Canadian Overseas Petroleum Limited (LSE:COPL, CSE:XOP) (COPL) has revealed that it ended the first quarter of 2023 with a strong cash position of $10.7mln, significantly higher than the $4.0mln reported at the end of 2022.
Reporting its results for the three months ended 31 March 2023, the international oil and gas exploration, production, and development firm with operations in Wyoming, said it experienced a decrease in crude oil sales and petroleum revenue during the period, with average crude oil sales before royalties declining to 974 barrels per day (bbls/d), compared to 1,177 bbls/d in the previous quarter.
COPL said the decrease was primarily due to operational disruptions caused by severe winter weather conditions, resulting in field shut-ins and restricted access for crude oil offtake. Petroleum sales, net of royalties, amounted to $5.2mln, down from $6.7mln in the fourth quarter of 2022. This reduction was attributed to both lower oil production and a decline in the realized sales price.
However, the company achieved a net realized hedging gain of $0.5mln on butane swap contracts, in contrast to a net loss of $2.2mln on crude oil and butane swap contracts in the previous quarter.
COPL successfully eliminated its crude oil hedge swap contracts for the first and second quarters of 2023 through a costless hedge restructuring. The company also realized a gain of $0.5mln on butane hedge contracts. These hedges were put in place to protect liquid purchases required for the miscible flood injection program.
Despite the challenges, COPL said it remains focused on increasing oil production, reducing costs, and improving its financial position. The company said is actively working on resolving infrastructure bottlenecks to enhance oil production and gas recovery.
The company raised $11.8mln in net proceeds from the issuance of convertible bonds in the quarter, which it said will support its US operations and provide financial flexibility during the installation of gas gathering system upgrades.
To manage capital resources and liquidity, COPL reduced its capital expenditures to $1.6mln in the first quarter, compared to $2.3mln in the previous quarter.
COPL's operations in Wyoming prioritize environmental responsibility, with minimal gas flaring and methane emissions. Additionally, the company sources electricity from a nearby wind farm to power its production facilities.