VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 19, 2012) - ShaMaran Petroleum Corp. (TSX VENTURE:SNM.V - News)(OMX:SNM.ST - News) ("ShaMaran" or the "Company") is pleased to announce its financial and operating results for the three months ended March 31, 2012.
Highlights
-- The Appraisal Work Program and Budget on the Atrush Block has been
approved by the KRG. The Program consists of 3D seismic and a number of
appraisal wells and studies.
-- 3D seismic acquisition on the Atrush Block is in progress and on
schedule to be completed by the end of June 2012. Preparations for the
Atrush-2 appraisal well are near complete and well spud is expected by
end of May 2012. Planning for an Early Well Test facility and a third
appraisal well is also underway.
-- Location construction and contracting is on schedule for a June 2012
spud of the Taza-1 exploration well. The Romfor-101 drilling rig has
been contracted to drill the well. The well is targeting the proven
regional Tertiary reservoirs of the Miocene Jeribe formation which is
confirmed as oil-bearing and highly productive at the on trend Sarqala-1
well, the Miocene Euphrates formation and the Oligocene Kirkuk Group.
-- 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 Production Sharing Contracts ("PSCs"). An amount of
$25 million was paid in January 2012 to the KRG as relinquishment fees
and 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.
-- In February 2012 the Company received a Detailed Property Report ("the
Report") from its independent qualified resources evaluator, McDaniel &
Associates Consultants Ltd. The Report is as at December 31, 2011 and
includes 124,782 Mboe as best estimate of Gross Estimated Contingent
Resources and 87,910 Mboe as the unrisked best estimate of Gross
Estimated Prospective Resources net to ShaMaran for the Company's two
assets. These estimates are exclusive of amounts relating to the
Pulkhana and Arbat Blocks which were relinquished in January 2012.
-- On April 2, 2012 the Company secured short term financing of $10 million
from two related parties.
-- The Company reported a net loss of $26.1 million for the quarter ended
March 31, 2012 (2011: $0.5 million net income). The cash balance of the
Company was $5.7 million as at March 31, 2012 (December 31, 2011: $49.1
million).
Financial and Operating Results for the three months ended March 31, 2012
(Unaudited:Expressed in thousands of United States Dollars)
During the three months ended March 31, 2012 the Company continued its exploration campaign in respect of the Taza and Atrush Block petroleum properties in Kurdistan constituting the continuing operations of the Company. These properties currently generate no revenues. The net loss in the quarter was 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 ended March 31,
2012 2011
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Expenses from continuing operations
General and administrative expenses (384) (164)
Share based payments recovery / (expense) 2 (59)
Depreciation and amortisation expense (49) (52)
Relinquishment costs (25,732) -
Impairment losses (248) -
Share of loss of associate (66) (79)
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Operating loss (26,477) (354)
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Finance costs - (227)
Finance income 391 1,162
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Net finance income 391 935
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Income / (loss) before income tax expense (26,086) 581
Income tax expense (24) (41)
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Net income / (loss) from continuing
operations (26,110) 540
Discontinued operations
Loss from discontinued operations (37) (78)
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Net income / (loss) for the period (26,147) 462
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Other comprehensive income:
Currency translation differences 33 36
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Total other comprehensive income 33 36
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Total comprehensive income / (loss) for the
period (26,114) 498
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Condensed Interim Consolidated Balance Sheet
(Unaudited: Expressed in thousands of United States Dollars)
March 31, December 31,
2012 2011
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Assets
Non-current assets
Intangible assets 48,262 45,836
Property, plant and equipment 210 382
Investment in associate 51,769 51,835
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100,241 98,053
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Current assets
Other current assets 377 647
Inventories 1,713 3,328
Other receivables 1,347 105
Cash and cash equivalents 5,670 49,085
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9,107 53,165
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Assets associated with discontinued operations 12 21
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Total assets 109,360 151,239
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Liabilities
Current liabilities
Accounts payable and accrued expenses 7,673 23,245
Current tax liabilities 120 122
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7,793 23,367
Liabilities associated with discontinued
operations 2,424 2,613
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Total liabilities 10,217 25,980
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Equity
Share capital 533,349 533,349
Share based payments reserve 3,826 3,828
Cumulative translation adjustment 15 (18)
Accumulated deficit (438,047) (411,900)
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Total equity 99,143 125,259
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Total liabilities and equity 109,360 151,239
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The cash position of the Company decreased by $43.4 million during first quarter of 2012. The main reasons for the decrease in the cash position was the payment to the KRG of $25 million in relinquishment fees and the outflow of funds to decrease accounts payable and accrued expenses by$15.6 million. In addition the Company spend $2.4 on its continuing exploration activities in Kurdistan. The Company received $10 million in short term financing subsequent to the reporting period on April 2, 2012 and has a number of additional financing possibilities which will be pursued as required. The Company is confident that it will obtain the resources sufficient to satisfy its contractual obligations and commitments under the agreed budgets.
Condensed Interim Consolidated Cash Flow Statement
(Unaudited: Expressed in thousands of United States Dollars)
Three months ended March 31,
2012 2011
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Operating activities
Net income / (loss) for the period from
continuing operations (26,110) 540
Adjustments for:
Interest income (24) (109)
Foreign exchange gain (367) (1,053)
Depreciation and amortisation expense 49 52
Income tax (2) 43
Impairment losses 248 -
Share-based payment recovery / (expense) (2) 59
Share of loss of associates 66 79
Capitalized expenses - (191)
Changes in trade and other receivables (1,242) (18)
Changes in other current assets 270 (269)
Changes in inventories 1,302 (863)
Changes in accounts payable and accrued
expenses (15,572) 2,280
Cash used in discontinued operations (217) (188)
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Net cash inflows / (outflows) from operating
activities (41,601) 362
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Investing activities
Intangible assets (2,432) (5,003)
Property, plant and equipment 194 (37)
Investment in associate - (4,000)
Interest received on cash deposits 24 109
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Net cash outflows to investing activities (2,214) (8,931)
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Financing activities
Proceeds net of costs 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 400 1,089
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Change in cash and cash equivalents (43,415) (7,424)
Cash and cash equivalents, beginning of the
period 49,085 58,684
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Cash and cash equivalents, end of the period 5,670 51,260
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Outlook
The outlook for the year 2012 for the two blocks which the Company holds interests in Kurdistan is as follows:
Atrush Block
The operating company (GEP) had completed half of the planned initial 275 square kilometers for the 3D seismic acquisition program by the end of December 2011 (Phase 1) when operations were suspended because of winter weather. Subsequently planned 3D coverage has been expanded to cover a total of 310 square kilometers. Operations to acquire the balance portion of the 3D Seismic (Phase Two) recommenced during the first quarter 2012 and are on schedule to be completed by the end of second quarter 2012. Preparations for the Atrush-2 are near complete. The rig contract was awarded to DQE International and the well spud is expected before the end of May 2012. Atrush-2 is estimated to take 65 days and has a planned total depth of 1,750m. The well is situated approximately 3.5 km east of the Atrush-1 well and is planned as an appraisal of the Jurassic oil discovery.
The processed Phase One 3D seismic will be used to select a drilling location for Atrush-3. Tendering is also in progress for an Early Well Test facility (EWT) that is planned to be commissioned before the end of the year 2012. GEP also plans to re-enter and recomplete the Atrush-1 well for production so that it can be connected to the EWT along with Atrush-2. The complete processed 3D seismic from both phases will be used to select drilling candidates for the 2013 drilling campaign.
Taza Block
Preparations for drilling the first Taza exploration well continued during the first quarter. The surface location for the well was approved and civil engineering works for site access and well site are under way. Work is on schedule for the planned commencement of drilling operations before the end of June 2012. The Taza-1 well is estimated to take 102 days, has a planned total depth of 3,250m and is targeting proven regionally productive Tertiary reservoirs of the Jeribe, Euphrates & Kirkuk Group.
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. It has two projects in the region: the Atrush Block and Taza Block (formerly 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 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
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
Keith Hill
ShaMaran Petroleum Corp.
Chairman
(604) 806-3583
khill@namdo.com
Pradeep Kabra
ShaMaran Petroleum Corp.
President and CEO
0041 22 560 8605
pradeep.kabra@shamaranpetroleum.com
Sophia Shane
ShaMaran Petroleum Corp.
Corporate Development
(604) 689-7842
(604) 689-4250 (FAX)
sophias@namdo.com
www.shamaranpetroleum.com