HOUSTON, May 29, 2018 (GLOBE NEWSWIRE) -- Greenfields Petroleum Corporation (the “Company” or “Greenfields”) (TSX VENTURE:GNF), an independent exploration and production company holding an 80% interest in producing assets in Azerbaijan, announces its financial and operating results for the three months ended March 31, 2018. Selected financial and operational information included below should be read in conjunction with the Company’s condensed consolidated financial statements for the three months ended March 31, 2018, with the notes thereto and related management’s discussion and analysis (“MD&A”), which can be found at www.Greenfields-Petroleum.com and on SEDAR at www.sedar.com. Except as otherwise indicated, all dollar amounts referenced herein are expressed in United States dollars.
First Quarter 2018 Highlights
“The Company has made good progress during the first quarter 2018 by increasing oil production in relation to fourth quarter 2017 through recompletions," said John Harkins, CEO. "Performance improvements in relation to service workovers contributed to restore and stabilize production. Our operating netback continues to improve due to increased oil production, coupled with higher market prices, and operating costs well under forecast.”
Operational Review
Selected Financial Information
(US$000’s, except as noted) | Three months ended March 31, | |||
2018 | 2017 *Restated* (1) | |||
Financial | ||||
Revenues | ||||
Crude oil and natural gas | 7,046 | 9,238 | ||
Net loss | (2,591 | ) | (1,368 | ) |
Loss per share, basic and diluted | ($0.01 | ) | ($0.01 | ) |
Operating | ||||
Average Entitlement Sales Volumes (2) | ||||
Crude Oil (bbl/d) | 597 | 709 | ||
Decrease with respect to same period in 2017 | (16 | %) | ||
Natural gas (mcf/d) | 14,855 | 17,296 | ||
Decrease with respect to same period in 2017 | (14 | %) | ||
Barrel oil equivalent (boe/d) | 3,072 | 3,591 | ||
Decrease with respect to same period in 2017 | (14 | %) | ||
Entitlement to gross sales volumes (3) | 88 | % | 84 | % |
Prices | ||||
Average oil price ($/bbl) | 64.25 | 48.20 | ||
Net realization price ($/bbl) | 63.11 | 47.24 | ||
Increase with respect to same period in 2017 | 34 | % | ||
Brent oil price ($/bbl) | 66.86 | 53.59 | ||
Natural gas price ($/mcf) (4) | 2.69 | 3.96 | ||
Net realization price ($/boe) (5) | 25.48 | 28.58 | ||
Operating cost ($/boe) (5) | (18.26 | ) | (19.61 | ) |
Operating Netback ($/boe) (5) | 7.22 | 8.97 | ||
Capital Items | ||||
Cash and cash equivalents | 210 | 1,891 | ||
Total Assets | 199,689 | 198,781 | ||
Working capital (6) | (6,666 | ) | (48,189 | ) |
Long term debt and shareholders’ equity | 180,087 | 138,147 | ||
(1) | The term *Restated* was added to the 2017 comparative information due to the reclassification of impairment expense, previously reported on a separate expense line, into operating expense, both within the same group of expenses as reported in the Company’s financial statements. The reclassification was made to conform to the basis of presentation for the current year and resulted in no change to total expenses, loss from operating activities, total comprehensive loss and loss per share reported for the three months ended March 31, 2017. See Note 15 – Segment Reporting in the Company’s Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2018. | |
(2) | Sales Volumes represent the Company’s share of entitlement production marketed by the State Oil Corporation of Azerbaijan (“SOCAR”) after in-kind production volumes delivered to SOCAR as compensatory petroleum and the government’s share of profit petroleum. The Company’s share of entitlement production includes the allocation of SOA’s share of cost recovery production as required by the carry 1 recovery provisions in the Exploration, Rehabilitation, Development and Production Sharing Agreement (the "ERDPSA"). Compensatory petroleum represents 10% of gross production from the ERDPSA and continues to be delivered to SOCAR, at no charge, until specific cumulative oil and natural gas production milestones are attained. | |
(3) | Represents the percentage of Bahar Energy Limited’s (“BEL”) entitlement production volume relative to gross lifted volumes from the ERDPSA. | |
(4) | The natural gas price was contractually fixed at $3.96 per mcf in the first quarter 2017 and then renegotiated to a new 5‑year term at $2.69 per mcf effective April 1, 2017. | |
(5) | “Net realization price, operating cost and operating netback” are Non-IFRS measures. For more information see “Non-IFRS Measures”. | |
(6) | Working capital at March 31, 2017 includes $47 million in loans maturing March 31, 2018 which were classified as short term loans due to its March 31, 2018 maturity. The loans were subsequently reclassified to long term at September 30, 2017 as the maturity date was extended to January 15, 2020. | |
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 is the sole owner of BEL, a venture with 80% participating interest in the ERDPSA with SOCAR and its affiliate SOA", in respect of the offshore block known as the Bahar Project, which includes the Bahar Gas Field and the Gum Deniz Oil Field. BEL operates the Bahar Project through its wholly owned subsidiary Bahar Energy Operating Corporation Limited.. 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 includes forward-looking statements concerning, but not limited to: operational and development plans of the Company and of BEL; the completion of refurbishments and the anticipated timing thereof; the completion of workovers and anticipated timing thereof; the completion of recompletions and reactivations and the anticipated timing thereof; the Bahar Gas Field and Gum Deniz field studies and plan of development and the expectations in relation thereto; production; the completion of waterflood injectivity tests; and the timing of secondary recovery projects. In addition, the use of any of the words “anticipated”, “scheduled”, “will”, “prior to”, “estimate”, “believe”, “should”, “future”, “continue”, “expect”, “plan” 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 and regulatory regimes, 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’ Management Discussion and 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.
Abbreviations
bbl | barrels | mcf | thousand cubic feet |
bbl/d | barrels per day | mcf/d | thousand cubic feet per day |
boe | barrels of oil equivalent | $/mcf | United States dollars per thousand cubic feet |
boe/d | barrels of oil equivalent per day | $/boe | United States dollars per barrels of oil equivalent |
$/bbl | United States dollars per barrel | ||
Non-IFRS Measures
Within this document, references are made to terms which are not recognized under IFRS. Specifically, “net realization price”, “operating netback” and “operating cost” do not have any standardized meaning as prescribed by IFRS and are regarded as non-IFRS measures. These non-IFRS measures may not be comparable to the calculation of similar amounts for other entities and readers are cautioned that use of such measures to compare issuers may not be valid. Non-IFRS measures are used to benchmark operations against prior periods and are widely used by investors, lenders, analysts and other parties. These non-IFRS measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. The definition and reconciliation of each non-IFRS measure or additional subtotal is presented herein.
“Net realization price”, “operating netbacks”, “operating costs” are common non-IFRS measurements applied in the oil and gas industry and are used by management to assess the operational performance and performance of the Company. “Net realization price” indicates the selling price of a good less the selling costs. “Operating netback” is a measure of oil and gas sales revenue net of royalties, production and transportation expenses. “Operating cost” provides an indication of the controllable cash costs incurred per boe during a period. Management believes that these non-IFRS measures assist management and investors in assessing Greenfields’ profitability and operating results on a per unit basis to better analyze performance against prior periods on a comparable basis.
The Operating Summary on page 10 of the Company’s first quarter 2018 MD&A includes a reconciliation of “net realization price”, “operating netback” and “operating cost” to the most closely related IFRS measure.
Notes regarding Oil and Gas Disclosures
Barrels of oil equivalent or “boe” may be misleading, particularly if used in isolation. The volumes disclosed in this press release use a 6 mcf: 1 boe, 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 6 mcf: 1 boe 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.
For more information, please contact:
Greenfields Petroleum Corporation | [email protected] |
John W Harkins (CEO) | +1 (832) 234 0836 |
Jose Perez-Bello (CFO) | +1 (832) 234 0831 |
Yellow Jersey (Media Relations) | [email protected] |
Charles Goodwin | +44 7747 788 221 |
Harriet Jackson | +44 7544 275 882 |