VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 06/10/11 -- ShaMaran Petroleum Corp. (TSX VENTURE: SNM) ("ShaMaran" or the "Company") is pleased to announce its financial and operating results for the three months ended March 31st, 2011.
Highlights
-- A major oil discovery in the Atrush Block was announced by the Company
on April 13, 2011. The Atrush 1 well flowed at rates totalling over
6,393 bopd of 26.5 API oil from three tests in the middle and upper
Jurassic reservoirs and well analysis indicated that the intervals are
capable of much higher rates when completed for production. The well was
drilled in budget and on time to a total depth of 3,400 meters.
-- Pulkhana 9 was spudded by the Company on April 3, 2011 with a planned
total depth of approximately 2,700 meters. The well targets the proven
Euphrates/Upper Jaddala and Shiranish oil reservoirs, as well as
evaluating a further potential reservoir in the Lower Jaddala.
-- Cash proceeds of $CAD 50.4 million ($CAD 49.1 million net of issuance
costs) were raised by the Company through a private placement of 56
million common shares at $CAD 0.90 per share which was concluded on May
5, 2011.
-- McDaniel & Associates Consultants Ltd, the Company's independent
qualified resource evaluator, provided the Company with a Detailed
Property Report ("the Report") in March 2011 which was based on
information prior to the appraisal drilling of Pulkhana and results from
the Atrush-1 well. The Report includes 82,461,000 boe as best estimate
of Company Gross Estimated Contingent Resources and 287,555,000 boe as
the unrisked best estimate of Company Gross Estimated Prospective
Resources for all four of the Company's assets.
-- The Company had net income of $462,000 for the three months ended March
31st, 2011 (2010: net income of $679,000). The cash balance of the
Company was $51.3 million as at March 31, 2011 (December 31st, 2010:
$58.7 million).
Financial and Operating Results for the first quarter of 2011
(Unaudited: Expressed in thousands of United States Dollars)
In the first quarter of 2011 the Company continued its exploration campaign in respect of its petroleum properties in Kurdistan constituting the continuing operations of the Company which currently have no corresponding revenue. The net income in the first quarter was primarily driven by the cumulative foreign currency translation gain of $1,053 which has offset normal operational expenses during this period.
Consolidated Interim Statement of Comprehensive Income
(Unaudited: Expressed in thousands of United States Dollars)
For the three months ended March 31,
2011 2010
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Expenses from continuing operations:
General and administrative (164) (219)
Share based payments (59) (254)
Depreciation expense (52) (26)
Share of loss of associate (79) -
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Operating loss (354) (499)
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Finance costs (227) (458)
Finance income 1,162 1,760
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Net finance income 935 1,302
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Income before income tax expense 581 803
Income tax expense (41) (13)
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Net income from continuing operations 540 790
Discontinued operations:
Loss from discontinued operations (78) (111)
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Net income for the period 462 679
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Other comprehensive income:
Currency translation differences 36 2
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Total other comprehensive income 36 2
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Total comprehensive income for the period 498 681
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The Company increased its investment in exploration, evaluation and other intangible assets by $5.2 million during the first three months of 2011 which relates to the initial stages of the exploration drilling campaign on the petroleum properties located in Kurdistan. In addition the deferred consideration liability was decreased by $4 million relating to funds provided to the associate of the Company, General Exploration Partners Inc, for the approved work program on the Atrush Block. There were no other significant changes to the consolidated balance sheet for the three months ended March 31st, 2011.
Consolidated Interim Balance Sheet
(Unaudited: Expressed in thousands of United States Dollars)
Mar 31, Dec 31, Jan 1,
2011 2010 2010
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Assets
Non-current assets
Exploration, evaluation and other intangible
assets 155,086 149,892 185,035
Property, plant & equipment 315 330 145
Investment in associate 44,203 44,282 -
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199,604 194,504 185,180
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Current assets
Other current assets 716 447 376
Inventories 3,519 2,656 -
Trade and other receivables 142 124 31
Cash and cash equivalents 51,260 58,684 63,565
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55,637 61,911 63,972
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Assets associated with discontinued
operations 65 74 847
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Total assets 255,306 256,489 249,999
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Liabilities
Current liabilities
Trade and other payables 7,436 5,156 2,087
Current tax liabilities 146 103 12
Deferred consideration 8,643 12,643 -
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16,225 17,902 2,099
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Non-current liabilities
Other long-term liabilities - - 170
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- - 170
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Liabilities associated with discontinued
operations 2,950 3,069 3,167
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Total liabilities 19,175 20,971 5,436
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Equity
Share capital 432,602 432,506 379,673
Equity share rights - - 61,349
Share premium account 3,987 3,968 3,405
Cumulative translation adjustment 41 5 4
Accumulated deficit (200,499) (200,961) (199,868)
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Total equity 236,131 235,518 244,563
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Net liabilities and equity 255,306 256,489 244,999
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The cash position of the Company decreased by $7,424 over the first quarter of 2011 compared to a decrease in cash by $994 during the first quarter of 2010.
Net cash used in investment activities during the quarter was $8,931 compared to funds used in first quarter of 2010 in the amount of $2,955. The main components of cash used were funding the investment in GEP in the amount of $4,000 and spending on E&E costs of $5,003 related to the drilling programs on the Company's petroleum properties in Kurdistan with an offset in the amount of $109 from interest received on cash deposits.
The Company had no significant financing activities during the first quarters of 2011 and 2010. In May 2011 the Company received funds from financing related to the private placement of 56 million common shares of $CAD 49.1 million.
Consolidated Cash Flow Statement
(Unaudited: Expressed in thousands of United States Dollars)
Three months ended March 31,
2011 2010
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Operating activities
Net income for the period from continuing operations 540 790
Adjustments for:
Interest income (109) (66)
Foreign exchange gain (1,053) (1,694)
Depreciation expense 52 26
Income tax 43 13
Share-based payment expense 59 254
Share of loss of associates 79 -
Capitalized expenses (191) -
Changes in trade and other receivables (18) (395)
Changes in other current assets (269) 262
Changes in inventories (863) -
Changes in trade and other payables 2,280 1,482
Cash used in discontinued operations (188) (407)
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Net cash inflows from operating activities 362 265
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Investment activities
Exploration, evaluation and other intangible assets (5,003) (3,258)
Property, plant & equipment (37) (40)
Investment in associate (4,000) -
Interest received on cash deposits 109 66
Cash provided by discontinued operations - 277
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Net cash outflows to investing activities (8,931) (2,955)
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Financing activities
Net proceeds on issuance of shares 56 -
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Net cash inflows from financing activities 56 -
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Effect of exchange rate changes on cash and cash
equivalents 1,089 1,696
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Change in cash and cash equivalents (7,424) (994)
Cash and cash equivalents, beginning of the period 58,684 63,565
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Cash and cash equivalents, end of the period 51,260 62,571
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Outlook
The outlook for the four blocks in Kurdistan for the remainder of the year 2011 is as follows:
Atrush Block
Atrush 1 was drilled to a total depth of 3,400 meters on January 21, 2011 and the comprehensive well testing program which concluded on April 13, 2011 confirmed a major oil discovery. The operating company, GEP, is currently preparing a program to appraise the Atrush Block for development and production.
Pulkhana Block
Pulkhana-9 was spudded in April 2011 and is planned to be drilled to a Total Depth of 2700m. The well is designed to appraise the proven Euphrates/Jaddala & Shiranish oil reservoirs as well as appraise possible upside in the Jeribe & Lower Jaddala formations.
ShaMaran has also received Ministry of Natural Resources ("MNR") approval for the Pulkhana-10 and preparations are being made to enable drilling of this well. The Company is tendering for a workover rig for the planned third quarter workover of Pulkhana-8 and at the same time progressing with the feasibility study and design for the Pulkhana Early Production Facility ("EPF") planned to be installed by the end of the year 2011. The first 3 wells (Pulkhana 8, 9 & 10) will be connected to the EPF, with the possibility to expand as future development wells are drilled.
Arbat Block
Following completion of seismic interpretation the Company has received MNR approval for the location of the first commitment exploration well (designated Arbat-A). Tendering and preparations are underway to enable drilling to commence in the 4th quarter of this year.
Block K42
Following the completion of 232.0 km of 2D seismic data acquisition the Company exercised its option to enter into a Production Sharing Contract. Approval from the KRG is currently pending.
New Ventures
As part of its normal business the Company is actively pursuing new opportunities in the region.
About ShaMaran
ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration vehicle. It has four projects in the region: the Pulkhana development/appraisal block and the Arbat, Atrush and K42 exploration blocks. These projects are 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 30 mid to large size international oil companies.
ShaMaran Petroleum is a Canadian oil and gas company listed on the TSX Venture 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
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.
Contacts:
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
