CALGARY, Aug. 23, 2012 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon"
or the "Company") is pleased to announce its 2012 second quarter
financial and operating results (the "Quarter"). All
dollar values are expressed in United States dollars unless
otherwise stated. Highlights: -- Achieved an average production
rate of 1,147 bopd as compared to 1,094 bopd in the second quarter
of 2011; -- Funds flow from operations for the Quarter of ($0.2)
million compared to $0.4 million in the first quarter of 2012 and
$0.9 million in the second quarter of 2011, mostly due to some
payment delays reflected in increased working capital needs, which
was offset subsequent to the Quarter end as indicated below; Net
loss for the Quarter was ($1.4) million compared to ($0.8) million
in the first quarter of 2012 and ($0.1) million in the second
quarter of 2011. -- Operating costs for the Quarter were $8.36/bbl
compared to $13.64/bbl in the first quarter of 2012 and $10.63/bbl
in the second quarter of 2011. -- Generated netbacks of $39.25/bbl
in the Quarter, compared to $41.93/bbl in the first quarter of 2012
and $38.68/bbl in the second quarter of 2011. -- Exited the Quarter
with cash and cash equivalents of $7.2 million and working capital
of $7.1 million, and $7.4 million of debt; Subsequent: --
Subsequent to Quarter end the Company collected $3.0 million in
outstanding accounts receivable. This is a substantial improvement
over the first quarter of 2012. -- Subsequent to the Quarter, the
Company repaid $4.4 million of their tranche B facility. FINANCIAL
& OPERATING HIGHLIGHTS The following table provides a summary
of Sea Dragon's financial and operating results for the three and
six months ended June 30, 2012 and 2011 and the three months ended
March 31, 2012. Consolidated financial statements with Management's
Discussion and Analysis ("MD&A") are now available on the
Company's website at www.seadragonenergy.com and on SEDAR at
www.sedar.com. Prior Quarter Three months Six months Fiscal Year
(1) ended June 30 ended June 30 2012 2011 2012 2011 Financial
$000's Cash, end of 4,285 7,179 10,027 7,179 10,027 period Working
8,077 7,197 13,988 7,197 13,988 capital Funds from 397 (213) 948
184 2,958 operations per share 0.00 0.00 0.00 0.01 (0.00) Net
Income/ (786) (1,377) (78) (2,163) 409 (Loss) per share (0.00)
(0.01) 0.00 (0.00) (0.00) Capital 1,955 3,140 1,626 5,095 4,540
expenditures Total assets 76,876 78,604 86,098 78,604 86,098
Shareholders' 68,289 67,061 81,698 67,061 81,698 equity Common
shares outstanding 376,459 376,459 376,459 376,459 376,459 (000's)
Warrants outstanding 30,000 30,000 30,000 30,000 30,000 (000's)
Operational Oil sales 1,019 1,147 1,094 1,083 1,135 (bbl/d) Brent
oil 118.47 108.44 116.84 113.42 111.27 price ($/bbl) Realized oil
115.10 103.90 111.77 109.17 105.76 price ($/bbl) Royalties 59.53
56.29 62.46 57.85 54.43 ($/bbl) Operating 13.64 8.36 10.63 10.85
10.05 costs ($/bbl) Netback 41.93 39.25 38.68 40.47 41.28 ($/bbl)
(1) Denotes the three months March 31, 2012. Operations:
NORTH WEST GEMSA CONCESSION During the second quarter of 2012, Sea
Dragon participated in the drilling of one well (0.1 net) in the NW
Gemsa Concession and completion of one additional well. The AASE-11
ST-1 development well was completed and placed on production.
During the quarter, the AASE-12 well was drilled, completed and
placed on production. Water injection in Al Amir SE is
ongoing, with three injection wells at Al Amir SE-7 and Al Amir
SE-8 and Al Amir-10. In the Geyad field injection is provided by
the Geyad-5 well. The NW Gemsa block is located in the Eastern
Desert on the southwest part of the Gulf of Suez and comprises 4
fields: the Al Amir field (undeveloped heavy oil field), the Al
Amir SE field, the Geyad field and the Al Ola field. Current
production from the concession is running steady at around 9100
bopd gross of light crude oil (42 API) (910 bopd net to the
Company). Cumulative oil production is 8.87 MMbbl gross (7.37 MMbbl
from Al Amir/Al Ola and 1.50 MMbbl from Geyad). Sea Dragon
has a 10% working interest in the Concession. NW Gemsa is producing
from the Shagar and Rahmi sands of the Kareem formation.
Potential for additional oil has also been demonstrated in the
Belayim, South Gharib, and Lower Rudeis Formations. Al Amir SE
Field Currently, 10 productive wells and 3 injectors exist at Al
Amir SE. Water is being injected in Al Amir SE-7 and Al Amir
SE-8 and Al Amir SE-10 injectors at a rate of over 18,000
bwpd. AASE-12 ST-1 Well: This development well, located in the
south eastern area of the field, was spud April 25, 2012. The
primary objective was to produce oil from the Shagar and Rahmi
reservoirs and appraise the shallower South Gharib and Belayim
reservoirs. The well was drilled to a total depth of 10,200 feet
and was subsequently sidetracked to the northeast. The sidetrack
was successfully drilled to a final total depth of 10,315 feet,
encountering 15.5 feet of oil pay in the Shagar sand. The Shagar
sand was perforated in the interval 9,669 to 9,684.5 feet and
flowed oil and gas on test at an average rate of 2,595 bopd and
4.7mmscf/d respectively, on a 48/64" choke. The well has now been
placed on production at an initial flow rate of 1,038 bopd. AASE-11
ST-1 Well: This development well encountered 42 feet of oil pay in
the Shagar reservoir and 22 feet in the Rahmi. The well was
successfully completed in the Shagar reservoir in the interval
10,730 feet to 10,780 feet and placed on a production test on April
24, 2012. The well flowed at a maximum rate of 3,500 bopd on a one
inch choke. The well was placed on production at a rate of 1,635
bopd on a half inch choke. The well experienced increased water
cuts shortly into its productive life. A review is ongoing in
order to assess the water source and a means of water shut-off.
Geyad Field Currently there are 3 productive wells and 1 water
injector well in the Geyad field. Water is being injected in
the Geyad-5 at a total rate of 4,000 bwpd, in both the Shagar and
Rahmi zones. North West Gemsa Operations subsequent to the Quarter:
Al Ola-3 Well: This injection well, located in the southern part of
Al Amir SE field known as the Al Ola development lease, was spud on
July 16, 2012. The primary objective of the well is to provide
injection support to the Kareem sands in Al Ola area of the field.
The Shagar and Rahmi sands were cored and the well was
drilled to a total depth of 10,550 ft. The well is
currently being logged. KOM OMBO CONCESSION During the second
quarter of 2012 the Company participated in the drilling of 2 wells
(net 1.0), West AB-2 and AB-16. During the quarter the
company also participated in the recompletion of AB-11. The
Company's 2012 drilling program was launched in March 2012. The
first exploration well, WAB-2, discovered oil in the shallow Abu
Ballas Reservoir. The AB-16 development well, targeting the deeper
Kom Ombo Sands, discovered oil in the Kom Ombo C and was placed on
production. Additionally, the AB-11 well was worked over and
recompleted in the Six Hills "F1" and resumed production. This
concession is located onshore in the southern part of Egypt some
1,000 km south of Cairo. It contains the Al Baraka oilfield,
producing light oil from multiple reservoirs and an exploration
area of 11,400 km². Sea Dragon has a 50% working interest in
the Concession. Production from the Al Baraka field is averaging
approximately 575 bopd (287 bopd net to Sea Dragon). West Al
Baraka-2 Well: The West Al Baraka-2 (WAB-2) exploratory well
discovered oil in the shallow Abu Ballas Formation. The West Al
Baraka structure, the second discovery on the Concession, is
located 9 km to the southwest of the Al Baraka producing oil field.
The Abu Ballas reservoir was selectively perforated in the interval
2,085-2,164 feet and successfully fraced. During clean up the
well tested 170 bopd. The well is currently shut in pending
declaration of commerciality and preparation of a Development Lease
application before being placed on production. Al Baraka 16 Well
(AB-16): This development well was spud on April 30, 2012. The
objective of AB-16 was to appraise the deeper Kom Ombo
"sands". AB-16 was successfully drilled to a total depth of
7,590 feet in the Basement. The well is located on Al Baraka
development lease on a separate fault block, immediately southwest
from the main Al Baraka field and 6 km up dip from the AB SE-1
well. The well encountered oil shows in the Six Hills F1, Kom
Ombo "C "and Kom Ombo "A " sands. Cores were cut in the Six Hills
F1 Kom Ombo "A" and "B". Core analysis and petrophysical
analysis indicate the well discovered 18 ft of oil pay in the Six
Hills F1 and 60 ft in the Kom Ombo C and 4 ft in the Kom Ombo A.
The Kom Ombo "C" was selectively perforated in the interval
6,610-6,767 ft and tested with Nitrogen lift at a rate of up
to 530 bopd with a 11% water cut. Upon placing the well
on production the daily oil rates declined sharply, and water cut
increased significantly. Reasons for the decline are being
investigated. Al Baraka 11 Well (AB-11): Previously this well was
standing as suspended in the Six Hills "E" Formation.
Following the logging of Six Hills F1 oil pay in AB-16, the well
was recompleted and perforated in the Six Hills "F1" interval
3,880-3,939 ft and successfully fraced. The well is currently
contributing 55 bopd to Al Baraka production. Kom Ombo Operations
subsequent to the Quarter: Faris-1 Well The second exploration
commitment well, located 4.5 km south of Al Baraka oilfield was
spud on June 26, 2012 and drilled to a total depth of 6,785 ft. The
primary objective was to test the Kom Ombo Sands involved in a
large faulted structure. The well encountered oil shows in both the
Kom Ombo "C" and "A" sands, however it failed to produce oil on
test and was subsequently plugged and abandoned. Al Baraka 17 Well
(AB-17) This step out well to AB-16 well was spud on July 28,
2012. AB-17 is located approximately 650 m to the south of
AB-16 and was successfully drilled to a total depth of 7,527 m in
the Basement and logged. Oil shows were encountered in the
Six Hills D, Kom Ombo "C" and "A" sands. Petrophysical
analysis indicate the intervals are predominantly water bearing and
the well was plugged and abandoned. Commenting on these latest
results, Company Chairman and CEO, Mr. Said Arrata "The performance
of the NW Gemsa concession is continuing to exceed initial
expectations with the water flooding scheme beginning to show good
results. Although the results of our 2012 drilling campaign
in Kom Ombo were somewhat disappointing, we are encouraged by the
West Al Baraka exploration discovery and its potential for future
development. On the financial front, the company generated funds
flow from operations before evaluation and exploration expense of
$2.3 million for the six months ended June 30, 2012. The Company
was also successful in collecting a significant portion of its
outstanding receivables and repay $4.4 million of debt. The Company
is continuing its efforts in search of economically attractive
growth opportunities." Certain statements contained in this press
release constitute "forward-looking statements" as such term is
used in applicable Canadian and US securities laws. These
statements relate to analyses and other information that are based
upon forecasts of future results, estimates of amounts not yet
determinable and assumptions of management. In particular,
statements concerning the 2012 drilling and capital expenditure
programs of the NW Gemsa and Kom Ombo Concessions and the results
referenced or implied herein should be viewed as forward-looking
statements. Any statements that express or involve discussions with
respect to predictions, expectations, beliefs, plans, projections,
objectives, assumptions or future events or are not statements of
historical fact and should be viewed as "forward-looking
statements". All reserves information contained herein as
well as the net present value of such reserves should be considered
as forward looking statements. Such forward looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Such risks and other factors
include, among others, costs and timing of exploration and
production development, availability of capital to fund exploration
and development and political, social and other risks inherent in
carrying on business in Egypt. There can be no assurance that
such statements will prove to be accurate as actual results and
future events could vary or differ materially from those
anticipated in such statements. Accordingly, readers should
not place undue reliance on forward-looking statements contained in
this news release. Forward-looking statements are made based on
management's beliefs, estimates and opinions on the date the
statements are made and the Corporation undertakes no obligation to
update forward-looking statements and if these beliefs, estimates
and opinions or other circumstances should change, except as
required by applicable law. Although Sea Dragon has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results not to be as anticipated, estimated or
intended. Investors are cautioned that such forward-looking
statements involve risks and uncertainties. Actual results
may differ materially from those currently anticipated. See
Sea Dragon's Annual Information Form for the year ended December
31, 2011 for a description of the risks and uncertainties
associated with the Company's business, including its exploration
activities. The forward-looking statements contained herein are
expressly qualified by this cautionary statement. 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 THE RELEASE.
Sea Dragon Energy Inc. CONTACT: Said ArrataChairman,
CEO and Director(403) 457-5035Tony AntonPresident, COO and
Director(403) 457-5035Olivier SerraChief Financial Officer and
Director+331 5343 9442Brisco Capital Partners Corp.Investor
Relations(403) 262-9888
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