Artumas Group Inc. (OSE:AGI) Artumas today announces its third quarter financial results. During the quarter the company received the results of an independent play analysis assessment of the resource potential in the company's Mozambique assets by Rose & Associates. The deepwater offshore area showed substantial crude oil potential from the committed drilling program. In Tanzania, the company completed the acquisition of 2D seismic and is compiling 3D seismic survey acquisition parameters. An updated resource report evaluated the drilling program to date and provided key information to assess the exploration targets in its Mnazi Bay Concession. In November, the company successfully completed a USD 170 million financing enabling the next stage of Artumas' exploration and development over the upcoming two years, with proposed capital spending of USD 124 million on its upstream work program for both Mozambique and Tanzania.
"Artumas continues showing progress in developing its assets in Tanzania and Mozambique. The markets' confidence in our work program and potential was recently confirmed by the successful USD 170 million equity and debt issue. We are well capitalized to move forward with our planned activity through 2008. One of the greatest challenges for any E&P company in today's environment is access to exploration acreage. Our 25,000 sq km land position, in what is being recognized as a highly potential deltaic basin, gives Artumas substantial "room to run" in growing its resource base," said Stephen Mason, CEO of Artumas Group.
Q3 Highlights:
Mozambique:
- Artumas Mozambique Onshore Block EPCC received administrative approval, with a September 1, 2007 Commencement Date for the first Exploration Period
- $20 million performance bond secured through Canada's Export Development Corporation (EDC) and posted with Mozambique government, guaranteeing the Company's minimum expenditure during the Exploration Period
- Approvals granted on exchange of interests between Anadarko Petroleum and Artumas Group on their respective Mozambique blocks
- Third-party assessment of deepwater resource potential assessed a 68% chance of making at least one oil discovery in a seven-well drill program in Mozambique Offshore Area One
Tanzania:
- 2D seismic acquisition program completed in Tanzania Mnazi Bay Concession, to support determination of 3D seismic program and upcoming drilling locations
- Revised and updated Mnazi Bay Concession resource report showed an overall increase in Pmean and P10 resource estimates of 8% and 18% respectively, and a decline of 6% in the P90 resources estimate
- Power sales from the Mtwara Energy Project increased 8.7% over the Q2 average
- An Arranger Agreement with FMO was completed to facilitate the financing of Artumas' planned 300 MW integrated power project in southern Tanzania. FMO will act as Arranger for two structured finance facilities for the power generation plant and the high-voltage transmission interconnect to the Tanzania grid, estimated at $225 million and $400 million, respectively.
- Phase 1 Pre-Feasibility analysis for the large scale power development completed by PB Power (power plant assessment) and SNC Lavalin (transmission line routing). Results provided support for this project on a commercial basis; the contractors have moved to Phase 2 analysis which includes refinement of costs and economics for EPC contracting, and Environmental Impact Assessment (EIA).
Corporate:
- John Bentley was appointed Non-Executive Chairman of the Board
- Mr. Duncan Nightingale appointed Senior Vice President, Exploration, effective November 12, 2007
Discussion and Analysis
In Tanzania, Artumas is continuing to advance its gas off-take commercialization negotiations. Pre-feasibility analysis completed in September for the large scale power project supports the economics of this development. The Project has been formally incorporated within the Tanzania Power System Master Plan update, and the Government of Tanzania has been presented with a Memorandum of Understanding in support of this commercialization initiative. Phase 2 Pre-feasibility results are due to be completed in 1Q:2008. The Arranger Agreement executed with FMO provides additional strength to this material gas off-take development.
The marine CNG export project continues to advance toward a sanctioning decision. A pivotal meeting was held in Mombasa in September at which TransCNG International and Artumas representatives convened a final technical seminar with representatives from the gas off-take clients to address final issues. A bilateral agreement between the Tanzania-Kenya governments on export-import of hydrocarbons will allow this project to move to execution of gas sales agreements.
In southern Tanzania, Artumas has seen steadily increasing power loads of 20% plus in response to the introduction of reliable electricity supply, reflecting the growing demand for electricity in the Mtwara/Lindi Regions. This underlines the significant economic and commercial growth potential of the area as businesses and consumers become increasingly comfortable and confident with 24/7 power.
Independent technical analysis ascribes considerable "size of prize" potential to our substantial land holdings in Mozambique. The Rovuma Delta Basin is recognized as one of the last undrilled tertiary basins in the world, and third party play analysis is giving Artumas some very encouraging probabilities of success. An extensive 3D seismic acquisition program will be initiated in the first months of 2008 over the deepwater portion of the Area One Block. The information gathered will be critical to the exploration program, and the hydrocarbon potential of this unexplored basin will be verified through the drill-bit.
The company's Q3 2007 Financial Statements, Management's Discussion and Analysis, and Q3 presentation are attached.
President and CEO, Stephen Mason will provide the Q3 2007 Interim Report presentation starting at 09:00 today in the Hotel Continental in Oslo.
The third quarter presentation can also be followed live on the internet through the link; http://media01.smartcom.no/Microsite/start.aspx?eventid=2158 as a webcast or at www.oslobors.no/webcast. An archived version of the webcast will be posted on www.artumas.com shortly after the presentation.
