HOUSTON, TEXAS--(Marketwired - May 27, 2016) - Greenfields Petroleum Corporation (the "Company" or "Greenfields") (TSX VENTURE:GNF)(TSX VENTURE:GNF.DB), an independent exploration and production company with producing assets in Azerbaijan, announces its financial results and operating highlights for the first quarter 2016. Except as otherwise indicated, all dollar amounts referenced herein are expressed in United States dollars.
First Quarter 2015 Financial Results and Operating Highlights
Operating Highlights and Plans
Acquisition of remaining 66.67% interest in BEL and Restructuring of Senior Debt
On March 7, 2016 the Company, through its wholly-owned subsidiary, GPIC, entered into a share purchase agreement with Baghlan Group Limited (in liquidation) and its liquidator, as agent for and on behalf of Baghlan, pursuant to which, GPIC agreed to purchase Baghlan's 66.67% interest in BEL and Baghlan's interest in a shareholder loan receivable due from BEL to Baghlan. The aggregate consideration payable by GPIC for the Acquisition includes a cash payment of $6.0 million, and a release and discharge of liabilities, claims and demands in relation to certain default loan amounts and any and all other obligations, liabilities, claims or demands of any kind owed to BEL, BEOC and/or Greenfields by Baghlan (the "Default Obligations"). The Company estimates the accrued Default Obligations to be an aggregate of $57.6 million. Upon completion of the Acquisition, BEL will become a wholly-owned subsidiary of GPIC. The cash consideration of $6.0 million has been placed into escrow pending satisfaction of certain conditions to the completion of the Acquisition. Greenfields anticipates closing of the Acquisition to occur in June 2016. Completion of the Acquisition is subject to certain closing conditions, including, without limitation, receipt of the approval of the TSX Venture Exchange (the "TSXV") and other necessary regulatory approvals.
In order to fund the Acquisition, the Company has agreed to restructure its debt and, in that regard, on March 4, 2016 the Company signed the Fifth Amending Agreement. The Fifth Amending Agreement provides for, among other things: (i) additional funding in the aggregate amount of $7.0 million to satisfy the purchase price in respect of the Acquisition and for working capital purposes; and (ii) an extension of the maturity date under the Loan Agreement from March 15, 2016 to May 16, 2016 in order to facilitate the completion of the Restructuring Transaction (as defined below). On May 16, 2016, the Company signed the Sixth Amending Agreement to extend the loan maturity date to June 30, 2016.
In connection with entering into the Fifth Amending Agreement, the Company has agreed to: (i) obtain the approval of holders ("Debentureholders") of the 9.00% convertible unsecured subordinated debentures due May 31, 2017 (the "Debentures") for the conversion (the "Debenture Conversion") of the CAD$23,725,000 aggregate principal amount of Debentures into an aggregate of approximately 33.2 million common shares in the capital of the Company ("Common Shares"); (ii) issue, in connection with the completion of the restructuring, up to an aggregate of 2,394,000 Common Shares for every $1,000,000 of principal due to the Lenders under the Loan Agreement; and (iii) issue, in connection with the completion of the restructuring, an equivalent number of Common Share purchase warrants ("Warrants") to the Lenders (collectively, the "Restructuring Transaction"). The Debenture Conversion will be implemented upon the approval of the Debentureholders, by way of extraordinary resolution, pursuant to and in accordance with the terms of the indenture governing the Debentures.
Contemporaneous with the completion of the Restructuring Transaction, the Company anticipates signing an amending agreement to further extend the maturity date under the Loan Agreement to December 31, 2017. The Restructuring Transaction will allow the Company to become the 100% shareholder of BEL, to reduce debt and related annual cash interest and to reduce financing expenses.
Both the Acquisition and Restructuring Transaction remain subject to approval in their entirety by the TSXV.
Selected Financial and Operating Information
The selected information below is from the Greenfields' Management Discussion & Analysis for the three months ended March 31, 2016. The Company's complete financial statements as of and for the three months ended March 31, 2016 and 2015 with the notes thereto and the related Management's Discussion & Analysis can be found on Greenfields' website at www.Greenfields-Petroleum.com and on SEDAR at www.sedar.com. All amounts below are in thousands of US dollars unless otherwise noted.
Greenfields Petroleum Corporation
(US$000's, except as noted) | ||
Three months ended March 31 |
||
2016 | 2015 | |
Financial | ||
Revenues | 334 | 337 |
Net (loss) income | (3,602) | (1,352) |
Per share, basic and diluted | ($0.16) | ($0.06) |
Capital Items | ||
Cash and cash equivalents | 906 | 65 |
Total Assets | 97,220 | 84,608 |
Working capital | (14,345) | 735 |
Convertible debt and Shareholders' equity | 53,990 | 60,103 |
Bahar Energy Limited (a Joint Venture) (2)
Total Joint Venture | Company's share | |||
(US$000's,except as noted) | Three months ended March 31 | |||
2016 | 2015 | 2016 | 2015 | |
Financial | ||||
Revenues | 7,399 | 9,430 | 2,466 | 3,143 |
Net income | 771 | 747 | 257 | 248 |
Operating | ||||
Average Entitlement Sales Volumes (1) | ||||
Oil and condensate (bbl/d) | 886 | 826 | 295 | 275 |
Natural gas (mcf/d) | 13,629 | 14,400 | 4,543 | 4,800 |
Barrel oil equivalent (boe/d) | 3,158 | 3,226 | 1,052 | 1,075 |
Average Oil Price | ||||
Oil price ($/bbl) | $30.84 | $47.75 | $30.84 | $47.75 |
Net realization price ($/bbl) | $29.99 | $46.36 | $29.99 | $46.36 |
Brent oil price ($/bbl) | $33.84 | $53.98 | $33.84 | $53.98 |
Natural gas price ($/mcf) | $3.96 | $3.96 | $3.96 | $3.96 |
Capital Items | ||||
Total Assets | 197,699 | 200,849 | 65,893 | 66,943 |
Total Liabilities | 35,335 | 40,627 | 11,777 | 13,541 |
Net Assets | 162,364 | 160,222 | 54,116 | 53,402 |
(1) Daily volumes represent the Company's share of the Contractor Parties' entitlement volumes net of compensatory petroleum and the government's share of profit petroleum. Compensatory petroleum delivered to SOCAR is 10% where it will remain until specific cumulative oil and gas production milestones are attained. |
(2) The Company's 33.33% interest in Bahar Energy Limited is disclosed in the Unaudited Condensed Consolidated Financial Statements as a Joint Venture and accounted for using the equity method. |
About Greenfields Petroleum Corporation
Greenfields is a junior oil and natural gas company focused on the development and production of proven oil and gas reserves principally in the Republic of Azerbaijan. The Company plans to expand its oil and gas assets through further farm-ins, and acquisitions of Production Sharing Agreements from foreign governments containing previously discovered but under-developed international oil and gas fields, also known as "greenfields". More information about the Company may be obtained on the Greenfields website at www.greenfields-petroleum.com.
Forward-Looking Statements
This press release contains forward-looking statements. More particularly, this press release may include, but is not limited to, statements concerning: operating plans of the Company, the Restructuring Transaction, the signing of an amending agreement to further extend the maturity date under the Loan Agreement; and the anticipated benefits of the Restructuring Transaction. In addition, the use of any of the words "initial, "scheduled", "can", "will", "prior to", "estimate", "anticipate", "believe", "should", "forecast", "future", "continue", "may", "expect", and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained herein are based on certain key expectations and assumptions made by the Company, including, but not limited to, expectations and assumptions concerning the success of optimization and efficiency improvement projects, the availability of capital, current legislation, receipt of required regulatory approval, the success of future drilling and development activities, the performance of existing wells, the performance of new wells, general economic conditions, availability of required equipment and services, weather conditions and prevailing commodity prices. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct.
Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties most of which are beyond the control of Greenfields. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information. These risks include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety, political and environmental risks), commodity price and exchange rate fluctuations, changes in legislation affecting the oil and gas industry and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures. Additional risk factors can be found under the heading "Risk Factors" in Greenfields' Annual Information Form and similar headings in Greenfields' Management's Discussion & Analysis which may be viewed on www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and Greenfields undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. The Company's forward-looking information is expressly qualified in its entirety by this cautionary statement.
Notes to Oil and Gas Disclosures
Barrels Oil Equivalent or "boe" may be misleading, particularly if used in isolation. All volumes disclosed in this press release use a 6mcf: 1boe, as such is typically used in oil and gas reporting and is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The Company uses a 6mcf: 1boe ratio to calculate its share of entitlement sales from the Bahar Project for its financial reporting and reserves disclosure.
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.
Greenfields Petroleum Corporation
John W. Harkins
Chief Executive Officer
(832) 234-0836
A. Wayne Curzadd
Chief Financial Officer
(832) 234-0835
[email protected]
www.greenfields-petroleum.com