Canada NewsWire
VANCOUVER, March 8, 2019
VANCOUVER, March 8, 2019 /CNW/ - ShaMaran Petroleum Corp. ("ShaMaran" or the "Company") (TSX VENTURE: SNM) (OMX: SNM) is pleased to announce its financial and operating results for the year ended December 31, 2018. Unless otherwise stated all currency amounts indicated as "$" in this news release are expressed in thousands of United States dollars. View PDF version.
HIGHLIGHTS
Chris Bruijnzeels, President and CEO of ShaMaran, commented "During 2018 we have been able to further strengthen ShaMaran and prepare the Company for future growth. The July bond refinancing and the subsequent repayment in February 2019 has placed ShaMaran on a solid financial footing and the agreements to acquire an additional 7.5 percent interest in Atrush puts the Company on track to further increase cash flows. We are making good progress to close this acquisition. With the HOEWT, EPF and debottlenecking activities we have a solid plan to increase Atrush production capacity to 50Mbopd in 2019, and another increase in proved and probable reserves confirms the value we see in Atrush. We are determined to look for more ways in 2019 to continue building value in ShaMaran."
Atrush Operations
Financial and Corporate
Reserves and Resources
OUTLOOK
Operations
The Company provides the following guidance for 2019:
Following the 2019 drilling program, the extended well testing in AT-3 and increased production, the Company expects to further assess the significant undeveloped Atrush resource base with the potential to grow to approximately 100.0 Mblpd production. Management expects that investment decisions for further phases of development can be made by early 2020.
--------------------------------
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 are 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. |
FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2018
Atrush production operations and work on the Atrush development program continued throughout the year 2018.
Financial Results
The Company has reported in 2018 a net income of $1.9 million which was primarily driven by the gross margin on Atrush oil sales, interest income on Atrush cost loans and interest on cash held in short term deposits offset by finance cost, the substantial portion of which was expensed borrowing costs on the Company's bonds, and routine general and administrative expenses.
Statement of Comprehensive Income
(Audited, expressed in thousands of United States Dollars)
For the year ended December 31, | ||||||
2018 | 2017 | |||||
Revenues | 69,600 | 17,689 | ||||
Cost of goods sold: | ||||||
Lifting costs | (12,047) | (5,547) | ||||
Other costs of production | (1,854) | (834) | ||||
Depletion | (28,171) | (7,628) | ||||
Gross margin on oil sales | 27,528 | 3,680 | ||||
General and administrative expense | (4,564) | (4,511) | ||||
Depreciation and amortisation expense | (8) | (26) | ||||
Share based payments expense | - | (11) | ||||
Income / (loss) from operating activities | 22,956 | (868) | ||||
Finance income | 2,091 | 1,649 | ||||
Finance cost | (23,114) | (12,195) | ||||
Net finance cost | (21,023) | (10,546) | ||||
Income / (loss) before income tax expense | 1,933 | (11,414) | ||||
Income tax expense | (64) | (85) | ||||
Income / (loss) for the year | 1,869 | (11,499) | ||||
Other comprehensive income | ||||||
Items that may be reclassified to profit or loss: | ||||||
Currency translation differences | 18 | 31 | ||||
Items that will not be reclassified to profit or loss: | ||||||
Re-measurements on defined pension plan | 357 | (13) | ||||
Total other comprehensive income | 375 | 18 | ||||
Total comprehensive income / (loss) for the year | 2,244 | (11,481) | ||||
Consolidated Balance Sheet
(Audited, expressed in thousands of United States Dollars)
As at December 31, | ||||
2018 | 2017 | |||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment | 195,908 | 184,921 | ||
Intangible assets | 67,829 | 89,119 | ||
Loans and receivables | 25,184 | 44,696 | ||
288,921 | 318,736 | |||
Current assets | ||||
Cash and cash equivalents, restricted | 67,884 | 2,162 | ||
Cash and cash equivalents, unrestricted | 24,586 | 3,094 | ||
Loans and receivables | 36,099 | 32,277 | ||
Other current assets | 2,286 | 212 | ||
130,855 | 37,745 | |||
Total assets | 419,776 | 356,481 | ||
Liabilities and equity | ||||
Current liabilities | ||||
Accrued interest expense on bonds | 14,080 | 2,799 | ||
Accounts payable and accrued expenses | 3,875 | 4,827 | ||
Current tax liabilities | 16 | - | ||
Borrowings | - | 185,692 | ||
17,971 | 193,318 | |||
Non-current liabilities | ||||
Borrowings | 236,717 | - | ||
Provisions | 9,559 | 9,427 | ||
Pension liability | 1,330 | 1,781 | ||
247,606 | 11,208 | |||
Total liabilities | 265,577 | 204,526 | ||
Equity | ||||
Share capital | 637,538 | 637,538 | ||
Share based payments reserve | 6,495 | 6,495 | ||
Cumulative translation adjustment | (12) | (30) | ||
Accumulated deficit | (489,822) | (492,048) | ||
Total equity | 154,199 | 151,955 | ||
Total liabilities and equity | 419,776 | 356,481 | ||
Total assets increased in the year 2018 by $63.3 million due to increases of $51 million in borrowings, of $10.3 million in accounts payable and accrued expenses and $2.3 million comprehensive income generated in the year and offset by a decrease of $0.3 million in pension and other non-current liabilities.
The book value of property, plant & equipment assets increased during the year ended December 31, 2018 by $11.0 million which was due to additions of $12.5 million in Atrush development costs, $4.9 million in capitalised borrowing costs and a one-time cost reclass to PP&E from E&E of $21.8 million net of depletion and depreciation costs of $28.2. The decrease by $21.3 million in the book value of intangible assets during 2018 resulted from the one time reclass to PP&E of $21.8 million net of $0.5 million of additions. Loans and receivables decreased by $15.7 million due to collecting $14.3 million of Atrush Development Cost and Feeder Pipeline Cost loan balances and $2.3 million of Atrush Exploration Cost Receivables, net of increases by $0.5 million of accounts receivables on Atrush oil sales and a $0.4 million increase in the Feeder Pipeline loan balance due to a final contribution in March 2018.
Consolidated Cash Flow Statement
(Audited, expressed in thousands of United States Dollars)
For the year ended December 31, | |||
2018 | 2017 | ||
Operating activities | |||
Income / (loss) for the year | 1,869 | (11,499) | |
Adjustments for: | |||
Depreciation, depletion and amortisation expense | 28,179 | 7,654 | |
Borrowing costs – net of amount capitalised | 23,084 | 12,089 | |
Re-measurements on defined pension plan | 357 | (13) | |
Foreign exchange loss | 26 | 102 | |
Unwinding discount on decommissioning provision | 5 | 4 | |
Share based payments expense | - | 11 | |
Interest income | (2,091) | (1,649) | |
Changes in current tax liabilities | 16 | - | |
Changes in pension liability | (438) | 37 | |
Changes in accounts receivables on Atrush oil sales | (574) | (13,957) | |
Changes in accounts payable and accrued expenses | (952) | (1,607) | |
Changes in other current assets | (2,074) | 12 | |
Net cash inflows from / (outflows to) operating activities | 47,407 | (8,816) | |
Investing activities | |||
Loans and receivables – payments received | 18,029 | 2,806 | |
Interest received on cash deposits | 720 | 107 | |
Loans and receivables – payments issued | (394) | (10,914) | |
Purchases of intangible assets | (632) | (82) | |
Purchase of property, plant and equipment | (12,259) | (8,621) | |
Net cash inflows from / (outflows to) investing activities | 5,464 | (16,704) | |
Financing activities | |||
Net proceeds received on bonds issued | 100,376 | - | |
Proceeds from shares issued | - | 27,281 | |
Share issue related transaction costs | - | (922) | |
Payments to bondholders - interest and call premiums | (15,575) | - | |
Cash paid out on bonds retired | (50,437) | - | |
Net cash inflows from financing activities | 34,364 | 26,359 | |
Effect of exchange rate changes on cash and cash equivalents | (21) | 1 | |
Change in cash and cash equivalents | 87,214 | 840 | |
Cash and cash equivalents, beginning of the year | 5,256 | 4,416 | |
Cash and cash equivalents, end of the year | 92,470 | 5,256 | |
The increase by $87.2 million in the cash position of the Company in the year 2018 was due to cash inflows of $51.4 million from operating activities after G&A and other cash expenses, $49.9 net cash received on bond refinancing and $18.0 million of principal and interest payments on KRG loans and the Exploration Cost Receivables and $0.7 million of interest generated on cash deposits which were offset by cash outflows of $15.6 million on bond coupon interest and call premiums, $12.9 million on Atrush development activities, $3.9 million of negative cash adjustments on accounts receivables, payables and other working capital items and $0.4 million of loans provided to the KRG.
OTHER
This information is information that ShaMaran Petroleum Corp is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 5:30 p.m. ET on March 8, 2019.
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 December 27, 2018 news release, the Company has signed agreements with Marathon Oil KDV B.V. and TAQA Atrush B.V to increase the Company's interest in the Atrush Block to 27.6%. Currently, certain conditions to close remain outstanding.
ShaMaran is a Canadian oil and gas company listed on the TSX Venture Exchange and the NASDAQ First North Exchange (Stockholm) 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 First North, +46 8 402 5000, [email protected].
The Company's 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).
The Company plans to publish on May 8, 2019 its financial and operational results for the three months ended March 31, 2019.
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, 2018 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.
View original content: http://www.newswire.ca/en/releases/archive/March2019/08/c1926.html