ROK Resources Files Financial Results and Management Discussion & Analysis for the First Quarter of 2024

REGINA, SK / ACCESSWIRE / May 21, 2024 / ROK Resources Inc. ("ROK" or the "Company") (TSXV:ROK)(OTCQB:ROKRF) has filed its interim Financial Results and Management Discussion & Analysis for the three months ended March 31, 2024.

The Company remained on strategy and budget for Q1 2024. Funds Flow of $6.3 million was used to further reduce Adjusted Net Debt. Despite the inactive quarter, the Company had modest production growth quarter over quarter and is well positioned to commence its drilling program in late Q2 2024, with the flexibility to allocate development capital across some of the most economic plays in North America.

Q1 2024 HIGHLIGHTS

• Production in line with Forecast: Production averaged 4,278 boepd (62% liquids);
• Operating Cost Reduction: realized operating costs of $27.55 per boe which represents an 18% reduction when compared to 2H 2023;
• Adjusted Net Debt Reduced: Adjusted Net Debt reduced from $18.7 million at the end of Q4 2023 to $14.4 million at the end Q1 2024; and
• Successful Reactivation and Optimization Program: Achieved capital efficiencies of $4,815 per boe on 12 reactivation/optimization projects in Southeast Saskatchewan.

OUTLOOK

Key initiatives for 2024 include reducing corporate finding and development costs and expanding core operating areas in Southeast Saskatchewan. The Company anticipates commencing its drilling program in late Q2 2024. The six well program, which will target Frobisher light oil prospects, the Company has allocated a budget of ~$10 million in 1H 2024. The commencement of the drilling program is contingent on various factors, including favorable weather and road conditions following spring break-up. The Company will provide detailed second-half 2024 guidance after its annual bank review process, expected to be completed in June 2024.

Q1 2024 FINANCIAL SUMMARY

In Q1 2024, the Company realized average daily production volume of 4,278 boepd (62% liquids), resulting in oil and natural gas sales of $20.9 million and realized hedge gain of $0.9 million. The Company realized Funds from Operations of $8.0 million, after royalties, operating expenses, and processing and other income.

Operating costs, which include expenses incurred to operate wells, gather, treat, and transport production volumes, as well as costs to perform well and facility repairs and maintenance, were consistent with Company expectations for the quarter, averaging $27.55 per boe, with lower maintenance and workover costs for the period when compared to 2023.

Capital expenditures in the quarter totaled $1.8 million. The Company incurred $1.2 million in capital expenditures towards well reactivations and finalization costs of new wells drilled in Q4 2023 including surface infrastructure, $0.4 million towards land and seismic acquisitions, and $0.2 million towards facilities and equipment. The first-half 2024 capital budget of $10.0 - 10.5 million will include a Q2 2024 six-well drilling program which will target Frobisher light oil prospects, and ongoing well reactivations and recompletions in core operating areas in Southeast Saskatchewan.

NET DEBT

Net Debt as at March 31, 2024, and December 31, 2023, as outlined below:

1. Represents undiscounted face value of debt balances and lease obligations outstanding as of each respective date presented.
2. Calculation of adjusted working capital excludes current portion of debt as presented on the statement of financial position. The mark-to-market fair value of the current portion of risk management contracts is included within adjusted working capital.

ROK uses "Net Debt" as a measure of the Company's financial position and liquidity, however it is not intended to be viewed as an alternative to other measures calculated in accordance with IFRS.

Complete reports and statements are available on SEDAR+ at www.sedarplus.ca and on the Company website www.rokresources.ca.

About ROK

ROK is primarily engaged in exploring for petroleum and natural gas development activities in Alberta and Saskatchewan. It has offices located in both Regina, Saskatchewan, Canada and Calgary, Alberta, Canada. ROK's common shares are traded on the TSX Venture Exchange under the trading symbol "ROK".

For further information, please contact:

Cameron Taylor, Chairman and Chief Executive Officer
Bryden Wright, President and Chief Operating Officer
Jared Lukomski, Senior Vice President, Land & Business Development
Lynn Chapman, Chief Financial Officer
Phone: (306) 522-0011
Email: investor@rokresources.ca
Website: www.rokresources.ca

Non-IFRS Measures

The non-IFRS measures referred to above do not have any standardized meaning prescribed by IFRS Accounting Standards ("IFRS") and, therefore, may not be comparable to similar measures used by other companies. Management uses this non-IFRS measurement to provide its shareholders and investors with a measurement of the Company's financial performance and are not intended to represent operating profits nor should they be viewed as an alternative to cash provided by operating activities, net income or other measures of financial performance calculated in accordance with IFRS. The reader is cautioned that these amounts may not be directly comparable to measures for other companies where similar terminology is used.

"Operating Income" is calculated by deducting royalties and operating expense from total sales revenue. Total sales revenue is comprised of oil and gas sales. The Company refers to Operating Income expressed per unit of production as an "Operating Netback". "Operating Income Profit Margin" is calculated by the Company as Operating Income as a percentage of oil and natural gas sales. "Funds from Operations" is calculated by adding other income and realized gains/losses on commodity contracts ("hedging") to Operating Income.

The following table reconciles the aforementioned non-IFRS measures:

"Net Debt" includes all indebtedness of the Company, such as the Credit Facility and Lease Obligations (each as defined within the Company's interim condensed financial statements for the three months ended March 31, 2024), net of Adjusted Working Capital. "Adjusted Working Capital" is calculated as current assets less current liabilities, excluding current portion of debt and lease liability as defined on the Company's statement of financial position within the Company's interim condensed financial statements for the three months ended March 31, 2024. "Adjusted Net Debt" is calculated by removing the "mark-to-market fair value of the current portion of risk management contracts" and "lease obligations" (each as defined within the Company's interim condensed financial statements for the three months ended March 31, 2024) from Net Debt.

The following table reconciles Net Debt to Adjusted Net Debt:

"Funds Flow" includes all cash from (used in) operating activities and is calculated before the change in non-cash working capital. "Funds Flow Basic ($/share)" and "Funds Flow Diluted ($/share)" are calculated by dividing Funds Flow by the weighted average number of basic shares and weighted average number of diluted shares outstanding, respectively, for the relevant period, as presented within the Company's interim condensed financial statements for the three months ended March 31, 2024. These are considered key measures of operating performance and capital management as they demonstrate the Company's ability to generate the cash necessary to repay debt and fund capital investments. Management believes that by excluding the temporary impact of changes in non-cash operating working capital, each of these provide useful measures of ROK's ability to generate cash that are not subject to short-term movements in non-cash operating working capital.

The following table reconciles cash flow from operating activities to Funds Flow: