CALGARY, ALBERTA--(Marketwired - May 13, 2014) - Serinus Energy Inc. ("Serinus", "SEN" or the "Company") (TSX:SEN), is pleased to report its financial and operating results for the quarter ended March 31, 2014.

First Quarter Highlights

  • Production in the first quarter was 4,849 boe/d, up 54% vs. Q1 2013, but down marginally from 5,088 boe/d in Q4 2013. The growth vs. Q1 2013 was assisted by the acquisition of Winstar Resources.
  • Organic growth in the Company's Ukraine properties continued, with average production (net to SEN WI) for the quarter rising 11% to 3,504 boe/d vs. the same period in 2013.
  • Gross revenues for the quarter reached $35.9 million, up 25% over Q1 2013. The portion allocable to SEN shareholders was $28.8 million vs. $20.1 million in Q1 2013. The balance is attributable to the owner of the remaining 30% of KUBGAS Holdings Limited not held by Serinus (see About Serinus below).
  • Tunisian netbacks continue to be robust at $65.86/boe. Netbacks in Ukraine were $30.85/boe ($5.14/Mcfe), affected significantly by the discounts on imported Russian gas, and the deterioration of the exchange rate between the Ukrainian Hryvnia ("UAH") and the US Dollar. The Hryvnia depreciated by 35% during the quarter.
  • Funds from Operations in the first quarter were up 49% to $14.9 million vs. $10.0 million in Q1 2013, and up 2% compared to $14.6 million in Q4 2013. The amount allocable to SEN shareholders was $11.3 million.
  • Net earnings for the quarter, before the currency charges, were $2.7 million ($1.7 million attributable to SEN shareholders), as compared to $4.2 million in Q1 2013 ($2.1 million attributable to SEN shareholders) due to an unrealized foreign exchange loss of $3.6 million. Before the foreign exchange impact, net earnings were $6.3 million. That foreign exchange loss relates to the translation of non-UAH denominated balances (predominantly the EBRD loan) to UAH on the books of the Ukrainian subsidiaries at the period end rate.
  • Serinus recorded a comprehensive net loss of $16.2 million ($0.19/sh) in the first quarter of 2014. Comprehensive earnings were impacted by a $18.9 million charge taken for unrealized foreign currency translation. This relates to the translation of the Ukrainian subsidiaries' financial statements from UAH to USD, and the loss reflects the deterioration of the UAH. As the exchange rate fluctuates, the equivalent value as reported in US dollars changes, but this does not impair the ability of those assets or liabilities to perform their intended purpose(s). If the Hryvnia were to appreciate, some or all of this unrealized loss would be recouped. Capital expenditures for the quarter were $10.3 million vs. $8.9 million for the same period in 2013.
  • During the quarter, KUB-Gas repaid $3.6 million of intercompany loans, and paid dividends of $1 million ($0.7 million SEN WI)

Note: Serinus prepares its financial results on a consolidated basis, which includes 100% of its indirectly 70% owned subsidiary, KUB-Gas LLC ("KUB-Gas"). Unless otherwise noted by the phrases "allocable to Serinus", "net to Serinus", "attributable to SEN shareholders" or "net to SEN WI", all values and volumes refer to the consolidated figures. Serinus reports in US dollars; all dollar values referred to herein, whether in dollars or per share values are in US dollars unless otherwise noted.

Summary Financial Results (US$ 000's unless otherwise noted)

Three Months Ending March 31
2014 2013 Change
Oil and Gas Revenue 35,863 28,709 25%
Net Income (as reported) 2,734 4,234 (35%)
per share, basic and diluted $0.03 $0.09
Net Income (allocable to SEN) 1,657 2,082 (20%)
per share, basic and diluted $0.02 $0.04
Comprehensive Net Income (16,156) 4,234 (482%)
per share, basic and diluted ($0.21) $0.09
Cash Flow from Operations (as reported) 14,867 9,961 49%
per share, basic and diluted $0.19 $0.21
Cash Flow from Operations (allocable to SEN) $11,315 $5,912 91%
per share, basic and diluted 0.14 0.12
Capital Expenditures 10,251 8,881 15%
Average Production (net to Serinus)
Oil (Bbl/d) 1,024 -
Gas (Mcf/d) 22,355 18,067 24%
Liquids (Bbl/d) 99 140 (29%)
BOE (boe/d) 4,849 3,151 54%
Average Sales Price
Oil ($/Bbl) $108.06 na
Gas ($Mcf) $9.04 $11.61
Liquids ($Bbl) $78.19 $95.69
BOE ($/boe) $66.07 $70.86
March 31
2014 2013
Cash & Equivalents 14,756 35,553
Working Capital (17,387) 1,217
Long Term Debt 10,571 17,112
Shares Outstanding 78,629,941 48,175,673
Average for period 78,620,897 48,175,673

Operational Highlights & Update

  • First quarter production and prices are broken down as follows:
Q1 2014 Production Q1 2014 Commodity Prices
Ukraine1 Tunisia Total Ukraine Tunisia Total
Oil (bbl/d) - 1,024 1,024 ($/bbl) - $108.06 $108.06
Gas (Mcf/d) 20,427 1,928 22,355 ($/Mcf) $8.55 $14.18 $9.04
Liquids (bbl/d) 99 - 99 ($/bbl) $78.19 - $78.19
Boe (boe/d) 3,504 1,345 4,849 ($/boe) $52.04 $102.57 $82.18
  1. Ukraine volumes are Serinus 70% interest
  • Production for the first quarter of 4,849 boe/d declined slightly vs. Q4 2013 (5,088 boe/d) due to continued facility constraints in Ukraine and pending workover requirements in Tunisia. Also, the schedule for Serinus' 2014 capital program is such that most of the expenditures that should directly increase production (such as drilling new wells, bringing on new facilities etc.) will occur in Q2, Q3 and Q4.
  • In Ukraine, the new gas processing facility in Makeevskoye started up on March 6th, 2014. Production increases to date have been limited while the Company reconfigures the flowlines to each plant to minimize the system back pressure and optimize overall production from both Makeevskoye and Olgovskoye fields.
  • The M-17 well was drilled during the first quarter. Logs indicated 9 metres of net pay in the primary target, the S6 sand, and 2.5 metres of pay in the S5. They also indicated resource potential of 5.5 metres in the deeper S7, and 22 metres in the R30c. Testing commenced in late April, and the S7 achieved a rate of 900 Mcf/d, exceeding the Company's expectations that it would require stimulation to produce at a commercial rate. Serinus has no reserves allocated to the S7 on its licences. A bridge plug will be set above the S7 to permit testing of the S6. Once testing is done, M-17 may be dually completed in the S6 and S7. The S7 is still being evaluated for stimulation in the planned frac' campaign this fall.
  • The O-24 well was also tested and flowed gas at low rates. It has been added to the fall stimulation program.
  • Average second quarter 2014 production to date is approximately 4,873 boe/d (1,008 bbl/d of oil, 22.6 MMcf/d of gas, 97 bbl/d of liquids).
  • Despite recent events in Ukraine, Serinus is pleased to report that all of its personnel are safe, and operations to date have continued without substantial interruption. The Company cautions however, that the situation is volatile, and that there can be no assurance that future disruptions or delays will not occur.


Serinus has an active program planned for the balance of the year, which includes among other things:

  • In Ukraine, the Company plans to drill 4 addition wells in 2014, including O-11 which is currently drilling at a depth of 2,867 metres. These will be funded through cash flow in Ukraine, although with the uncertainty in gas prices there, it is possible that the program could be constrained.
  • Fracture stimulations are planned for four wells in Ukraine, including NM-3, O-11, O-15 and possibly the S7 zone in M-17.
  • The official price for May at which gas can be sold to industrial customers in Ukraine is 4,724 UAH per Mcm. At the current exchange rate of 11.65 UAH/USD, that is equivalent to $11.42/Mcf. The price that KUB-Gas receives is approximately 10% lower, reflecting the margins of the traders through whom the gas is sold. The Company's realized gas price during the first quarter was $8.55/Mcf.
  • In Tunisia, a coiled tubing unit commenced operations in April to remediate the CS-Sil-1 and CS-Sil-10 wells. The rig cleaned out the well to bottom, opened two sliding sleeves and installed a velocity tubing string to more efficiently lift the liquids on CS-Sil-1. Rates and pressures are continuing to increase as it recovers the water from the wellbore.
  • A workover rig has moved to Ech Chouech. Operations are expected to commence by the end of May. Four wells, EC-4, ECS-1, CS-11 and CS-8bis, are scheduled to have various work performed intended to increase or restore production, and to improve overall uptime rates. Pending regulatory approval, ECS-1 and EC-4 will be stimulated during the summer.
  • Two wells will be drilled in the Sabria field in Tunisia. Each well is anticipated to cost $14.4 million ($6.5 million SEN WI) and take 70 days to drill. The first well, Winstar-12bis, is expected to spud in mid-June.
  • A 203 km2 3D seismic survey will be shot over the Sanrhar concession during May and June.
  • In Romania, Serinus will drill two exploration wells and shoot 180 km2 of new 3D seismic. Each well is expected to cost $3 million (SEN WI). Spud date for the first well is anticipated to be in November. The seismic acquisition is slated to commence in September.

Updated Corporate Presentation

Serinus' May 2014 corporate presentation is now available on the Company's website at, in the Investor Centre.

Supporting Documents

The full Management Discussion and Analysis ("MD&A") and Financial Statements have been filed in English on and in Polish and English via the ESPI system, and will also be available on


bbl Barrel(s) bbl/d Barrels per day
boe Barrels of Oil Equivalent boe/d Barrels of Oil Equivalent per day
Mcf Thousand Cubic Feet Mcf/d Thousand Cubic Feet per day
MMcf Million Cubic Feet MMcf/d Million Cubic Feet per day
Mcfe Thousand Cubic Feet Equivalent Mcfe/d Thousand Cubic Feet Equivalent per day
MMcfe Million Cubic Feet Equivalent MMcfe/d Million Cubic Feet Equivalent per day
Mboe Thousand boe Bcf Billion Cubic Feet
MMboe Million boe Mcm Thousand Cubic Metres

About Serinus

Serinus is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Brunei, Tunisia, Romania and Syria and with a risk profile ranging from exploration in Brunei, Romania and Syria to production and development in Ukraine and Tunisia. The common shares of the Company trade under trading symbol "SEN" on both the WSE (Warsaw Stock Exchange) and the TSX.

In Ukraine, Serinus owns an effective 70% interest in KUB-Gas LLC through its 70% shareholding of KUBGas Holdings Limited. The assets of KUB-Gas LLC consist of 100% interests in five licences near to the City of Lugansk in the northeast part of Ukraine. Four of the licences are gas producing.

In Tunisia, Serinus owns a 100% working interest in the Chouech Essaida, Ech Chouech, Sanrhar and Zinnia concessions, and a 45% working interest in the Sabria concession. Four of the concessions are currently producing oil or gas.

In Brunei, Serinus owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L.

In Romania, Serinus has an undivided 60% working interest in the onshore Satu Mare concession, a 2,949 square kilometre exploration and development block, in north western Romania.

In Syria, Serinus holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. The Company has an agreement to assign a 5% ownership interest to a third party which is subject to the approval of Syrian authorities, and which, if approved, would leave the Company with a remaining effective interest of 45% in Syria Block 9. Serinus declared force majeure, with respect to its operations in Syria, in July 2012.

The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.

Translation: This news release has been translated into Polish from the English original.

Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company's projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company's published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.

Suite 1170, 700-4th Avenue SW, Calgary, Alberta, Canada
Telephone: +1-403-264-8877
Al Shafar Investment Building, Suite 123, Shaikh Zayed Road, Dubai, UAE
Telephone: +971-4-339-5212
Nowogrodzka 18/29, 00-511 Warsaw, Poland
Telephone: +48 (22) 414 21 00

Contact Information:

Serinus Energy Inc. - Canada
Norman W. Holton
Vice Chairman

Serinus Energy Inc. - Canada
Gregory M. Chornoboy
Director - Capital Markets & Corporate Development

Serinus Energy Inc. - Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
+48 22 414 21 00