RE: RE: RE: aen Contender Licence
P201 Block 211/22a Contender Area, Antrim 8.4%
On January 14, 2013, Antrim announced that first oil production had been achieved from the Cormorant East Field 85 days after discovery of the field. Production is processed through the North Cormorant platform before being exported to the Sullom Voe terminal. The Cormorant East Field is initially being produced under primary depletion with a single production well, with the potential to install a water injection scheme and/or additional production wells at a later date. Future drilling locations are being considered by the partners.
Production from the Cormorant East Field averaged 688 gross bopd in the first quarter of 2013 compared to nil in 2012, after production commenced in January 2013. During the quarter, pressure problems experienced on the well have resulted in shut-ins and reduced production volumes. Further, production in the quarter was interrupted for nine days due to a shut down on the Cormorant Alpha platform.
Under the terms of the farm-out agreement with the operator, 100% of the drilling, completion and tie in costs of the Contender Well were funded by the operator. Antrim will receive its share of production after Antrim's working interest share of the completion and tie in costs are recovered from production revenue.
Ireland
Licensing Option 11/5 Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14, 44/15, Antrim 25%
Antrim acquired the Licensing Option in the 2011 Atlantic Margin Licensing Round. The Licensing Option includes Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14 and 44/15, an area of 1,409 km2. Antrim has licensed, reprocessed and interpreted 2D seismic data over the blocks and identified a Cretaceous deep sea fan complex similar in seismic character to many of the recent Cretaceous discoveries offshore West Africa.
On April 18, 2013, the Company announced a farmout agreement of the Licencing Option to Kosmos Energy Ltd. ("Kosmos"). Kosmos will acquire a 75% interest in, and operatorship, of the Licensing Option in exchange for carrying the full costs of a planned 3D seismic program within the licence area (the "Skellig Block") and re-imbursement to Antrim of a portion of the exploration costs incurred on the blocks to date. Antrim will retain a 25% interest. In May 2013 the transaction was approved by the Department of Communications, Energy and Natural Resources of Ireland ("DCENR"). Kosmos and Antrim expect to apply to DCENR for conversion of the Licensing Option to a Frontier Exploration Licence and approval for the 3D seismic program as soon as possible. Under the terms of the Licensing Option, a minimum 25% of the area must be relinquished when converting to a Frontier Exploration Licence.
Tanzania
Production Sharing Agreement - Pemba and Zanzibar
Antrim holds an option to acquire a 20% interest in the production sharing agreement for the Pemba-Zanzibar exploration licence offshore and onshore Tanzania (the "P-Z PSA") following the pre-drilling (seismic) phase and an additional 10% interest to be exercised up to 180 days following receipt of the initial drilling results. Should Antrim exercise the initial option, costs for the seismic phase associated with Antrim's acquired interests would be repaid from future production. RAK Gas, the Operator, has submitted a proposal for a revised work programme to the federal government of Tanzania. Environmental impact assessment work has commenced, with seismic operations expected to proceed in the near future.
On October 29, 2012, an agreement between the federal government of Tanzania and the government of Zanzibar on the sharing of any future hydrocarbon revenues was announced, potentially ending a moratorium which has delayed exploration of the licence. The agreement has still to be ratified and final details are still to be agreed. It is not yet known what, if any, impact this agreement will have on the P-Z PSA.
Fyne Licence
P077 Block 21/28a - Fyne and Crinan, Antrim 100%
In late March 2013 the Company announced that it would not proceed with development of the Fyne Field with the Teekay FPSO. Until late March, estimated costs indicated that the planned Fyne development satisfied the Company's economic threshold and, contingent on timing of the redeployment of the FPSO from its current location, was on track for a late 2014 start-up. However, projected capital costs increased substantially, and in the Company's view, made the project uneconomic under the FPSO development proposal. The licence remains valid and the Company is in discussions with potential partners regarding future development programs.
Carra
P1563 Blocks 21/28b and 21/29c, Antrim 100%
Licence P1563 contains the Carra Prospect, the Riddon and Scavaig discoveries and several other prospects. In October 2012, DECC agreed to waive the contingent well obligation on Licence P1563 Blocks 21/28b & 21/29c as it was determined by Antrim that there was insufficient potential to proceed with drilling. The licence was relinquished in February 2013.
West Teal
Licence P1625 Block 21/24b, Antrim 100%
In March 2013, DECC agreed to waive the contingent well obligation on Licence P1625 Block 21/24b which allows the Company to relinquish the licence in its entirety. Accordingly, the Company plans to relinquish the licence in its entirety in the second quarter of 2013.
Corporate
On January 23, 2013, Antrim announced that it entered into a $30 million payment swap transaction with a major financial institution. This transaction provided Antrim with funding to meet its commitments for cost overruns on the completion of the production well in the Causeway Field, future costs related to the Causeway water injection well and initial FEED work associated with the Fyne Field.
Under the terms of the payment swap, $30 million is repayable in 29 instalments commencing September 2013 and concluding January 2016. As a part of the transaction, Antrim also entered into a forward sale of 657,350 barrels of Brent crude oil at a fixed price of $89.37 covering the period from February 2013 to December 2015.
Following the closing of the payment swap, Antrim also paid a fee of $487,500 to a major shareholder as a break fee relating to a proposed standby alternative debt financing arrangement. The major shareholder is considered a related party of the Company, as at the date of this press release, they directly or indirectly owned or controlled 33,588,900 common shares (representing 18.2% of the issued and outstanding common shares) of the Company.
Financial Discussion of Continuing Operations (unaudited)
| | Three Months Ended
March 31 | |
| | 2013 | | 2012 | |
| Financial Results ($000's except per share amounts) | | | | |
| Cash flow from (used in) operations (1) | 6,613 | | (1,601 | ) |
| Cash flow from (used in) operations per share (1) | 0.04 | | (0.01 | ) |
| Net loss - continuing operations | 2,853 | | 56,091 | |
| Net loss | 2,853 | | 55,421 | |
| Net loss per share - basic, continuing operations | 0.02 | | 0.30 | |
| Total assets | 126,693 | | 171,125 | |
| Working capital (deficiency) | (4,591 | ) | 46,343 | |
| Expenditures on petroleum & natural gas properties - continuing operations | 13,479 | | 6,043 | |
| | | | | |
| Common shares outstanding (000's) | | | | |
| End of period | 184,731 | | 184,116 | |
| Weighted average - basic | 184,731 | | 184,116 | |
| Weighted average - diluted | 185,336 | | 185,567 | |
(1) Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to "Non-IFRS Measures" in Management's Discussion and Analysis.
Financial Resources, Liquidity and Going Concern
In January 2013, the Company entered into a $30 million payment swap transaction which is subject to a number of financial and operating covenants. In addition, funds received from the swap arrangement are subject to restrictions as to their use and subsequent to March 31, 2013 additional restrictions were imposed following lower than anticipated production volumes during the quarter. The Company is working with the lender to reduce the impact of these additional restrictions, however, there is no certainty that the funds will be made available which may cast further doubt on the Company's ability to continue as a going concern. The restrictions may impact the Company's ability to fund capital expenditure and operations.
There are a number of material uncertainties that raise significant doubts as to the Company's ability to continue as a going concern, including the performance of the producing wells, oil prices, ability to finish the planned development program within budget, ability to secure additional financing, relinquishment of commitments on certain licences and settlement of contingencies.
If the lender does not reduce the restrictions the Company has other viable options such as issuing new equity and/or debt, selling and/or acquiring assets, and controlling capital expenditure programs.
As at March 31, 2013, Antrim had a working capital deficiency of $4.6 million compared to a working capital deficiency of $10.7 million as at December 31, 2012. The lower working capital deficiency is primarily due to the payment swap transaction and operations, partially offset by costs for the development of the Causeway and Fyne Fields.
Accounts payable and accrued liabilities were $19.7 million at March 31, 2013 primarily related to costs for the development of the Causeway and Fyne Fields, compared to $18.1 million as at December 31, 2012.
Although there have been improvements in the global economy and financial markets, restrictions on availability of credit remain and may limit Antrim's ability to access debt or equity financing for its exploration and development projects. Antrim forecasts cash flows against a range of macroeconomic and financing market scenarios in an effort to identify future commitments and arrange financing, if necessary.
Antrim's planned capital program for 2013 is primarily costs associated with the ongoing development of the Causeway Field and the Cormorant East Field.
Outlook
Antrim expects to see increased production from the Causeway Field following deployment of the ESP in the second half of 2013. A water injection scheme is scheduled to commence operation in 2014.
Following the discovery of the Cormorant East Field by the Contender Well, Antrim anticipates at least one appraisal well, downdip of the discovery well and a plan to explore the adjacent fault compartments.
Recent seismic studies on the Skellig block in the Porcupine Basin offshore Southwest Ireland have high graded the Dunree Prospect, adjacent to the licence holding the Dunquin Prospect, where drilling operations commenced in April 2013. Antrim and its joint venture partner Kosmos plan to apply for conversion of the Licensing Option to a Frontier Exploration Licence in the second quarter of 2013 and obtain approval for a 3D seismic program to cover the entire licence.
About Antrim
Antrim Energy Inc. is a Canadian, Calgary based junior oil and gas exploration and production company with assets in the UK North Sea and Ireland. Antrim is listed on the Toronto Stock Exchange (AEN) and on the London Stock Exchange's Alternative Investment Market (AEY). Visit www.antrimenergy.com for more information.
Forward-Looking and Cautionary Statements
This press release and any documents incorporated by reference herein contain certain forward-looking statements and forward-looking information which are based on Antrim's internal reasonable expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information. Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting", "forecast", "achieve" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. Antrim believes that the expectations reflected in those forward-looking statements and information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information included in this press release and any documents incorporated by reference herein should not be unduly relied upon. Such forward-looking statements and information speak only as of the date of this press release or the particular document incorporated by reference herein and Antrim does not undertake any obligation to publicly update or revise any forward-looking statements or information, except as required by applicable laws.
In particular, this press release and any documents incorporated by reference herein, contain specific forward-looking statements and information pertaining to the quantity of and future net revenues from Antrim's reserves of oil, natural gas liquids ("NGL") and natural gas production levels. This press release may also contain specific forward-looking statements and information pertaining to Antrim's plans for exploring and developing its licences, including exploration of the Skellig block, future development plans with respect to its properties in Cormorant East Field, Causeway Field, Ireland and Tanzania, commodity prices, foreign currency exchange rates and interest rates, capital expenditure programs and other expenditures, supply and demand for oil, NGL's and natural gas, expectations regarding Antrim's ability to raise capital, to continually add to reserves through acquisitions and development, the schedules and timing of certain projects, Antrim's strategy for growth, Antrim's future operating and financial results, treatment under governmental and other regulatory regimes and tax, environmental and other laws.
With respect to forward-looking statements contained in this press release and any documents incorporated by reference herein, Antrim has made assumptions regarding Antrim's ability to obtain additional drilling rigs and other equipment in a timely manner, obtain regulatory approvals, future oil and natural gas production levels from Antrim's properties and the price obtained from the sales of such production, the level of future capital expenditure required to exploit and develop reserves, the ability of Antrim's partners to meet their commitments as they relate to the Company and Antrim's reliance on industry partners for the development of some of its properties, Antrim's ability to meet is obligations under the payment swap and the forward sale of 657,350 barrels Brent oil crude, the general stability of the economic and political environment in which Antrim operates and the future of oil and natural gas pricing. In respect to these assumptions, the reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.
Antrim's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of assumptions proving inaccurate and of both known and unknown risks, including risks associated with the exploration for and development of oil and natural gas reserves such as the risk that drilling operations may not be successful, unanticipated delays with respect to the development of Antrim's properties, operational risks and liabilities that are not covered by insurance, volatility in market prices for oil, NGLs and natural gas, changes or fluctuations in oil, NGLs and natural gas production levels, changes in foreign currency exchange rates and interest rates, the ability of Antrim to fund its substantial capital requirements and operations and to repay its obligations under the payment swap and Brent oil commodity swap, Antrim's reliance on industry partners for the development of some of its properties, risks associated with ensuring title to the Company's properties, liabilities and unexpected events inherent in oil and gas operations, including geological, technical, drilling and processing problems the risk of adverse results from litigation, the accuracy of oil and gas reserve estimates and estimated production levels as they are affected by the Antrim's exploration and development drilling and estimated decline rates, in particular the future production rates at the Causeway and Cormorant East Fields in the UK North Sea. Additional risks include the ability to effectively compete for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of acquisitions, Antrim's success at acquisition, exploitation and development of reserves, changes in general economic, market and business conditions in Canada, North America, the United Kingdom, Europe and worldwide, actions by governmental or regulatory authorities including changes in income tax laws or changes in tax laws, royalty rates and incentive programs relating to the oil and gas industry and more specifically, changes in environmental or other legislation applicable to Antrim's operations, and Antrim's ability to comply with current and future environmental and other laws, adverse regulatory rulings, order and decisions and risks associated with the nature of the Common Shares.
Many of these risk factors, other specific risks, uncertainties and material assumptions are discussed in further detail throughout this press release and in Antrim's annual information form for the year ended December 31, 2012. Readers are specifically referred to the risk factors described in this press release under "Risk Factors" and in other documents Antrim files from time to time with securities regulatory authorities. Copies of these documents are available without charge from Antrim or electronically on the internet on Antrim's SEDAR profile at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The calculation of barrels of oil equivalent ("boe") is based on a conversion rate of six thousand cubic feet of natural gas ("mcf") to one barrel of crude oil ("bbl"). Boe's 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.
In accordance with AIM guidelines, Mr. Kerry Fulton, P. Eng and Vice President, Operations for Antrim, is the qualified person that has reviewed the technical information contained in this press release. Mr. Fulton has over 30 years operating experience in the upstream oil and gas industry.
Antrim Energy Inc.
Consolidated Balance Sheet
As at March 31, 2013 (unaudited)
(Amounts in US$ thousands)
| | Note | March 31
2013 | | December 31
2012 | |
| Assets | | | | | |
| | Current assets | | | | | |
| | Cash and cash equivalents | | 1,023 | | 1,503 | |
| | Restricted cash | 3 | 22,590 | | 808 | |
| | Accounts receivable | | 331 | | 332 | |
| | Inventory and prepaid expenses | 4 | 3,558 | | 5,877 | |
| | | 27,502 | | 8,520 | |
| | | | | | |
| Property, plant and equipment | 5 | 91,393 | | 81,069 | |
| Exploration and evaluation assets | 6 | 7,798 | | 6,931 | |
| | | 126,693 | | 96,520 | |
| Liabilities | | | | | |
| | Current liabilities | | | | | |
| | | Accounts payable and accrued liabilities | | 19,733 | | 18,165 | |
| | | Current portion of financial derivative | 14 | 2,721 | | - | |
| | | Current portion of long-term debt | 7 | 9,639 | | - | |
| | | Deferred revenue | | - | | 1,089 | |
| | | 32,093 | | 19,254 | |
| | | | | | |
| Long-term debt | 7 | 13,166 | | - | |
| Financial derivative | 14 | 4,198 | | - | |
| Decommissioning obligations | 8 | 12,851 | | 10,270 | |
| | | 62,308 | | 29,524 | |
| | | | | | |
| Going concern | 1 | | | | |
| Commitments and contingencies | 13 | | | | |
| Subsequent event | 15 | | | | |
| | | | | | |
| Shareholders' equity | | | | | |
| Share capital | | 361,922 | | 361,922 | |
| Contributed surplus | | 20,943 | | 20,626 | |
| Accumulated other comprehensive income | | 4,581 | | 4,656 | |
| Deficit | | (323,061 | ) | (320,208 | ) |
| | | 64,385 | | 66,996 | |
| | | 126,693 | | 96,520 | |
The accompanying notes are an integral part of the interim consolidated financial statements.
Antrim Energy Inc.
Consolidated Statement of Comprehensive Loss
For the three months ended March 31, 2013 and 2012 (unaudited)
(Amounts in US$ thousands, except per share data)
| | | | |
| | | Three Months Ended
March 31 | |
| | Note | 2013 | | 2012 | |
| | | | | | |
| Revenue | | 11,991 | | - | |
| | | | | | |
| Expenses | | | | | |
| Direct production and operating expenditures | | 1,264 | | - | |
| General and administrative expenses | | 1,393 | | 1,471 | |
| Depletion and depreciation | 5 | 7,079 | | 24 | |
| Share-based compensation | 9 | 249 | | 112 | |
| Exploration and evaluation | | 1,774 | | - | |
| Impairment | | - | | 54,700 | |
| Finance income | | (2 | ) | (85 | ) |
| Finance costs | 11 | 2,572 | | 52 | |
| Loss on financial derivative | 14 | 379 | | - | |
| Foreign exchange loss | | 136 | | (183 | ) |
| Loss from continuing operations before income taxes | | (2,853 | ) | (56,091 | ) |
| Income tax expense | | - | | - | |
| Loss from continuing operations after income taxes | | (2,853 | ) | (56,091 | ) |
| Income from discontinued operations | | - | | 670 | |
| Net loss for the period | | (2,853 | ) | (55,421 | ) |
| | | | | | |
| Other comprehensive (loss) income | | | | | |
| Items that may be subsequently reclassified to profit or loss: | | | | | |
| | Foreign currency translation adjustment | | (75 | ) | 5,349 | |
| Other comprehensive (loss) income for the period | | (75 | ) | 5,349 | |
| Comprehensive loss for the period | | (2,928 | ) | (50,072 | ) |
| | | | | | |
| Net (loss) income per common share | | | | | |
| Basic & diluted - continuing operations | 10 | (0.02 | ) | (0.30 | ) |
| Basic & diluted - discontinued operations | 10 | - | | 0.00 | |
| | | | | | |
The accompanying notes are an integral part of the interim consolidated financial statements.
Antrim Energy Inc.
Consolidated Statement of Cash Flows
For the three months ended March 31, 2013 and 2012 (unaudited)
(Amounts in US$ thousands)
| | | | | | |
| | | Three Months Ended
March 31 | |
| | Note | 2013 | | 2012 | |
| Operating Activities | | | | | |
| Loss from continuing operations after income taxes | | (2,853 | ) | (56,091 | ) |
| Items not involving cash: | | | | | |
| | Depletion and depreciation | 5 | 7,079 | | 24 | |
| | Share-based compensation | 9 | 249 | | 112 | |
| | Interest from long-term debt facility | 7 | 1,361 | | - | |
| | Accretion of decommissioning obligations | 8 | 46 | | 35 | |
| | Change in financial derivative | 14 | 79 | | - | |
| | Foreign exchange loss (gain) | | 652 | | (381 | ) |
| | Impairment | | - | | 54,700 | |
| Changes in non-cash working capital items - continuing operations | 12 | (243 | ) | (8,713 | ) |
| Cash provided by (used in) operating activities - continuing operations | | 6,370 | | (10,314 | ) |
| Cash provided by operating activities - discontinued operations | | - | | 1,232 | |
| Cash provided by (used in) operating activities | | 6,370 | | (9,082 | ) |
| | | | | | |
| Financing Activities | | | | | |
| Proceeds from long-term debt facility | 7 | 30,000 | | - | |
| Issuance costs on long-term debt facility | | (1,423 | ) | - | |
| Cash provided by financing activities | | 28,577 | | - | |
| | | | | | |
| Investing Activities | | | | | |
| Capital expenditures | | (13,479 | ) | (6,043 | ) |
| Change in restricted cash | | (21,830 | ) | 11,638 | |
| Cash (used in) provided by investing activities - continuing operations | | (35,309 | ) | 5,595 | |
| Cash used in investing activities - discontinued operations | | - | | (668 | ) |
| Cash (used in) provided by investing activities | | (35,309 | ) | 4,927 | |
| | | | | | |
| Effects of foreign exchange on cash and cash equivalents | | (118 | ) | 748 | |
| Net increase (decrease) in cash and cash equivalents | | (480 | ) | (3,407 | ) |
| Cash and cash equivalents - beginning of period | | 1,503 | | 47,105 | |
| Cash and cash equivalents - end of period | 12 | 1,023 | | 43,698 | |
The accompanying notes are an integral part of the interim consolidated financial statements.
Antrim Energy Inc.
Consolidated Statement of Changes in Equity
For the three months ended March 31, 2013 and 2012 (unaudited)
(Amounts in US$ thousands)
| | | | | | | | | | | |
| |
Note | Number of common shares | Share capital | Contributed
surplus | Accumulated other comprehensive income | |
Deficit | |
Total | |
| | | | | | | | | | | |
| Balance, December 31, 2011 | | 184,116,078 | 361,587 | 19,579 | (5,971 | ) | (168,007 | ) | 207,188 | |
| Net loss for the period | | - | - | - | - | | (55,421 | ) | (55,421 | ) |
| Other comprehensive income | | - | - | - | 5,349 | | - | | 5,349 | |
| Share-based compensation | 9 | - | - | 161 | - | | - | | 161 | |
| Balance, March 31, 2012 | | 184,116,078 | 361,587 | 19,740 | (622 | ) | (223,428 | ) | 157,277 | |
| | | | | | | | | | | |
| Balance, December 31, 2012 | | 184,731,076 | 361,922 | 20,626 | 4,656 | | (320,208 | ) | 66,996 | |
| Net loss for the period | | - | - | - | - | | (2,853 | ) | (2,853 | ) |
| Other comprehensive loss | | - | - | - | (75 | ) | - | | (75 | ) |
| Share-based compensation | 9 | - | - | 317 | - | | - | | 317 | |
| Balance, March 31, 2013 | | 184,731,076 | 361,922 | 20,943 | 4,581 | | (323,061 | ) | 64,385 | |
| The accompanying notes are an integral part of the interim consolidated financial statements. | | | | | |
Contact Information:
Antrim Energy Inc.
Stephen Greer
President & CEO
(403) 264-5111