CALGARY, ALBERTA--(Marketwired - May 13, 2015) - Serinus Energy Inc. ("Serinus", "SEN" or the "Company") (TSX:SEN)(WARSAW:SEN), is pleased to report its financial and operating results for the quarter ended March 31, 2015.
First Quarter Highlights
Notes: 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) |
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Three Months Ending March 31 | |||||||||||
2015 | 2014 | Change | |||||||||
Oil and Gas Revenue | 25,155 | 35,863 | (30 | %) | |||||||
Net Income (as reported) | (4,123 | ) | 2,734 | (251 | %) | ||||||
per share, basic and diluted | ($0.05 | ) | $0.03 | ||||||||
Net Income (allocable to SEN) | (4,268 | ) | 1,657 | (358 | %) | ||||||
per share, basic and diluted | ($0.05 | ) | $0.02 | ||||||||
Comprehensive Net Income (as reported) | (14,990 | ) | (16,156 | ) | (7 | %) | |||||
per share, basic and diluted | ($0.19 | ) | ($0.21 | ) | |||||||
Funds from Operations (as reported) | 4,344 | 15,762 | (72 | %) | |||||||
per share, basic and diluted | $0.06 | $0.20 | |||||||||
Funds from Operations (allocable to SEN) | $3,167 | $11,315 | (72 | %) | |||||||
per share, basic and diluted | 0.04 | 0.14 | |||||||||
Capital Expenditures | 11,246 | 10,251 | 10 | % | |||||||
Average Production (net to Serinus) | |||||||||||
Oil | (Bbl/d) | 1,240 | 1,024 | 21 | % | ||||||
Gas | (Mcf/d) | 18,581 | 22,355 | (17 | %) | ||||||
Liquids | (Bbl/d) | 69 | 99 | (30 | %) | ||||||
BOE | (boe/d) | 4,406 | 4,849 | (9 | %) | ||||||
Average Sales Price | |||||||||||
Oil | ($/Bbl) | $53.85 | $108.06 | (50 | %) | ||||||
Gas | ($Mcf) | $8.13 | $8.90 | (9 | %) | ||||||
Liquids | ($Bbl) | $39.83 | $78.19 | (49 | %) | ||||||
BOE | ($/boe) | $49.75 | $62.75 | (21 | %) | ||||||
March 31 | |||||||||||
2015 | 2014 | ||||||||||
Cash & Equivalents | 22,819 | 14,756 | |||||||||
Working Capital | (7,685 | ) | (17,387 | ) | |||||||
Long Term Debt | 44,533 | 10,571 | |||||||||
Shares Outstanding | 78,629,941 | 78,629,941 | |||||||||
Average for period | 78,629,941 | 78,620,897 |
* | Funds from Operations is not a recognized measure under IFRS. See Management's |
Discussion and Analysis for further information on non-IFRS measures. | |
Operational Highlights & Update | ||||||||||
First quarter production and prices are broken down as follows: | ||||||||||
Q1 2015 Production1 | Q1 2015 Commodity Prices | |||||||||
Ukraine2 | Tunisia | Total | Ukraine | Tunisia | Total | |||||
Oil | (bbl/d) | - | 1,240 | 1,240 | ($/bbl) | - | $53.85 | $53.85 | ||
Gas | (Mcf/d) | 16,550 | 2,031 | 18,581 | ($/Mcf) | $7.84 | $11.58 | $8.13 | ||
Liquids | (bbl/d) | 69 | - | 69 | ($/bbl) | $39.83 | - | $39.83 | ||
Boe | (boe/d) | 2,827 | 1,579 | 4,406 | ($/boe) | $46.84 | $57.20 | $49.75 |
1. Numbers may not add due to rounding |
2. Ukraine volumes are Serinus 70% interest |
Note on nomenclature: Wells in the Company's Ukraine properties are named by the initial of the field followed by a well number. Wells in Olgovskoye, Makeevskoye, Vergunskoye, Krutogorovskoye and North Makeevskoye fields use the prefixes "O", "M", "V", "K" and "NM" respectively. For example, the Makeevskoye-17 well is referred to herein as M-17.
Ukraine Legislative Developments
As previously disclosed in the Company's press releases of January 23 and April 14, 2015, the Ukraine government issued three decrees (No.'s 596, 599, and 647) last November which cumulatively required 170 of the largest gas consumers in Ukraine to purchase their gas solely from Naftogaz until the end of February 2015. These bills were challenged in the Ukrainian courts, and after two appeals, the High Administrative Court of Ukraine dismissed the government's claims in their entirety on March 31, 2015. The market has started to readjust and KUB-Gas' gas sales increased modestly in April.
The effects of these resolutions materially affected the Company's operations during the first quarter. With a large portion of the natural gas market unavailable, private producers were left to scramble for the few remaining creditworthy customers. Management estimates that KUB-Gas' total sales volumes were approximately 4.5 MMcf/d below its productive capacity for the quarter. Although gas prices increased in UAH terms vs. Q4 2014, the increased competition caused a fall relative to the Limit Price (the maximum price that can be charged to industrial customers) set by regulators each month. As royalties are calculated on the Limit Price rather than those realized, the effective royalty rates were higher than the nominal published rates.
On January 1, 2015, the government made permanent the royalty rates of 55% and 45% for gas and oil respectively that were originally imposed in August 2014. This new legislation however, eliminated the provision for the "lowering coefficient" for new wells, under which the royalty rate for gas from new wells was reduced to 30.25% for the first two years of production. The immediate effect was that the M-17 well which accounted for approximately 35% of KUB-Gas' Q1 production became subject to the 55% rate rather than the 30.25% for which it previously qualified. On March 3, 2015, the government passed a bill reinstating the relief period effective April 1, 2015. Notwithstanding the latest change however, the nominal gas royalty rate for the first quarter was 55%, and given the disparity between the Limit Price and realized prices as mentioned above, the effective aggregate rate was 63.9%.
On March 3, 2015, the National Bank of Ukraine issued Resolution No. 160, which extended most of the existing restrictions on foreign currency transactions set out in Resolution No. 758 and introduced several additional restrictions, all to be effective until June 3, 2015.
Outlook
Average daily production (SEN WI) for April 2015 was approximately 4,480 boe/d (1,235 bbl/d of oil, 19.1 MMcf/d of gas, 69 bbl/d of liquids). This reflects a slight increase in production in Ukraine now that the legislation restricting the gas market has been overturned.
Ukraine
The Limit Price for May at which gas can be sold to industrial customers in Ukraine is 6,810 UAH per Mcm. At the current exchange rate of 21.0 UAH/USD, that is equivalent to $9.13/Mcf. The price that KUB-Gas receives has been 15% - 18% lower, reflecting the margins of the traders through whom the gas is sold, and lingering effects of the erstwhile gas market restrictions.
The Company is considering hydraulic stimulations for the O-11, O-15 and M-22 wells. If approved, the campaign will take place during the summer of 2015.
A compression unit will be installed at the Olgovskoye Field facilities in May to address sales gas dew point issues, and is expected to be functional by the beginning of June.
Tunisia
The WIN-13 well has been tied into the flowline and currently producing at approximately 138 bbl/d and 272 Mcf/d. Remedial work is expected to commence in mid to late May.
Romania
The drilling, completion and testing of Moftinu-1001 and 1002bis, along with the 180 km23D seismic program in the Santau area shot in late 2014 and associated filings to the Government, fulfils both the Government and partner work commitments for the Satu Mare Concession, Phase 2. Satisfactory completion of Phase 2 entitles the Company to enter into exclusive negotiations with the Romanian government with respect to a third 3-year exploration phase. Serinus has commenced preliminary discussions with the National Agency for Mineral Resources ("NAMR") with respect to the attendant work program. Written confirmation of the extension is expected to be received from NAMR in May 2015. Also pending written confirmation of the Satu Mare Concession extension, the Company will commence the process of establishing a Production Concession at Moftinu.
Supporting Documents
The full Management Discussion and Analysis ("MD&A") and Financial Statements have been filed in English on www.sedar.com and in Polish and English via the ESPI system, and will also be available on www.serinusenergy.com. An updated version of the corporate presentation is also now available on the the Company's website.
Abbreviations |
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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 |
UAH | Ukrainian Hryvnia | USD | U.S. Dollar |
CAD | Canadian Dollar | ||
Cautionary Statement:
BOEs 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.
Test results are not necessarily indicative of long-term performance or of ultimate recovery. Test data contained herein is considered preliminary until full pressure transient analysis is complete.
About Serinus
Serinus is an international upstream oil and gas exploration and production company that owns and operates projects in Ukraine, Tunisia, and Romania.
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.
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