LNGE LNG Energy Group Corp

LNG Energy Group Corp. (TSXV: LNGE) (TSXV: LNGE.WT) (OTCQB: LNGNF) (FWB: E26) (the “Corporation” or “LNG Energy Group”) is pleased to announce its financial and operating results for the quarter ended on June 30, 2024. All dollar amounts are expressed in United States dollars, except where otherwise indicated.

“In Q2 2024, we continued our work on growing the production of our Colombian portfolio in a capital efficient manner through workovers and field optimizations,” commented Pablo Navarro, Chief Executive Officer and Chairman of the Corporation. “The two CPPs in Venezuela, have the potential to provide LNG Energy Group with a material opportunity in one of the most prolific hydrocarbon provinces in the world.”

2024 Second Quarter Financial and Operating Results

• For the second quarter of 2024 Adjusted EBITDAX (1) was $5.7 million, 5% lower than 1Q24. For the first half of 2024 EBITDAX(1) was $11.4 million.
• The Corporation has gross daily gas volumes of approximately 34 MMcf/d for 2Q24 and 35 MMcf/d for the first half of 2024. In boe terms, the Corporation had a production decline of 6% in 2Q24 versus 1Q24, driven by client maintenance program and workovers.
• In 2Q24, the Corporation had revenues, net of royalties of $9.1 million with natural gas revenues accounting for $8.6 million. For the first half of 2024, total sales, net of royalties, was $19 million, with natural gas accounting for $17.7 million. Compared to 1Q24, the 2Q24 revenues largely followed production volumes.
• In 2Q24, the natural gas operating netback was $5.08/Mcf. Condensate operating netback was $51.58/bbl. Netback for total production was $29.74/boe. For the first half of 2024, the natural gas operating netback was $5.18/Mcf. Condensate operating netback was $54.50/bbl. Netback for total production was $30.40/boe.
• In 2Q24, the Corporation finalized the compressor project in the producing Bullerengue field as scheduled. The project will increase the ability to respond to regulatory requirements and improve general operational efficiencies.
• Continue workover campaign started in 2Q24, seeking to extend the present production profile
• The Corporation expects to drill at least two more new wells in the second half of 2024 focusing on production and lower risk exploration.
• On April 17, 2024, LNG Energy Group’s wholly own subsidiary, LNGEG Growth I Corp. (“LNG Venezuela”) was conditionally entered into a binding agreement with PDVSA Petroleo S.A. (“PPSA”), a subsidiary of Petroleos de Venezuela S.A. (“PDVSA”), the Venezuelan national oil company, for the operation of the Nipa-Nardo-Niebla and the Budare-Elotes CPPs in onshore Venezuela (collectively, the “Venezuela Blocks”).
• On August 22, 2024, the Corporation announced the creation of a new Oilfield Services Division where it will capitalize on its unique vertical integration model to access new revenue streams.

 (1)   Non-IFRS measures – see “Non-IFRS Measures” section within this news release for further details.

FINANCIAL & OPERATING HIGHLIGHTS- SECOND QUARTER 2024

(In United States dollars (tabular amounts in thousands) except as otherwise noted)

Financial	Three months ended June 30, 2024	Six months ended June 30, 2024
Total sales, net of royalties	9,078	19,036
Net income (Loss) and other comprehensive income (loss)	(2,509)	(8,004)
Cash Flow provided by operating activities	3,274	6,087
Adjusted EBITDAX(1)	5,657	11,419
Capital expenditures	2,205	3,498
Cash and cash equivalent + restricted cash	2,367	2,367
Total debt	55,368	55,368
Total assets	207,852	207,852
Operating	Three months ended June 30, 2024	Six months ended June 30, 2024
Production
Gas (Mcf/d)	17,043	17,430
Condensate (bbl/d)	99	122
Total (boe/d)	3,089	3,180
Realized Contract Sales
Gas (Mcf/d)	16,852	17,276
Condensate (bbls/d)	102	122
Total (boe/d)	3,058	3,153
Operating Netback(1)
Gas ($/Mcf)	5.08	5.18
Condensate ($/bbl)	51.58	54.50
Total ($/boe)	29.74	30.40

 (1)   Non-IFRS measures – see “Non-IFRS Measures” section within this news release for further details.

2024 Outlook

For the remainder of 2024, LNG Energy Group is focused on the following objectives:

Colombia

In Colombia, the Corporation expects to complete the following: (1) a workover and optimization program targeting four to six wells; (2) drill two development wells in the producing Bullerengue field in the Sinú-San Jacinto-1 (“SSJN-1”) Block; (3) continuing to evaluate and strengthen the Corporation’s commitment to environmental, social and governance initiatives; and (4) the repayment of its indebtedness and strengthening of its capital and liquidity resources.   For more information, please see the Corporation’s news release dated March 5, 2024.

Venezuela

On April 17, 2024, LNG Energy Group’s wholly own subsidiary, LNG Venezuela was conditionally entered into a binding agreement with PPSA, a subsidiary of PDVSA, the Venezuelan national oil company, for the operation of the Nipa-Nardo-Niebla and the Budare-Elotes CPPs in onshore Venezuela. These Blocks are currently producing 3,000 bbl/d of light and medium oil. The CPPs were executed within the term of General License 44 issued by the US Office of Foreign Assets Control (OFAC). License 44 has been replaced by License 44A requiring US persons to wind down oil operations in Venezuela before May 31, 2024. The Corporation continues to assess the applicability of License 44A to its intended operations in Venezuela and determine the most appropriate course of action. The Corporation intends to operate in full compliance with the applicable sanction regimes. For more information, please see the Corporation’s news release dated April 24, 2024.

This news release should be read in conjunction with the Corporation’s interim condensed consolidated financial statements and related Management’s Discussion and Analysis (“MD&A”). The Corporation has filed its condensed consolidated financial statements and related MD&A as at and for the three months ended June 30, 2024, with the Canadian securities regulatory authorities. These filings are available for review on SEDAR+ at www.sedarplus.ca.

About LNG Energy Group Corp.

The Corporation is focused on the acquisition and development of oil and gas exploration and production assets in Latin America.

For more information, please see below:

Website: www.lngenergygroup.com

Investor Relations:James Morris, Vice-President, Business Development and Investor RelationsEmail: investor.relations@lngenergygroup.comTelephone: 205-835-0676

Find us on social media:LinkedIn: https://www.linkedin.com/company/lng-energy-group-inc/   Instagram: @lngenergygroup X: @LNGEnergyCorp 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities laws. All statements other than statements of historical fact are forward-looking statements, and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often using phrases such as “expects”, “anticipates”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends”, or variations of such words and phrases, or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved, are not statements of historical fact and may be forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors which may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include: general business, economic, competitive, political and social uncertainties; delay or failure to receive any necessary board, shareholder or regulatory approvals, factors may occur which impede or prevent LNG Energy Group’s future business plans; and other factors beyond the control of LNG Energy Group. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, LNG Energy Group assumes no obligation to update the forward-looking statements, whether they change as a result of new information, future events or otherwise, except as required by law. There can be no guarantee that the Corporation or LNG Venezuela shall be able to complete the acquisition terms required by PPSA.

Non-IFRS Measures

Two of the benchmarks the Corporation uses to evaluate its performance are adjusted funds from operations and adjusted EBITDAX, which are measures not defined in IFRS. Adjusted funds from operations represent cash flow provided by operating activities before the settlement of decommissioning obligations and changes in non-cash working capital, adjusted for non-recurring charges. Adjusted EBITDAX is defined as net income (loss) and comprehensive income (loss) adjusted for interest, income taxes, depreciation, depletion, amortization, pre-license costs and other similar non-recurring or non-cash charges.

LNG Energy Group considers these measures as key measures to demonstrate its ability to generate the cash flow necessary to fund future growth through capital investment, pay dividends and repay its debt. These measures should not be considered as an alternative to, or more meaningful than, cash provided by operating activities or net income (loss) and comprehensive income (loss) as determined in accordance with IFRS as an indicator of the Corporation’s performance. The Corporation determination to take these measures may not be comparable to that reported by other companies.

Operating Netbacks

In addition to the above, management uses the Operating Netback measure. Operating Netback is a benchmark common in the oil and gas industry and is calculated as revenue, less royalties, less operating expenses, calculated on a per unit basis of sales volumes. Operating netback is an important measure in evaluating operational performance as it demonstrates profitability relative to current commodity prices. Operating netback as presented does not have any standardized meaning prescribed by IFRS and therefore may not be comparable with the calculation of similar measures for other entities.

The term “boe” is used in this news release. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of cubic feet of natural gas to barrels of oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. In this news release, boe is expressed using the Colombian conversion standard of 5.7 Mcf: 1 bbl required by the Ministry of Mines and Energy of Colombia. Natural gas and liquified natural gas volumes per day are expressed in thousand cubic feet per day (“Mcf/d”) or million cubic feet per day (“MMcf/d”) throughout this news release.

Please see the Corporation’s interim condensed consolidated financial statements and related MD&A for additional disclaimers.