KFG Earns $461,100US in Q1 2014, $0.01c eps
KFG Resources Ltd. Financial and MD&A Highlights for Q1 2014 Ending July 31
(Expressed in US Dollars)
Price: $0.10
Shares Outstanding: 50,584,144 with no options or warrants
Cash: $1,133,429
Accounts Receivables: $1,032,148
Prepaid Expenses: $22,922
Reclamation Bond: $20,000
Property & Equipment: $1,432,033
Total Assets: $3,640,532
Total Liabilities: $1,042,248 (All payables)
Revenue
Oil and gas: $788,143
Management Fees $116,266
Total Revenue: $904,409
Total Expenses: $444,015
Net Income: $460,100
Basic and diluted income per common share: $0.01
Now we will move onto the MD&A. Keep in mind the following:
1) 4 main wells paid out mid Q1, so only half of that new revenue was added to this quarter
2) Craig 3 was put online end of Q1, no revenue from that
3) Barnum wasn't online until mid Q2
This is why the well count only shows 21. With Craig 3 and Barnum we are at 23. Not sure why it isn't 24, maybe one well was down this quarter. Either way, the above translates to a much bigger revenue/profit for Q2 and with several wells to go it will only increase. $0.04-0.05c eps for 2014 is very realistic at this point. Even at a lower range 10 times earnings price, KFG would be at $0.40-0.50c minimum by next fall. Doesn't include additional revenue and new discoveries either.
MD&A
Overall Performance
For the three months ended July 31, 2014, the Company had cash flow from oil and gas production of $788,143, compared to $519,526 for the three months ended July 31, 2013. Oil production decreased from 86.15 BOPD to 75.07 BOPD, and gas production decreased 3.86 MCF per day. The average price of gas increased $0.87 per MCF and the average price of crude oil decreased $11.43 per bbl when comparing the three months ended July 31, 2014 and July 31, 2013.
Overall the Company has recovered from giving up 25% of its interested in the Fayette Field wells at payout. Currently, with the MacNeil wells and Craig wells at payout, revenues are on a growth pattern again. The Company was able to grow just utilizing cash flow. Several new projects are in the pipeline and the Craig #3 well will payout in the next few months increasing that revenue stream. KFG will have no problems financing growth through its internal cash flow throughout the remainder of its fiscal year ending April 30, 2015. In addition, the Barnum #2 well is on production as of mid September 2014. The Craig #4 will be drilled in mid October 2014.
The Company reported net income of $460,100 for the three months ended July 31, 2014 compared to net income of $113,525 for the three months ended July 31, 2013, with the increase in net income a result of less operating expenses plus better prices for oil and new oil from the Craig and McNeil bases due to increased working interest in the wells.
The quarter ended July 31, 2014 reflected the production of the Craig #2 well as well as payout of the Craig #1 and #2 wells increasing KFG’s working interest from 10% to 21.5% and late in the quarter the MacNeil #1 and #2 paid out increasing the working interest in those wells from 8% to 20.5%.
Production at Fayette is stable and has started a slow decline. With the Dale lease back on production and new production coming off the Craig and Parker leases, KFG will have adequate internal cash flow to develop existing leases as well as support several new prospects in the coming months. Unless the price of oil collapses, the Company will generate sufficient capital to fund its requirements throughout 2014 internally.
