VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/12/17 -- ShaMaran Petroleum Corp. ("ShaMaran" or the "Company") (TSX VENTURE: SNM)(OMX: SNM) is pleased to announce its financial and operating results for three months ended March 31, 2017. Unless otherwise stated all currency amounts indicated as "$" in this news release are expressed in thousands of United States dollars.
Chris Bruijnzeels, President and CEO of ShaMaran, commented, "I am extremely pleased that we expect to be producing before the end of June 2017. The Atrush field holds significant resources and the onset of production will allow us to move forward to realise full value from this asset."
HIGHLIGHTS AND DEVELOPMENTS
Operations
-- The 30,000 bopd Atrush Phase 1 Production Facility ("Production
Facility"), the pipeline between the Production Facility and the block
boundary (the "Spur Pipeline"), the pump station, the intermediate
pigging and pressure reduction station ("IPPR") and four production
wells are all ready for first oil.
-- The final 35km section of pipeline which will run from the Atrush Block
boundary to the tie-in point on the main export pipeline (the "Feeder
Pipeline") is nearing completion. It is expected that the Feeder
Pipeline will completed and first oil exports will commence by the end
of June 2017.
Corporate
-- In January 2017 the Company completed the issue of 360 million common
shares of ShaMaran on a private placement basis at a price per share of
CAD 0.10 (equal to SEK 0.67) which resulted in gross proceeds to the
Company of $27.3 million ($26.4 million net of transaction related
costs).
-- In February 2017 the Company reported on a property gross basis
estimates as at December 31, 2016 of 85.1 MMbbl of Total Field Proven
plus Probable ("2P") Reserves and 389 MMboe Total Field Unrisked Best
Estimate Discovered Recoverable Resources ("2P + 2C") (1) (2). Reserves
and resources are unchanged from the 2015 year end estimates.
OUTLOOK
Operations
-- First oil is expected by the end of June 2017.
-- 2017 plans include conducting extended testing of the CK-6 well which is
located on the eastern side of the Atrush Block and which is not one of
the four initial production wells. This would involve the installation
of temporary production facilities near the Chamanke-C well pad and the
delivery by truck of oil to the main Phase I Production Facilities.
-- Work on the final pipeline facilities, to allow for other future users,
will continue after first oil.
-- It is planned in 2017 to drill and test CK-7, an appraisal and
development well located in the central area of the Atrush Block, and to
commence drilling CK-9, a dedicated water disposal well.
Corporate
-- Semi-annual coupon interest on the Senior Bonds and Super Senior Bonds
issued by General Exploration Partners Inc., a wholly owned subsidiary
of the Company, which amounts to $9.6 million in total and is due on May
13, 2017, will be paid in kind in accordance with the terms of the bond
agreements by issuing new bonds ("PIK Bonds").
(1) "MMbbl" means million barrels and "MMboe" means million barrels of oil equivalents. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 million cubic feet ("Mcf") per one barrel is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
(2) This estimate of remaining recoverable resources (unrisked) includes contingent resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered.
FINANCIAL AND OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2017
During the reporting period the Company continued with the first phase of the development program in respect of the Atrush petroleum property located in the Kurdistan Region of Iraq. Atrush currently generates no revenues.
Financial Results
The Company reports a net loss of $2.3 million for the three months ended March 31, 2017 which was primarily driven by routine general and administrative expenses and finance cost, the substantial portion of which was expensed borrowing costs on the Company's bonds. These charges have been offset by interest income on Atrush cost loans and interest on cash held in short term deposits.
Condensed Interim Statement of Comprehensive Income
(Unaudited, expressed in thousands of United States Dollars)
For the three months ended
March 31,
2017 2016
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Expenses
Depreciation and amortisation expense (10) (11)
Share based payments expense (11) (76)
General and administrative expense (1,090) (1,302)
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Loss before finance items and income tax
expense (1,111) (1,389)
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Finance income 352 21
Finance cost (1,503) (1,402)
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Net finance cost (1,151) (1,381)
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Loss before income tax expense (2,262) (2,770)
Income tax expense (21) (26)
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Loss for the period (2,283) (2,796)
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Other comprehensive income
Items that may be reclassified to profit or
loss:Currency translation differences 16 32
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Total other comprehensive income 16 32
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Total comprehensive loss for the period (2,267) (2,764)
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Condensed Interim Consolidated Balance Sheet
(Unaudited, expressed in thousands of United States Dollars)
At March 31, At December 31,
2017 2016
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Assets
Non-current assets
Property, plant and equipment 182,504 174,658
Intangible assets 89,202 89,007
Loans and receivables 47,614 46,114
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319,320 309,779
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Current assets
Cash and cash equivalents 22,006 4,416
Loans and receivables 10,405 7,252
Other current assets 268 224
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32,679 11,892
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Total assets 351,999 321,671
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Liabilities and equity
Current liabilities
Accrued interest expense on bonds 7,349 2,503
Accounts payable and accrued
expenses 6,547 6,434
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13,896 8,937
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Non-current liabilities
Borrowings 165,339 165,129
Provisions 9,898 8,869
Pension liability 1,697 1,670
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176,934 175,668
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Total liabilities 190,830 184,605
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Equity
Share capital 637,538 611,179
Share based payments reserve 6,495 6,484
Cumulative translation adjustment (45) (61)
Accumulated deficit (482,819) (480,536)
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Total equity 161,169 137,066
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Total liabilities and equity 351,999 321,671
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Total assets increased during the first quarter of 2017 by $30.3 million as a result of increases in share capital and equity reserves by $26.4 million, accrued bond interest by $4.9 million and other non-current liabilities by $1.3 million which were offset by an increase in the accumulated deficit by $2.3 million, principally due to the net loss recorded in the period.
Property, plant & equipment assets increased during the first three months of 2017 by $7.8 million which was due to addition of $4.3 million in Atrush development costs and $3.5 million in capitalised borrowing. The increase in intangible assets by $0.2 million during 2016 resulted principally from capitalised borrowing costs. Loans and receivables increased by $4.7 million from funding $3.2 million of Feeder Pipeline costs, from funding $1.2 million of the KRG's share of development costs and from accruing $0.3 million in interest on the outstanding loan balances.
Condensed Interim Consolidated Cash Flow Statement
(Unaudited, expressed in thousands of United States Dollars)
For the three months ended
March 31,
2017 2016
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Operating activities
Loss for the period (2,283) (2,796)
Adjustments for:
Interest expense on borrowings - net 1,466 1,335
Foreign exchange loss 47 41
Share based payments expense 11 76
Depreciation and amortisation expense 10 11
Unwinding discount on decommissioning
provision (10) 26
Interest income (352) (21)
Changes in accounts payable and accrued
expenses 113 2,396
Changes in current tax liabilities - (15)
Changes in other current assets (44) (22)
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Net cash (outflows to) / inflows from
operating activities (1,042) 1,031
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Investing activities
Interest received on cash deposits 26 21
Purchases of intangible assets (30) (361)
Purchase of property, plant and equipment (3,391) (8,365)
Loans and receivables - advances to joint
venture partner (4,327) -
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Net cash outflows to investing activities (7,722) (8,705)
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Financing activities
Shares issued on private placement 27,281 -
Transaction costs on private placement (922) -
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Net cash inflows from financing activities 26,359 -
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Effect of exchange rate changes on cash and
cash equivalents (5) (11)
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Change in cash and cash equivalents 17,590 (7,685)
Cash and cash equivalents, beginning of the
period 4,416 31,921
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Cash and cash equivalents, end of the period 22,006 24,236
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The increase by $17.6 million in the cash position of the Company during the first quarter of 2017 was due to cash inflows of $26.4 million in net proceeds from the sale of the Company's shares in a private placement completed in January 2017 which were offset by spending of $3.4 million on Atrush development activities, $4.3 million of financing provided to a joint venture partner and $1.1 million of cash out on G&A and other cash expenses.
ANNUAL GENERAL MEETING
The Company also announces that the Annual General Meeting of Shareholders will be held on Wednesday, June 15, 2017, at 8:00 a.m. (Vancouver time) at Suite 2000, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8.
OTHER
This information in this release is subject to the disclosure requirements of ShaMaran Petroleum Corp. under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was publicly communicated on May 12, 2017 at 4:00 p.m. Toronto Time.
ABOUT SHAMARAN
ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration company with a 20.1% direct interest in the Atrush oil discovery. The Atrush Block is currently undergoing an appraisal and development campaign.
ShaMaran is a Canadian oil and gas company listed on the TSX Venture Exchange and the NASDAQ First North Exchange (Stockholm) under the symbol "SNM". Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Pareto Securities AB is the Company's Certified Advisor on NASDAQ First North.
The Company's condensed interim consolidated financial statements, notes to the financial statements and management's discussion and analysis have been filed on SEDAR (www.sedar.com) and are also available on the Company's website (www.shamaranpetroleum.com).
FORWARD-LOOKING STATEMENTS
This news release contains statements and information 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. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking information. Forward-looking information typically contains statements with words such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "projects", "potential", "scheduled", "forecast", "outlook", "budget" or the negative of those terms or similar words suggesting future outcomes. The Company cautions readers regarding the reliance placed by them on forward-looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company.
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.
Reserves and resources: ShaMaran Petroleum Corp.'s reserve and contingent resource estimates are as at December 31, 2016, and have been prepared and audited in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). Unless otherwise stated, all reserves estimates contained herein are the aggregate of "proved reserves" and "probable reserves", together also known as "2P reserves". 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.
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 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. There is no certainty that it will be commercially viable for the Company to produce any portion of the contingent resources.
BOEs: BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf per 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Contacts:
Chris Bruijnzeels
President and CEO
ShaMaran Petroleum Corp.
+41 22 560 8605
chris.bruijnzeels@shamaranpetroleum.com
Sophia Shane
Corporate Development
ShaMaran Petroleum Corp.
+1 604 689 7842
sophias@namdo.com
www.shamaranpetroleum.com
Robert Eriksson
Investor Relations, Sweden
ShaMaran Petroleum Corp.
+46 701 112615
reriksson@rive6.ch
