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How Sustainable Methods Help this Oil & Gas Co. Achieve Success

Stockhouse Editorial
1 Comment| May 10, 2021

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(Image via ShaMaran Petroleum Corporation.)

Investors in the energy sector, specifically oil and gas, have been talking about the recent news from Sweden’s Lundin Energy AB (OMX: LUNE), who announced in late April 2021 that it had sold the world’s first ever certified carbon neutrally produced oil to Italian refiner Saras S.p.A, from its Edvard Grieg field, offshore Norway.

It will see roughly 600,000 barrels of Edvard Grieg crude supplied, resulting in 2,302 tonnes residual CO2 emissions captured using high quality, nature-based solutions. This achievement comes as oil companies continue to work towards producing and marketing their products in a cleaner fashion to advance the business of capturing fossil fuels in an industry that is seeing a greater push among regulators, activists, and investors to see more work done to curb climate change.

This is great news as well as great inspiration for Kurdistan-focused oil production and development Company, ShaMaran Petroleum Corp. (TSX-V: SNM, OTC: SHASF, Forum), who, along with Lundin Energy, is part of the Lundin Group of Companies. Some of the many advantages of being part of the Lundin Group are that the companies can share with each other experiences and know-how on developing more environmentally sustainable operations.

SNM holds a 27.6% working interest in the Atrush Block, located in the Kurdistan region of Iraq. In 2021 the Atrush field gross average daily production is expected to range from 39,000 barrels of oil per day (bopd) to 44,000 bopd. With further development, the field offers significant production growth potential.

The Company’s leadership team believes strongly in the importance of a sensible Environment, Social and Governance (ESG) policy for all its business dealings. These ESG efforts measure the sustainability and societal impact of an investment in a company or business. ESG investing is also a risk-management strategy and some companies that are not run sustainably can be less viable long-term.

Via the Company’s own ESG policy statement, it has been protecting and safeguarding the environment in all business decisions. Its Atrush 2021 capital program includes drilling and completion of a production well with targeted offtake rates of more than 4,000 bopd as well as the initiation of the gas solution project, which will significantly reduce emissions and operating costs from reliance on diesel use.

In Kurdistan, the Company has held Operated and Non-Operated positions, with a focus on developing the world-class Atrush asset. The Atrush partnership has been at the forefront of strong environmental protection strategies such as the implementation of the first dedicated water reinjection well in the Kurdistan region, the deployment of stringent site restoration measures as well as waste management practices. The Atrush partnership remains committed to mitigating risks that could harm the environment in its ongoing development of this asset.

On the social side of the equation, the ShaMaran team strives to be a partner of choice in the communities where it conducts business, with a strong commitment to optimizing local content.

Prior to the commencement of the Atrush oil production, the Atrush partnership in Kurdistan conducted a socio-economic survey in coordination with the Ministry of Natural Resources of the Kurdistan Regional Government, and accordingly a five-year plan has been created and implemented in the Atrush block for local communities.

As per the Company’s own governance policy, it adheres to its Code of Business Conduct and Ethics, which is a code that all its employees, directors and officers are required to follow, as well as its agents, representatives, and consultants.

The Company recently received payment of $45.5 million ($15.4 million net to the Company) from the Kurdistan Regional Government for the monthly Atrush oil sales and entitlements invoiced for January and February 2021. In addition, the Company has also been paid $3.44 million as the first two monthly payments implementing the KRG's repayment mechanism for receivables owed to the Company.

The Company also just purchased and retired its Bonds in the principal amount of $10 million. The Company's Bond amortization payment due in December 2021 has accordingly been reduced by 67%, from $15 million down to $5 million. Commenting on this in an April 2021 news release, ShaMaran’s President and Chief Executive Officer, Dr. Adel Chaouch explained that, as a result of continued sustained production in the Atrush field, Q1 2021’s increase in oil prices and ShaMaran’s financial discipline, the Company has been able to utilize its free cash to make purchases in the market at commercially attractive rates as permitted by an amendment to its Bond terms.

“ShaMaran is determined to reduce its debt obligations and the Company looks forward to further progress reports over the remainder of 2021.

ShaMaran’s focus on financial discipline and paying down our debt has resulted in extremely positive results for the Company. Our Q1 EBITDA of $13.5 million is more than double that of the same period last year, and we achieved a positive net income of $2.5 million for the quarter.

Of course, the true mark of success of a company lies not only on financials but on the success of its social license as well. We are excited about and committed to achieving real results in terms of our ESG and Climate programs and we will keep our shareholders updated on this.”

ShaMaran Petroleum Corporation is an exciting play for oil and gas investors, especially considering that the Company reported a 39% increase in 2020 oil production versus 2019. Investors would be wise to deepen their due diligence into this Company ahead of more exciting news to come in 2021.

FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.

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