August 25, 2020, Vancouver, Canada – Renaissance Oil Corp. (“Renaissance” or the “Company”) (TSX-V:ROE / OTCQB: RNSFF) reports its second quarter 2020 results. All dollar figures are in Canadian dollars, unless otherwise noted.
HIGHLIGHTS FOR THE THREE MONTHS ENDED JUNE 30, 2020
- Renaissance signed a binding letter agreement to acquire an option for a 50% working interest, in all rights from surface to basement, in a large Petroleum Licence, comprising 2.45 million acres in the Kavango sedimentary basin, in Botswana, Africa (the “Licence”); and
- Revenue and operating netback in the second quarter of 2020 were $2.5 million and $0.3 million respectively, with production of 1,215 boe/d in line with previous quarters.
|Three Months Ended|
|June 30, 2020||March 31, 2020||June 30, 2019|
|Crude oil (Bbl/d)||364||371||376|
|Natural gas (Mcf/d)||5,101||5,240||5,102|
|Crude oil ($/Bbl)||30.32||54.90||82.83|
|Natural gas ($/Mcf)||3.21||4.32||4.54|
|Net income (loss)||(2,163,374)||1,624,417||(1,112,903)|
|Per share, basic & diluted||(0.01)||0.01||0.00|
|Funds flow from operations1||(416,812)||(136,086)||(478,491)|
|Per share, basic & diluted1||0.00||0.00||(0.00)|
1See Non-GAAP Measures Section 13 of the MD&A
In light of the ongoing political and regulatory challenges in Mexico, the Company determined that until government policies become more favorable, it is in the best interest of shareholders for management to diversify Renaissance’s interests outside of Mexico, while continuing to maintain its existing, high potential assets, within Mexico. In June 2020, the Company entered into a binding letter agreement (the “Letter Agreement”) to acquire an option for a 50% working interest, in all rights from surface to basement, for the Botswana Licence.
This opportunity in Botswana will provide Renaissance with an important and potentially high impact oil and gas play, through the opening of the Kavango basin, a previously unrecognized, deep sedimentary basin in northwestern Botswana and northeastern Namibia. Botswana is considered a stable, industry friendly jurisdiction which offers some of the most attractive fiscal terms worldwide.
Renaissance, and its partner LUKOIL, continue to negotiate towards the development plan for the Amatitlán block for the commercialization of all prospective zones, with particular emphasis on the Upper Jurassic formations. Specifically, management is progressing the migration of Amatitlán from a service contract to a mutually beneficial contract structure for all partners.
The Company produced an average of 1,215 boe/d at the Mundo Nuevo and Malva blocks in Chiapas during the second quarter of 2020, which has been consistent with previous production levels while Topén-3 has been shut in. The Company’s cash flows have been negatively impacted by the continued delay in receipt of payments on its sales of oil and natural gas production. This, in addition to the impact of the COVID-19 pandemic, has resulted in the deferral of royalty payments due since September 2019. Management continues discussions with funding sources in Europe, North America and Mexico, however, there is no assurance further financing efforts will be successful. Failure to make the royalty payments may result in penalties and could jeopardize the license agreements on the Company’s Chiapas properties.
The global impact of the COVID-19 pandemic as well as declines in spot prices for oil and gas have fostered a great deal of uncertainty as to the health of the global economy over the near term. The Company continues to pursue various measures of relief, provided by Mexican oil and gas regulations, to required work programs in Chiapas due to the operational and logistical challenges created by the COVID-19 pandemic.
RENAISSANCE OIL CORP.
Per: Craig Steinke
Chief Executive Officer
For further information contact:
Craig Steinke, Chief Executive Officer | Tel: +1-604-536-3637
Kevin J. Smith, Vice President, Business Development | Tel: +1-403-200-9047
This news release should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements for the three and six months ended June 30, 2020 and related management’s discussion and analysis. These filings are available for review on SEDAR at www.sedar.com.