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VANCOUVER, BRITISH COLUMBIA - ShaMaran Petroleum Corp. ("ShaMaran" or the
"Company") (TSX VENTURE: SNM) (OMX: SNM) is pleased to announce its financial
and operating results for year ended December 31, 2017. Unless otherwise stated
all currency amounts indicated as “$” in this news release are expressed in
thousands of United States dollars.
Chris Bruijnzeels, President and CEO of ShaMaran, commented “2017 was a
defining year for ShaMaran with start of production in July 2017. I am
encouraged by the production performance and the continued payments from the
Kurdistan Regional Government which will allow us to continue investing in
Atrush and work towards defining the next phase of development.”
HIGHLIGHTS AND DEVELOPMENTS
Operations
-- Oil production on the Atrush Block commenced in July 2017. Average
production in the fourth quarter of 2017 was 21,700 barrels of oil per day
(“bopd”). To address certain production constraints the facilities were
shut down in the beginning of October. These constraints have now
successfully been resolved. In winter months the Atrush Production
Facilities are limited to processing approximately 27,000 bopd of the total
30,000 bopd capacity due to low ambient temperatures which reduces the
amount of heat otherwise available to process the oil to export
specifications.
-- 3.4 million barrels of oil
were produced and exported from Atrush for sale to the
Kurdistan Regional Government (“KRG”)
during the second half of 2017
resulting in an average production of 18.1 thousand barrels per day. The
Company’s entitlement share1
of 2017 exports was approximately 400 thousand barrels which were sold
at an average netback pric
e2
of $44.38 per barrel of oil. In the fourth quarter of 2017 oil was
exported and sold from Atrush
totalling 2.0 million barrels. The Company’s entitlement share of fourth
quarter exports was approximately 295 thousand barrels which were sold
at an average netback pric
e of $47.0 per barrel of oil.
-- The Company’s cash inflows from Atrush related activities are comprised of
three elements:
-- Entitlement share of Atrush PSC profit oil and cost oil: from
commencement of exports in July 2017 u
p to the date of the MD&A the Company has received payments totalling
$8.5 million which reflect its entitlement share of the $44.2 million in
total payments received by the Atrush Non-Government Contractors from
the KRG for July through November 2017 oil sales.
-- Atrush Exploration Costs receivable: over this same period the Company
collected a further $458 thousand of Atrush Exploration Cost receivables
from the KRG’s entitlement share of July through November 2017 oil
sales.
-- The Atrush Development Cost Loan and the Atrush Feeder Pipeline Cost
Loan (“the KRG Loans”),
In January 2018 the
Non-Government Contractors and the KRG agreed that substantially all the
first two instalments on the KRG Loans, which were due in November and
December of 2017, would be offset against amounts owed to the KRG for
security services which they provided for the Atrush operations, and an
Atrush production bonus. The KRG Loan balances collected by the Company
under the agreement was $2.6 million.
January 2018 and subsequent invoices are expected to be paid in line
with the current practice for crude oil sales payments. The January 2018
invoice is therefore expected to be paid in April 2018.
-- The Chiya Khere-7 (“CK-7”) well, which was spudded on September 17, 2017
reached a final depth of 1,861 metres in early November 2017. The reservoir
section was encountered approximately 114 metres shallower than prognosis
which had a positive impact of the Company’s 2P reserves reported as at
December 31, 2017. The well was drilled on time and under budget.
-- In February 2018 a new sales agreement was concluded between the Atrush
Non-Government Contractors and the KRG for the sale of Atrush oil whereby
the KRG will buy oil exported from the Atrush field by pipeline at the
Atrush block boundary based upon the Dated Brent oil price minus $15.73
($16.04 under the previous agreement) for quality discount and all local
and international transportation costs. This discount is based on the same
principles as other oil sales agreements in the Kurdistan Region of Iraq
and reflects a better API gravity than was assumed in the previous sales
agreement.
Corporate
-- On January 30, 2017 the Company completed the issue of 360 million common
shares of ShaMaran on a private placement basis (the “Private Placement”)
at a price per share of CAD 0.10 (equal to SEK 0.67) which resulted in
gross proceeds to the Company of $27.3 million ($26.4 million net of
transaction related costs). Zebra Holdings and Investments SARL, Lorito
Holdings SARL and Lundin Petroleum BV, the Company’s major shareholders,
subscribed for 43,463,618 shares, 16,984,621 shares and 17,800,000 shares,
respectively, in the Private Placement.
-- On
February 15, 2018 the Company reported estimated reserves and contingent
resources for the Atrush field as at December 31, 2017. Total Field Proven
plus Probable (“2P”) Reserves on a property gross basis for Atrush
increased from 85.1 MMbbl reported as at December 31, 2016 to 102.7 MMbbl
which, when 2017 Atrush production of 3.4 MMbbl is included, represents an
increase of 25 percent. Total Field Unrisked Best Estimate Contingent Oil
Resources (“2C”)3
on a property gross basis for Atrush was approximately the same as the 2016
estimate at 296 MMbbl. Total discovered oil in place in the Atrush Block is
a low estimate of 1.5 billion barrels,
a best estimate of 2.1 billion barrels and
a high estimate of 2.9 billion barrels.
OUTLOOK
Operations
-- Production guidance for Atrush gross in 2018 is 25,000 to 30,000 bopd
with lifting costs for the year forecasted at $6.8/bbl.
-- Capital expenditure
guidance
is
$1
9.6
million
(20.1% working interest in Atrush) which includes
:
-- identify and install additional heat sources ahead of the next winter
months;
-- continue with program to identify debottleneck opportunities to further
increase production capacity beyond 30,000 bopd;
-- testing and completion of the CK-7 well;
-- install the CK-7 flow line and bring CK-7 into production;
-- drilling, testing and completion of
Chiya Khere
(“CK-10”), a sixth development well;
-- drilling and completion of
Chiya Khere
(“CK-9”), a dedicated water disposal well; and
-- conducting extended testing of the CK-6 well which is located on the
eastern side of the Atrush Block and which is outside the 2P reserve area
of Atrush. This would involve the installation of temporary production
facilities near the Chamanke–C well pad and the delivery by truck of oil to
the main Phase 1 Production Facilities.
-- Following the results of the CK-7 and CK-10 wells, the extended well
testing in CK-6 and sustained production from the Phase 1 Production
Facilities the Company expects to further assess the significant
undeveloped Atrush resource base with the potential to grow organically to
approximately 100,000 bopd production.
1. The Company’s entitlement share includes an adjustment for the exploration
cost sharing arrangement between TAQA and GEP.
2. This includes a discount to Dated Brent for oil quality and all local and
international transportation costs.
3. 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 AND OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017
Oil production commenced on July 3, 2017 from the Atrush Block located in the
Kurdistan Region of Iraq and work continued on the Atrush development program
throughout the year 2017.
Financial Results
The Company has reported in 2017 a net loss of $11.5 million which was
primarily driven by finance cost, the substantial portion of which was expensed
borrowing costs on the Company’s bonds, and routine general and administrative
expenses. These charges have been offset by the gross margin on Atrush oil
sales, interest income on Atrush cost loans and interest on cash held in short
term deposits.
Statement of Comprehensive Income
(Audited, expressed in thousands of United States Dollars)
For the year ended
December 31,
2017 2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Revenues 17,689 -
Cost of goods sold:
Lifting costs (5,547) -
Other costs of production (834) -
Depletion (7,628) -
--------------------------------------------------------------------------------
Gross margin on oil sales 3,680 -
Service fee income - 120
Share based payments expense (11) (249)
Depreciation and amortisation expense (26) (45)
General and administrative expense (4,511) (3,811)
Loss from operating activities (868) (3,985)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finance income 1,649 484
Finance cost (12,195) (5,586)
--------------------------------------------------------------------------------
Net finance cost (10,546) (5,102)
--------------------------------------------------------------------------------
---------
Loss before income tax expense (11,414) (9,087)
Income tax expense (85) (69)
--------------------------------------------------------------------------------
Loss for the year (11,499) (9,156)
--------------------------------------------------------------------------------
Other comprehensive income
Items that may be reclassified to profit or loss: 31 22
Currency translation differences
Items that will not be reclassified to profit or loss:
Actuarial (loss) / gain on defined pension plan (13) 15
--------------------------------------------------------------------------------
Total other comprehensive income 18 37
--------------------------------------------------------------------------------
Total comprehensive loss for the year (11,481) (9,119)
--------------------------------------------------------------------------------
Consolidated Balance Sheet
(Audited, expressed in thousands of United States Dollars)
As at December 31,
2017 2016
----------------------------------------------------------------
----------------------------------------------------------------
Assets
Non-current assets
Property, plant and equipment 184,921 174,658
Intangible assets 89,119 89,007
Loans and receivables 44,696 46,114
318,736 309,779
----------------------------------------------------------------
----------------------------------------------------------------
Current assets
Loans and receivables 32,277 7,252
Cash and cash equivalents, unrestricted 3,094 4,416
Cash and cash equivalents, restricted 2,162 -
Other current assets 212 224
37,745 11,892
----------------------------------------------------------------
Total assets 356,481 321,671
----------------------------------------------------------------
----------------------------------------------------------------
Liabilities and equity
Current liabilities
Borrowings 185,692 -
Accounts payable and accrued expenses 4,827 6,434
Accrued interest expense on bonds 2,799 2,503
193,318 8,937
----------------------------------------------------------------
----------------------------------------------------------------
Non-current liabilities
Provisions 9,427 8,869
Pension liability 1,781 1,670
Borrowings - 165,129
11,208 175,668
----------------------------------------------------------------
Total liabilities 204,526 184,605
----------------------------------------------------------------
Equity
Share capital 637,538 611,179
Share based payments reserve 6,495 6,484
Cumulative translation adjustment (30) (61)
Accumulated deficit (492,048) (480,536)
----------------------------------------------------------------
Total equity 151,955 137,066
----------------------------------------------------------------
Total liabilities and equity 356,481 321,671
----------------------------------------------------------------
Total assets increased over the year 2017 by $34.8 million due to increases in
share capital and equity reserves by $26.4 million, borrowings and accrued
interest by $20.8 million and other non-current liabilities by $0.7 million
which were offset by an increase in the accumulated deficit by $11.5 million,
principally due to the net loss recorded in the period and a decrease in
current liabilities by $1.6 million.
Property, plant & equipment assets increased during the 12 months ended
December 31, 2017 by $10.3 million which was due to additions of $9.1 million
in Atrush development costs and $8.8 million in capitalised borrowing net of
$7.6 million in depletion costs. The increase in intangible assets by $112
thousand during the year 2017 resulted from net additions of $104 thousand and
$16 thousand in capitalised borrowing costs net of $8 thousand in amortisation
and revaluation of foreign currency item. Loans and receivables increased by
$23.6 million from accruing $14.0 million of accounts receivables on Atrush oil
sales, funding $7.2 million of Feeder Pipeline costs and $3.7 million of the
KRG’s share of development costs, and accruing interest of $1.5 million on the
outstanding loan balances, net of $0.2 million Atrush Exploration Cost
Receivables collected and $2.6 million of loans amounts due from the KRG which
were offset against amounts owed to the KRG.
Consolidated Cash Flow Statement
(Audited, expressed in thousands of United States Dollars)
For the year ended
December 31,
2017 2016
--------------------------------------------------------------------------------
Operating activities
Loss for the year (11,499) (9,156)
Adjustments for:
Interest expense on borrowings – net 12,089 5,518
Depreciation, depletion and amortisation expense 7,654 45
Foreign exchange loss 102 -
Share based payments expense 11 249
Unwinding discount on decommissioning provision 4 68
Actuarial (loss) / gain on pension plan (13) 15
Interest income (1,649) (484)
Changes in pension liability 37 (18)
Changes in other current assets 12 (24)
Changes in current tax liabilities - (31)
Changes in accounts payable and accrued expenses (1,607) (3,126)
Changes in accounts receivables on Atrush oil sales (13,957) -
Net cash outflows to operating activities (8,816) (6,944)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investing activities
Loans and receivables – payments received 2,806 -
Interest received on cash deposits 107 44
Purchases of intangible assets (82) (7)
Purchase of property, plant and equipment (8,621) (32,073)
Loans and receivables – payments issued (10,914) (4,769)
Net cash outflows to investing activities (16,704) (36,805)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financing activities
Proceeds from shares issued 27,281 -
Share issue related transaction costs (922) -
Proceeds from shares issued - 17,000
Bond transaction costs - (777)
Net cash inflows from financing activities 26,359 16,223
--------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash 1 21
equivalents
--------------------------------------------------------------------------------
Change in cash and cash equivalents 840 (27,505)
Cash and cash equivalents, beginning of the year 4,416 31,921
Cash and cash equivalents, end of the year 5,256 4,416
--------------------------------------------------------------------------------
The increase by $0.8 million in the cash position of the Company in 2017 was
due to cash inflows of $26.4 million in net proceeds from the sale of the
Company’s shares in a private placement completed in January 2017, $6.7 million
from operating activities after G&A and other cash expenses, and $2.8 million
of loan repayments which were offset by negative cash adjustments of $15.5
million on accounts receivables, payables and other working capital items, and
cash outflows of $8.7 million on Atrush development activities and $10.9
million on loans provided to the KRG.
OTHER
This information in this release is subject to the disclosure requirements of
ShaMaran Petroleum Corp. under the EU Market Abuse Regulation and the Swedish
Securities Market Act. This information was publicly communicated on March 9,
2018 at 23:30 Central European 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. 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Chris Bruijnzeels
President and CEO
ShaMaran Petroleum Corp.
+41 22 560 8605
chris.bruijnzeels@shamaranpetroleum.com
Sophia Shane
Corporate Development
ShaMaran Petroleum Corp.
+1 604 689 7842
sophias@namdo.com
www.shamaranpetroleum.com
Robert Eriksson
Investor Relations, Sweden
ShaMaran Petroleum Corp.
+46 701 112615
reriksson@rive6.chVANCOUVER, BRITISH COLUMBIA - ShaMaran Petroleum Corp. ("ShaMaran" or the
"Company") (TSX VENTURE: SNM) (OMX: SNM) is pleased to announce its financial
and operating results for year ended December 31, 2017. Unless otherwise stated
all currency amounts indicated as “$” in this news release are expressed in
thousands of United States dollars.
Chris Bruijnzeels, President and CEO of ShaMaran, commented “2017 was a
defining year for ShaMaran with start of production in July 2017. I am
encouraged by the production performance and the continued payments from the
Kurdistan Regional Government which will allow us to continue investing in
Atrush and work towards defining the next phase of development.”
HIGHLIGHTS AND DEVELOPMENTS
Operations
-- Oil production on the Atrush Block commenced in July 2017. Average
production in the fourth quarter of 2017 was 21,700 barrels of oil per day
(“bopd”). To address certain production constraints the facilities were
shut down in the beginning of October. These constraints have now
successfully been resolved. In winter months the Atrush Production
Facilities are limited to processing approximately 27,000 bopd of the total
30,000 bopd capacity due to low ambient temperatures which reduces the
amount of heat otherwise available to process the oil to export
specifications.
-- 3.4 million barrels of oil
were produced and exported from Atrush for sale to the
Kurdistan Regional Government (“KRG”)
during the second half of 2017
resulting in an average production of 18.1 thousand barrels per day. The
Company’s entitlement share1
of 2017 exports was approximately 400 thousand barrels which were sold
at an average netback pric
e2
of $44.38 per barrel of oil. In the fourth quarter of 2017 oil was
exported and sold from Atrush
totalling 2.0 million barrels. The Company’s entitlement share of fourth
quarter exports was approximately 295 thousand barrels which were sold
at an average netback pric
e of $47.0 per barrel of oil.
-- The Company’s cash inflows from Atrush related activities are comprised of
three elements:
-- Entitlement share of Atrush PSC profit oil and cost oil: from
commencement of exports in July 2017 u
p to the date of the MD&A the Company has received payments totalling
$8.5 million which reflect its entitlement share of the $44.2 million in
total payments received by the Atrush Non-Government Contractors from
the KRG for July through November 2017 oil sales.
-- Atrush Exploration Costs receivable: over this same period the Company
collected a further $458 thousand of Atrush Exploration Cost receivables
from the KRG’s entitlement share of July through November 2017 oil
sales.
-- The Atrush Development Cost Loan and the Atrush Feeder Pipeline Cost
Loan (“the KRG Loans”),
In January 2018 the
Non-Government Contractors and the KRG agreed that substantially all the
first two instalments on the KRG Loans, which were due in November and
December of 2017, would be offset against amounts owed to the KRG for
security services which they provided for the Atrush operations, and an
Atrush production bonus. The KRG Loan balances collected by the Company
under the agreement was $2.6 million.
January 2018 and subsequent invoices are expected to be paid in line
with the current practice for crude oil sales payments. The January 2018
invoice is therefore expected to be paid in April 2018.
-- The Chiya Khere-7 (“CK-7”) well, which was spudded on September 17, 2017
reached a final depth of 1,861 metres in early November 2017. The reservoir
section was encountered approximately 114 metres shallower than prognosis
which had a positive impact of the Company’s 2P reserves reported as at
December 31, 2017. The well was drilled on time and under budget.
-- In February 2018 a new sales agreement was concluded between the Atrush
Non-Government Contractors and the KRG for the sale of Atrush oil whereby
the KRG will buy oil exported from the Atrush field by pipeline at the
Atrush block boundary based upon the Dated Brent oil price minus $15.73
($16.04 under the previous agreement) for quality discount and all local
and international transportation costs. This discount is based on the same
principles as other oil sales agreements in the Kurdistan Region of Iraq
and reflects a better API gravity than was assumed in the previous sales
agreement.
Corporate
-- On January 30, 2017 the Company completed the issue of 360 million common
shares of ShaMaran on a private placement basis (the “Private Placement”)
at a price per share of CAD 0.10 (equal to SEK 0.67) which resulted in
gross proceeds to the Company of $27.3 million ($26.4 million net of
transaction related costs). Zebra Holdings and Investments SARL, Lorito
Holdings SARL and Lundin Petroleum BV, the Company’s major shareholders,
subscribed for 43,463,618 shares, 16,984,621 shares and 17,800,000 shares,
respectively, in the Private Placement.
-- On
February 15, 2018 the Company reported estimated reserves and contingent
resources for the Atrush field as at December 31, 2017. Total Field Proven
plus Probable (“2P”) Reserves on a property gross basis for Atrush
increased from 85.1 MMbbl reported as at December 31, 2016 to 102.7 MMbbl
which, when 2017 Atrush production of 3.4 MMbbl is included, represents an
increase of 25 percent. Total Field Unrisked Best Estimate Contingent Oil
Resources (“2C”)3
on a property gross basis for Atrush was approximately the same as the 2016
estimate at 296 MMbbl. Total discovered oil in place in the Atrush Block is
a low estimate of 1.5 billion barrels,
a best estimate of 2.1 billion barrels and
a high estimate of 2.9 billion barrels.
OUTLOOK
Operations
-- Production guidance for Atrush gross in 2018 is 25,000 to 30,000 bopd
with lifting costs for the year forecasted at $6.8/bbl.
-- Capital expenditure
guidance
is
$1
9.6
million
(20.1% working interest in Atrush) which includes
:
-- identify and install additional heat sources ahead of the next winter
months;
-- continue with program to identify debottleneck opportunities to further
increase production capacity beyond 30,000 bopd;
-- testing and completion of the CK-7 well;
-- install the CK-7 flow line and bring CK-7 into production;
-- drilling, testing and completion of
Chiya Khere
(“CK-10”), a sixth development well;
-- drilling and completion of
Chiya Khere
(“CK-9”), a dedicated water disposal well; and
-- conducting extended testing of the CK-6 well which is located on the
eastern side of the Atrush Block and which is outside the 2P reserve area
of Atrush. This would involve the installation of temporary production
facilities near the Chamanke–C well pad and the delivery by truck of oil to
the main Phase 1 Production Facilities.
-- Following the results of the CK-7 and CK-10 wells, the extended well
testing in CK-6 and sustained production from the Phase 1 Production
Facilities the Company expects to further assess the significant
undeveloped Atrush resource base with the potential to grow organically to
approximately 100,000 bopd production.
1. The Company’s entitlement share includes an adjustment for the exploration
cost sharing arrangement between TAQA and GEP.
2. This includes a discount to Dated Brent for oil quality and all local and
international transportation costs.
3. 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 AND OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017
Oil production commenced on July 3, 2017 from the Atrush Block located in the
Kurdistan Region of Iraq and work continued on the Atrush development program
throughout the year 2017.
Financial Results
The Company has reported in 2017 a net loss of $11.5 million which was
primarily driven by finance cost, the substantial portion of which was expensed
borrowing costs on the Company’s bonds, and routine general and administrative
expenses. These charges have been offset by the gross margin on Atrush oil
sales, interest income on Atrush cost loans and interest on cash held in short
term deposits.
Statement of Comprehensive Income
(Audited, expressed in thousands of United States Dollars)
For the year ended
December 31,
2017 2016
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Revenues 17,689 -
Cost of goods sold:
Lifting costs (5,547) -
Other costs of production (834) -
Depletion (7,628) -
--------------------------------------------------------------------------------
Gross margin on oil sales 3,680 -
Service fee income - 120
Share based payments expense (11) (249)
Depreciation and amortisation expense (26) (45)
General and administrative expense (4,511) (3,811)
Loss from operating activities (868) (3,985)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finance income 1,649 484
Finance cost (12,195) (5,586)
--------------------------------------------------------------------------------
Net finance cost (10,546) (5,102)
--------------------------------------------------------------------------------
---------
Loss before income tax expense (11,414) (9,087)
Income tax expense (85) (69)
--------------------------------------------------------------------------------
Loss for the year (11,499) (9,156)
--------------------------------------------------------------------------------
Other comprehensive income
Items that may be reclassified to profit or loss: 31 22
Currency translation differences
Items that will not be reclassified to profit or loss:
Actuarial (loss) / gain on defined pension plan (13) 15
--------------------------------------------------------------------------------
Total other comprehensive income 18 37
--------------------------------------------------------------------------------
Total comprehensive loss for the year (11,481) (9,119)
--------------------------------------------------------------------------------
Consolidated Balance Sheet
(Audited, expressed in thousands of United States Dollars)
As at December 31,
2017 2016
----------------------------------------------------------------
----------------------------------------------------------------
Assets
Non-current assets
Property, plant and equipment 184,921 174,658
Intangible assets 89,119 89,007
Loans and receivables 44,696 46,114
318,736 309,779
----------------------------------------------------------------
----------------------------------------------------------------
Current assets
Loans and receivables 32,277 7,252
Cash and cash equivalents, unrestricted 3,094 4,416
Cash and cash equivalents, restricted 2,162 -
Other current assets 212 224
37,745 11,892
----------------------------------------------------------------
Total assets 356,481 321,671
----------------------------------------------------------------
----------------------------------------------------------------
Liabilities and equity
Current liabilities
Borrowings 185,692 -
Accounts payable and accrued expenses 4,827 6,434
Accrued interest expense on bonds 2,799 2,503
193,318 8,937
----------------------------------------------------------------
----------------------------------------------------------------
Non-current liabilities
Provisions 9,427 8,869
Pension liability 1,781 1,670
Borrowings - 165,129
11,208 175,668
----------------------------------------------------------------
Total liabilities 204,526 184,605
----------------------------------------------------------------
Equity
Share capital 637,538 611,179
Share based payments reserve 6,495 6,484
Cumulative translation adjustment (30) (61)
Accumulated deficit (492,048) (480,536)
----------------------------------------------------------------
Total equity 151,955 137,066
----------------------------------------------------------------
Total liabilities and equity 356,481 321,671
----------------------------------------------------------------
Total assets increased over the year 2017 by $34.8 million due to increases in
share capital and equity reserves by $26.4 million, borrowings and accrued
interest by $20.8 million and other non-current liabilities by $0.7 million
which were offset by an increase in the accumulated deficit by $11.5 million,
principally due to the net loss recorded in the period and a decrease in
current liabilities by $1.6 million.
Property, plant & equipment assets increased during the 12 months ended
December 31, 2017 by $10.3 million which was due to additions of $9.1 million
in Atrush development costs and $8.8 million in capitalised borrowing net of
$7.6 million in depletion costs. The increase in intangible assets by $112
thousand during the year 2017 resulted from net additions of $104 thousand and
$16 thousand in capitalised borrowing costs net of $8 thousand in amortisation
and revaluation of foreign currency item. Loans and receivables increased by
$23.6 million from accruing $14.0 million of accounts receivables on Atrush oil
sales, funding $7.2 million of Feeder Pipeline costs and $3.7 million of the
KRG’s share of development costs, and accruing interest of $1.5 million on the
outstanding loan balances, net of $0.2 million Atrush Exploration Cost
Receivables collected and $2.6 million of loans amounts due from the KRG which
were offset against amounts owed to the KRG.
Consolidated Cash Flow Statement
(Audited, expressed in thousands of United States Dollars)
For the year ended
December 31,
2017 2016
--------------------------------------------------------------------------------
Operating activities
Loss for the year (11,499) (9,156)
Adjustments for:
Interest expense on borrowings – net 12,089 5,518
Depreciation, depletion and amortisation expense 7,654 45
Foreign exchange loss 102 -
Share based payments expense 11 249
Unwinding discount on decommissioning provision 4 68
Actuarial (loss) / gain on pension plan (13) 15
Interest income (1,649) (484)
Changes in pension liability 37 (18)
Changes in other current assets 12 (24)
Changes in current tax liabilities - (31)
Changes in accounts payable and accrued expenses (1,607) (3,126)
Changes in accounts receivables on Atrush oil sales (13,957) -
Net cash outflows to operating activities (8,816) (6,944)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Investing activities
Loans and receivables – payments received 2,806 -
Interest received on cash deposits 107 44
Purchases of intangible assets (82) (7)
Purchase of property, plant and equipment (8,621) (32,073)
Loans and receivables – payments issued (10,914) (4,769)
Net cash outflows to investing activities (16,704) (36,805)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financing activities
Proceeds from shares issued 27,281 -
Share issue related transaction costs (922) -
Proceeds from shares issued - 17,000
Bond transaction costs - (777)
Net cash inflows from financing activities 26,359 16,223
--------------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash 1 21
equivalents
--------------------------------------------------------------------------------
Change in cash and cash equivalents 840 (27,505)
Cash and cash equivalents, beginning of the year 4,416 31,921
Cash and cash equivalents, end of the year 5,256 4,416
--------------------------------------------------------------------------------
The increase by $0.8 million in the cash position of the Company in 2017 was
due to cash inflows of $26.4 million in net proceeds from the sale of the
Company’s shares in a private placement completed in January 2017, $6.7 million
from operating activities after G&A and other cash expenses, and $2.8 million
of loan repayments which were offset by negative cash adjustments of $15.5
million on accounts receivables, payables and other working capital items, and
cash outflows of $8.7 million on Atrush development activities and $10.9
million on loans provided to the KRG.
OTHER
This information in this release is subject to the disclosure requirements of
ShaMaran Petroleum Corp. under the EU Market Abuse Regulation and the Swedish
Securities Market Act. This information was publicly communicated on March 9,
2018 at 23:30 Central European 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. 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Chris Bruijnzeels
President and CEO
ShaMaran Petroleum Corp.
+41 22 560 8605
chris.bruijnzeels@shamaranpetroleum.com
Sophia Shane
Corporate Development
ShaMaran Petroleum Corp.
+1 604 689 7842
sophias@namdo.com
www.shamaranpetroleum.com
Robert Eriksson
Investor Relations, Sweden
ShaMaran Petroleum Corp.
+46 701 112615
reriksson@rive6.ch |