VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 9, 2018) - ShaMaran Petroleum Corp. ("ShaMaran" or the "Company") (TSX VENTURE:SNM)(OMX:SNM) is pleased to announce its financial and operating results for year ended December 31, 2017. Unless otherwise stated all currency amounts indicated as "$" in this news release are expressed in thousands of United States dollars.
Chris Bruijnzeels, President and CEO of ShaMaran, commented, "2017 was a defining year for ShaMaran with start of production in July 2017. I am encouraged by the production performance and the continued payments from the Kurdistan Regional Government which will allow us to continue investing in Atrush and work towards defining the next phase of development."
HIGHLIGHTS AND DEVELOPMENTS
Operations
Corporate
OUTLOOK
Operations
FINANCIAL AND OPERATING RESULTS FOR THE YEAR ENDED DECEMBER 31, 2017
Oil production commenced on July 3, 2017 from the Atrush Block located in the Kurdistan Region of Iraq and work continued on the Atrush development program throughout the year 2017.
Financial Results
The Company has reported in 2017 a net loss of $11.5 million which was primarily driven by finance cost, the substantial portion of which was expensed borrowing costs on the Company's bonds, and routine general and administrative expenses. These charges have been offset by the gross margin on Atrush oil sales, interest income on Atrush cost loans and interest on cash held in short term deposits.
Statement of Comprehensive Income
(Audited, expressed in thousands of United States Dollars)
For the year ended December 31, | |||||||
2017 | 2016 | ||||||
Revenues | 17,689 | - | |||||
Cost of goods sold: | |||||||
Lifting costs | (5,547 | ) | - | ||||
Other costs of production | (834 | ) | - | ||||
Depletion | (7,628 | ) | - | ||||
Gross margin on oil sales | 3,680 | - | |||||
Service fee income | - | 120 | |||||
Share based payments expense | (11 | ) | (249 | ) | |||
Depreciation and amortisation expense | (26 | ) | (45 | ) | |||
General and administrative expense | (4,511 | ) | (3,811 | ) | |||
Loss from operating activities | (868 | ) | (3,985 | ) | |||
Finance income | 1,649 | 484 | |||||
Finance cost | (12,195 | ) | (5,586 | ) | |||
Net finance cost | (10,546 | ) | (5,102 | ) | |||
Loss before income tax expense | (11,414 | ) | (9,087 | ) | |||
Income tax expense | (85 | ) | (69 | ) | |||
Loss for the year | (11,499 | ) | (9,156 | ) | |||
Other comprehensive income | |||||||
Items that may be reclassified to profit or loss: | |||||||
Currency translation differences | 31 | 22 | |||||
Items that will not be reclassified to profit or loss: | |||||||
Actuarial (loss) / gain on defined pension plan | (13 | ) | 15 | ||||
Total other comprehensive income | 18 | 37 | |||||
Total comprehensive loss for the year | (11,481 | ) | (9,119 | ) | |||
Consolidated Balance Sheet
(Audited, expressed in thousands of United States Dollars)
As at December 31, | ||||||
2017 | 2016 | |||||
Assets | ||||||
Non-current assets | ||||||
Property, plant and equipment | 184,921 | 174,658 | ||||
Intangible assets | 89,119 | 89,007 | ||||
Loans and receivables | 44,696 | 46,114 | ||||
318,736 | 309,779 | |||||
Current assets | ||||||
Loans and receivables | 32,277 | 7,252 | ||||
Cash and cash equivalents, unrestricted | 3,094 | 4,416 | ||||
Cash and cash equivalents, restricted | 2,162 | - | ||||
Other current assets | 212 | 224 | ||||
37,745 | 11,892 | |||||
Total assets | 356,481 | 321,671 | ||||
Liabilities and equity | ||||||
Current liabilities | ||||||
Borrowings | 185,692 | - | ||||
Accounts payable and accrued expenses | 4,827 | 6,434 | ||||
Accrued interest expense on bonds | 2,799 | 2,503 | ||||
193,318 | 8,937 | |||||
Non-current liabilities | ||||||
Provisions | 9,427 | 8,869 | ||||
Pension liability | 1,781 | 1,670 | ||||
Borrowings | - | 165,129 | ||||
11,208 | 175,668 | |||||
Total liabilities | 204,526 | 184,605 | ||||
Equity | ||||||
Share capital | 637,538 | 611,179 | ||||
Share based payments reserve | 6,495 | 6,484 | ||||
Cumulative translation adjustment | (30 | ) | (61 | ) | ||
Accumulated deficit | (492,048 | ) | (480,536 | ) | ||
Total equity | 151,955 | 137,066 | ||||
Total liabilities and equity | 356,481 | 321,671 | ||||
Total assets increased over the year 2017 by $34.8 million due to increases in share capital and equity reserves by $26.4 million, borrowings and accrued interest by $20.8 million and other non-current liabilities by $0.7 million which were offset by an increase in the accumulated deficit by $11.5 million, principally due to the net loss recorded in the period and a decrease in current liabilities by $1.6 million.
Property, plant & equipment assets increased during the 12 months ended December 31, 2017 by $10.3 million which was due to additions of $9.1 million in Atrush development costs and $8.8 million in capitalised borrowing net of $7.6 million in depletion costs. The increase in intangible assets by $112 thousand during the year 2017 resulted from net additions of $104 thousand and $16 thousand in capitalised borrowing costs net of $8 thousand in amortisation and revaluation of foreign currency item. Loans and receivables increased by $23.6 million from accruing $14.0 million of accounts receivables on Atrush oil sales, funding $7.2 million of Feeder Pipeline costs and $3.7 million of the KRG's share of development costs, and accruing interest of $1.5 million on the outstanding loan balances, net of $0.2 million Atrush Exploration Cost Receivables collected and $2.6 million of loans amounts due from the KRG which were offset against amounts owed to the KRG.
Consolidated Cash Flow Statement
(Audited, expressed in thousands of United States Dollars)
For the year ended December 31, | |||||||
2017 | 2016 | ||||||
Operating activities | |||||||
Loss for the year | (11,499 | ) | (9,156 | ) | |||
Adjustments for: | |||||||
Interest expense on borrowings - net | 12,089 | 5,518 | |||||
Depreciation, depletion and amortisation expense | 7,654 | 45 | |||||
Foreign exchange loss | 102 | - | |||||
Share based payments expense | 11 | 249 | |||||
Unwinding discount on decommissioning provision | 4 | 68 | |||||
Actuarial (loss) / gain on pension plan | (13 | ) | 15 | ||||
Interest income | (1,649 | ) | (484 | ) | |||
Changes in pension liability | 37 | (18 | ) | ||||
Changes in other current assets | 12 | (24 | ) | ||||
Changes in current tax liabilities | - | (31 | ) | ||||
Changes in accounts payable and accrued expenses | (1,607 | ) | (3,126 | ) | |||
Changes in accounts receivables on Atrush oil sales | (13,957 | ) | - | ||||
Net cash outflows to operating activities | (8,816 | ) | (6,944 | ) | |||
Investing activities | |||||||
Loans and receivables - payments received | 2,806 | - | |||||
Interest received on cash deposits | 107 | 44 | |||||
Purchases of intangible assets | (82 | ) | (7 | ) | |||
Purchase of property, plant and equipment | (8,621 | ) | (32,073 | ) | |||
Loans and receivables - payments issued | (10,914 | ) | (4,769 | ) | |||
Net cash outflows to investing activities | (16,704 | ) | (36,805 | ) | |||
Financing activities | |||||||
Proceeds from shares issued | 27,281 | - | |||||
Share issue related transaction costs | (922 | ) | - | ||||
Proceeds from shares issued | - | 17,000 | |||||
Bond transaction costs | - | (777 | ) | ||||
Net cash inflows from financing activities | 26,359 | 16,223 | |||||
Effect of exchange rate changes on cash and cash equivalents | 1 | 21 | |||||
Change in cash and cash equivalents | 840 | (27,505 | ) | ||||
Cash and cash equivalents, beginning of the year | 4,416 | 31,921 | |||||
Cash and cash equivalents, end of the year | 5,256 | 4,416 | |||||
The increase by $0.8 million in the cash position of the Company in 2017 was due to cash inflows of $26.4 million in net proceeds from the sale of the Company's shares in a private placement completed in January 2017, $6.7 million from operating activities after G&A and other cash expenses, and $2.8 million of loan repayments which were offset by negative cash adjustments of $15.5 million on accounts receivables, payables and other working capital items, and cash outflows of $8.7 million on Atrush development activities and $10.9 million on loans provided to the KRG.
OTHER
This information in this release is subject to the disclosure requirements of ShaMaran Petroleum Corp. under the EU Market Abuse Regulation and the Swedish Securities Market Act. This information was publicly communicated on March 9, 2018 at 2:30 p.m. Vancouver time.
ABOUT SHAMARAN
ShaMaran Petroleum Corp. is a Kurdistan focused oil development and exploration company with a 20.1% direct interest in the Atrush oil discovery. The Atrush Block is currently undergoing an appraisal and development campaign.
ShaMaran is a Canadian oil and gas company listed on the TSX Venture Exchange and the NASDAQ Stockholm First North Exchange (Sweden) under the symbol "SNM". 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. Pareto Securities AB is the Company's Certified Advisor on NASDAQ Stockholm First North.
The Company's condensed interim consolidated financial statements, notes to the financial statements and management's discussion and analysis have been filed on SEDAR (www.sedar.com) and are also available on the Company's website (www.shamaranpetroleum.com).
FORWARD LOOKING STATEMENTS
This news release contains statements and information 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. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking information. Forward-looking information typically contains statements with words such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "projects", "potential", "scheduled", "forecast", "outlook", "budget" or the negative of those terms or similar words suggesting future outcomes. The Company cautions readers regarding the reliance placed by them on forward‐looking information as by its nature, it is based on current expectations regarding future events that involve a number of assumptions, inherent risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company.
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 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.
Reserves and resources: ShaMaran Petroleum Corp.'s reserve and contingent resource estimates are as at December 31, 2017, and have been prepared and audited in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook"). Unless otherwise stated, all reserves estimates contained herein are the aggregate of "proved reserves" and "probable reserves", together also known as "2P reserves". Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Contingent resources: Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political and regulatory matters or a lack of markets. There is no certainty that it will be commercially viable for the Company to produce any portion of the contingent resources.
BOEs: BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf per 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.
1 The Company's entitlement share includes an adjustment for the exploration cost sharing arrangement between TAQA and GEP.
2 This includes a discount to Dated Brent for oil quality and all local and international transportation costs.
3 This estimate of remaining recoverable resources (unrisked) includes contingent resources that have not been adjusted for risk based on the chance of development. It is not an estimate of volumes that may be recovered.
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