HOUSTON, TEXAS -- (Marketwire) -- 03/27/13 -- Cub Energy Inc. ("Cub" or the "Company") (TSX VENTURE: KUB) announces that its subsidiary, KUB-Gas LLC ("KUB-Gas"), in which Cub has a 30% ownership interest, has distributed a dividend in the amount of USD 10 million, out of which Cub has received USD 3 million.
The owner of KUB-Gas, Kubgas Holdings Limited ("KH"), a Cypriot holding company, paid a USD 10 million dividend to its shareholders with Cub receiving its USD 3 million share.
This is the first time a dividend has been paid to the shareholders of KH. It was determined that profits generated by current KUB-Gas operations are high enough to pay out funds to its owners without any negative impact on the current investment plan. Until recently, cash generated from operations has primarily been re-invested in KUB-Gas operations to continue the development of additional reserves and production and to purchase necessary technology and equipment.
Mikhail Afendikov, President and Chief Executive Officer of Cub, commented:
"I am pleased with progress made in our joint-venture. KUB-Gas growth has been significant over the last few years and receipt of this first dividend is an important milestone for our company.
"We are delighted that operations are not only funding our extensive work programme planned for these assets in 2013, but are also returning profits to the joint-venture shareholders. This is a testament to the hard work of the Cub, KUB-Gas and our joint-venture partners. I am proud and appreciative of our team's dedication and efforts."
The strong financial position of KUB-Gas is a result of its operational success over past several years. During the year ended 31 December 2012 KUB-Gas' natural gas production in Ukraine averaged 22.8 million cubic feet per day ("MMcf/d") (6.84 MMcf/d net to Cub). The price received for natural gas during 2012 averaged $11.71 per thousand cubic feet ("Mcf").
Increased sales volumes and the strong selling price for natural gas contributed to an increase in the netback to KUB-Gas from natural gas and condensate sales to $8.15 per Mcf equivalent. Since June 2010, KUB-Gas has generated $143.8 million of gross production revenue, with Cub's 30% share being $43.1 million.
Having paid the dividend, the cash flow generated to KUB-Gas from its natural gas and condensate production is sufficient to cover all the costs associated with the exploration and production activities planned for 2013.
KUB-Gas owns a 100% interest in the Olgovskoye, Makeevskoye and North Makeevskoye, Krutogorovskoye and Vergunskoye licenses in the Lugansk area of Ukraine.
About Cub Energy Inc.
Cub Energy Inc. (TSX VENTURE: KUB) is an upstream oil and gas company with 110,000 net acres in nine exploration and production licences within the two major producing basins of Ukraine. 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 visit our website: www.cubenergyinc.com.
Except for statements of historical fact, this news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and other similar words, or statements that certain events or conditions "may" or "will" occur. CUB believes that the expectations reflected in the forward-looking information are reasonable; however there can be no assurance those expectations will prove to be correct. We cannot guarantee future results, performance or achievements. Consequently, there is no representation that the actual results achieved will be the same, in whole or in part, as those set out in the forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking information. Some of the risks and other factors that could cause the results to differ materially from those expressed in the forward-looking information include, but are not limited to: general economic conditions in the Ukraine and globally; industry conditions, including fluctuations in the prices of natural gas; governmental regulation of the natural gas industry, including environmental regulation; unanticipated operating events or performance which can reduce production or cause production to be shut in or delayed; failure to obtain industry partner and other third party consents and approvals, if and when required; competition for and/or inability to retain drilling rigs and other services; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; volatility in market prices for natural gas; liabilities inherent in natural gas operations; competition for, among other things, capital, acquisitions of reserves, undeveloped lands, skilled personnel and supplies; incorrect assessments of the value of acquisitions; geological, technical, drilling, processing and transportation problems; changes in tax laws and incentive programs relating to the natural gas industry; failure to realize the anticipated benefits of acquisitions and dispositions; and the other factors. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
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