Canada NewsWire
VANCOUVER, Aug. 8, 2018
VANCOUVER, Aug. 8, 2018 /CNW/ - ShaMaran Petroleum Corp. ("ShaMaran" or the "Company") (TSX VENTURE: SNM) (OMX: SNM) is pleased to announce its financial and operating results for the six months ended June 30, 2018. Unless otherwise stated all currency amounts indicated as "$" in this news release are expressed in thousands of United States dollars. View in PDF Format.
HIGHLIGHTS
Chris Bruijnzeels, President and CEO of ShaMaran, commented "We've had a lot to cheer about so far this year: the agreement to acquire another 15% in Atrush is highly accretive for ShaMaran and sets the table for significant additional cash flows, the refinancing of our bonds has left the Company with a solid liquidity position, and the recent addition of CK-7 and CK-10 are pushing Atrush production up towards the facility's nameplate capacity. And, looking forward to the rest of 2018, I'm excited by our plans to seek out ways to optimise the Atrush production facility and unlock further capacity and to look to better define what kind of long term production potential we have in the eastern side of the block with our planned heavy oil extended well test on AT-3.
Operations
Financial and Corporate
_______________________ | |
1 |
The Exploration Costs Receivable is related to the repayment of certain development costs that ShaMaran paid on behalf of the KRG which, for purposes of repayment, are governed under the Atrush PSC and the related Facilitation Agreement and deemed to be Exploration Costs. |
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. |
OUTLOOK
Operations
Financing and corporate
FINANCIAL RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018
Oil production commenced on July 3, 2017 from the Atrush Block located in the Kurdistan Region of Iraq. Atrush production operations and work on the Atrush development program continued throughout the first six months of 2018.
Financial Results
The net income was primarily driven by the gross margin on Atrush oil sales and interest income on Atrush cost loans to the KRG and was reduced by general and administrative expenses and finance cost, the substantial portion of which were expensed borrowing costs on the Company's Senior Bonds and Super Senior Bonds.
Condensed Interim Statement of Comprehensive Income |
||||||
(Unaudited, expressed in thousands of United States Dollars) |
||||||
Three months ended June 30, |
Six months ended June 30, | |||||
2018 |
2017 |
2018 |
2017 | |||
Revenues |
15,328 |
- |
41,829 |
- | ||
Cost of goods sold: |
||||||
Lifting costs |
(2,463) |
- |
(4,889) |
- | ||
Depletion |
(4,646) |
- |
(14,186) |
- | ||
Other costs of production |
119 |
- |
(83) |
- | ||
Gross margin on oil sales |
8,338 |
- |
22,671 |
- | ||
Share based payments expense |
- |
- |
- |
(11) | ||
Depreciation and amortisation expense |
(2) |
(8) |
(6) |
(18) | ||
General and administrative expense |
(941) |
(818) |
(1,866) |
(1,908) | ||
Income / (loss) from operating activities |
7,395 |
(826) |
20,799 |
(1,937) | ||
Finance income |
444 |
439 |
827 |
770 | ||
Finance cost |
(3,016) |
(1,482) |
(7,186) |
(2,964) | ||
Net finance cost |
(2,572) |
(1,043) |
(6,359) |
(2,194) | ||
Income / (loss) before income tax expense |
4,823 |
(1,869) |
14,440 |
(4,131) | ||
Income tax expense |
(11) |
(14) |
(27) |
(35) | ||
Income / (loss) for the period |
4,812 |
(1,883) |
14,413 |
(4,166) | ||
Other comprehensive income |
||||||
Items that may be reclassified to profit or loss: |
||||||
Actuarial profit on defined pension plan |
197 |
- |
197 |
- | ||
Currency translation differences |
(2) |
18 |
16 |
34 | ||
Total other comprehensive income |
195 |
18 |
213 |
34 | ||
Total comprehensive income / (loss) for the period |
5,007 |
(1,865) |
14,626 |
(4,132) |
Condensed Interim Consolidated Balance Sheet |
|||
(Unaudited, expressed in thousands of United States Dollars) |
|||
At June 30, 2018 |
At December 31, 2017 | ||
Assets |
|||
Non-current assets |
|||
Property, plant and equipment |
181,532 |
184,921 | |
Intangible assets |
88,924 |
89,119 | |
Loans and receivables |
32,368 |
44,696 | |
302,824 |
318,736 | ||
Current assets |
|||
Loans and receivables |
38,129 |
32,277 | |
Cash and cash equivalents, restricted |
25,613 |
2,162 | |
Cash and cash equivalents, unrestricted |
1,611 |
3,094 | |
Other current assets |
2,279 |
212 | |
67,632 |
37,745 | ||
Total assets |
370,456 |
356,481 | |
Liabilities and equity |
|||
Current liabilities |
|||
Borrowings |
186,112 |
185,692 | |
Accrued interest expense on bonds |
2,799 |
2,799 | |
Accounts payable and accrued expenses |
2,615 |
4,827 | |
Current tax liabilities |
4 |
- | |
191,530 |
193,318 | ||
Non-current liabilities |
|||
Provisions |
10,770 |
9,427 | |
Pension liability |
1,575 |
1,781 | |
12,345 |
11,208 | ||
Total liabilities |
203,875 |
204,526 | |
Equity |
|||
Share capital |
637,538 |
637,538 | |
Share based payments reserve |
6,495 |
6,495 | |
Cumulative translation adjustment |
(14) |
(30) | |
Accumulated deficit |
(477,438) |
(492,048) | |
Total equity |
166,581 |
151,955 | |
Total liabilities and equity |
370,456 |
356,481 |
Total assets increased in the first half of 2018 by $14.0 million due to a decrease in the accumulated deficit by $14.6 million, related to the income generated in the period, and increases in borrowings, accrued interest and other non-current liabilities by $1.6 million, net of a decrease in accounts payable and accrued expenses by $2.2 million.
Property, plant & equipment assets decreased during the 6 months ended June 30, 2018 by $3.4 million which was due to depletion and depreciation costs of $14.2 million net of additions of $6.5 million in Atrush development costs, $3.8 million in capitalised borrowing costs and a one-time cost reclass to PP&E from E&E of $0.5 million. The decrease in intangible assets by $195 thousand during the half of 2018 resulted from Atrush exploration and evaluation costs of $132 thousand and $175 thousand in capitalised borrowing costs net of $498 thousand relating to the reclass to PP&E from E&E and $4 thousand in amortisation and revaluation of foreign currency item. Loans and receivables decreased by $6.5 million due to collecting $7.1 million of Atrush Development Cost and Feeder Pipeline Cost loans and $1.2 million of Atrush Exploration Cost Receivables, net of accruing an additional $1.4 million of accounts receivables on Atrush oil sales and funding $0.4 million of Feeder Pipeline costs.
Condensed Interim Consolidated Cash Flow Statement |
||||||
(Unaudited, expressed in thousands of United States Dollars) |
||||||
Three months ended June 30, |
Six months ended June 30, | |||||
2018 |
2017 |
2018 |
2017 | |||
Operating activities |
||||||
Income / (loss) for the period |
4,812 |
(1,883) |
14,413 |
(4,166) | ||
Adjustments for: |
||||||
Depreciation, depletion and amortisation expense |
4,648 |
8 |
14,192 |
18 | ||
Interest expense on borrowings – net |
3,025 |
1,478 |
7,181 |
2,944 | ||
Actuarial profit on defined pension plan |
197 |
- |
197 |
- | ||
Pension expense |
- |
11 |
- |
11 | ||
Share based payments expense |
- |
- |
- |
11 | ||
Unwinding discount on decommissioning provision |
(11) |
3 |
(6) |
(7) | ||
Foreign exchange (gain) / loss |
(60) |
(21) |
10 |
26 | ||
Interest income |
(384) |
(418) |
(827) |
(770) | ||
Changes in accounts receivables on Atrush oil sales |
11,172 |
- |
(1,372) |
- | ||
Changes in accounts payable and accrued expenses |
636 |
(412) |
(2,212) |
(299) | ||
Changes in current tax liabilities |
(5) |
- |
4 |
- | ||
Changes in pension liability |
(187) |
- |
(186) |
- | ||
Changes in other current assets |
(1,979) |
29 |
(2,067) |
(15) | ||
Net cash inflows from / (outflows to) operating activities |
21,864 |
(1,205) |
29,327 |
(2,247) | ||
Investing activities |
||||||
Loans and receivables – payments received |
8,510 |
- |
9,050 |
- | ||
Interest received on cash deposits |
10 |
39 |
18 |
65 | ||
Purchases of intangible assets |
(240) |
(6) |
(301) |
(36) | ||
Loans and receivables – payments issued |
- |
(3,150) |
(394) |
(7,477) | ||
Purchase of property, plant and equipment |
(3,551) |
(2,920) |
(5,000) |
(6,311) | ||
Net cash outflows to investing activities |
4,729 |
(6,037) |
3,373 |
(13,759) | ||
Financing activities |
||||||
Interest payments to bondholders |
(10,719) |
- |
(10,719) |
- | ||
Proceeds from shares issued |
- |
- |
- |
27,281 | ||
Share issue related transaction costs |
- |
- |
- |
(922) | ||
Net cash (outflows to) / inflows from financing activities |
(10,719) |
- |
(10,719) |
26,359 | ||
Effect of exchange rate changes on cash and cash equivalents |
- |
(5) |
(13) |
(10) | ||
Change in cash and cash equivalents |
15,874 |
(7,247) |
21,968 |
10,343 | ||
Cash and cash equivalents, beginning of the period |
11,350 |
22,006 |
5,256 |
4,416 | ||
Cash and cash equivalents, end of the period* |
27,224 |
14,759 |
27,224 |
14,759 |
The increase by $22.0 million in the cash position of the Company in the first six months of 2018 was due to cash inflows of $35.1 million from operating activities after G&A and other cash expenses and $9.1 million of principal and interest payments on KRG loans and the Exploration Cost Receivables which were offset by cash outflows of $5.3 million on Atrush development activities, $0.4 million of loans provided to the KRG, $5.8 million of negative cash adjustments on accounts receivables, payables and other working capital items and $10.7 million on bond coupon interest .
OTHER
This information in this release is subject to the disclosure requirements of ShaMaran Petroleum Corp. under the EU Market Abuse Regulation and/or the Swedish Securities Market Act. This information was publicly communicated on August 8, 2018 at 5:30 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. As announced in ShaMaran's June 4, 2018 news release, the Company has signed an agreement with Marathon Oil KDV B.V. to acquire its 15% interest in the Atrush Block. 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 Stockholm First North Exchange (Sweden) 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 Stockholm 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 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, 2017, 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.
SOURCE ShaMaran Petroleum Corp.
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