TORONTO, ONTARIO--(Marketwired - Aug. 9, 2013) -Candax Energy Inc. ("Candax" or the "Company") (TSX:CAX), a company focused on mature oil field development in Tunisia, today announced financial and operating results for the quarter ended June 30, 2013. The unaudited financial statements, notes and MD&A pertaining to the period are available on the System for Electronic Document Analysis and Retrieval ("SEDAR") atwww.sedar.com and by visiting www.candax.com. All monetary figures reported herein are U.S. dollars unless otherwise stated.
Selected Operational & Financial Highlights
- Production, net of royalties, for the quarter ended June 30, 2013 was 457 bopd compared to 321 bopd for the same period last year. The increase was a result of the implementation of a successful gas cycling production process on the El Bibane asset, which was partially offset by the loss of production due to a workover campaign in the Ezzouia field;
- Revenue for the quarter ended June 30, 2013 was $8.3 million compared to $3.8 million for the same period last year. The increase in revenue was due to the seasonal time interval between oil liftings, which resulted in 88,237 barrels of oil being transported to market during the second quarter;
- The Company reported a profit for the quarter ended June 30, 2013 of $nil compared to a loss of $1.9 million for the same period last year. The improvement in profit was due in part to the timing of the lifting and a deferred tax credit;
- As at June 30, 2013, Candax held cash and cash equivalents of $10.6 million;
- As at June 30, 2013, Candax had loans and borrowings of $33.9 million with a current-portion of $3.2 million;
- A workover campaign is currently underway on the Ezzouia asset's EZZ-9, EZZ-17 and EZZ-1 wells. The EZZ-1 workover has been completed and is on track to commence production in the coming days; and
- As previously announced, Candax has entered into an agreement with Oyster Oil & Gas Limited to sell its 10% interest in Madagascar Block 1101. The transaction has received initial government approval but is subject to final due diligence and is expected to close in the third quarter of 2013.
"Our second quarter was highlighted by our ongoing work program designed to boost Candax's overall production and reserves over the near-term," said Benoit Debray, Chairman and CEO of Candax. "We are currently in the midst of completing four workovers on our Ezzouia and Belli assets and will be acquiring a second gas compressor for our El Bibane asset later this year. We expect this to result in a near doubling of condensate production at El Bibane, the possible reopening of the Belli field, and a verification of remaining reserves at Ezzouia. These initial steps are the start of our broader plan to solidify a base of cash-yielding assets that are able to fund future exploration programs."
Review of Key Operations
During 2012, Candax consolidated its working interests for its main producing assets. As a result of these transactions, Candax now has 100% ownership of El Bibane, 100% ownership of Robbana and 45% ownership of Ezzaouia, on which Candax has partnered with ETAP, the Tunisian state oil and gas company. The streamlining of the Company's ownership interests allows Candax to develop its fields according to its own vision of their potential. El Bibane and Robbana are operated from Tunis by Ecumed, a 100% subsidiary of Candax. Ezzaouia is operated from Tunis by Maretap, a 50/50 joint venture between ETAP and Ecumed.
El Bibane
The encouraging results of the gas-cycling pilot program, which commenced in May 2012, more than doubled production when compared with the same quarter last year. The success of this program has subsequently enabled the design and planning of the next phase, which will be executed in two steps. The first step will be to increase the gas recompression facilities at the El Bibane onshore Central Processing Facilities (CPF) in order to facilitate the near doubling of condensate production from the field. A second gas compressor is scheduled for delivery in the fourth quarter of 2013, at which point the Company expects to achieve a production rate of more than 400 barrels of condensate per day. Current production during the first half of 2013 averaged approximately 250 bopd.
Following this, the second step will be to investigate, with the Company's Tunisian partners, the possibility of selling a maximum of 5 mmscf/d of natural gas to local buyers. Management anticipates that ongoing gas sales could contribute to optimum overall resource recovery by partially liberating dissolved gas present in the remains of the oil rim.
Ezzaouia
During the second quarter, production from the Ezzaouia asset decreased slightly to 193 bopd (net) from 204 bopd during the same period last year. This was a result of halted production from the EZZ-9, EZZ-17 and EZZ-1 wells. The Company is planning remedial workovers on these three wells and is anticipating them to resume production by the end of the third quarter.
At the end of June, the main producing well, EZZ-2, stopped producing due to a pressure-related issue between the casing and tubing. This resulted in the improper functioning of the jet pumping methodology used to produce from this well. Candax and its partners are assessing viable solutions to this halted production, including the possibility of incorporating EZZ-2 into the current workover campaign. Production from the Ezzaouia field is expected to increase to approximately 375 bopd (net) after the completion of these workovers.
Over the course of the year, Maretap, expects to bolster its workforce and expertise in order to consistently maintain total Ezzaouia field production within the range of 700 bopd and 1,000 bopd. Additionally, Maretap also plans to continue to perform G&G studies within the field, which could confirm significant potential for recoverable reserves. Candax views its involvement in Maretap as a strategic benefit intended to gain access to high quality resources and expertise in Tunisia.
Belli
After a 2012 review of Belli's historical performance that was conducted by Maretap, a workover was agreed upon for the BEL-1 well in order to reopen the field and test the Bou Dabbous formation. The well is currently accessing the water-bearing Abiod formation. The workover is scheduled to take place during the fourth quarter of 2013 and will allow the Company to test the Bou Dabbous formation with the intent of possibly recharging the reservoir. Assuming positive results, a three month extended production test will be performed prior to additional geoscience studies.