CALGARY,
March 31, 2014 /CNW/ - Stream Oil
& Gas Ltd. (TSX-V: SKO) (the "Company") is pleased to report
its financial and operating results for the year ended November 30, 2013.
2013 Summary of Results
|
Three Months Ended
November 30, |
Year Ended
November 30, |
(US$000s, except as noted) |
2013 |
2012* |
2013 |
2012* |
Financial |
|
|
|
|
Revenue |
9,292 |
8,646 |
35,880 |
31,881 |
Revenue, net of mineral tax
royalty |
8,364 |
7,781 |
32,292 |
28,677 |
Net operating income (loss) |
6,453 |
2,586 |
22,984 |
20,366 |
Funds from (used in)
operations |
(2,849) |
4,566 |
14,309 |
13,339 |
Net income (loss) |
(7,393) |
(2,229) |
(5,495) |
1,975 |
Per share - basic &
diluted |
(0.12) |
(0.03) |
(0.08) |
0.03 |
Additions to property &
equipment |
(6,645) |
5,974 |
15,399 |
29,953 |
Operating |
|
|
|
|
Average production (boed) |
|
|
|
|
Gross production |
1,454 |
1,684 |
1,610 |
1,706 |
Pre-existing
obligations |
574 |
641 |
601 |
687 |
Net production (Stream's
share) |
880 |
1,043 |
1,009 |
1,019 |
Gross average price
($/boed) |
74.63 |
76.40 |
73.68 |
74.81 |
Netback ($/boed) |
52.88 |
48.66 |
50.52 |
50.02 |
|
|
|
|
|
As at |
|
|
Nov. 30,
2013 |
Nov. 30, 2012 |
Cash and cash equivalents |
|
|
1,962 |
1,147 |
Shareholders' equity |
|
|
21,869 |
26,946 |
Weighted average shares outstanding -
basic (#) |
|
66,686,431 |
66,503,921 |
* Restated
to reflect deferred income tax |
|
|
|
The Company had to deal with a challenging business
environment in 2013 related to the newly elected government in
Albania. As part of this change,
the newly elected government, including Albpetrol Sh.A.
("Albpetrol") and the Albanian National Agency for Natural
Resources ("AKBN"), had a transition period that resulted in delays
in resolving key matters related to tax neutralization and the
transfer of the Ballsh-Hekal oilfield to Stream. In late
2013, the new Albanian government confirmed its support for the
Company and has agreed to resolve the outstanding matters in an
expeditious manner, including commencing immediate procedures for
the transfer of the balance of the Ballsh-Hekal oilfield to
Stream.
During the transition period to the newly elected
Government, Stream continued its production operations in the
Cakran-Mollaj, Gorisht-Kocul and Ballsh-Hekal fields.
Concurrently, Stream finalized its preparations for the Delvina gas
field development horizontal drilling, which commenced drilling
activities in March 2014. In
anticipation of the takeover of the remainder of Ballsh-Hekal
field, Stream optimized its detailed plans for takeover and
outstanding matters related to infrastructure assets, leveraging
lessons learnt from prior field takeovers. Stream also completed
upgrades of the export facilities at Petrolifera in Vlore, enabling
it to handle larger cargos. This will allow the Company to
realize higher net revenues in the mid-future.
In March 2013, Stream and
Albpetrol finalized the amending agreements for the neutralization
of the mineral royalty tax, which was imposed and payable by Stream
since 2008. Neutralization is expected to be achieved by a
combination of reducing Stream's future pre-existing production
payments to Albpetrol, providing Albpetrol's share of pre-existing
production volumes to the Company (valued at approximately
$11.4 million) and the turnover of
infrastructure assets. Neutralization is mandated by the
stabilization provisions within the original concession agreements
for Stream's fields. Submitted to the Ministry of
Environment, Technology and Energy ("METE"), the amended agreements
did not receive final ratification since the government suspended
significant decision making in support of the effective governance
framework imposed on Albania by
the European Union ("EU") in light of Albania's imminent entry into EU.
Subsequent to November 30, 2013,
the government engaged with Stream to negotiate obligations between
Stream and Albpetrol regarding outstanding oil royalties and oil
delivered in excess. The final agreement resulted in Stream
recording a net liability of $11.4
million at November 30, 2013.
To significantly offset this obligation, Stream had negotiated a
settlement with Albpetrol in March
2013 to reduce this liability by royalty mineral tax paid,
which at November 30, 2013 was
$9.4 million. This agreement is
awaiting amendments and final ratification.
They have committed to finalize all amendments within 2014,
including timely adjustments to the temporary reversal of the
implementation of the March 2013
amending agreements as agreed upon previously by Albpetrol (see
'Operational Update', 'Liquidity and Capital Resources' and
'Outlook' sections in the Company's 2013 Management's Discussion
and Analysis).
Mid-2013 also saw the ownership change of the local ARMO
refining corporation to an international conglomerate, where METE
continues to be a 15% shareholder. As part of the amending
agreements noted above, Stream is released from the mandatory
supply of Delvina gas to ARMO. This enables the Company to monetize
its gas through thermal power generation. With the expected
unplugging of the Delvina 12 well combined with discharge of the
ARMO provision by Albpetrol/METE, Stream's consumer, Thermo Energy,
will be able to commence sustained generation operations, and thus,
monetization of the Company's gas. The installed power
generation facility was commissioned and tested using the Delvina 4
well gas supply.
2013 Highlights:
- Despite the challenging environment, net production remained
stable averaging 1,009 boed compared to 1,019 boed in 2012.
- Gross revenue increased by 13% to $35.9
million compared to $31.9
million for the corresponding period in 2012 (net
$32.3 million in 2013 compared to
$28.7 million).
- Net operating income increased by 13% to $23.0 million from $20.4
million.
- The Company realized a net loss of $5.5
million compared to net income of $2.0 million in 2012 due in a large part to the
increase in estimate at year-end for the liability to Albpetrol for
oil production. (see 'Albpetrol Sh.A. Oil Production Share' in the
Company's 2013 Management's Discussion and Analysis).
- Commissioned and started-up upgraded oil export facilities,
which will allow the Company to capture higher revenues from export
sales.
- Executed a gas sales contract for the sale of up to 6.5 MMcf/d
natural gas from Delvina.
- Supported Thermo Energy in finalizing the installation of their
power generation equipment.
- Installed Stream's gas re-injection facilities in the Delvina
gas field in preparation for gas production from the Delvina D12
vertical and the D34H1 horizontal wells.
- Completed preparatory work for the drilling of the Delvina
D34H1 well.
- Finalized detailed drilling program and procurement
requirements for the Delvina Block exploration well, forecast to
spud after the completion of the D34H1 well.
- Executed a $20.0 million
prepayment agreement for crude oil sales with Trafigura Pte Ltd.
("Trafigura"), utilizing $7.0 million
within the fiscal year.
- Committed key equipment as required for the oilfields'
development activities.
- Completed audits by Albanian regulators as a result of the new
Government's plan to understand the hydrocarbon activity in the
country.
Consistent with International Financial
Reporting Standards, the Company booked a deferred income tax
expense of $3,878,000 related to its
Albanian operations during the fiscal year ended November 30, 2013. This expense is a result
of the Company's utilization of its cost recovery pools due to
increased production and an increase in net income before tax in
Albania. The amount does not
represent actual income taxes owed, but is derived by the resulting
difference between the carrying values of property and equipment in
comparison to available tax cost pools.
Fourth Quarter Highlights:
- Average net production decreased to 880 boed compared to 1,043
boed in the fourth quarter of 2012.
- Realized average gross crude price of $74.63 per barrel, a 2% increase over
$76.40 per barrel in the same period
of 2012 due to lower average Brent crude pricing.
- Revenue increased by 7% to $8.4
million compared to $7.8
million for the corresponding period in 2012.
- Net operating income increased to $6.5
million from $2.6 million for
the same period in 2012.
- Received newly elected Albanian Government's confirmation for
takeover of the inter-field pipelines as well as the Ballsh-Hekal
oilfield.
- Re-engaged with newly appointed Albpetrol and related Ministry
officials in finalizing amendments for neutralization of impacts
from modified legislations.
Subsequent to Year-End
- Oil production peaked at over 1,270 net bbls/d, while
Management focused on delivering the prior demonstrated oil
production levels exceeding 1,770 gross bbls/d on a sustained
basis.
- The rig, ancillary services and goods for drilling the D34H1
well arrived at Delvina, commencing drilling activities in
March 2014.
- Supported Thermo Energy with commissioning their 2 megawatt
("MW") generation unit using Delvina 4 gas.
- Completed annual reserves update, delivering materially
unchanged valuation despite a lower commodity price deck and the
inclusion of recently legislated VAT costs in Albania.
- Arranged a bridge loan of Cdn $5.0
million.
- Received confirmation for takeover of the Ballsh-Hekal
oilfield; Stream commenced procedures for the immediate transfer of
remaining assets.
Outlook
Subsequent to the deferral of development
activities while awaiting the outcome of the transition of the
Albania Government, Stream is focused on re-engaging in production
growth in 2014, as demonstrated by its continuing reserves value
despite lower commodities forecast. Stream's plans for 2014 include
the following activities:
- Cakran-Mollaj: Repair jet pump systems and install
procured hydraulic RRP lift systems; pilot ASP to reduce
water production while commencing alternate water disposal, thus
eliminating infield re-injection;
- Gorisht-Kocul: Continue waterflood expansion along
with recompletions with PCPs and hydraulic RRP lift systems;
- Ballsh-Hekal: Takeover the remainder of the field,
re-validate primary targets and recomplete with PCPs; and
- Delvina: Finalize drilling, completion and testing
of the horizontal well, while commencing drilling of the
exploration well in step out structures.
Stream is also evaluating the extension of the
services of the drilling rig active in Delvina, in order to
commence infill drilling in the Cakran-Mollaj and Ballsh-Hekal
fields.
With the positive collaboration from the Albanian
Government, including Albpetrol and AKBN, Management anticipates to
conclude, ratify and execute the Stream/Albpetrol amending
agreements within 2014.
Management is of the opinion that the Company will
be able to focus its primary efforts on development activities
going forward. Stream expects that periphery items previously
consuming Management's attention will no longer inhibit its
efforts, specifically: finalizing its long outstanding
amending agreements; confirming positive collaboration with the
newly elected Albanian Government; stability of Albania's business environment realized from
the full confirmation of the elected party (in prior dispute for
nearly four years); and Albania's
adherence to the increased governance framework imposed by EU as
part of its recommendation for Albania's candidate status.
Additional Information
Stream has filed its audited Consolidated
Financial Statements for the year ended November 30, 2013, and its related Management's
Discussion and Analysis with Canadian securities regulatory
authorities. Copies of these documents may be obtained via
www.sedar.com or the Company's website,
www.streamoilandgas.com.
_______________
Forward-Looking Statements
Information in this news release respecting
matters such as plans of development or exploration, reserves
estimates, production estimates and targets, development costs,
work programs and budgets constitute forward-looking information
(collectively, "forward-looking statements") under the meaning of
applicable securities laws, including Canadian Securities
Administrators' National Instrument 51-102 Continuous Disclosure
Obligations. Such forward-looking information is based on certain
assumptions, including the availability of funds for capital
expenditures necessary to construct the infrastructure required for
future development, a favorable political and economic operating
environment, a consistent rate of well re-completions and costs,
success rates, production performance and build-up periods for well
re-completions that are consistent with or an improvement over
historical levels.
The forward-looking statements contained
herein are made as of the date of this release solely for the
purpose of generally disclosing Stream's 2013 annual results and
outlook for 2014. Investors are cautioned that these
forward-looking statements are neither promises nor guarantees, and
are subject to risks and uncertainties that may cause future
results to differ materially from those expected. Such
forward-looking information reflect management's current beliefs
and are based on assumptions made by and information currently
available to the Company, and involves known and unknown risks,
uncertainties and other factors which may cause the actual costs
and results of the Company and its operations to be materially
different from estimated costs or results expressed or implied by
such forward-looking statements. Such factors include, among others
political and economic risks associated with foreign operations,
general risks inherent in petroleum operations, risks associated
with equipment procurement and equipment failure, availability of
qualified personnel, risks associated with transportation, currency
and exchange rate fluctuations and other general risks inherent in
oil and gas operations.
Although the Company has attempted to take
into account important factors that could cause actual costs or
results to differ materially, there may be other factors that cause
costs and timing of the Company's program or results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking information. These forward-looking
statements are made as of the date hereof and the Company does not
assume any obligation to update or revise them to reflect new
events or circumstances except as required under applicable
securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses
production and reserve volumes on a barrel of oil equivalent (Boe)
basis whereby natural gas volumes are converted at the ratio of six
thousand cubic feet of natural gas to one barrel of oil. Boe 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.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based
emerging oil and gas production, development and exploration
company focused on the re-activation and re-development of three
oilfields and a gas/condensate field in Albania. The Company's strategy is to use
proven technology, incremental and enhanced oil recovery techniques
to significantly increase production and reserves.
Neither 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.
SOURCE Stream Oil & Gas Ltd.