ShaMaran Petroleum Corp. (TSX VENTURE:SNM)(OMX:SNM) ("ShaMaran" or the
"Company") is pleased to announce its financial and operating results for the
three and nine months ended September 30, 2012.
Highlights
-- On November 7, 2012 General Exploration Partners Ltd, operator of the
Atrush Block and acting on behalf of the Contractor Group under the
Atrush Block Production Sharing Contract, submitted to the Atrush Block
Management Committee a Declaration of Commercial Discovery with effect
from November 7, 2012.
-- The Atrush-2 appraisal well was spudded on May 23, 2012 and a total
depth of 1,750 meters was reached ahead of schedule on July 10, 2012.
Following the conclusion of the comprehensive well testing program the
Company announced on September 13, 2012 that the main reservoir in
Atrush-2 produced a combined flow rate of more than 42,200 barrels of
oil per day ("bopd") and that additional oil resources were confirmed in
two additional formations.
-- The Atrush 1 discovery well which was drilled last year was completed in
November 2012. The well is now ready to be connected to production
facilities and put on stream as a future producer.
-- Civil works for road access and site preparation for the Atrush-3
appraisal well are nearing completion. The drilling rig used to drill
Atrush-2 and complete Atrush-1 will be moved to Atrush-3 which is
expected to spud before the end of this year.
-- 3D seismic acquisition on the Atrush Block was completed on August 11,
2012. Final processing of the complete 3D seismic survey is expected in
the first quarter of 2013.
-- The tendering process has been completed for a contract to install and
operate extended test facilities ("ETF") on the Atrush Block with a
production capacity of up to 5,000 bopd. The ETF is expected to be
commissioned in the first quarter of the year 2013 with production
coming from the Atrush-1 well.
-- The Company announced on August 20, 2012 that it sold its entire 20%
undivided participating interest in the Taza production sharing contract
("PSC") to a subsidiary of Total S.A. for a USD 48 million purchase
price plus a reimbursement of costs incurred on joint operations from
April 1, 2012 until the closing date.
-- The Company signed final binding agreements with the KRG in January 2012
to relinquish the 60% working interests previously held in each of the
Arbat and Pulkhana PSCs. An amount of $25 million was paid in January
2012 to the KRG as relinquishment fees to fulfill all outstanding
financial commitments on these two blocks. The agreements relieve the
Company of any further obligations under these PSCs. Disappointing
testing results from the Pulkhana 9 well led the Company to this
decision.
-- The Company has re-engaged McDaniel & Associates Consultants Ltd
("McDaniels"), its independent qualified resources evaluator, to provide
the Company with a Detailed Property Report ("DPR") which will include
the results of an evaluation of the reserves and resources data of the
Company as at December 31, 2012.
-- In August 2012 the Company repaid in full the short term financing of
$10 million which had been obtained in April 2012 from two related
parties.
-- The Company reported net income of nil and a net loss of $26.2 million
for the three and nine months ended September 30, 2012 (2011: net losses
of $2.8 million and 3.3 million). The cash balance of the Company was
$43.3 million as at September 30, 2012 (December 31, 2011: $49.1
million).
Financial and Operating Results for the three and nine months ended September
30, 2012
During the nine months ended September 30, 2012 the Company continued its
exploration and appraisal campaign in respect of petroleum properties located in
the Kurdistan Region of Iraq which constitute the continuing operations of the
Company. These petroleum properties have generated no revenues. The net loss in
the first three quarters of 2012 was primarily driven by one-time relinquishment
fees totaling $25 million which were relating to the relinquishment of the
Pulkhana and Arbat Block PSCs paid to the KRG in January 2012.
Condensed Interim Consolidated Statement of Comprehensive Income
(Unaudited, expressed in thousands of United States Dollars)
Three months Nine months
ended ended
September 30, September 30,
2012 2011 2012 2011
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Expenses from continuing operations
General and administrative
(expense) / recovery (512) 202 (1,355) (799)
Share based payments expense (2) (70) (8) (243)
Depreciation and amortisation
expense (46) (58) (143) (166)
Share of loss of associate (97) (173) (209) (282)
Relinquishment costs - - (25,732) -
Impairment recovery / (loss) (138) - 559 -
Gain on sale of asset 1,100 - 1,100 -
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Income / (loss) before finance
items and income tax expense 305 (99) (25,788) (1,490)
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Finance cost (393) (2,780) (719) (1,984)
Finance income 1 147 383 424
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Net finance loss (392) (2,633) (336) (1,560)
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Loss before income tax expense (87) (2,732) (26,124) (3,050)
Income tax expense (11) (32) (63) (106)
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Net loss from continuing operations (98) (2,764) (26,187) (3,156)
Discontinued operations
Loss from discontinued operations (12) (46) (62) (167)
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Net loss for the period (110) (2,810) (26,249) (3,323)
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Other comprehensive income:
Currency translation differences 21 (61) 4 8
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Total other comprehensive income /
(loss) 21 (61) 4 8
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Total comprehensive loss for the
period (89) (2,871) (26,245) (3,315)
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Condensed Interim Consolidated Balance Sheet
(Unaudited, expressed in thousands of United States Dollars)
September 30, December 31,
2012 2011
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Assets
Non-current assets
Intangible assets 3,046 45,836
Property, plant and equipment 112 382
Investment in associate 57,422 51,835
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60,580 98,053
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Current assets
Other current assets 132 647
Inventories 236 3,328
Other receivables 109 105
Cash and cash equivalents 43,253 49,085
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43,730 53,165
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Assets associated with discontinued
operations 5 21
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Total assets 104,315 151,239
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Liabilities
Current liabilities
Accounts payable and accrued
expenses 2,537 23,245
Current tax liabilities 63 122
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2,600 23,367
Liabilities associated with
discontinued operations 1,974 2,613
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Total liabilities 4,574 25,980
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Equity
Share capital 534,068 533,349
Share based payments reserve 3,836 3,828
Cumulative translation adjustment (14) (18)
Accumulated deficit (438,149) (411,900)
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Total equity 99,741 125,259
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Total liabilities and equity 104,315 151,239
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The cash position of the Company decreased by $5.8 million during first nine
months of 2012. The decrease in the cash position was due to $59.3 in cash
outflows, which was mainly comprised of cash payments to the KRG of $25 million
in relinquishment fees, payments against accounts payable and accrued expenses
by $20.7 million and $14.1 million in spending related to the Atrush and Taza
Block petroleum properties, offset by cash inflows of $53.5 million related to
the sale of the Taza Block PSC interest and other assets.
Condensed Interim Consolidated Cash Flow Statement
(Unaudited, expressed in thousands of United States Dollars)
Three months Nine months
ended ended
September 30, September 30,
2012 2011 2012 2011
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Operating activities
Net loss for the period from
continuing operations (98) (2,764) (26,187) (3,156)
Adjustments for:
Gain on sale of asset (1,100) - (1,100) -
Interest income (1) (147) (26) (424)
Interest expense on equity based
finance fee 359 - 719 -
Foreign exchange loss / (gain) 34 2,572 (357) 1,320
Depreciation and amortisation
expense 46 58 143 166
Income tax 13 (98) (59) (7)
Impairment (recovery) / loss 138 - (559) -
Share based payments expense 2 70 8 243
Share of loss of associates 97 173 209 282
Capitalized expenses - (473) - (1,070)
Changes in trade and other
receivables 542 14 (4) (22)
Changes in other current assets 75 489 515 (115)
Changes in inventories (196) (210) 2,509 (770)
Changes in accounts payable and
accrued expenses (991) 8,136 (20,708) 15,863
Cash used in discontinued
operations (131) (104) (685) (458)
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Net cash inflows from / (outflows
to) operating activities (1,211) 7,716 (45,582) 11,852
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Investing activities
Net proceeds on sale of intangible
assets 52,671 - 52,671 -
Purchases of intangible assets (3,540) (46,222) (7,721) (74,549)
Net proceeds on sale of property,
plant and equipment 595 - 804 -
Purchases of property, plant and
equipment (134) (9) (595) (611)
Investment in associate (1,105) (2,345) (5,796) (17,788)
Interest received on cash deposits 1 147 26 424
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Net cash inflows from / (outflows
to) investing activities 48,488 (48,429) 39,389 (92,524)
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Financing activities
Net proceeds (costs) on issuance of
shares - (4) - 51,917
Repayment of borrowings (10,000) - - -
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Net cash inflows from / (outflows
to) financing activities (10,000) (4) - 51,917
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Effect of exchange rate changes on
cash and cash equivalents (13) (2,633) 361 (1,312)
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Change in cash and cash equivalents 37,264 (43,350) (5,832) (30,067)
Cash and cash equivalents,
beginning of the period 5,989 71,967 49,085 58,684
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Cash and cash equivalents, end of
the period 43,253 28,617 43,253 28,617
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Outlook
The outlook to the end of the year 2013 is as follows:
Atrush Block
The Contractor is currently in the process of preparing a Field Development Plan
which will be submitted to the Atrush Block Management Committee within 180 days
following the Declaration of Commercial Discovery which was submitted on
November 7, 2012.
The Atrush-3 appraisal well is expected to be spudded before the end of the
current year. Civil engineering work is nearing completion which will provide
road access to the Atrush-3 well location which is approximately 5km east of the
Atrush-2 well. The drilling rig will be moved from the Atrush-1 well site to the
Atrush-3 location.
The Atrush-4 and Atrush-5 appraisal wells are planned to be spudded during the
year 2013. Planning for these wells is currently underway.
The 3D seismic acquisition program which covered the entire Atrush block and
adjoining Swara Tika discovery was completed on August 11, 2012. Final
processing of the complete 3D seismic survey is expected in the first quarter of
2013.
The tendering process has been completed for a contract to install and operate
extended test facility ("ETF") with a maximum production capacity of 5,000 bopd.
The ETF is expected to be commissioned in the first quarter of 2013 with
production coming from the Atrush-1 well. The Atrush-2 well will be used to
monitor reservoirs. An additional ETF is planned to be installed on the Atrush-3
well in the second half of the year 2013. Work on an enhanced ETF with
production capacities from 10,000 bopd expandable to 30,000 bopd is planned to
commence in the second half of the year 2013.
New Ventures
As part of its normal business the Company continues to evaluate new
opportunities in the region.
About ShaMaran
ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration
vehicle with an indirect interest in the Atrush Block located in the region.
This project is nearby and on trend with existing fields and recent discoveries.
Kurdistan lies within the northern extension of the Zagros Folded Belt. The area
is highly underexplored and is currently undergoing a significant exploration
and development campaign by over 40 mid to large size international oil
companies.
ShaMaran Petroleum is a Canadian oil and gas company listed on the TSX Venture
Exchange and the NASDAQ OMX First North Exchange (Stockholm) under the symbol
"SNM".
Forward-Looking Statements
This press release contains statements about expected or anticipated future
events and financial results that are forward-looking in nature and, as a
result, are subject to certain risks and uncertainties, such as legal and
political risk, civil unrest, general economic, market and business conditions,
the regulatory process and actions, technical issues, new legislation,
competitive and general economic factors and conditions, the uncertainties
resulting from potential delays or changes in plans, the occurrence of
unexpected events and management's capacity to execute and implement its future
plans. Actual results may differ materially from those projected by management.
Further, any forward-looking information is made only as of a certain date and
the Company undertakes no obligation to update any forward-looking information
or statements to reflect events or circumstances after the date on which such
statement is made or reflect the occurrence of unanticipated events, except as
may be required by applicable securities laws. New factors emerge from time to
time, and it is not possible for management of the Company to predict all of
these factors and to assess in advance the impact of each such factor on the
Company's business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any
forward-looking information.
On behalf of the Board,
Pradeep Kabra, President and CEO
ShaMaran Petroleum's Certified Advisor on NASDAQ OMX First North is Pareto Ohman AB.
FOR FURTHER INFORMATION PLEASE CONTACT:
ShaMaran Petroleum Corp.
Keith Hill
Chairman
(604) 806-3583
khill@namdo.com
ShaMaran Petroleum Corp.
Pradeep Kabra
President and CEO
0041 22 560 8605
pradeep.kabra@shamaranpetroleum.com
ShaMaran Petroleum Corp.
Sophia Shane
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
sophias@namdo.com
www.shamaranpetroleum.com
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