VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 26, 2011) - Africa Oil Corp. (TSX VENTURE:AOI)(OMX:AOI) ("Africa Oil", "the Company" or "AOC") is pleased to announce its financial and operating results for the three months ended March 31, 2011.
Highlights and accomplishments during the first quarter of 2011 included:
Keith Hill, President and CEO, commented, "Africa Oil continued to add highly prospective exploration acreage to its portfolio during the first quarter of 2011. Exploration activities continued throughout the quarter with FTG, 2D seismic and drilling preparations continuing on multiple blocks. The Company is very well financed, has a well diversified exploration portfolio and reputable joint venture partners. We are looking forward to the commencement of continuous drilling in 2011."
First Quarter 2011 Financial and Operating Highlights | |||
Consolidated Statement of Net Income and Comprehensive Income | |||
(Unaudited; United States Dollars) | |||
For the three months ended, | March 31, 2011 | March 31, 2010 | |
Operating expenses | |||
Salaries and benefits | $ 436,617 | $ 235,755 | |
Stock-based compensation | 1,456,226 | 167,356 | |
Bank charges | 99,388 | 10,312 | |
Travel | 136,652 | 168,292 | |
Management fees | 64,122 | 56,924 | |
Office and general | 413,059 | 236,083 | |
Depreciation | 14,119 | 24,780 | |
Professional fees | 217,715 | 133,273 | |
Stock exchange and filing fees | 151,444 | 39,490 | |
2,989,342 | 1,072,265 | ||
Finance income | (4,327,574) | (11,592,774) | |
Net income and comprehensive income attributable to common shareholders | 1,338,232 | 10,520,509 | |
Net income (loss) per share | |||
Basic | $ 0.01 | $ 0.15 | |
Diluted | $ (0.01) | $ 0.08 | |
Weighted average number of shares outstanding | |||
Basic | 154,450,530 | 70,205,496 | |
Diluted | 162,549,283 | 74,274,808 |
As the Company is in the exploration stage, no oil and gas revenue has been generated to date. Accordingly, income reported primarily relates to interest income on its cash deposits, potential foreign exchange gains mainly the result of holding Canadian dollar deposits, and fair market value adjustments on warrants and convertible debentures
Operating expenses increased to $3.0 million in the first quarter of 2011 from $1.1 million in the first quarter of 2010 due a $1.3 million increase in stock-based compensation related to options granted in the first quarter of 2011. The remainder of the increase can be attributed to increased salary and benefit costs, increased costs associated with our listing on the NASDAQ OMX, and an increase in general office costs and professional fees associated with increased operational expansion.
Finance income for the three months ended March 31, 2011 and 2010 is made up of the following items:
March 31, 2011 | March 31, 2010 | |
Fair market value adjustment - warrants | 779,181 | 6,881,571 |
Fair market value adjustment - convertible debt | 1,722,256 | 4,641,657 |
Interest and other income | 243,686 | 5,316 |
Foreign exchange gain | 1,582,451 | 64,230 |
4,327,574 | 11,592,774 |
The fair market value gain on warrants and convertible debt was significantly larger in the first quarter of 2010 due to a larger reduction in AOC's share price from the end of the previous quarter. Interest income was higher in the first quarter of 2011 due to a significant increase in the average cash balance versus the first quarter of 2010. The $1.6 million foreign exchange gain in the first quarter of 2011 is the result of an increase in the value of the Canadian dollar at a time when AOC was holding a significant amount of Canadian dollars raised through the non-brokered private placement (CAD $25 million gross proceeds) which closed during July 2010 and the warrant exercises in the fourth quarter of 2010 (CAD $55.8 million gross proceeds).
Consolidated Balance Sheets | ||||
(Unaudited; United States Dollars) | ||||
March 31, | December 31, | January 1, | ||
2011 | 2010 | 2010 | ||
ASSETS | ||||
Current assets | ||||
Cash and cash equivalents | $ 77,811,360 | $ 76,125,834 | $ 11,145,486 | |
Accounts receivable | 8,767,575 | 2,323,208 | 5,396,253 | |
Prepaid expenses | 289,840 | 595,729 | 508,344 | |
86,868,775 | 79,044,771 | 17,050,083 | ||
Long-term assets | ||||
Restricted cash | 5,082,750 | 3,181,500 | 1,800,000 | |
Property and equipment | 35,809 | 39,621 | 107,549 | |
Intangible exploration assets | 150,648,738 | 96,468,816 | 76,138,940 | |
155,767,297 | 99,689,937 | 78,046,489 | ||
Total assets | $ 242,636,072 | $ 178,734,708 | $ 95,096,572 | |
LIABILITIES AND EQUITY ATTRIBUTABLE TO COMMON SHAREHOLDERS | ||||
Current liabilities | ||||
Accounts payable and accrued liabilities | $ 5,275,375 | $ 7,122,007 | $ 3,244,871 | |
Current portion of warrants | 701,704 | 874,949 | - | |
Current portion of convertible debenture | 23,729,065 | 411,220 | 407,950 | |
29,706,144 | 8,408,176 | 3,652,821 | ||
Long-term liabilities | ||||
Warrants | 4,570,913 | 5,195,914 | 21,673,039 | |
Convertible debenture | - | 54,077,952 | 40,820,217 | |
4,570,913 | 59,273,866 | 62,493,256 | ||
Total liabilities | 34,277,057 | 67,682,042 | 66,146,077 | |
Equity attributable to common shareholders | ||||
Share capital | 257,929,756 | 163,231,076 | 62,712,759 | |
Contributed surplus | 5,661,377 | 4,391,940 | 3,313,753 | |
Deficit | (55,232,118) | (56,570,350) | (37,076,017) | |
Total equity attributable to common shareholders | 208,359,015 | 111,052,666 | 28,950,495 | |
Total liabilities and equity attributable to common shareholders | $ 242,636,072 | $ 178,734,708 | $ 95,096,572 |
The increase in total assets from January 1, 2010 to December 31, 2010 is attributable to the equity financings, expansion of acreage in East Africa (Blocks 12A and 13T (Kenya) and South Omo (Ethiopia)), drilling of Bogal-1 in Block 9, and the seismic acquisition programs on Block 10BB in Kenya and the Ogaden blocks in Ethiopia. The increase in total assets from December 31, 2010 to March 31 2011 is primarily attributable to closing of the acquisition of Centric which was funded by the issuance of shares and a nominal cash value.
Consolidated Statement of Cash Flows | ||||
(Unaudited; United States Dollars) | ||||
Three months ended, | March 31, 2011 | March 31, 2010 | ||
Cash flows provided by (used in): | ||||
Operations: | ||||
Net income for the period | $ 1,338,232 | $ 10,520,509 | ||
Item not affecting cash: | ||||
Stock-based compensation | 1,456,226 | 167,356 | ||
Depreciation | 14,119 | 24,780 | ||
Fair market value adjustment - warrants | (779,181) | (6,881,571) | ||
Fair market value adjustment - convertible debt | (1,722,256) | (4,641,657) | ||
Unrealized foreign exchange gain | (1,594,595) | (174,853) | ||
Changes in non-cash operating working capital: | ||||
Accounts receivable and prepaid expenses | 26,196 | (88,563) | ||
Accounts payable and accrued liabilities | 21,574 | 37,509 | ||
(1,239,686) | (1,036,490) | |||
Investing: | ||||
Property and equipment expenditures | (1,484) | (3,799) | ||
Intangible exploration expenditures | (4,973,882) | (2,902,406) | ||
Farmout proceeds, net | 14,900,160 | - | ||
Cash received on business acquisition, net of cash issued | 738,960 | - | ||
Repayment of liability portion of convertible debt | (411,220) | (407,949) | ||
Changes in non-cash investing working capital: | ||||
Accounts receivable and prepaid expenses | (6,013,668) | 2,427,287 | ||
Accounts payable and accrued liabilities | (1,868,206) | (1,027,160) | ||
2,370,660 | (1,914,027) | |||
Financing: | ||||
Common shares issued, net of issuance costs | 257,758 | - | ||
Issuance of cash for bank guarantee | (1,451,250) | - | ||
Changes in non-cash financing working capital: | ||||
Accounts payable and accrued liabilities | 168,569 | - | ||
(1,024,923) | - | |||
Effect of exchange rate changes on cash and cash equivalents denominated in foreign currency | 1,579,475 | 161,219 | ||
Increase (decrease) in cash and cash equivalents | 1,685,526 | (2,789,298) | ||
Cash and cash equivalents, beginning of period | $ 76,125,834 | $ 11,145,486 | ||
Cash and cash equivalents, end of period | $ 77,811,360 | $ 8,356,188 | ||
Supplementary information: | ||||
Interest paid | 411,220 | 407,949 | ||
Taxes paid | Nil | Nil |
The increase in cash in 2010 is indicative of the significant amount of equity financing obtained by the company via the July 2010 non-brokered private placement raising CAD$25 million (gross) and the exercise of warrants which raised CAD$55.8 million (gross). The increase in cash in 2011 is a result of proceeds received on close of farmouts offset partially by intangible exploration expenditures, operating expenses and issuance of cash on bank guarantees.
Consolidated Statement of Equity Attributable to Commonshareholders | |||
(Unaudited; United States Dollars) | |||
March 31, | March 31, | ||
2011 | 2010 | ||
Share capital: | |||
Balance, beginning of period | $ 163,231,076 | $ 62,712,759 | |
Acquisition of Centric Energy | 60,165,193 | - | |
Issued on conversion of convertible debenture | 28,795,200 | - | |
Amended Farmout Agreement with Lion Energy | 5,274,675 | - | |
Exercise of warrants | 61,631 | - | |
Farmout ageement finder's fees | 94,960 | - | |
Exercise of options | 307,021 | - | |
Balance, end of period | 257,929,756 | 62,712,759 | |
Contributed surplus: | |||
Balance, beginning of period | $ 4,391,940 | $ 3,313,753 | |
Expiration of warrants | 3,676 | - | |
Stock based compensation | 1,456,226 | 167,356 | |
Issuance of shares in lieu of finder's fee | (94,960) | - | |
Exercise of options | (95,505) | - | |
Balance, end of period | 5,661,377 | 3,481,109 | |
Deficit: | |||
Balance, beginning of period | $ (56,570,350) | $ (37,076,017) | |
Net income (loss) for the period | 1,338,232 | 10,520,509 | |
Balance, end of period | (55,232,118) | (26,555,508) | |
Equity Attributable to Common Shareholders | $ 208,359,015 | $ 39,638,360 |
The Company's consolidated financial statements, notes to the financial statements, management's discussion and analysis and Annual Information Form have been filed on SEDAR (www.sedar.com) and are available on the Company's website (www.africaoilcorp.com). The Annual Information Form includes the Company's reserves and resource data for the period ended December 31, 2010 and other oil and natural gas information prepared in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.
Outlook
AOC and its partners have an aggressive exploration program planned for the next two years, which is anticipated to include seismic and drilling across all play types and geographic areas of operation. The Company enters the second quarter of 2011 in an extremely strong financial position with working capital in excess of $57 million. Additional financing is not required at this time to meet current operational plans.
New discoveries have been announced on all sides of the Company's virtually unexplored land position including the major Tullow Albert Graben oil discovery in neighboring Uganda. Similar to the Albert Graben play model, the Company's concessions have older wells, a legacy database, and host numerous oil seeps indicating a proven petroleum system. Good quality existing seismic show robust leads and prospects throughout the AOC's project areas.
Africa Oil Corp. is a Canadian oil and gas company with assets in Kenya, Ethiopia, Puntland (Somalia) and Mali. Africa Oil's East African holdings are in within a world-class exploration play fairway with a total gross land package in this prolific region in excess of 300,000 square kilometers. The East African Rift Basin system is one of the last of the great rift basins to be explored. New discoveries have been announced on all sides of Africa Oil's virtually unexplored land position including the major Albert Graben oil discovery in neighbouring Uganda. Similar to the Albert Graben play model, Africa Oil's concessions have older wells, a legacy database, and host numerous oil seeps indicating a proven petroleum system. Good quality existing seismic show robust leads and prospects throughout Africa Oil's project areas. The Company is listed on the TSX Venture Exchange and on First North at NASDAQ OMX-Stockholm under the symbol "AOI".
FORWARD-LOOKING STATEMENTS
Certain statements made and information contained herein constitute "forward-looking information" (within the meaning of applicable Canadian securities legislation). Such statements and information (together, "forward looking statements") relate to future events or the Company's future performance, business prospects or opportunities. Forward-looking statements include, but are not limited to, statements with respect to estimates of reserves and or resources, future production levels, future capital expenditures and their allocation to exploration and development activities, future drilling and other exploration and development activities, ultimate recovery of reserves or resources and dates by which certain areas will be explored, developed or reach expected operating capacity, that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
All statements other than statements of historical fact may be forward-looking statements. Statements concerning proven and probable reserves and resource estimates may also be deemed to constitute forward-looking statements and reflect conclusions that are based on certain assumptions that the reserves and resources can be economically exploited. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions) are not statements of historical fact and may be "forward-looking statements". Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. The Company does not intend, and does not assume any obligation, to update these forward- looking statements, except as required by applicable laws. These forward-looking statements involve risks and uncertainties relating to, among other things, changes in oil prices, results of exploration and development activities, uninsured risks, regulatory changes, defects in title, availability of materials and equipment, timeliness of government or other regulatory approvals, actual performance of facilities, availability of financing on reasonable terms, availability of third party service providers, equipment and processes relative to specifications and expectations and unanticipated environmental impacts on operations. Actual results may differ materially from those expressed or implied by such forward-looking statements.
ON BEHALF OF THE BOARD
Keith C. Hill, President and CEO
Africa Oil's Certified Advisor on First North is E. Öhman J:or Fondkommission AB.
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.
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