MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:SKN) is pleased to
announce the addition of Messrs. Joerg Pigaht (Vice President & Chief Operating
Officer) and Jim Strachan (Vice President & Chief Geoscientist) to its senior
leadership team. The Company also announced an operational and corporate update
on MENA and its priorities for the balance of 2011.
Graham Lyon, President & Chief Executive Officer of MENA stated that "MENA is up
and running promptly after closing the reverse take-over of SKANA Capital. MENA
has secured a top class leadership team, initiated development of its Lagia
asset in Egypt, commenced exploration activity on Block 9 in Syria and is adding
further to its resource base. All of these activities being consistent with
creating a vigorous and successful oil and gas company by building a portfolio
of production, development and high impact exploration assets."
Leadership team
With the addition of Messrs. Pigaht and Strachan, MENA's leadership team brings
to MENA significant oil & gas exploration and development and financial
experience with a track record of demonstrated success in the MENA region and
elsewhere.
Graham Lyon, Director, President & Chief Executive Officer. Mr. Graham Lyon is a
senior energy executive with over 30 years experience encompassing global
technical, operational and commercial leadership roles. Mr. Lyon graduated from
Imperial College, University of London with a Bachelor of Science degree (Eng)
Honours in Petroleum Engineering with post grad education from the Ivy School of
Business (Canada), SMU Cox School of Business (US) and INSEAD (Europe) in energy
related leadership, business administration and M&A disciplines. Mr. Lyon worked
with Petro-Canada as an officer and director and through its predecessor
companies for 25 years. He held various senior positions, including Vice
President Business Development, International and Offshore, Regional Manager for
the Middle East and Caspian, Head of Business Development and Production Manager
for Egypt. As Vice President of Business Development for Petro-Canada's
International and Offshore Business unit, he was also responsible for the
strategic planning and economical development of this largest business unit.
Jason Bednar, Director, Vice President & Chief Financial Officer. Mr. Jason
Bednar is a Chartered Accountant with more than 15 years professional
experience. Mr. Bednar was the founding Chief Financial Officer of Sagres
Energy, a South American and Caribbean exploration company (June 2009 to May
2011). Prior thereto, he was the founding Chief Financial Officer of Pan Orient
Energy, a South East Asia exploration company, (2004 to May 2009), past Manager
of Financial Reporting for Canadian 88 Energy (1998-2002) and former Controller
of Canadian Superior Energy (2002-2004). He is a member of the board of
directors of Sagres Energy, Canacol Energy, and is the Chairman of the board of
directors of Gallic Energy.
Joerg Pigaht, Vice President & Chief Operating Officer. Mr. Joerg Pigaht is a
senior operational oil and gas leader with over 30 years experience in the
international arena. Mr. Pigaht is a petroleum engineer by background and has
spent the majority of his career with Petro-Canada and its predecessor
companies. He has led businesses in Libya, producing 100,000 boe/d operated
production, and Syria with over 150,000 boe/d equity production. He has
developed operated businesses offshore Netherlands for Petro-Canada and most
recently in Brazil for Maersk Oil as Director. Joerg has lived and worked during
his formative years in Egypt as head of reservoir studies for Suez Oil Company.
Jim Strachan, Vice President & Chief Geoscientist. Mr. Jim Strachan is an
international oil and gas geologist with over 30 years of professional
experience. Until recently, he was Chief Geologist for Petro-Canada's
International and Offshore Division. In that role he grew its international
prospective acreage five-fold and increased discovered resources' potential by
600 MMboe at a finding cost of about $3/bbl through participation in more than
60 wells. Jim led a large international team including geological staff in
London, Syria and Libya and was responsible for hiring, mentoring, training,
assessment and career-development of the geoscience staff. He was responsible
for oversight and audit of Petro-Canada's international subsurface geoscience
work including assessment of acreage for licensing rounds and all geoscience
aspects of field development plans. Jim developed and maintained standards for
subsurface technical work including audit of well plans for international
exploration and development projects. Jim has a proven oil-finder's capability
coupled with vast international knowledge that has been focused on many regions
including North Africa, the Middle East, Caribbean, Latin America and Northwest
Europe.
The appointments of Messrs. Pigaht and Strachan are subject to the approval of
the TSX Venture Exchange.
Board of directors
In addition to Messrs. Lyon and Bednar, MENA has a top tier board of directors
that bring to MENA significant experience and depth of understanding in the MENA
region.
Abdel (Abby) Badwi (Chairman). Mr. Abdel (Abby) Badwi, PGeol, is an
international energy executive and professional geologist, with more than 35
years experience in the exploration, development, and production of oil and gas
fields, in North America, South America, Europe, Asia and the Middle East. He is
currently the President and Chief Executive Officer of Bankers Petroleum.
Previously, he served as President and Chief Executive Officer of Rally Energy,
which was sold in 2007. He has been an officer and director of several Canadian
public and private companies. Mr. Badwi is currently a director of Bankers
Petroleum, Valeura Energy and ArPetrol.
Robert Cross. Mr. Robert Cross has more than 20 years of experience as a
financier in the mining and oil & gas sectors. Mr. Cross is a co-founder and
Non-Executive Chairman of Bankers Petroleum, Non-Executive Chairman of B2Gold,
co-founder and Chairman of Petrodorado Energy and, until October 2007, was the
Non-Executive Chairman of Northern Orion Resources. Between 1996 and 1998, Mr.
Cross was Chairman and Chief Executive Officer of Yorkton Securities. From 1987
to 1994, he was a Partner, Investment Banking with Gordon Capital in Toronto. He
has an Engineering Degree from the University of Waterloo, and received his MBA
from Harvard Business School in 1987. Mr. Cross is currently a director of MENA,
Gallic Energy, Bankers Petroleum, B2Gold, Petrodorado Energy, BNK Petroleum, LNG
Energy, Avanti Mining and Zodiac Exploration.
Richard Grafton. Mr. Richard Grafton has over 30 years' experience in the
investment and energy business. Currently, Mr. Grafton is President and Chief
Executive Officer of Grafton Capital, a private capital company concentrating on
long term value creation. In 2007, Mr. Grafton was appointed Vice-Chairman of
Canaccord Capital acting as the firm's ambassador to the global energy markets.
Prior thereto, Mr. Grafton acted as Executive Vice President and Managing
Director, Global Head of Energy of Canaccord Adams where he was responsible for
all aspects of the firm's oil and gas operations. Mr. Grafton is currently a
director of Peak Energy Services, Gallic Energy and Altus Energy Services.
Brian Tingle. Mr. Tingle has a Bachelor of Commerce in Finance from the
University of British Columbia and has accumulated 15 years of experience in the
resource and technology venture capital markets, serving on the board and
advisory boards of numerous private and TSXV companies. He is the Managing
Partner of a UK Firm that has helped raise over $150 million over the past two
years. Mr. Tingle is currently a director of Eshippers Management and was, until
June 2010, a director of SKANA Capital (now MENA).
Greg Clarkes. Mr. Clarkes is a financier with over 20 years of experience in
raising capital for public companies in the resource and industrial sectors. He
has been a major shareholder as well as an officer and director of many junior
venture companies, and has been instrumental in helping them formulate business
plans and strategies resulting in successful utilization of their financial
resources. He was a founder, director and significant shareholder of Skye
Resources which was sold to HudBay Minerals in 2008 for $460 million. He is also
the founder, officer and director of SKANA Capital.
Merfyn Roberts. Mr. Merfyn Roberts of London, England has been a fund manager
and investment advisor for more than 25 years and has been closely associated
with the energy industry. Mr Roberts is a graduate of Liverpool University, UK
(BSc. Geology) and Oxford University, UK (MSc. Geochemistry) and is a member of
the Institute of Chartered Accountants in England and Wales. Mr. Roberts is
currently a director of Rambler Metals and Mining, Agnico-Eagle Mines, Sennen
Resources, Newport Exploration, and Eastern Platinum.
Dr. Magdy L. Bassaly. Dr. Magdy L. Bassaly has over 18 years of experience in
the international energy sector. He founded the National Geophysical Company in
1996 as well as the National Exploration Company. He founded Alliance
International Petroleum that held the Lagia development lease in Egypt (Alliance
Egyptian National Oil Company). Dr. Bassaly is currently the President of MENA
International Petroleum Company and the Chairman of Child Support Foundation
(international charity foundation for children in Africa).
Principal properties
MENA owns interests, and rights to acquire interests, in oil and gas properties
in Egypt and Syria. The following is a description of MENA's principal oil and
gas properties and operations.
Egypt, Lagia oil field
MENA has completed the acquisition of the remaining 25% interest in the Lagia
Development Lease and the related Lagia Concession. The Lagia Development Lease
covers a 32 square kilometre block of land located on the Sinai Peninsula,
directly adjacent to the Gulf of Suez. Within the lease, four wells have been
drilled between the years 1949 to 2000 that have identified the Lagia heavy oil
field. Three producing oil fields, Sudr, Matarma and Asl, are located as close
as 26 km to the north of the Lagia oil field.
The following table sets forth certain information relating to MENA's crude oil
reserves contained in one main fault block covered by the Lagia Development
Lease and the net present values of future net revenue associated with such
reserves, as evaluated by DeGolyer & MacNaughton Canada Limited ("D&M") in the
report of D&M dated May 19, 2011 evaluating the crude oil reserves of MENA as at
May 18, 2011 (the "Lagia Reserves Report") in accordance with National
Instrument 51 101 - "Standards of Disclosure for Oil and Gas Activities" ("NI 51
101") and the standards contained in the Canadian Oil and Gas Evaluation
Handbook ("COGE") and NI 51-101.
-----------------------------------------------------------
Gross
Working
Interest Net Present Values of Future Net Revenue
Remaining
Reserves
-----------------------------------------------------------
Discounted
--------------------------------
Heavy Crude
Oil Undiscounted at 5% at 10% at 15% at 20%
-----------------------------------------------------------
Proved Developed
Proved
Undeveloped 1,149,190 10,387 5,681 2,425 150 (1,453)
Probable 2,898,104 54,816 37,696 26,840 19,646 14,679
-----------------------------------------------------------
Total Proved plus
Probable 4,047,294 65,203 43,377 29,265 19,796 13,226
Possible(1) 6,410,376 107,183 65,759 39,688 25,652 17,039
-----------------------------------------------------------
Total Proved plus
Probable plus 10,457,670 172,386 107,136 68,953 45,448 30,265
Possible(1)
Notes:
1. Possible reserves are those additional reserves that are less certain to
be recovered than probable reserves. There is a 10% probability that the
quantities actually recovered will equal or exceed the sum of proved
plus probable plus possible reserves.
2. Pursuant to the Lagia Concession, the Egyptian General Petroleum Company
will pay MENA's share of income taxes out of its share of the profit oil
and gas. As Egyptian income tax is factored into the royalty deductions,
income tax is deducted from all future net revenue amounts. Accordingly,
the net present value of future net revenue attributable to the reserves
categories referred to above are the same both before and after
deducting future income tax expenses for the purposes of NI 51-101.
3. MENA requested that D&M provide the Lagia Reserves Report following the
completion of the acquisition of the remaining 25% interest in the Lagia
Development Lease and the related Lagia Concession. Other than
information relating to such acquisition, the Lagia Reserves Report is
based on data and other information available as of December 31, 2010.
4. It should not be assumed that the estimates of future net revenues
presented in the table above represent the fair market value of the
reserves.
D&M also prepared a report dated July 26, 2010 estimating, as of March 31, 2010,
the contingent petroleum resources of certain heavy crude oil accumulations
located in the Lagia oil field (the "Lagia Resource Report"). Estimates of the
gross working-interest (100% interest) contingent oil resources quantities for
certain heavy crude oil accumulations located in the Lagia oil field, as of
March 31, 2010, are summarized as follows, expressed in barrels (bbl) of oil:
Best High
Low Estimate Estimate Estimate
------------------------------------
Gross working interest contingent oil
resources, bbl 356,823 3,374,001 11,992,575
Notes:
1. Recovery efficiency is applied to contingent resources in this table.
2. Application of any risk factor to contingent resources quantities does
not equate contingent resources with reserves.
3. There is no certainty that it will be commercially viable to produce any
portion of the contingent resources evaluated and described above.
At present, MENA expects to workover two existing wells located on the Lagia
block to test their flow potential and drill two development wells and one
appraisal well in 2011. It is expected that steam will be injected into the new
development wells to increase the flow rates as part of a pilot project. If
successful, first production is expected before the end of 2011.
The petroleum resources set out above are classified as "contingent resources".
Contingent resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from known accumulations using established
technology or technology under development, but which are not currently
considered to be commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal, environmental,
political, and regulatory matters or a lack of markets. It is also appropriate
to classify as contingent resources the estimated discovered recoverable
quantities associated with a project in the early evaluation stage. Contingent
resources are further classified in accordance with the level of certainty. See
"Uncertainty Categories" below for further information.
Contingent resources may also be sub-classified based on project maturity and/or
characterized by their economic status. Because of the lack of commerciality or
sufficient development drilling, the contingent resources estimated in the Lagia
Resource Report cannot be classified as reserves. The contingent resources
estimated in the Lagia Resource Report were assigned an economic status of
"undetermined". The principle contingencies identified in the Lagia Resource
Report are that the project is at an early evaluation stage, and further
development is required. There is no certainty that it will be commercially
viable to produce any portion of the contingent resources.
Syria, Block 9
MENA owns a 30% participating interest in a Syrian concession for the exclusive
right to explore an onshore exploration block in north western Syria known as
"Block 9". The concession is for an initial exploration period of 4 years, which
term may be extended for up to 5 years subject to the satisfaction of certain
conditions. Block 9 is located on the north western flank of the hydrocarbon
producing Palmyrides Basin. The block, which comprises 10,032 square kilometres
(2,478,876 acres), is prospective for crude oil, natural gas and condensate.
Major gas and oil pipelines lie in close proximity to the initial exploration
focus area in the southeast part of Block 9.
RPS Energy Canada Ltd. ("RPS") prepared a report dated March 21, 2011
estimating, as at December 31, 2010, the oil and gas prospective resources of
two prospect locations (Itheria and Bashaer) in Block 9 in Syria (the "Block 9
Resource Report"). The Block 9 Resource Report was prepared in accordance with
the COGE Handbook, and the definitions contained in NI 51 101 and the COGE
Handbook, for the Syria Block 9 consortium consisting of Loon Latakia Ltd.
(Kulczyk Oil Ventures), MENA and Triton Petroleum Pte Ltd.
The tables below summarize RPS' "high", "best" and "low" estimates for
prospective oil and solution gas resources of the Itheria and Bashaer prospect
locations in Block 9 in Syria:
Prospective Resources Summary
100% field basis, unrisked
Resources Low Best High
Prospect Category Estimate Estimate Estimate Mean
----------------------------------------------------------------------------
Itheria(1) Oil (MMbbls) 80 300 677 350
Gas (Bscf) 57 225 530 268
Bashaer(1) Oil (MMbbls) 50 94 165 102
Gas (Bscf) 25 47 82 51
Prospective Resources Summary
MENA 30% working interest basis, unrisked
Resources Low Best High
Prospect Category Estimate Estimate Estimate Mean
----------------------------------------------------------------------------
Itheria(1) Oil (MMbbls) 24 90 203 105
Gas (Bscf) 17 68 159 81
Bashaer(1) Oil (MMbbls) 15 28 49 31
Gas (Bscf) 7.5 14 25 15
Notes:
1. "GPoS" or "Geological Probability of Success" is estimated by RPS to be
19% for the Itheria prospect and 14% for the Bashaer prospect. This
concept refers to the technical chance of success of a geological model
as it applies to the entire volumetric expectation curve between P0 and
P100. No commercial cut-off is applied and the geological chance should
not be taken as necessarily equivalent to the commercial success chance.
Geological chances calculated by multiplying play chance (source,
reservoir and seal) and prospect specific chance (trap and timing, seal,
charge and reservoir).
Kulczyk Oil Ventures, the operator of Block 9 in Syria, has advised that plans
and preparations for drilling the Itheria and Bashaer prospects in the
southeastern part of Syria Block IX are proceeding on schedule. The first of
these exploration wells is planned to spud in July 2011. Approvals and equipment
for this first well are either in place or being finalized, and the drilling
team is being mobilized and drill-site preparations are over 50 percent
completed.
The petroleum resources set out above are classified as "prospective resources".
Prospective resources are those quantities of petroleum estimated, as of a given
date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective resources have both an
associated chance of discovery and a chance of development. There is no
certainty that any portion of the resources will be discovered. If discovered,
there is no certainty that it will be commercially viable to produce any portion
of the resources.
Proposed acquisition
MENA also announced that it has signed an agreement to acquire a 55 percent
participating interest in an offshore development lease located 60km off the
Mediterranean coast of Egypt. The offshore segment is part of a larger
concession agreement in which MENA will acquire a 35 percent participating
interest. Five gas or gas-condensate discoveries have been made on the lease.
The lease is under standard commercial terms for Egyptian concessions. The
offshore development lease is valid for 20 years from the date of first gas
deliveries, with an optional five-year extension. The purchase price is US7.5
million (subject to adjustments) payable in cash. MENA intends to seek
appointment as operator upon completion of the acquisition which is subject to
rights of pre-emption in favour of the seller's joint venture partners, the
approval of the Egyptian General Petroleum Corporation and the Egyptian
Government and other customary closing conditions.
Other matters
On May 25, 2011, SKANA Capital continued its incorporation to Alberta whereafter
it amalgamated with its wholly-owned subsidiary, changed its name to "MENA
Hydrocarbons Inc.", and continued with MENA's financial year-end of December 31
and KPMG LLP as its auditor.
About MENA Hydrocarbons
MENA Hydrocarbons is an international oil and gas company focused on growing an
asset base of production, development and high impact exploration in the Middle
East, North Africa and Mediterranean regions. In Egypt, MENA owns and operates
the development lease for the Lagia oil field, a 32 square kilometer onshore
block located on the Sinai Peninsula, directly adjacent to the Gulf of Suez. In
Syria, MENA owns a 30% participating interest in Block 9 in Syria, a 10,032
square kilometer onshore block prospective for crude oil, natural gas and
condensate. MENA's shares currently trade on the TSX Venture Exchange under the
symbol "SKN". It is expected that MENA's shares will begin trading on the TSX
Venture Exchange under the symbol "MNH" in June.
Forward looking information
This news release contains forward-looking information relating to adding to the
Company's resource base, the Company's growth and related strategy, reserves and
resource estimates, planned development and exploration activities on the
properties in which the Company has interests, and other statements that are not
historical facts. Such forward-looking information is subject to important
risks, uncertainties and assumptions. The results or events predicated in this
forward-looking information may differ materially from actual results or events.
As a result, you are cautioned not to place undue reliance on these
forward-looking information.
Forward-looking information is based on certain factors and assumptions
regarding, among other things, the impact of increasing competition; the general
stability of the economic and political environments in which the Company
operates or owns interests; the timely receipt of any required regulatory
approvals; the ability of the Company to obtain qualified staff, equipment and
services in a timely and cost efficient manner; drilling results; the ability of
the operator of the projects which the Company has an interest in to operate the
field in a safe, efficient and effective manner; the ability of the Company to
obtain financing on acceptable terms; field production rates and decline rates;
the ability to replace and expand oil and natural gas reserves through
acquisition, development of exploration; the timing and costs of pipeline,
storage and facility construction and expansion and the ability of the Company
to secure adequate product transportation; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in which the
Company operates; and the ability of the Company to successfully market its oil
and natural gas products, and other similar matters. While the Company considers
these assumptions to be reasonable based on information currently available to
it, they may prove to be incorrect.
Forward looking-information is subject to certain factors, including risks and
uncertainties that could cause actual results to differ materially from what is
currently expected. These factors include risks associated with instability of
the economic and political environments in which the Company operates or owns
interests, oil and gas exploration, development, exploitation, production,
marketing and transportation, loss of markets, volatility of commodity prices,
currency fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, incorrect assessment of the value of acquisitions, the inability to
settle the definitive terms of the farmout arrangements, failure to realize the
anticipated benefits of acquisitions, delays resulting from or inability to
obtain required regulatory approvals and ability to access sufficient capital
from internal and external sources, reliance on key personnel, regulatory risks
and delays, including risks relating to the acquisition of necessary licenses
and permits, environmental risks and insurance risks.
The estimates of reserves and resources in this news release constitute
forward-looking information which are subject to certain risks and
uncertainties, including those associated with the drilling and completion of
future wells, limited available geological data and uncertainties regarding the
actual production characteristics of, and recovery efficiencies associated with,
the reservoirs, all of which are being assumed. As estimates, there is no
guarantee that the estimated reserves or resources will be recovered or
produced. Actual reserves and resources may be greater than or less than the
estimates provided in this presentation. Information concerning the independent
evaluations from which these estimates are derived may be accessed under the
Company's profile on SEDAR at www.sedar.com.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. While the Company may elect
to, the Company is under no obligation and does not undertake to update this
information at any particular time, except as required by law.
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