August 5, 2011 (SNM-TSXV & NASDAQ OMX: SNM). ShaMaran Petroleum Corp.
("ShaMaran" or the "Company") (TSX VENTURE: SNM) (NASDAQ OMX: SNM) is pleased
to announce its financial and operating results for the second quarter of 2011.
Highlights
• A major oil discovery in the Atrush Block was announced by the Company on
April 13, 2011. The Atrush 1 well flowed at rates totalling over 6,393 bopd
of 26.5 API oil from three tests in the middle and upper Jurassic
reservoirs and well analysis indicated that the intervals are capable of
much higher rates when completed for production. The well was drilled in
budget and on time to a total depth of 3,400 meters.
□ Pulkhana 9 was spudded by the Company on April 3, 2011 and a total
depth of 2,333 meters was reached on July 23, 2011. Oil indications
have been seen in all of the four targeted Pulkhana reservoirs. A
comprehensive well testing program which could include up to five tests
has commenced and is expected to be completed in early September 2011.
□ The Company's 100% owned subsidiary ShaMaran Petroleum BV entered into
a production sharing contract (“PSC”) on July 27, 2011 in respect of
the Taza Block (formerly Block K42) in the Kurdistan Region of Iraq.
ShaMaran holds a 20% working interest in the PSC, and Oil Search Iraq
Limited (“OSIL”) is the operator with a 60% working interest in the
PSC. The Kurdistan Regional Government of Iraq (“KRG”) holds a 20%
working interest in the PSC with costs carried by ShaMaran and OSIL.
□ The Appraisal Work Program on the Atrush Block has been submitted to
the KRG. The program consists of 3D seismic, appraisal wells and
studies leading to the possible installation of an Early Production
facility in 2012. 3D seismic acquisition operations commenced on the
block in July 2011 and planning for the Atrush-2 well is currently in
progress.
□ Trading of the common shares of the Company on the NASDAQ OMX First
North Exchange (Stockholm) commenced at the market opening on June 22,
2011.
□ Cash proceeds of $CAD 50.4 million ($CAD 49.5 million net of issuance
costs) were raised by the Company through a private placement of 56
million common shares at $CAD 0.90 per share which was concluded on May
5, 2011.
□ The Company had net losses of $975,000 and $513,000 for the three and
six months ended June 30th, 2011 (2010: $3,430,000 and $2,751,000). The
cash balance of the Company was $72.0 million as at June 30th, 2011
(December 31st 2010: $58.7 million).
Financial and Operating Results for the three and six months ended June 30th
2011
(Unaudited: Expressed in thousands of United States Dollars)
In the first six months of 2011 the Company continued its exploration campaign
in respect of its petroleum properties in Kurdistan constituting the continuing
operations of the Company which currently have no corresponding revenue. The
net losses in 2011 were driven by normal operational and corporate expenses
incurred over the reporting periods.
Consolidated Interim Statement of Comprehensive Income
(Unaudited: Expressed in thousands of United States Dollars)
Three months Six months
ended June 30, ended June 30,
2011 2010 2011 2010
Expenses from continuing operations
General and administrative (837) (360) (1,001) (579)
Share based payments (114) (161) (173) (415)
Depreciation expense (56) (29) (108) (55)
Share of loss of associate (30) - (109) -
Operating loss (1,037) (550) (1,391) (1,049)
Finance costs (229) (2,212) (456) (976)
Finance income 367 74 1,529 140
Net finance income / (loss) 138 (2,138) 1,073 (836)
Loss before income tax expense (899) (2,688) (318) (1,885)
Income tax expense (33) (14) (74) (27)
Net loss from continuing operations (932) (2,702) (392) (1,912)
Discontinued operations
Loss from discontinued operations (43) (728) (121) (839)
Net loss for the period (975) (3,430) (513) (2,751)
Other comprehensive income:
Currency translation differences 33 (28) 69 (26)
Total other comprehensive income / (loss) 33 (28) 69 (26)
Total comprehensive loss for the period (942) (3,458) (444) (2,777)
attributable to owners
The Company increased its investment in exploration, evaluation and other
intangible assets by $29.9 million during the first six months of 2011 relating
to its exploration properties located in Kurdistan. In addition the deferred
consideration liability outstanding at December 31, 2010 was discharged
completely by providing funds to the associate of the Company, General
Exploration Partners Inc (“GEP”), for its approved work program on the Atrush
Block. Trade and other accounts payable increased by $7.7 million over the
balance at December 31, 2010 primarily due to the increase in activity
associated with the Company's exploration campaign in Kurdistan.
Consolidated Interim Balance Sheet
(Unaudited: Expressed in thousands of United States Dollars)
June 30, December 31, January 1,
2010 2010
2011
Assets
Non-current assets
Exploration, evaluation and other 179,769 149,892 185,035
intangible assets
Property, plant & equipment 759 330 145
Investment in associate 46,973 44,282 -
227,501 194,504 185,180
Current assets
Other current assets 1,051 447 376
Inventories 3,216 2,656 -
Trade and other receivables 160 124 31
Cash and cash equivalents 71,967 58,684 63,565
76,394 61,911 63,972
Assets associated with discontinued 79 74 847
operations
Total assets 303,974 256,489 249,999
Liabilities
Current liabilities
Trade and other payables 12,883 5,156 2,087
Current tax liabilities 194 103 12
Deferred consideration - 12,643 -
13,077 17,902 2,099
Non-current liabilities
Provisions 888 - -
Other long-term liabilities - - 170
888 - 170
Liabilities associated with 2,841 3,069 3,167
discontinued operations
Total liabilities 16,806 20,971 5,436
Equity
Share capital 484,831 432,506 379,673
Equity share rights - - 61,349
Share premium account 3,737 3,968 3,405
Cumulative translation adjustment 74 5 4
Accumulated deficit (201,474) (200,961) (199,868)
Total equity 287,168 235,518 244,563
Net liabilities and equity 303,974 256,489 249,999
The cash position of the Company increased by $20,707 over the second quarter
of 2011 and $13,283 during the first six months of 2011. The main reason for
the increase in the cash position was the receipt by the Company in May 2011 of
funds related to the private placement of 56 million common shares to $51.3
million ($CAD 49.5 million). This increase in cash was offset by the outflow
of funds in the amount $28.3 million for its exploration properties in
Kurdistan and $15.4 million on the investment in GEP.
Consolidated Cash Flow Statement
(Unaudited: Expressed in thousands of United States Dollars)
Three months Six months
ended June 30, ended June 30,
2011 2010 2011 2010
Operating activities
Net loss for the period from continuing (932) (2,702) (392) (1,912)
operations
Adjustments for:
Interest income (168) (74) (277) (140)
Foreign exchange gain / (loss) (199) 1,764 (1,252) 70
Depreciation expense 56 29 108 55
Income tax 48 14 91 27
Share-based payment expense 114 161 173 415
Share of loss of associates 30 - 109 -
Capitalized expenses (406) - (597) -
Changes in trade and other receivables (18) 274 (36) (121)
Changes in other current assets (335) (65) (604) 197
Changes in inventories 303 - (560) -
Changes in trade and other payables 5,447 (1,529) 7,727 (47)
Cash used in discontinued operations (166) (524) (354) (931)
Net cash inflows / (outflows) from 3,774 (2,652) 4,136 (2,387)
operating activities
Investment activities
Exploration, evaluation and other (23,324) (5,357) (28,327) (8,615)
intangible assets
Property, plant & equipment (565) (88) (602) (128)
Investment in associate (11,443) - (15,443) -
Interest received on cash deposits 168 74 277 140
Cash provided by discontinued operations - - - 277
Net cash outflows to investing (35,164) (5,371) (44,095) (8,326)
activities
Financing activities
Net proceeds on issuance of shares 51,865 - 51,921 -
Net cash inflows from financing 51,865 - 51,921 -
activities
Effect of exchange rate changes on cash 232 (1,792) 1,321 (96)
and cash equivalents
Change in cash and cash equivalents 20,707 (9,815) 13,283 (10,809)
Cash and cash equivalents, beginning of 51,260 62,571 58,684 63,565
the period
Cash and cash equivalents, end of the 71,967 52,756 71,967 52,756
period
Outlook
The outlook for the remainder of the year 2011 for the four blocks which the
Company holds interests in Kurdistan is as follows:
Atrush Block
Atrush 1 was drilled to a total depth of 3,400 meters on January 21, 2011 and
the comprehensive well testing program which concluded on April 13, 2011
confirmed a major oil discovery. Consistent with the Appraisal Work Program 3D
seismic acquisition operations commenced on the block in July 2011. Planning
for the Atrush-2 well is currently in progress and drilling is expected to
commence in 2012.
Pulkhana Block
Pulkhana 9 was spudded by the Company on April 3, 2011 and a total depth of
2,333 meters was reached on July 23, 2011. Oil indications have been seen in
all of the four targeted Pulkhana reservoirs. A comprehensive well testing
program has commenced and is expected to be completed in early September 2011.
The Company has received KRG approval to contract the existing Sakson 101
rig for an additional two firm and two option wells. The rig is going to be
moved directly to Pulkhana-10 once operations on Pulkhana-9 have been
completed. A workover of the legacy Pulkhana-8 well will commence in the third
quarter of 2011.
In addition the Company is progressing with the feasibility study and design
for the Pulkhana Early Production Facility ("EPF") planned to be installed in
the year 2012. The first 3 wells (Pulkhana 8, 9 and 10) will be connected to
the EPF, with the possibility to expand as future development wells are
drilled.
Arbat Block
Following completion of seismic interpretation the Company has received MNR
approval for the location of the first commitment exploration well (designated
Arbat-A). Site construction will commence shortly. The well is to be situated
approximately 3km north of Arbat town and is expected to start drilling before
year end. The Company is preparing to go to tender for an infill 2D seismic
program to better define several significant leads in the block as potential
drilling prospects for the Company's second obligation well.
Taza Block (Formerly Block K42)
Following the completion of 232.0 km of 2D seismic data acquisition the Company
exercised its option to enter into a Production Sharing Contract and which was
approved with the PSC signed on July 27, 2011. The Jeribe formation which has
reported test rates of over 9,000 barrels of oil per day from the recently
announced Western Zagros Sarqala oil discovery to the south of the Taza Block
will be one of the main targets for the upcoming exploration well on the
identified prospect which is expected to be drilled in 2012.
New Ventures
As part of its normal business the Company is actively pursuing new
opportunities in the region.
About ShaMaran
ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration
vehicle. It has four projects in the region: the Pulkhana development/appraisal
block and the Arbat, Atrush and Taza Block (formerly K42) exploration blocks.
These projects are nearby and on trend with existing fields and recent
discoveries.
Kurdistan lies within the northern extension of the Zagros Folded Belt. The
area is highly underexplored and is currently undergoing a significant
exploration and development campaign by over 30 mid to large size international
oil companies.
ShaMaran Petroleum is a Canadian oil and gas company listed on the TSX Venture
Exchange and the NASDAQ OMX First North Exchange (Stockholm) under the symbol
"SNM".
Forward-Looking Statements
This press release contains statements 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. 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 of
these 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.
(For full report, see attached file)
On behalf of the Board,
Pradeep Kabra,
President and CEO
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.
ShaMaran Petroleum's Certified Advisor on First North is E. Öhman J:or
Fondkommission AB.
FOR FURTHER INFORMATION PLEASE CONTACT: ShaMaran Petroleum Corp. Keith Hill
Chairman (604) 806-3583 khill@namdo.com
or
ShaMaran Petroleum Corp. Pradeep Kabra President and CEO 0041 22 560 8605
pradeep.kabra@shamaranpetroleum.com
or
ShaMaran Petroleum Corp. Sophia Shane Corporate Development (604) 689-7842
(604) 689-4250 (FAX) sophias@namdo.com www.shamaranpetroleum.com
