CALGARY, AB, Aug. 8, 2024 /CNW/ - (TSX:RBY) – Rubellite Energy Inc. ("Rubellite", or the "Company"), is pleased to report its second quarter 2024 financial and operating results. Select financial and operational information is outlined below and should be read in conjunction with Rubellite's unaudited condensed interim consolidated financial statements and related Management's Discussion and Analysis (MD&A") for the three and six months ended June 30, 2024, which are available through the Company's website at www.rubelliteenergy.com and Sedar+ at www.sedarplus.ca. This news release contains certain specified financial measures that are not recognized by GAAP and used by management to evaluate the performance of the Company and its business. Since certain specified financial measures may not have a standardized meaning, securities regulations require that specified financial measures are clearly defined, qualified and, where required, reconciled with their nearest GAAP measure. See "Non GAAP and Other Financial Measures" in this news release and in the MD&A for further information on the definition, calculation and reconciliation of these measures. This news release also contains forward-looking information. See "Forward-Looking Information". Readers are also referred to the other information under the "Advisories" section in this news release for additional information. On August 2, 2024, Rubellite closed the previously announced acquisition of Buffalo Mission Energy Corp. ("Buffalo Mission") for total consideration of $97.5 million (the "Acquisition"), inclusive of $23.5 million of assumed net debt, which consisted of $62.7 million in cash and the issuance of 5.0 million common shares of Rubellite to certain shareholders of Buffalo Mission having a deemed value of $11.3 million. Rubellite funded the cash portion of the Acquisition through (a) expanded bank credit facilities (the "Expanded Facility") and (b) a new senior secured second-lien term loan placed, directly or indirectly, with certain directors and officers of Rubellite and the Company's significant shareholder for $20.0 million (the "Second-Lien Term Loan"). The Company's borrowing base was increased to $100.0 million from $60.0 million at June 30, 2024, until the next scheduled semi-annual borrowing base redetermination on or before November 30, 2024. In addition, the Company's lenders provided a $20.0 million bank syndicate term loan that matures on or before December 15, 2024. The Second-Lien Term Loan bears interest at 11.5% with interest to be paid quarterly, and matures in five years from the date of issue, and can be repaid by the Company without penalty at any time. In conjunction with the Expanded Facility, the credit facility lending syndicate will be expanded to include The Bank of Nova Scotia joining the Bank of Montreal as agent, ATB Financial as co-lead and Canadian Western Bank. SECOND QUARTER 2024 HIGHLIGHTS Second quarter conventional heavy oil sales production of 4,503 bbl/d was relatively unchanged from the first quarter of 2024 (Q1 2024 - 4,514 bbl/d) and up 58% from the second quarter of 2023 (Q2 2023 - 2,844 bbl/d). Exploration and development capital expenditures(1) totaled $21.1 million for the second quarter to drill, complete, equip and tie-in eight (8.0 net) multi-lateral horizontal development wells at Figure Lake. Spending on facilities of $1.9 million in the quarter for the 2024 Figure Lake gas conservation project, bringing total expenditures for 2024 to $2.4 million. Adjusted funds flow(1) in the second quarter was $20.7 million ($0.33 per share), a 12% increase from the first quarter of 2024 (Q1 2024 - $18.5 million; $0.30/share) driven by higher realized oil prices. Adjusted funds flow increased 72% from the second quarter of 2023 (Q2 2023 - $12.0 million and $0.19 per share), driven by the growth in sales production and higher realized oil prices, partially offset by higher cash costs. Cash costs(1) were $9.3 million or $22.58/boe in the second quarter of 2024 (Q2 2023 - $5.9 million or $22.73/boe). On a per boe basis, the reduction in costs were driven by efficiencies over a higher production base and lower trucking rates, partially offset by higher royalties and G&A costs. Net income was $12.4 million in the second quarter of 2024 (Q2 2023 - $3.4 million net income) driven by higher adjusted funds flow and a $3.6 million unrealized gain on risk management contracts. As at June 30, 2024, net debt(1) was $49.1 million, a decrease from $51.0 million as at December 31, 2023, driven by $2.4 million of free funds flow(1). Rubellite had available liquidity(2) at June 30, 2024 of $26.8 million, comprised of the $60.0 million borrowing limit of Rubellite's first lien credit facility, less current borrowings of $30.8 million and outstanding letters of credit of $2.4 million. (1)     Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures" in this news release. OPERATIONS UPDATE Rubellite drilled and rig released a total of eight (8.0 net) horizontal wells in the second quarter of 2024, all in the Greater Figure Lake area, bringing the total number of new horizontal drills rig released in 2024 to fourteen (14.0 net) as at June 30, 2024. Production results from the 2024 drilling program have averaged IP(30) 130 bbl/d (11 wells) and IP(60) 120 bbl/d (10 wells), as compared to the McDaniel Type Curve(1) rates of 120 and 112,bbl/d, respectively. Repeatable results from the 2024 capital program continue to meet expectations, confirming the geologic model and increasing the confidence in the identified drilling inventory in excess of 220.0 net locations (165.0 net unbooked(1)) at Figure Lake and Edwand. In late June, the Company contracted a second rig to drill up to ten (10.0 net) additional development / step-out delineation multi-lateral wells in the greater Figure Lake area over the balance of the year. At East Edwand, the Company is encouraged by early results of the step-out delineation well at 06-09-062-16W4 where an IP(15) of 190 bbl/d has been recorded in the field. During the second quarter, Rubellite began testing the economic viability of a tighter inter-leg spacing pattern, reducing the distance between laterals from approximately 50m to approximately 35m, and increasing the open hole lateral length per well to greater than 14,000 meters in several wells to determine if economically accelerated production and improvements to the oil recovery factor could be obtained. In addition to a tighter inter-leg spacing, a "fan" well is currently being drilled to optimize boundary reservoir coverage and is expected to reach total depth in early August. Production results from the different well configurations will be analyzed over the remainder of the year and inform the well design for future exploitation strategies. Subsequent to the end of the second quarter, the Company entered into an agreement with the Buffalo Lake Métis Settlement ("BLMS") to acquire an additional eight (8.0 net) sections of land immediately offsetting existing operations. The acquired BLMS lands further consolidates the prospective acreage at Figure Lake, adds drilling inventory, and builds on the positive, mutually-beneficial relationship established with BLMS. To advance solution gas conservation at Figure Lake, construction and installation of natural gas compression, dehydration, and associated facilities have progressed and will be complete in advance of the re-activation of the sales meter in March of 2025. Tie-in of the associated solution gas at Figure Lake will not only significantly reduce emissions, but is also forecast to deliver an attractive rate of return in excess of 75% which is enhanced by the re-use of existing gas gathering pipelines and a forecast reduction in carbon taxes related to reduced flaring and incineration. Once operational, management is forecasting approximately 3 MMcf/d gross of natural gas to be brought to sales. Rubellite has additionally licensed a horizontal well approximately 90km north of Figure Lake in the Nixon/Calling Lake area, to test a new play concept for which the Company currently holds 108.0 net sections of land. In total in 2024, the Company is planning to drill thirty four (34.0 net) open hole multi-lateral wells at Figure Lake and twelve gross (6.0 net) wells on the recently acquired Mannville Stack assets at Frog Lake. In addition, surface access arrangements are on track to provide for the drilling of one (0.3 net) well at Marten Hills to commence waterflood operations, one (0.5 net) exploratory step-out horizontal well at Dawson, and one (1.0 net) exploration horizontal well at Calling Lake. Rubellite also plans to advance other exploration activities and to pursue additional land capture and de-risking during 2024. (1) Type curve assumptions are based on the Total Proved plus Probable Undeveloped reserves contained in the McDaniel Reserve Report as disclosed in the Company's Annual Information Form which is available under the Company's profile on SEDAR+ at www.sedarplus.ca. "McDaniel" means McDaniel & Associates Consultants Ltd. independent qualified reserves evaluators. "McDaniel Reserve Report" means the independent engineering evaluation of the heavy crude oil and conventional natural gas reserves, prepared by McDaniel with an effective date of December 31, 2023 and a preparation date of March 14, 2024. OUTLOOK AND GUIDANCE Rubellite's Board of Directors has approved exploration and development capital spending for 2024 of approximately $82 to $87 million to drill, complete, equip and tie-in thirty four to thirty five (34.0 to 35.0 net) multi-lateral development / step-out wells in the greater Figure Lake area as previously disclosed, twelve gross (6.0 net) wells on the recently acquired Mannville Stack assets, and includes a total of $6.0 million of estimated capital spending required for the Figure Lake gas sales plant and related pipeline tie-ins. Incrementally, additional capital spending for exploratory drilling activity is expected in Q4 2024 / Q1 2025 and will be timed to optimize rig operations. Forecast drilling activities will be funded from adjusted funds flow and available credit facilities. Production sales volumes are expected to grow approximately 70% year-over-year to average 5,600 to 5,900 boe/d and exit the year at approximately 7,500 - 7,900 boe/d, poised for continued growth into 2025 with the full integration of the Mannville Stack assets. Capital spending, drilling activity and operational guidance for 2024 are outlined in the table below: 2024 Guidance Q4 2024 Guidance Sales Production (bbl/d) 5,600 - 5,900 7,400 - 7,800 Exploration and Development spending ($ millions)(1)(2)(3) $82 - $87 $21 - $23 Multi-lateral development / step-out wells (net)(1) 40.0 - 41.0 12.0 Heavy oil wellhead differential ($/bbl)(1) $5.50 - $6.00 $5.50 - $6.00 Royalties (% of revenue)(1) 11% - 12% 11% - 12% Production & operating costs ($/boe)(1) $7.25 - $7.75 $7.50 - $8.00 Transportation costs ($/boe)(1) $7.50 - $8.00 $7.50 - $8.00 General & administrative costs ($/boe)(1) $4.75 - $5.25 $4.50 - $5.00 (1)     Non-GAAP financial measure, non-GAAP ratio or supplementary financial measure. See "Non-GAAP and Other Financial Measures". (2)     Includes $6.0 million for the Figure Lake gas conservation project in 2024. (3)     Excludes land and acquisition spending. (4)     2024 guidance and Q4 2024 guidance are unchanged from the guidance provided in the news release dated August 2, 2024. SUMMARY OF QUARTERLY RESULTS Three months ended June 30,