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An Important Investor Update on a Major Supercycle Petro Play in Northern Iraq

Dave Jackson Dave Jackson, Stockhouse
12 Comments| November 10, 2021

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Investors in the resource sector – particularly the oil & gas industry – know that the profitability of the multi-billion dollar multi-nationals is tied to fluctuation price of the commodity. In short, basic Economics 101.

And as savvy investors know petroleum is poised to soar from the new oil supercycle.

But where real value and opportunity exist here is with the smaller, more agile juniors with less overhead and newer, underexplored projects and properties.

One such company is ShaMaran Petroleum Corp. (TSX-V.SNM, OTCMKTS: SNM, Forum). When we last caught up with the low-cost, junior oil and gas explorer in Kurdistan Iraq, and its CEO Dr. Adel Chaouch, we talked about the company’s major oil discovery on its Atrush Block. After a successful appraisal program, ShaMaran developed the field from scratch and put it into production in 2017 and is now the third largest producer in Kurdistan.

To date, over 50 million barrels of oil have been produced


(Click image to enlarge)


Now, Stockhouse Editorial is going to take a deeper dive into this unique company to get shareholders and investors up-to-date on a number of exciting new company initiatives and what to expect looking forward with this very busy, and very focused oil development and exploration company, specifically with its vast Atrush Block located in the Kurdistan region of Northern Iraq.

In 2021 the Atrush field gross average daily production is expected to range from 39,000 barrels of oil per day to 44,000 bopd (barrels of oil per day) and the company continues to be on track to achieve this. In September, the company passed a major milestone of 50 million barrels cumulative production.

At present, the Atrush operating expenditure is forecast to be USD$80million (USD$22 million net to ShaMaran) for this year. Additionally, Atrush’s average lifting costs per barrel are estimated to range from USD$4.70 to USD$5.70.

With further development, this field offers significant production growth potential. ShaMaran is a member of the Lundin Group of Companies. Billions of dollars in financing have been raised to develop Lundin Group projects around the world. The twelve companies operated by the Lundins are actively engaged in the exploration, development and production of oil and gas, gold, copper, zinc, lead, silver, nickel, and diamonds.

The Vancouver BC-based Lundin Group operates in more than 25 different countries and has been highly commended by local communities and governments for efforts in developing a set of protocols that ensure issues of environmental and cultural concern are addressed as well as economic benefits and employment opportunities.


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"It's a whole different story this year – the world has changed, and our story has changed for the best.”

— Dr. Adel Chaouch, President and CEO, ShaMaran Petroleum Corp.



In the News

Unlike at lot juniors in this space, ShaMaran continues to produce oil….and…revenue. At press time, the company has more than doubled shareholder value in year to date:


(12 month TSX-V.SNM stock chart Nov 2020 – Nov 2021. Click image to link to chart)


On November 3rd, the company confirmed receipt of payment for the August 2021 Atrush sales and entitlements at $32.1 million ($11.8 million net to the company). The company was also in receipt of $1.97 million net to the Company as an instalment in the Kurdistan Regional Government receivable repayment mechanism. This instalment reduces the KRG’s outstanding receivable amount owed to the Company to $25.92 million. Shamaran continues to be in dialogue with the KRG on its amendment proposal.

On September 27th, ShaMaran and its President & CEO Dr. Adel Chaouch was selected as a 2021 S&P Global Platts Global Energy Awards Finalist – one of the most prestigious awards offered in the sector. In fact, ShaMaran is a finalist in the category "Award of Excellence – Upstream Transformation" and Dr. Chaouch is a finalist in the category "Chief Trailblazer of the Year". In addition to optimized operational practices, the winner will have clearly demonstrated its commitment to emissions reductions, safer extraction techniques, and investments in technology, while providing economic benefits to its communities. Often described as "the Oscars of the Energy Industry", the S&P Global Platts Global Energy Awards showcase achievements in innovation, leadership, and company performance in 22 categories spanning the entire energy complex.

Traditionally, judges seek companies and individuals that have firmly weathered the recent downturn in the sector which was further heavily impacted by the COVID-19 crisis. For instance, creating innovative financial solutions, establishing world-class standards in exploration and production (E&P), reaching new levels of technical excellence, and bringing complex and/or intricate projects to completion.

And, as previously mentioned, just two weeks earlier, ShaMaran announced it had reached its 50 MMBbls production milestone at the Atrush block.

CEO Dr. Chaouch commented:

"This significant operational achievement is noteworthy as the production milestone has been achieved notwithstanding 2020's significantly reduced development program due to the global pandemic and collapse of world crude oil prices. This demonstrates that the Atrush joint venture has the ability to successfully navigate through the Kurdistan oil industry's difficult as well as good times."

Not the least of which in its acquisition strategy, on July 12th, ShaMaran reported its transformative acquisition of a TotalEnergies' Affiliate with an 18% interest in the Sarsang PSC in Kurdistan and new financings. Sarsang comprises two world class oil fields adjacent to Atrush.


Highlights of the Acquisition:

  • Adds immediate incremental participating interest production of approximately 5,000 bopd of light crude oil
  • Is expected to double ShaMaran's Q2 2021 average net production of 11,090 bopd following the completion of the processing facility expansion at Swara Tika field by mid-2022
  • Enhances ShaMaran's oil reserves through the addition of high API and low sulphur oil that achieves a low discount to Brent Crude
  • And, provides a low cost structure with life-of-field operating expenditure anticipated to be approximately USD 5.60/boe.


From the CEO

SH: To start off, Dr. Chaouch, can you update our investor audience and your company shareholders on any new operational developments since we last chatted?

AC: We have completely turned around the company – and it’s just the beginning. You know, when Covid first hit and the oil markets were collapsing we had huge debt payments due. It was a very tough time. But we faced things head on and re-negotiated our debt, put in strict Covid protocols, and brought in very successful operational efficiencies. In fact they were so efficient that we still met our production guidance despite all the difficulties during that time. I’m proud of that achievement.

SH: What are the long-term plans for the company moving into 2022 and beyond?

AC: We are going to grow this company. This most recent acquisition we did of the Sarsang fields is going to effectively double the company’s production and reserves in 2022. And like I said earlier, this is just the beginning. I am focused on growth – production, reserves and shareholder value.

SH: For our audience that might not be that familiar with the Iraqi-Kurdish petroleum exploration and production sector, can you give us a brief overview?

Click to enlargeAC: There is huge opportunity in the region. Host to a major oil trend that is underdeveloped. Lots of upside. Many people when they hear Iraq-Kurdistan they shy away - but in fact there is a good system in place and it is a very workable region to do business in. I’ve successfully carried out business there for years. The whole area is actually under-valued with much upside potential.

SH: I know you’re a humble and modest man, Dr. Chaouch, but you’ve accomplished a great deal in turning the company around, including the aforementioned award nomination. What do you attribute this to?

AC: I’m passionate about my work and love the industry that I’m in. I’m 100% committed to building our company and building value for our shareholders. I’ve always felt in my core that if you believe in what you are doing, great things are possible. Additionally, we have a great team at ShaMaran with decades of experience in the region that is equally committed to the mission of growth of the company. The success of the company would have not occurred without their dedication and hard work.


Investors Corner: ShaMaran in Synopsis

ShaMaran is a Kurdistan-focused oil development and exploration company which holds a 27.6% interest, through its wholly-owned subsidiary General Exploration Partners, Inc., in the Atrush Block and as announced in the Company's news release of July 12, 2021 upon successful closing of the acquisition from a TotalEnergies' affiliate will then also hold an 18% interest through its then wholly-owned subsidiary TEPKRI Sarsang A/S in the Sarsang Block.

ShaMaran is a Canadian oil and gas company listed on the TSX Venture Exchange and the Nasdaq First North Growth Market (Sweden) under the symbol "SNM" and is part of the "Lundin Group of Companies".


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Shamaran Petroleum Corp. - Video Q&A with CEO Dr. Adel Chaouch



(Click image to play video)


For more information, please visit www.shamaranpetroleum.com


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

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