GeoGlobal Resources Inc. ("GeoGlobal" or the "Company") (NYSE
MKT:GGR) (NYSE Amex:GGR) today announced operating highlights and
selected financial results for the quarter ended September 30,
2012. All amounts are in US dollars unless otherwise noted.
Selected Operational Highlights
Since July 1, 2012 the Company has announced:
-- Sale of 8,500,000 shares acquired in the Securities Purchase and
Exchange Agreement between the Company and ILDE for net proceeds to
GeoGlobal of approximately US$1.4 million;
-- Completion of drilling operations and initiation of testing on the
Punam-1 well on the RJ-20 block onshore India based on positive
indications of oil-bearing formations within the targeted Bilara-Jodhpur
reservoirs. The oil samples recovered from the wireline formation tests
and conventional testing program have a density of 17-degree API. Based
on this oil discovery, the consortium is pursuing a further extension of
Exploration Phase-I to complete the minimum work program commitments on
this block;
-- Approval by the Government of India of a 28-month extension to the
Phase-I exploration period on the KG Onshore Block. This extension
allows the Oil India Limited GeoGlobal consortium until December 2014 to
complete the minimum work program commitments in the block, primarily
the drilling of 12 exploratory wells;
-- Completion of drilling of the Myra-1 side-track well reaching a final
Total Vertical Depth Subsea ("TVDSS") of 5,388 metres. Based on logging
performed during the drilling, sands were encountered in the Miocene but
they appeared to be water saturated and no significant quantities of
hydrocarbons were detected and the well was plugged and abandoned;
-- Completion of drilling of the Sara-1 well reaching a final TVDSS of
3,928 metres. We encountered approximately 98 meters of high quality
reservoir sands in the lower Miocene / upper Oligocene which had good
porosity and permeability. Wireline logs confirmed residual gas
saturation in the reservoir suggesting hydrocarbon migration through the
system. The sands were wet with no commercial quantities of hydrocarbons
present and the well was plugged and abandoned;
-- Receipt of a Resource Report prepared by Netherland, Sewell &
Associates, Inc. of Houston, Texas on the offshore Israel license known
as 388/Samuel. The Company holds an effective 34.872% interest in the
license; and
-- Grant of a further extension by the Ministry of Energy and Water of the
State of Israel of the dates for the execution of a drilling rig
contract and the spudding of the first well on the Samuel offshore
license to March 31, 2013 and April 30, 2013, respectively.
"We made rapid progress on our planned drilling program offshore
Israel during the quarter, drilling exploration wells in both the
Myra and Sara licenses," said Paul B. Miller, President and CEO of
GeoGlobal. "Although we did not find commercial quantities of
hydrocarbons in either well, we significantly expanded the
consortium's understanding of the geology of the region, which will
support future drilling decisions in the area. We also secured an
extension to the drilling deadlines at Samuel, which will give us
sufficient time to finalize our plans for the license."
Financial Review
All of the Company's oil and gas sales were derived from
production of six wells in India. Oil and gas sales for the three
months ended September 30, 2012 were $109,000 compared with
$195,000 for the three months ended September 30, 2011. Oil and gas
sales for the nine months ended September 30, 2012 were $379,000
compared with $446,000 for the nine months ended September 30,
2011. The decreases are mainly attributable to lower oil and gas
production and sales for the three and nine months ended September
30, 2012 combined with a decrease in the average oil and gas
commodity price when compared with the same periods in 2011.
Oil sales are currently based on the spot price based on
discount to the Nigeria Bonny Light Crude bench mark. To date, none
of GeoGlobal's production has been hedged. All associated natural
gas is sold to local markets at a firm contract price of $7.00 per
Mcf adjusted for rebate/premium on account of calorific value.
Operating costs for the three months ended September 30, 2012
remained fairly constant at $34,000, or $20.86 per BOE, compared
with $36,000 or $19.95 per BOE for the three months ended September
30, 2011. Operating costs for the nine months ended September 30,
2012 also remained fairly constant at $106,000, or $19.57 per BOE,
compared with $104,000 or $20.47 per BOE for the nine months ended
September 30, 2011. The operating costs include handling and
processing charges, transportation costs and utilities, maintenance
and tank rental charges and contain a fixed and variable
portion.
For the three months ended September 30, 2012, general and
administrative expenses decreased to $121,000 from $826,000 for the
three months ended September 30, 2011. This decrease is mostly
attributable to management's efforts on overall cost control
combined with an increase in our overhead recoveries as a result of
our drilling activity in Israel. Management's efforts on overall
cost control include a decrease in the Directors' and Special
Committee fees of $107,000, a decrease in salaries and benefits of
$85,000, and a decrease in travel, hotel, advertisement and
promotion of $64,000. These efforts when combined with an increase
in overhead recoveries of $559,000 contributed to a significant
decrease in overall general and administrative costs.
The decrease in the overall general and administrative costs
were offset with an increase in stock-based compensation costs of
$99,000 to $192,000 for the three months ended September 30, 2012
from $93,000 for the comparative three months in 2011. These
compensation costs are for stock-based compensation arrangements
with employees and directors which are being expensed over their
respective vesting periods of the related option grants.
For the nine months ended September 30, 2012, general and
administrative expenses were $933,000, a decrease of $2,192,000
compared with $3,125,000 for the nine months ended September 30,
2011. This decrease is mostly attributable to management's efforts
on overall cost control combined with an increase in our overhead
recoveries as a result of our drilling activity in Israel.
Management's efforts on overall cost control resulted in a
reduction of $294,000 in the Directors' and Special Committee fees
and a decrease in salaries and benefits of $262,000, which mostly
relate to bonuses in 2011 paid to directors and employees that was
not paid in 2012. These efforts when combined with an increase in
our overhead recoveries as a result of increased drilling activity
in Israel further contributed to the reduction in general and
administrative costs by $1,018,000.
These decreases combined with additional reductions in travel
and hotel by $114,000, education and training of $19,000, bank
guarantee fees of $132,000, and a decrease in stock-based
compensation costs of $332,000 to $251,000 for the nine months
ended September 30, 2012 compared with $583,000 for the nine months
ended September 30, 2011 all contributed to a significant decrease
in the Company's overall general and administrative costs.
General and administrative expenses also include other costs
related to the corporate head office including rent and office
costs, insurance, NYSE MKT listing and filing fees, investor
relation services and transfer agent fees and services.
For the three and nine months ended September 30, 2012, the
Company recorded $9.6 and $10.6 million, respectively, of
impairment on oil and gas properties compared to $nil for the three
and nine months ended September 30, 2011. Any impairment to
unproved properties is transferred to the Company's full cost pool
of proved properties which is subject to ceiling test limitations
and impairment charges and is recorded if the net capitalized costs
of proved oil and gas properties exceed the ceiling test
limitations.
For the three and nine months ended September 30, 2012, the
Company recorded a $2.7 million loss on and impairment of available
for sale investment. This loss on and impairment of available for
sale investment can be split into two components. During the year,
the Company received 28.4 million common shares of ILDE as an
available for sale investment, in exchange for the issuance of
certain securities in GeoGlobal. ILDE's common stock is listed and
traded on the Tel Aviv Stock Exchange.
During the third quarter of 2012, GeoGlobal sold 13.9 million
shares of ILDE for a net loss of $0.8 million. Fair value of this
investment is measured on the reporting date using the closing
price of ILDE's shares traded on the Tel Aviv Stock Exchange. As
the decrease in fair value is deemed other than temporary, a
further $1.9 million of impairment charges were recorded.
During the three months ended September 30, 2012, the Company
incurred a net loss of approximately $13.9 million, used
approximately $1.5 million of cash flow in its operating
activities, used approximately $0.1 million in its investing
activities and had an accumulated deficit of approximately $75.8
million.
At September 30, 2012, GeoGlobal's cash and cash equivalents
were $10.1 (December 31, 2011 - $10.5 million) of which $10.0
million is committed to carry out the exploration activities of the
Myra and Sara joint venture and not available for use in general
operations or other exploration activities. The residual cash of
$0.1 million is available to us for general operations. As at
September 30, 2012, the Company had a working capital deficiency of
approximately $14.2 million.
GeoGlobal's cash balance at September 30, 2012 and anticipated
cash flow from operating activities are not sufficient to satisfy
its current liabilities and meet its exploration commitments of
$15.1 million and $27.9 million, over the twelve months ending
September 30, 2013 and the twenty-seven months ending December 31,
2014, respectively.
To meet its obligations, the Company will be required to divest
certain oil and gas interests, subsidiaries or other available
assets, including by entering into other financing arrangements
typical in the industry such as farming out interests in oil and
natural gas properties. The Company will also continue to seek to
raise capital through equity and debt markets.
The Company's cash as at September 30, 2012, available for
general operations of $0.1 million is not sufficient to meet its
ongoing operational requirements. Subsequent to September 30, 2012,
the Company has curtailed staffing at its Canadian and Indian
offices and rationalized other expenditures to minimize the ongoing
operational requirements pending the outcome of uncommitted
financing activities described above. If these activities are
unsuccessful, the Company will be forced to substantially curtail
or cease exploration, appraisal and development expenditures and
other operating activities.
The Company's ability to continue as a going concern is
dependent on the success of the operational and financing
initiatives and the successfully completion of further exploration
and development activities that will generate profitable operations
from its oil and natural gas interests in the future. The Company
must make an assessment of its ability to fulfill current
liabilities and to meet future exploration requirements in the
normal course of business. The assessment requires estimates
regarding future uncommitted financing, future costs of exploration
programs, timing of activities, future oil and gas prices, amongst
other things. Such estimates are subject to uncertainty and should
our estimates be materially incorrect, the Company's ability to
continue as a going concern would be impaired and these unaudited
consolidated financial statements could require material
adjustments to the value of assets and liabilities. The unaudited
consolidated financial statements for the quarter ended September
30, 2012, do not reflect any such adjustments or
reclassifications.
Outlook
Management's exploration and development activities pursuant to
the Company's PSCs in India will continue through the remainder of
2012 and throughout 2013 in accordance with the terms of those
agreements. During the first quarter of 2013, based on the current
budgets in India, GeoGlobal anticipates drilling its first shallow
exploration well in the KG Onshore block as well as anticipates,
during the second and third quarters of 2013, drilling one
additional exploration well and ten core wells. The Company further
expects to tie-in additional oil wells in Tarapur along with the
Tarapur G gas well and to continue with the construction of the gas
gathering and production facilities together with further
development drilling on the KG Offshore Block in which it has a
carried interest. Additional expenditures may be incurred in
connection with additional exploratory, appraisal and development
wells the Company may participate in.
Management also expects exploration activities pursuant to our
licenses in Israel will continue through the remainder of 2012 and
2013 in accordance with the terms of those agreements.
The Company has filed with the US and Canadian Regulatory
authorities its unaudited consolidated financial statements for the
quarter ended September 30, 2012.
Set forth below is certain financial information taken from the
unaudited consolidated financial statements.
September 30, 2012 December 31, 2011
US$ US$
----------------------------------------
Current assets 68,881,794 71,047,262
Property and equipment 45,229,522 42,580,105
Total assets 116,158,415 114,967,629
Current liabilities 83,116,114 72,978,114
Total liabilities 83,931,621 73,744,826
Stockholders' equity 32,226,794 41,222,803
Three months Three months Nine months Nine months
ended Sept ended Sept ended Sept ended Sept
30, 2012 30, 2011 30, 2012 30, 2011
--------------------------------------------------------
Oil and gas sales 108,536 195,300 378,849 446,326
Interest Income 3,271 7,528 10,785 27,730
Total expenses 12,967,942 1,443,870 15,953,672 4,823,766
Net loss (12,862,370) (1,255,464) (15,583,519) (4,386,564)
Net loss per share -
basic and diluted (0.10) (0.02) (0.12) (0.05)
Conference Call
The Company's Annual Meeting of Stockholders is scheduled for
December 19, 2012 at 3:00 pm at the Westin Calgary, 320 - 4th
Avenue SW, Calgary, Alberta. The Company will not be holding a
quarterly update conference call at this time due to the proximity
to the upcoming Annual Meeting of Stockholders. The Company will
address all items associated with the third quarter financial
results and operational updates during the annual meeting on
December 19, 2012.
About GeoGlobal
GeoGlobal Resources Inc., headquartered in Calgary, Alberta,
Canada, is a US publicly traded oil and gas company, which, through
its subsidiaries, is engaged in the pursuit of petroleum and
natural gas in high potential exploration targets through
exploration and development in India, Israel and Colombia.
Cautionary Statement For Purposes Of The "Safe Harbor"
Provisions Of The Private Securities Litigation Reform Act Of
1995
This press release contains statements which constitute
forward-looking statements within the meaning of the US Private
Securities Litigation Reform Act of 1995, including statements
regarding the plans, intentions, beliefs and current expectations
of GeoGlobal Resources Inc., its directors, or its officers with
respect to the oil and gas exploration, development and drilling
and spudding activities being conducted and intended to be
conducted and the outcome of those activities on the exploration
blocks in which the Company has an interest. The company updates
forward-looking information related to operations, production and
capital spending on a quarterly basis and updates reserves, if any,
on an annual basis.
We caution you that various risk factors accompany our
forward-looking statements and are described, among other places,
under the caption "Risk Factors" in our Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and our Current Reports on
Form 8-K. These risk factors could cause our operating results,
financial condition and ability to fulfill our plans to differ
materially from those expressed in any forward-looking statements
made in this press release and could adversely affect our financial
condition and our ability to pursue our business strategy and
plans. If our plans fail to materialize, your investment will be in
jeopardy.
An investment in shares of our common stock involves a high
degree of risk. Our periodic reports, which we file with the
Securities and Exchange Commission and Canadian provincial
authorities may be viewed at http://www.sec.gov and
www.sedar.com.
Contacts: GeoGlobal Resources Inc.
+1-403-777-9250info@geoglobal.com www.geoglobal.com Debby
Communications Moshe Debby +1-972-3-5683000moshe@debby.co.il The
Equicom Group Dave Feick Managing Director, Western Canada
+1-403-218-2839dfeick@equicomgroup.com
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