Antrim nears acquisition of Skellig block in Q3
2015-11-26 18:21 ET - News Release
Mr. Anthony Potter reports
ANTRIM ENERGY INC. ANNOUNCES 2015 THIRD QUARTER RESULTS
Antrim Energy Inc. has released its financial results for the three- and nine-month period ended Sept. 30, 2015. (All financial figures are unaudited and in U.S. dollars unless otherwise noted.)
Highlights:
- Strong cash position, no debt, low general and administrative costs, and limited financial commitments moving forward;
- Obtain 100-per-cent interest in the highly prospective Skellig block, Ireland (subject to finalization and government approval);
- Completion of abandonment program in United Kingdom Central North Sea;
- Realization of significant abandonment cost reductions ($1,900);
- Collection of abandonment amounts ($4,487) due from industry partners (November, 2015).
Corporate
Antrim, with its current cash resources, no debt and no decommissioning obligations, continues to maintain a strong financial position. Working capital at Sept. 30, 2015, was $10.1-million (U.S.) (seven Canadian cents per share), and in November, 2015, the company collected amounts due from its former joint venture partners for their portion of the successful 2015 abandonment program.
In addition, the company anticipates obtaining, at no further cost, a 100-per-cent working interest in frontier exploration licence (FEL) 1/13, subject to finalization and government approval of the transfer of Kosmos Energy Ireland's (Kosmos) interest to Antrim. Antrim was one of the first companies to realize the potential in the southern Porcupine basin. The company has, in conjunction with Kosmos, identified numerous leads, including two highly prospective Jurassic fault blocks and one Cretaceous submarine fan system in the FEL 1/13 licence. The Porcupine basin is the conjugate basin to the Eastern Canadian Orphan basin/Flemish Pass area. Studies of these conjugate margins have demonstrated many similarities in terms of source rock, maturation, hydrocarbon migration, reservoir characteristics and trap formation. To move exploration of FEL 1/13 forward, Antrim will be seeking to farm out to a new operator a portion of its interest in the licence. Participants' interest in the Ireland 2015 Atlantic margin licensing round, which closed in September, 2015, was very high, and the results, when announced, may have a further impact on the farm-out process.
With respect to the company's search for merger and acquisition opportunities, there is a growing consensus that oil and gas sector M&A activity will increase. Antrim will continue to assess opportunities based on, amongst other criteria, fit, focus on near-term appraisal/development, use of funds, transformative potential with upside potential for Antrim shareholders, and current- or near-term cash flow.
Ireland
Frontier exploration licence (FEL) 1/13, Antrim 25 per cent
In 2013, Kosmos farmed in to Antrim's licensing option over the Skellig block and acquired a 75-per-cent interest in and operatorship of FEL 1/13 in exchange for carrying the full costs of a 3-D seismic program and reimbursement of a portion of Antrim's past exploration costs. Results from the subsequent 3-D seismic reinforced Antrim's interpretation based on 2-D seismic and strongly indicated the presence of a Lower Cretaceous slope fan and channel deposits similar in geometry and seismic character to many of the recent Cretaceous oil discoveries offshore West Africa.
In September, 2015, Antrim was advised by Kosmos that it intended to withdraw from all of its licence interests in Ireland to focus on other recent discoveries in its African portfolio. The company anticipates obtaining at no further cost a 100-per-cent working interest in and operatorship of the licence, subject to finalization and government approval of the transfer of Kosmos interest in FEL 1/13 to Antrim.
Prior to its notice to withdraw, Kosmos prepared a prospect inventory, which includes several leads previously identified and highlights three prospects, including two tilted Jurassic fault blocks and a Cretaceous submarine fan. Two of the three prospects were included as leads in the prospective resources evaluated by McDaniel & Associates Consultants Ltd. in accordance with National Instrument 51-101 in a report dated effective June 30, 2014. In the McDaniel report, prospective resources were assigned to 17 leads within the Skellig block, further details of which are included in Antrim's annual information form for the year ended Dec. 31, 2014. A second Jurassic prospect identified by Kosmos has yet to be reviewed by McDaniel.
FEL 1/13 has a 15-year term, with an initial three-year term followed by three four-year terms.
The initial three-year term of the FEL expires in early July, 2016. At least three months before the end of the initial term, a work program for the second term must be proposed. That program must include the drilling of an exploration well.
Fyne licence
P077 block 21/28a -- Fyne, Antrim 100 per cent
United Kingdom seaward licences require licensees to permanently abandon all suspended wells prior to licence expiry. In the third quarter of 2015, the company permanently plugged and abandoned three suspended wells on the Fyne licence and one suspended well on the Erne licence in the United Kingdom Central North Sea. The well abandonment campaign was completed as part of a larger abandonment program allowing Antrim to share certain common costs offering significant cost savings.
The company is in discussion with the Oil and Gas Authority (OGA), formerly DECC, with respect to relinquishment and possible reapplication for the licence. The carrying value of the Fyne licence at Sept. 30, 2015, is nil (Dec. 31, 2014: nil).
Erne licence
P1875 block 21/29d -- Erne, Antrim 50 per cent
Previous discoveries on the Erne licence are not commercial on their own, but may be economic to develop as tie-backs to an adjacent production facility if such a facility were available. The carrying value of the Erne licence at Sept. 30, 2015, is nil (Dec. 31, 2014: nil).
FINANCIAL DISCUSSION OF CONTINUING OPERATIONS ($000s except per-share amounts) Three months ended Nine months ended Sept. 30, Sept. 30, 2015 2014 2015 2014 Financial results Cash flow used in operations $(2,173) $(109) $(2,826) $(3,798) Cash flow used in operations per share (0.01) (0.00) (0.01) (0.02) Net income (loss) -- continuing operations 736 (538) 2,009 (5,742) Net income (loss) per share -- basic, continuing operations 0.00 0.00 0.01 (0.03) Net income (loss) 736 (528) 2,009 (9,212) Net income (loss) per share -- basic 0.00 0.00 0.01 (0.05)
Cash flow and net income (loss) from continuing operations
In the nine-month period ended Sept. 30, 2015, cash flow used in operations was $2.8-million compared with cash flow used in operations of $3.8-million for the corresponding period in 2014. Cash flow used in operations decreased due to lower general and administrative costs and a $2.0-million foreign exchange gain in 2015 as a result of a significant decline year to date in the value of the Canadian dollar relative to the U.S. dollar, partially offset by actual decommissioning costs incurred in 2015. Excluding foreign exchange gains and losses, cash flows used in operations in the nine-month period ended Sept. 30, 2015, increased to $4.8-million compared with $4.0-million for the corresponding period in 2014 due to actual decommissioning costs incurred in 2015.
In the nine-month period ended Sept. 30, 2015, Antrim had net income from continuing operations of $2.0-million compared with a net loss from continuing operations of $5.7-million for the corresponding period in 2014. Net income increased due to lower decommissioning obligations, foreign exchange gains, and lower general and administrative costs.
Financial resources and liquidity
Antrim had a working capital surplus at Sept. 30, 2015, of $10.1-million compared with a working capital surplus of $15.1-million as at Dec. 31, 2014. Working capital decreased due to general and administrative expenses and actual decommissioning costs incurred in the period.
Outlook
The company continues to search for merger and acquisition opportunities and assess those opportunities based on, amongst other criteria, fit, focus on near-term appraisal/development, use of funds, transformative potential with upside potential for Antrim shareholders, and current- or near-term cash flow.
We seek Safe Harbor.