energy Inc. (“Cub” or the “Company”) (TSX-V: KUB), a
Black Sea region-focused upstream oil and gas company, announced today its unaudited interim
financial and operating results for the three months ended March 31, 2014. All dollar amounts are
expressed in United States dollars.
In the first quarter of 2014, Cub achieved several key accomplishments including its eighth
consecutive quarter of production growth and operational success on the Company’s 100% working
interest Rusko-Komarovske-21 (“RK-21”) well which was drilled during the first quarter and
subsequently tied-in.
Operational Highlights
 Production averaged 1,857 boe/d (95% natural gas) for the three months ended March 31, 2014
for an increase of 22% over 1,528 boe/d in the same period in 2013;
 Exit rate of 1,952 boe/d at March 31, 2014 for a 6% decrease over exit rate of 2,070 boe/d at
December 31, 2013;
 Current production of approximately 1,900 boe/d;
 Achieved average natural gas price of $8.63/Mcf and condensate price of $78.19/bbl for the
three months ended March 31, 2014;
 On March 14, 2014, the RK-21 well was spud and subsequently cased to TD, tested 2.6 MMcf/d
and tied-in;
 Completed the expansion of the Kub-Gas (30% WI) Makeevskoye and Olgovskoye production
and processing facility in 2013. Gas began flowing on March 6, 2014 resulting in increased
capacity to 68 MMcf/d from the previous 30 MMcf/d. While this work was completed by the end
of the first quarter of 2014, full production gains are pending re-routing of gas production and
permitting which is expected in the next couple of months;
 The M-17 well (30% WI) was drilled to its total depth of 3,445 metres and the S7 zone tested gas
at a rate of over 0.9 MMcf/d through a seven millimetre choke; and
 Cub also announced the O-24 well (30% WI) tested and flowed gas at low rates in the R30c
zone. The Company plans to fracture stimulate this zone later this year.

Financial Highlights

 Netback of $30.28/Boe or $5.05/Mcfe for the quarter ended March 31, 2014;
 Revenue from hydrocarbon sales for the three months ended March 31, 2014 increased 55% to
$1.7 million (2013 – $1.1 million) which was driven by the recent success of RK-22;
 Revenue from hydrocarbon sales by KUB-Gas for the three months ended March 31, 2014 were
$23.4 million (2013 – $28.7 million) for a decrease of 18% of which the Company’s 30% share
was $7.0 million (2013 – $8.6 million). The decrease was due to lower gas prices and the
devaluation of the Ukrainian Hrynvia;
2
 The total pro-rata revenue from hydrocarbon sales, a non-IFRS measure combining the
Company’s revenue and 30% of the allocated KUB-Gas revenue, totaled $8.7 million (2013 -
$9.7 million) for the three months ended March 31, 2014;
 During the three months ended March 31, 2014, the Company received $1.0 (2013 – $3.0) in the
form of dividends from KUB-Gas representing the distribution of excess cash flow;
 Income from the Company’s 30% equity investment in KUB-Gas for the three months ended
March 31, 2014 was $1.1 million (2013 – $2.2 million);
 The net loss for the three months ended March 31, 2014 was $0.9 million or $0.00 per share
(2013 – net income of $0.3 million or $0.00 per share);
 Capital expenditures of $1.1 million (2013 $0.3 million) for the three months ended March 31,
2014 and the pro-rata capital expenditures, a non-IFRS measure combining the Company’s
capital expenditures and 30% of the allocated KUB-Gas capital expenditures, totaled $3.2
million (2013 – $1.9 million) for the three month ended March 31, 2014.
 The Company utilized $1.0 million of the available $5.0 million unsecured line of credit with
Pelicourt during the three months ended March 31, 2014

(in thousands of US dollars)
Three Months
Ended
March 31, 2014
Three Months
Ended
March 31, 2013

Petroleum and natural gas revenue 1,701 1,055
Pro-rata petroleum and natural gas revenue(1)
8,734 9,668
Net profit (loss) (915) 276
Earnings (loss) per share – basic and diluted (0.00) 0.00
Funds generated from (used in) operations(2)
(126) 1,583
Pro-rata funds generated from operations(3)
2,391 2,692
Capital expenditures(4)
1,074 323
Pro-rata capital expenditures(4)
3,222 1,871
Pro-rata netback ($/boe) 30.28 43.84
Pro-rata netback ($Mcfe) 5.05 7.31

March 31,
2014
December 31,
2013

Working capital (deficit) (306) 942
Cash and cash equivalents 1,908 1,617
Long-term debt 1,000 -

Notes:

(1)

Pro-rata petroleum and natural gas revenue is a non-IFRS measure that adds the Company’s petroleum and natural revenue earned in the respective
periods to the Company’s 30% equity share of the KUB-Gas petroleum and natural gas sales that the Company has an economic interest in.
(2)

Funds from operations is a non-IFRS measure and is defined as cash flow from operating activities, excluding changes in non-cash working capital.
3
(3)

Pro-rata funds from operations is a non-IFRS measure that adds the Company’s funds from operations in the respective periods to the Company’s 30%
equity share of the KUB-Gas funds from operations that the Company has an economic interest in. The KUB-Gas funds from operations is calculated as
the income from equity investment less the KUB-Gas depletion and depreciation.
(4)

Capital expenditures includes the purchase of property, plant and equipment and the purchase of exploration and evaluation assets. Pro-rata capital
expenditures is a non-IFRS measure that adds the Company’s capital expenditures in the respective periods to the Company’s 30% equity share of the
KUB-Gas capital expenditures that the Company has an economic interest in.

Mikhail Afendikov, Chief Executive Officer of Cub Energy, commented, “During the first quarter we
continued our production growth with a particular emphasis on our western 100% owned Ukrainian
assets. The RK-22 well was brought on production in late 2013 and improved our production and
cashflow. We recently announced the success of the follow up RK-21 well with plans to drill the RK-
1 re-entry, RK-23 and RK-24 wells in the next two quarters. Gas prices realised during the first
quarter were negatively impacted by the temporary agreement between Russia and Ukraine and the
devaluation of the Ukrainian currency. The gas price agreement between Russian and Ukraine was
terminated at the end of March 2014 and gas prices have improved materially in April and May of
2014 which we anticipate will improve income and cashflow in our upcoming quarter.”

Outlook
For the remainder of 2014, the Company will continue it’s previously announced work program on its
100% owned Tysagaz assets in western Ukraine. The Company plans to drill the RK-23 and RK-24
development wells, re-enter the RK-1 well for completion in a deeper zone and plans to drill up to
two wells on the Stanivske licence.

Operations expected in the remainder of 2014 for KUB-Gas include the drilling of four wells including
the current O-11 well, four fracture stimulations and a workover of the O-6 well and construction of
pipeline to tie-in wells as needed. The Makeevskoye and Olgovskoye production and processing
facilities is expected to be optimized in the next couple of months.

Supporting Documents
Cub’s complete quarterly reporting package, including the unaudited interim financial statements
and associated Management’s Discussion and Analysis, have been filed on SEDAR
(www.sedar.com) and has been posted on the Company’s website at www.cubenergyinc.com.
About Cub Energy Inc.

Cub Energy Inc. (TSX-V: KUB) is an upstream oil and gas company, with a proven track record of
exploration and production cost efficiency in the Black Sea region. 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

Mikhail Afendikov
Chairman and Chief Executive Officer
(713) 677-0439
mikhail.afendikov@cubenergyinc.com

Lionel C. McBee
Director of Investor Relations
(713) 577-1955
lionel.mcbee@cubenergyinc.com

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