Q1 Results
June 10, 2011
ShaMaran Q1 2011 Financial and Operating Results
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 10, 2011) - ShaMaran Petroleum Corp. (TSX VENTURE:SNM) ("ShaMaran" or the "Company") is pleased to announce its financial and operating results for the three months ended March 31st, 2011.
Highlights
-- A major oil discovery in the Atrush Block was announced by the Companyon April 13, 2011. The Atrush 1 well flowed at rates totalling over6,393 bopd of 26.5 API oil from three tests in the middle and upperJurassic reservoirs and well analysis indicated that the intervals arecapable of much higher rates when completed for production. The well wasdrilled in budget and on time to a total depth of 3,400 meters.-- Pulkhana 9 was spudded by the Company on April 3, 2011 with a plannedtotal depth of approximately 2,700 meters. The well targets the provenEuphrates/Upper Jaddala and Shiranish oil reservoirs, as well asevaluating a further potential reservoir in the Lower Jaddala.-- Cash proceeds of $CAD 50.4 million ($CAD 49.1 million net of issuancecosts) were raised by the Company through a private placement of 56million common shares at $CAD 0.90 per share which was concluded on May5, 2011.-- McDaniel & Associates Consultants Ltd, the Company's independentqualified resource evaluator, provided the Company with a DetailedProperty Report ("the Report") in March 2011 which was based oninformation prior to the appraisal drilling of Pulkhana and results fromthe Atrush-1 well. The Report includes 82,461,000 boe as best estimateof Company Gross Estimated Contingent Resources and 287,555,000 boe asthe unrisked best estimate of Company Gross Estimated ProspectiveResources for all four of the Company's assets.-- The Company had net income of $462,000 for the three months ended March31st, 2011 (2010: net income of $679,000). The cash balance of theCompany was $51.3 million as at March 31, 2011 (December 31st, 2010:$58.7 million).
Financial and Operating Results for the first quarter of 2011
(Unaudited: Expressed in thousands of United States Dollars)
In the first quarter of 2011 the Company continued its exploration campaign in respect of its petroleum properties in Kurdistan constituting the continuing operations of the Company which currently have no corresponding revenue. The net income in the first quarter was primarily driven by the cumulative foreign currency translation gain of $1,053 which has offset normal operational expenses during this period.
Consolidated Interim Statement of Comprehensive Income(Unaudited: Expressed in thousands of United States Dollars)For the three months ended March 31,2011 2010--------------------------------------------------------------------------Expenses from continuing operations:General and administrative (164) (219)Share based payments (59) (254)Depreciation expense (52) (26)Share of loss of associate (79) ---------------------------------------------------------------------------Operating loss (354) (499)--------------------------------------------------------------------------Finance costs (227) (458)Finance income 1,162 1,760--------------------------------------------------------------------------Net finance income 935 1,302--------------------------------------------------------------------------Income before income tax expense 581 803Income tax expense (41) (13)--------------------------------------------------------------------------Net income from continuing operations 540 790Discontinued operations:Loss from discontinued operations (78) (111)--------------------------------------------------------------------------Net income for the period 462 679----------------------------------------------------------------------------------------------------------------------------------------------------Other comprehensive income:Currency translation differences 36 2--------------------------------------------------------------------------Total other comprehensive income 36 2--------------------------------------------------------------------------Total comprehensive income for the period 498 681----------------------------------------------------------------------------------------------------------------------------------------------------
The Company increased its investment in exploration, evaluation and other intangible assets by $5.2 million during the first three months of 2011 which relates to the initial stages of the exploration drilling campaign on the petroleum properties located in Kurdistan. In addition the deferred consideration liability was decreased by $4 million relating to funds provided to the associate of the Company, General Exploration Partners Inc, for the approved work program on the Atrush Block. There were no other significant changes to the consolidated balance sheet for the three months ended March 31st, 2011.
Consolidated Interim Balance Sheet(Unaudited: Expressed in thousands of United States Dollars)Mar 31, Dec 31, Jan 1,2011 2010 2010--------------------------------------------------------------------------AssetsNon-current assetsExploration, evaluation and other intangibleassets 155,086 149,892 185,035Property, plant & equipment 315 330 145Investment in associate 44,203 44,282 ---------------------------------------------------------------------------199,604 194,504 185,180--------------------------------------------------------------------------Current assetsOther current assets 716 447 376Inventories 3,519 2,656 -Trade and other receivables 142 124 31Cash and cash equivalents 51,260 58,684 63,565--------------------------------------------------------------------------55,637 61,911 63,972--------------------------------------------------------------------------Assets associated with discontinuedoperations 65 74 847--------------------------------------------------------------------------Total assets 255,306 256,489 249,999----------------------------------------------------------------------------------------------------------------------------------------------------LiabilitiesCurrent liabilitiesTrade and other payables 7,436 5,156 2,087Current tax liabilities 146 103 12Deferred consideration 8,643 12,643 ---------------------------------------------------------------------------16,225 17,902 2,099--------------------------------------------------------------------------Non-current liabilitiesOther long-term liabilities - - 170--------------------------------------------------------------------------- - 170--------------------------------------------------------------------------Liabilities associated with discontinuedoperations 2,950 3,069 3,167--------------------------------------------------------------------------Total liabilities 19,175 20,971 5,436--------------------------------------------------------------------------EquityShare capital 432,602 432,506 379,673Equity share rights - - 61,349Share premium account 3,987 3,968 3,405Cumulative translation adjustment 41 5 4Accumulated deficit (200,499) (200,961) (199,868)--------------------------------------------------------------------------Total equity 236,131 235,518 244,563--------------------------------------------------------------------------Net liabilities and equity 255,306 256,489 244,999----------------------------------------------------------------------------------------------------------------------------------------------------
The cash position of the Company decreased by $7,424 over the first quarter of 2011 compared to a decrease in cash by $994 during the first quarter of 2010.
Net cash used in investment activities during the quarter was $8,931 compared to funds used in first quarter of 2010 in the amount of $2,955. The main components of cash used were funding the investment in GEP in the amount of $4,000 and spending on E&E costs of $5,003 related to the drilling programs on the Company's petroleum properties in Kurdistan with an offset in the amount of $109 from interest received on cash deposits.
The Company had no significant financing activities during the first quarters of 2011 and 2010. In May 2011 the Company received funds from financing related to the private placement of 56 million common shares of $CAD 49.1 million.
Consolidated Cash Flow Statement(Unaudited: Expressed in thousands of United States Dollars)Three months ended March 31,2011 2010--------------------------------------------------------------------------Operating activitiesNet income for the period from continuing operations 540 790Adjustments for:Interest income (109) (66)Foreign exchange gain (1,053) (1,694)Depreciation expense 52 26Income tax 43 13Share-based payment expense 59 254Share of loss of associates 79 -Capitalized expenses (191) -Changes in trade and other receivables (18) (395)Changes in other current assets (269) 262Changes in inventories (863) -Changes in trade and other payables 2,280 1,482Cash used in discontinued operations (188) (407)--------------------------------------------------------------------------Net cash inflows from operating activities 362 265--------------------------------------------------------------------------Investment activitiesExploration, evaluation and other intangible assets (5,003) (3,258)Property, plant & equipment (37) (40)Investment in associate (4,000) -Interest received on cash deposits 109 66Cash provided by discontinued operations - 277--------------------------------------------------------------------------Net cash outflows to investing activities (8,931) (2,955)--------------------------------------------------------------------------Financing activitiesNet proceeds on issuance of shares 56 ---------------------------------------------------------------------------Net cash inflows from financing activities 56 ---------------------------------------------------------------------------Effect of exchange rate changes on cash and cashequivalents 1,089 1,696--------------------------------------------------------------------------Change in cash and cash equivalents (7,424) (994)Cash and cash equivalents, beginning of the period 58,684 63,565--------------------------------------------------------------------------Cash and cash equivalents, end of the period 51,260 62,571----------------------------------------------------------------------------------------------------------------------------------------------------
Outlook
The outlook for the four blocks in Kurdistan for the remainder of the year 2011 is as follows:
Atrush Block
Atrush 1 was drilled to a total depth of 3,400 meters on January 21, 2011 and the comprehensive well testing program which concluded on April 13, 2011 confirmed a major oil discovery. The operating company, GEP, is currently preparing a program to appraise the Atrush Block for development and production.
Pulkhana Block
Pulkhana-9 was spudded in April 2011 and is planned to be drilled to a Total Depth of 2700m. The well is designed to appraise the proven Euphrates/Jaddala & Shiranish oil reservoirs as well as appraise possible upside in the Jeribe & Lower Jaddala formations.
ShaMaran has also received Ministry of Natural Resources ("MNR") approval for the Pulkhana-10 and preparations are being made to enable drilling of this well. The Company is tendering for a workover rig for the planned third quarter workover of Pulkhana-8 and at the same time progressing with the feasibility study and design for the Pulkhana Early Production Facility ("EPF") planned to be installed by the end of the year 2011. The first 3 wells (Pulkhana 8, 9 & 10) will be connected to the EPF, with the possibility to expand as future development wells are drilled.
Arbat Block
Following completion of seismic interpretation the Company has received MNR approval for the location of the first commitment exploration well (designated Arbat-A). Tendering and preparations are underway to enable drilling to commence in the 4th quarter of this year.
Block K42
Following the completion of 232.0 km of 2D seismic data acquisition the Company exercised its option to enter into a Production Sharing Contract. Approval from the KRG is currently pending.
New Ventures
As part of its normal business the Company is actively pursuing new opportunities in the region.