CALGARY,
April 12, 2013 /CNW/ - Sea Dragon
Energy Inc. ("Sea Dragon" or the "Company") (TSXV: SDX) is pleased
to announce its financial and operating results for the three
months and year ended December 31,
2012. All dollar values are expressed in United States dollars unless otherwise
stated.
2012 Highlights:
- Increased oil sales during the last three months of 2012 by 28%
to 1273 bopd as compared to 991 bopd during the same period in
2011
- Increased Netbacks during the last three months of 2012 by 43%
to $5.3MM ($45.09/bbl) as compared to $3.7MM($40.75/bbl)
during the same period in 2011
- Reduced 2012 G&A costs by 22% to $4.7MM from $6.0MM
in 2011
- Completed the acquisition of National Petroleum Company
Shukheir Marine Ltd. ("NPC SHM") as of December 1st.2012, thus adding circa
500 bopd from the Shukheir Bay and Gamma oil fields in the Gulf of
Suez
- Exited the year with production of 1665 bopd, cash and cash
equivalents of $5.7MM and working
capital of $6.6 MM and no net
debt
- Realized a net loss of $28.1MM,
due to an impairment loss on the Company's Kom Ombo asset.
Subsequent to year-end:
- Production is currently 1911 boepd
- Collected $6.2MM in outstanding
accounts receivable, thus reducing the Company's receivables to
$3.5MM, equating to two months of
production
- Paid back $1.0MM of debt, with a
current cash balance of $5.1MMand
nill net debt
- Successfully completed the AASE#14 well as a Kareem Formation
producer in NW Gemsa initially contributing 1333 boepd of new
production
- Successfully drilled the AASE#16 well as a new Kareem Formation
water injector
- Finalized the West Al Baraka Development Lease and placed the
West Al Baraka#2 well on extended production testing
- Completed the gas conservation project in the NW Gemsa
concession with condensate, NGL and sales gas commencing in
February, 2013 and adding some 180boepd of net production
- During the first quarter of 2013 additional testing results
from West Al Baraka field were significantly lower than
anticipated. These results are an indicator of impairment for
the Kom Ombo concession and as a result the carrying amount will be
tested for impairment in the subsequent period.
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Three months
ended |
Twelve months
ended |
|
|
December 31 |
December 31 |
$000's except per unit amounts |
|
2012 |
|
2011 |
2012 |
|
2011 |
|
|
|
|
|
|
|
|
Financial |
|
|
|
|
|
|
|
Oil sales |
|
12,353 |
|
9,527 |
44,998
|
|
41,901 |
Royalties |
|
(6,496) |
|
(4,713) |
(23,804) |
|
(21,407) |
Operating costs |
|
(578) |
|
(1,100) |
(3,680) |
|
(3,007) |
Netback (1) |
|
5,279 |
|
3,714 |
17,514 |
|
17,487 |
|
|
|
|
|
|
|
|
Net loss |
|
(6,447) |
|
(14,389) |
(28,108) |
|
(12,838) |
Cash and cash equivalents |
|
5,658 |
|
6,125 |
5,658 |
|
6,125 |
Cash and cash equivalents plus working capital |
|
6,645 |
|
11,939 |
6,645 |
|
11,939 |
Total assets |
|
52,006 |
|
75,663 |
52,006 |
|
75,663 |
Debt |
|
3,000 |
|
3,000 |
3,000 |
|
3,000 |
Shareholders' equity |
|
41,250 |
|
68,877 |
41,250 |
|
68,877 |
Capital expenditures |
|
1,358 |
|
1,892 |
8,355 |
|
8,024 |
Weighted average outstanding shares |
|
376,459 |
|
376,459 |
376,459 |
|
376,459 |
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|
Drilling |
|
|
|
|
|
|
|
Gross wells (number of wells) |
|
1 |
|
2 |
10 |
|
9 |
Success rate (%) |
|
100 |
|
100 |
80 |
|
89 |
|
|
|
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|
Net wells (number of wells) |
|
0.1 |
|
0.2 |
2.6 |
|
2.1 |
Success rate (%) |
|
100 |
|
100 |
62 |
|
76 |
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Company Gross Reserves
(2) |
|
|
|
|
|
|
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Proved |
|
|
|
|
|
|
|
|
Natural gas (mmcf) |
|
2,532 |
|
2,664 |
2,532 |
|
2,664 |
|
Oil and liquids (mbbl) |
|
3,370 |
|
3,815 |
3,370 |
|
3,815 |
|
Total oil equivalent (mboe) |
|
3,792 |
|
4,259 |
3,792 |
|
4,259 |
|
|
|
|
|
|
|
- |
Proved plus probable |
|
|
|
|
|
|
- |
|
Natural gas (mmcf) |
|
3,897 |
|
3,839 |
3,897 |
|
3,839 |
|
Oil and liquids (mbbl) |
|
5,894 |
|
6,608 |
5,894 |
|
6,608 |
|
Total oil equivalent (mboe) |
|
6,544 |
|
7,248 |
6,544 |
|
7,248 |
|
|
|
|
|
|
|
- |
Proved plus probable plus
possible |
|
|
|
|
|
|
- |
|
Natural gas (mmcf) |
|
3,988 |
|
3,940 |
3,988 |
|
3,940 |
|
Oil and liquids (mbbl) |
|
6,993 |
|
8,829 |
6,993 |
|
8,829 |
|
Total oil equivalent (mboe) |
|
7,658 |
|
9,486 |
7,658 |
|
9,486 |
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Three months ended |
|
Twelve months ended |
|
December 31 |
|
December 31 |
$000's except per unit amounts |
2012 |
2011 |
|
2012 |
2011 |
Net present value of future
cash flows after tax ($000's) (3) |
|
|
|
|
- |
Proved |
|
|
|
|
- |
5% discount rate |
45,015 |
56,630 |
|
45,015 |
56,630 |
10% discount rate |
38,433 |
46,856 |
|
38,433 |
46,856 |
15% discount rate |
33,499 |
39,883 |
|
33,499 |
39,883 |
|
|
|
|
|
- |
Proved plus probable |
|
|
|
|
- |
5% discount rate |
77,290 |
97,327 |
|
77,290 |
97,327 |
10% discount rate |
62,115 |
73,336 |
|
62,115 |
73,336 |
15% discount rate |
51,593 |
57,194 |
|
51,593 |
57,194 |
|
|
|
|
|
- |
Proved plus probable plus possible |
|
|
|
|
- |
5% discount rate |
105,255 |
148,252 |
|
105,255 |
148,252 |
10% discount rate |
82,754 |
109,300 |
|
82,754 |
109,300 |
15% discount rate |
67,259 |
83,389 |
|
67,259 |
83,389 |
|
|
|
|
|
- |
Reserve life index (years)
(4) |
|
|
|
|
- |
Proved |
8.2 |
11.8 |
|
8.2 |
12 |
Proved plus probable |
14.1 |
20.0 |
|
14.1 |
20 |
(1) Netback is a
non-GAAP measure that represents sales net of all operating
expenses and government royalties.
Management believes that netback is a useful supplemental
measure to analyze operating performance and provide
an indication of the results generated by the Company's
principal business activities prior to the consideration of
other
income and expenses. Management considers netbacks an important
measure as it demonstrates the Company's
profitability relative to current commodity prices. Netback may
not be comparable to similar measures used by other
companies. |
(2) Company gross
reserves are gross working interest reserves before the deduction
of royalties as determined
by the Company's independent reserves evaluators. |
(3) As determined
by Ryder Scott, the Company's independent reserves evaluators.
Estimated values of future net
revenue disclosed do not represent fair market
values. |
(4) Calculated by dividing the
Company's gross reserves by the 2012 fourth quarter production
rate |
(5) Disclosure
provided herein in respect of BOEs may be misleading, particularly
if used in isolation. A BOE
conversion ratio of 6 Mcf: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. |
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CEO's Message:
In 2012, the Company closed on the acquisition
of the shallow offshore Shukheir Marine concession in the prolific
Gulf of Suez area in Egypt, thus
adding circa 500 bopd to its production from the Shukheir Bay and
Gamma fields, with significant upside potential once we firm up new
drillable loctions. With the capital markets remaining difficult,
the Company was able to conclude this acquisition with a cash
consideration of only $250,000 after
working capital adjustments.
The following highlights the results of our 2012
activities,
- Exited the year with production of 1665 bopd compared to 1012
bopd in December, 2011
- Reduced 2012 G&A costs by 22%
- Exited the year with cash and cash equivalent of $5.7 million and no net debt.
Through the use of its existing cash flows, the
Company continued to exploit its reserves in the NW Gemsa and Kom
Ombo concessions. The Company participated in the drilling of 10
wells with a success ratio of 80%. As well, the solution gas
conservation and hydrocarbon extraction project in NW Gemsa was
completed and gas and liquids sales commenced in February 2013 adding to the peak production being
almost double over a 1-year period.
In 2013, the Company intends to continue to
consolidate its reserve and production base in Egypt through exploration and appraisal
drilling of existing properties, the acquisition of new properties
and participation in concession bid rounds. The recently acquired
Shukheir Marine concession holds significant upside potential which
is currently being evaluated for future appraisal.
The Company is also continuing to search for
attractive acreage in Africa,
which could add significantly to the Company's resources and
reserves, and contribute towards its diversification strategy.
Year in Review:
North West Gemsa
The 2012 activity was directed towards continued
development/appraisal drilling and waterflood expansion. The
program was successful with six wells drilled and completed, four
producers and two injectors. Two additional wells have, thus
far, been drilled in 2013.
Production averaged 8674 bopd in 2012 (867 net
to Sea Dragon) and is currently averaging 11200 boepd (1120 net to
Sea Dragon, including 120 boepd of gas and liquids).
Cumulative oil production from the Concession has now exceeded 10.9
million barrels. Water injection which began in 2011 in the
Al Amir SE field was expanded to include the Geyad field in
January 2012, with a continued
positive pressure response to water injection being observed in
several wells. The netback for NW Gemsa for 2012 is $25.5 per barrel.
The NW Gemsa year-end independent reserves
report supports the Company's Gross Proven and Proved plus Probable
reserves of 3.23 and 4.96 million barrels of oil equivalent,
respectively.
The Company's $3.0MM capital expenditure program for 2013
includes, but is not limited to, the drilling of two development
wells, three water injection wells, and completing the gas
compression facilities.
Kom Ombo
In 2012 the Company's exploration commitments
were fulfilled, with the West Al Baraka Development lease receiving
Government approval in January 2013
following the drilling of the West Al Baraka-2 discovery
well. The Kom Ombo concession generated netbacks of
$39.0 per barrel.
Gross production averaged 490 bopd in 2012 (245
bopd net to Sea Dragon) with current rates averaging 378 bopd gross
(189 bopd net to Sea Dragon).
The Kom Ombo year-end independent reserves
report estimates Company Gross Proven and Proved plus Probable
reserves of 0.38 and 1.29 million barrels of oil, respectively. The
Company's $0.5 million capital
expenditure program for 2013 is covering the monitoring of
production performance of the West Al Baraka-2 well.
Shukheir Marine
Effective December 1,
2012, the Company acquired all of the issued and outstanding
shares of National Petroleum Company Shukheir Marine Limited.
The acquired assets include a 100% participating interest in the
Shukheir Marine Concession which contains the Shukheir Bay and
Gamma oil fields, both located in the shallow offshore Gulf of
Suez, 300 Km SE of Cairo.
In December 2012,
the Company installed a new water injection pump to replace the
previous rental unit and in February
2013 a workover was successfully completed on the SHB-5
producer to replace a corroded tubing string, with production being
restored at previous levels.
Production in 2012 averaged 486 bopd. The
Shukheir Marine concession generated netbacks of $26.85 per barrel in December 2012.
The Shukheir Marine year-end independent
reserves report supports Company Gross share of Proved and Proved
plus Probable reserves of 0.18 and 0.30 million barrels of oil
equivalent, respectively.
The Company's $0.5MM capital expenditure program for 2013
includes minor fixed asset expenditures and well performance
monitoring and stimulation plans.
Reserves:
Reserve estimates have been calculated in
compliance with the National Instrument 51-101 Standards of
Disclosure ("NI 51-101"). Under NI 51-101, proved reserves
are defined as reserves that can be estimated with a high degree of
certainty to be recoverable with a target of a 90 percent
probability that the actual reserves recovered over time will equal
or exceed proved reserve estimates, while probable reserves are
defined as having an equal (50%) probability that the actual
reserves recovered will equal or exceed the proved and probable
reserve estimates. In accordance with NI 51-101, proved
undeveloped reserves have been recognized in cases where plans are
in place to bring the reserves on production within a short, well
defined time frame. Proved undeveloped reserves often involve
infill drilling into existing pools. Of the net present value of
the Company's reserves, 100 percent were evaluated by an
independent third party engineer, Ryder Scott Company Canada
("Ryder Scott") in their report dated February 21, 2013.
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Total |
|
|
Proved Plus |
Company gross reserve reconciliation (mboe) |
|
Proved |
|
|
Probable |
December 31, 2011 Reserves (mboe) |
|
4,259 |
|
|
7,248 |
2012 Production (mbbl) |
|
(410) |
|
|
(410) |
Net Additions (mboe) |
|
(879) |
|
|
(1,111) |
December 31, 2012 Reserves (mboe) |
|
3,792 |
|
|
6,544 |
Year over year increase (decrease) in reserves |
|
-11% |
|
|
-10% |
Production replacement |
|
-214% |
|
|
-271% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company gross reserves |
|
Natural Gas |
|
Liquids |
|
Oil |
|
Total |
Reserves Category |
|
(mmcf) |
|
(mbbls) |
|
(mbbls) |
|
(mboe) |
Proved: |
|
|
|
|
|
|
|
|
|
Proved Producing |
|
1,280 |
|
87 |
|
1,817 |
|
2,117 |
|
Undeveloped |
|
1,252 |
|
85 |
|
1,381 |
|
1,675 |
Total Proved |
|
2,532 |
|
172 |
|
3,198 |
|
3,792 |
Probable |
|
1,365 |
|
92 |
|
2,432 |
|
2,752 |
Total Proved Plus Probable |
|
3,897 |
|
264 |
|
5,630 |
|
6,544 |
Possible |
|
91 |
|
7 |
|
1,092 |
|
1,114 |
Total Proved Plus Probable Plus Possible |
|
3,988 |
|
271 |
|
6,722 |
|
7,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net present value after income
tax ($000's) |
Discount Factor |
Reserves Category |
0% |
|
5% |
|
10% |
|
15% |
Proved: |
|
|
|
|
|
|
|
|
Proved Producing |
30,496 |
|
27,073 |
|
24,459 |
|
22,399 |
|
Undeveloped |
23,588 |
|
17,941 |
|
13,975 |
|
11,100 |
Total Proved |
54,084 |
|
45,015 |
|
38,433 |
|
33,499 |
Probable |
46,260 |
|
32,276 |
|
23,682 |
|
18,095 |
Total Proved Plus Probable |
100,344 |
|
77,290 |
|
62,115 |
|
51,593 |
Possible |
39,083 |
|
27,964 |
|
20,639 |
|
15,665 |
Total Proved Plus Probable Plus Possible |
139,427 |
|
105,255 |
|
82,754 |
|
67,259 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves and Netbacks |
|
Proved |
|
Proved
Plus
Probable |
Capital expenditures ($000's) |
|
8,355 |
|
8,355 |
Change in future development
costs |
|
2,197 |
|
(9,718) |
Total costs |
|
10,552 |
|
(1,363) |
|
|
|
|
|
Net additions (mboe) excluding
acquisitions |
|
(467) |
|
(705) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 Netback ($/bbl) |
|
39.85 |
|
39.85 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value |
|
|
2012 |
|
2011 |
Net present value of oil and gas reserves, discounted at 10%,
after income tax |
|
|
$ |
62,115 |
|
$ |
73,336 |
Working capital |
|
|
$ |
6,143 |
|
$ |
11,939 |
Net asset value |
|
|
$ |
68,258 |
|
$ |
85,275 |
Shares outstanding (000's) |
|
|
|
376,459 |
|
|
376,459 |
Net asset value per share |
|
|
$ |
0.18 |
|
$ |
0.23 |
|
|
|
|
|
|
|
|
The disclosures required in accordance with
National Instrument 51‐101 of the Canadian Securities
Administrators will be available in the Company's Annual
Information Form to be filed on the SEDAR website at
www.sedar.com.
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 2013 drilling and capital expenditure
programs of the NW Gemsa, Kom Ombo and Shukheir Marine 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, 2012 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.
A "boe" conversion ratio of 6 Mcf of natural
gas = 1 barrel of oil has been used and is based on the standard
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead.
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.
SOURCE Sea Dragon Energy Inc.