CALGARY, April 2, 2014 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon" or
the "Company") (TSXV: SDX), an oil and gas exploration and production
company with assets in Egypt, is pleased to announce its financial and
operating results for the three months and year ended December 31,
2013. All dollar values are expressed in United States dollars net to
the Company unless otherwise stated.
2013 Highlights:
Financial Highlights
-
Increased oil & gas sales for the year by 55% to 1,783 boepd as compared
to 1,147 boepd for 2012;
-
Increased Netbacks for the year by 19% to US$20.9MM (US$32.04/bbl) as
compared to US$17.5MM (US$41.72/bbl);
-
Realized Funds from Operations of US$5.4MM, a 69% increase as compared
to US$3.2MM in 2012;
-
Improved collection of Account Receivables to 31 days (current);
-
Invested US$7.1MM in capital expenditure in its assets;
-
Exited the year with cash and cash equivalents of US$4.3MM, working
capital of US$9.9MM and no debt;
-
Realized a Net Loss of US$7.7MM compared to 2012 of US$28.1MM. Net loss
in both 2013 and 2012 were driven by the impairment of the Kom Ombo
concession.
Operational Highlights
-
Appointed a new President, C.E.O, C.O.O., Mr. Paul Welch;
-
Consolidated the Company's activities into a London base and a Cairo
operations centre, creating a simpler and more effective structure;
-
Drilled 6 successful development wells in the North West Gemsa
concession, increasing sales volumes to 13,250 boepd now at plateau
(gross field, 10% net to the Company);
-
Completed the sale of the Kom Ombo concession as of November 1, 2013 for
cash consideration of US$6.0MM and a working capital and interim period
adjustment of US$1.3MM;
-
Completed the acquisition of NPC South Ramadan, located in the prolific
shallow offshore Gulf of Suez basin in Egypt, as of October 31, 2013
for US$0.6MM;
-
Was awarded a 100% interest in the South Disouq exploration concession
located in the south-western section of the onshore gas producing Nile
Delta basin;
-
Exited the year with production of 1,720 boepd (December production for
NW Gemsa and SHM).
Subsequent to year-end:
-
Collected US$2.1MM in outstanding accounts receivable, with a
receivables position of one month of production;
-
Successfully drilled the ASSE-19 development well as a Shagar and Rahmi
oil producer in NW Gemsa;
-
On February 12, 2014 paid the signature bonus of US$4.0MM for the South
Disouq concession;
-
On March 19, 2014 the South Disouq concession was ratified by the
Egyptian government;
Commenting, Paul Welch, President and CEO of Sea Dragon, said:
"2013 was a year of consolidation. The focus was on portfolio
management, improving internal efficiencies and streamlining our
systems; all of which we successfully accomplished. Looking ahead, Sea
Dragon has quality assets, which provide us with a platform from which
we can continue our growth. The Company remains in good financial
health; has extensive regional knowledge and understanding in the areas
in which we operate and as Egyptian market conditions continue to
improve, we believe we are well placed to capitalise on existing and
new opportunities as they arise".
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Three months ended
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Twelve months ended
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December 31
|
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December 31
|
S000's except per unit amounts
|
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|
2013
|
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2012
|
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2013
|
|
|
2012
|
|
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|
|
|
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|
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FINANCIAL
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil revenue
|
|
|
15,062
|
|
|
12,353
|
|
|
61,305
|
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|
44,998
|
Royalties
|
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|
(8,377)
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|
(6,496)
|
|
|
(32,350)
|
|
|
(23,804)
|
|
|
|
6,685
|
|
|
5,857
|
|
|
28,955
|
|
|
21,194
|
Gas revenue
|
|
|
102
|
|
|
-
|
|
|
301
|
|
|
-
|
Royalties
|
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(43)
|
|
|
-
|
|
|
(126)
|
|
|
-
|
|
|
|
59
|
|
|
-
|
|
|
175
|
|
|
-
|
NGL revenue
|
|
|
167
|
|
|
-
|
|
|
497
|
|
|
-
|
Royalties
|
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(70)
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|
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-
|
|
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(207)
|
|
|
-
|
|
|
|
97
|
|
|
-
|
|
|
290
|
|
|
-
|
Operating Costs
|
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|
(2,342)
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(578)
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|
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(8,562)
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(3,680)
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Netback (1)
|
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4,499
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|
|
5,279
|
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|
20,858
|
|
|
17,514
|
|
|
|
|
|
|
|
|
|
|
|
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Oil Sales (bbl/d)
|
|
|
1,570
|
|
|
1,273
|
|
|
1,627
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|
|
1,147
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Gas Sales (mcf/d)
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|
|
1,110
|
|
|
-
|
|
|
825
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|
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-
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Liquids Sales (bbl/d)
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24
|
|
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-
|
|
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18
|
|
|
-
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Total boe/d
|
|
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1,779
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1,273
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1,783
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1,147
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Net loss
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(1,071)
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(6,447)
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(7,708)
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(28,108)
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Cash and cash equivalents
|
|
|
4,287
|
|
|
5,658
|
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4,287
|
|
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5,658
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Cash and cash equivalents plus working capital
|
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9,879
|
|
|
6,645
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|
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9,879
|
|
|
6,645
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Total assets
|
|
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39,529
|
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52,006
|
|
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39,529
|
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52,006
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Debt
|
|
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-
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3,000
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|
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-
|
|
|
3,000
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Shareholders' equity
|
|
|
34,341
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|
41,250
|
|
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34,341
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|
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41,250
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Capital expenditures
|
|
|
1,625
|
|
|
1,358
|
|
|
7,137
|
|
|
8,355
|
Weighted average outstanding shares
|
|
|
376,459
|
|
|
376,459
|
|
|
376,459
|
|
|
376,459
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|
|
|
|
|
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|
|
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DRILLING
|
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Gross wells (number of wells)
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|
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2
|
|
|
1
|
|
|
7
|
|
|
10
|
success rate (%)
|
|
|
100
|
|
|
100
|
|
|
86
|
|
|
80
|
Net wells (number of wells)
|
|
|
0.2
|
|
|
0.1
|
|
|
0.7
|
|
|
2.6
|
success rate (%)
|
|
|
100
|
|
|
100
|
|
|
86
|
|
|
62
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COMPANY GROSS RESERVES (2)
|
|
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|
As at
December 31,
2013
|
|
|
|
As at
December 31,
2012
|
Proved
|
|
|
|
|
|
|
|
|
|
Natural gas (mmcf)
|
|
|
|
2,450
|
|
|
|
2,532
|
|
Oil and liquids (mbbl)
|
|
|
|
2,548
|
|
|
|
3,370
|
|
Total oil equivalent (mboe) (3)
|
|
|
|
2,956
|
|
|
|
3,792
|
|
|
|
|
|
|
|
|
|
Proved plus probable
|
|
|
|
|
|
|
|
|
|
Natural gas (mmcf)
|
|
|
|
3,119
|
|
|
|
3,897
|
|
Oil and liquids (mbbl)
|
|
|
|
3,228
|
|
|
|
5,894
|
|
Total oil equivalent (mboe) (3)
|
|
|
|
3,748
|
|
|
|
6,544
|
|
|
|
|
|
|
|
|
|
Proved plus probable plus possible
|
|
|
|
|
|
|
|
|
|
Natural gas (mmcf)
|
|
|
|
3,153
|
|
|
|
3,988
|
|
Oil and liquids (mbbl)
|
|
|
|
3,268
|
|
|
|
6,993
|
|
Total oil equivalents (mboe) (3)
|
|
|
|
3,794
|
|
|
|
7,658
|
|
|
|
|
|
|
|
|
|
|
|
|
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As at December 31
|
|
|
|
As at December 31
|
S000's except per unit amounts
|
|
|
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2013
|
|
|
|
2012
|
Net present value of future cashflows after tax ($000's) (3)
|
|
|
|
|
|
|
|
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Proved
|
|
|
|
|
|
|
|
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5% discount rate
|
|
|
|
41,620
|
|
|
|
45,015
|
10% discount rate
|
|
|
|
35,574
|
|
|
|
38,433
|
15% discount rate
|
|
|
|
31,113
|
|
|
|
33,499
|
|
|
|
|
|
|
|
|
|
Proved plus probable
|
|
|
|
|
|
|
|
|
5% discount rate
|
|
|
|
50,452
|
|
|
|
77,290
|
10% discount rate
|
|
|
|
42,137
|
|
|
|
62,115
|
15% discount rate
|
|
|
|
36,189
|
|
|
|
51,593
|
|
|
|
|
|
|
|
|
|
Proved plus probable plus possible
|
|
|
|
|
|
|
|
|
5% discount rate
|
|
|
|
50,980
|
|
|
|
105,255
|
10% discount rate
|
|
|
|
42,526
|
|
|
|
82,754
|
15% discount rate
|
|
|
|
36,489
|
|
|
|
67,259
|
|
|
|
|
|
|
|
|
|
Reserve life index (years) (4)
|
|
|
|
|
|
|
|
|
Proved
|
|
|
|
4.7
|
|
|
|
8.2
|
Proved plus probable
|
|
|
|
5.9
|
|
|
|
14.1
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(1)
|
Netback is a non-GAAP measure that represents sales net of all operating
expenses and government royalties. Management believes that netback is
a useful supplemental measure to analyze operating performance and
provide an indication of the results generated by the Company's
principal business activities prior to the consideration of other
income and expenses. Management considers netbacks an important measure
as it demonstrates the Company's profitability relative to current
commodity prices. Netback may not be comparable to similar measures
used by other companies.
|
(2)
|
Company gross reserves are gross working interest reserves before the
deduction of royalties as determined by the Company's independent
reserves evaluators.
|
(3)
|
As determined by Ryder Scott, the Company's independent reserves
evaluators. Estimated values of future net revenue disclosed do not
represent fair market values.
|
(4)
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Calculated by dividing the Company's gross reserves by the 2013 fourth
quarter production rate
|
(5)
|
Disclosure provided herein in respect of BOEs 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.
|
CEO's Message:
We have made significant progress in 2013 towards achieving our
strategic objectives set out at the start of the year. We have
increased our sales volumes by 55% and increased revenue collection.
We restructured our asset base with the sale of Kom Ombo and the
purchase of South Ramadan. The sale, which took place in October 2013
for proceeds of US$7.3MM, provided funds which were reinvested into our
Gulf of Suez fairway, where we purchased a 12.75% equity interest in
the South Ramadan concession. This asset supplemented our acquisition,
in December of 2012, of the Shukheir Marine concession which is in the
same section of the Gulf of Suez. This is an area we have been
consistently developing, and an area in which we have a solid
understanding of the geology and operating environment. Earlier in the
year, we were awarded the South Disouq concession as a result of a
successful bid in the EGAS bid round. The block sits in the same
geologic section of the Nile Delta where management had its previous
success discovering the large El Wastani field with over 500BCF of
original gas in place and offers analogous potential.
After consolidating our activities into a London base and Cairo
operations centre, we now have a simpler and more effective structure.
This has enabled us to refocus our resources and management time on
areas which we believe offer the most potential to deliver return to
shareholders. Financially, we have collected all local accounts
receivables and also paid back all our debt balances. This leaves us
with the financial flexibility to move Sea Dragon forward and
capitalize on the active deal potential pipeline Egypt has to offer.
Operationally we have made solid progress in the Gulf of Suez fairway.
During 2013 we drilled six successful development wells at NW Gemsa
with Al Amir SE 17 development well testing at a rate of 3,664 bopd one
of our highest test rates to date; reinforcing the potential of the
area for production and cash flow.
Gross sales volumes for 2013 increased to 13,250 boepd, now at plateau
(net 1,325) and 380 boepd at NW Gemsa and Shukheir Marine respectively.
Looking ahead the 2014 work plan for NW Gemsa includes three new
development wells and one work-over with the objective of maintaining
production at the current plateau rate. At Shukheir Marine the
technical review we completed identified additional prospectivity which
is why we have applied for a 10 year extension. Government discussion
is expected to be concluded during the first half of the year which
will determine the work programme for the concession in 2014 and
beyond. Exploration and Development activities are anticipated in South
Ramadan while technical studies combined with farm-out activities are
planned for South Disouq. The team is well placed to execute on our
2014 objectives of acquiring assets and developing their potential with
the goal of doubling production and reserves within 18-24 months, and
as a result, increasing stakeholder value.
Reserves:
The decrease in reserves year on year results primarily from the sale of
the Kom Ombo during the period. The Kom Ombo reserves impact is most
notable in the 2P and 3P categories where they represent 46% (1.29
MMboe) and 58% (2.26 MMboe) of the change in terms of volume
respectively. Regarding value, the change is even more pronounced with
the Kom Ombo sale accounting for 81% (US$ 19.98MM) of the 2P change and
88% (US$40.23MM) of the 3P change. 1P values were not significantly
impacted by the Kom Ombo sale due to the relatively small volume of 1P
reserves that were carried for the asset.
The NW Gemsa waterflood program that was implemented in both the Shagar
and Rahmi horizons performed well in 2013, and as a result, the
recovery efficiency in these intervals has increased. Our NW Gemsa
asset continues to deliver superior value and performance and we
anticipate this to continue in future periods.
|
|
|
|
|
|
|
|
Proved Plus
|
Company gross reserve reconciliation (mboe)
|
|
|
|
|
Proved
|
|
|
Probable
|
December 31, 2012 Reserves (mboe)
|
|
|
|
|
3,792
|
|
|
6,544
|
2013 Production (mboe)
|
|
|
|
|
(595)
|
|
|
(595)
|
Dispositions (mboe)
|
|
|
|
|
(378)
|
|
|
(1,288)
|
Net Technical and Commercial Revisions (mboe)
|
|
|
|
|
137
|
|
|
(912)
|
December 31, 2013 Reserves (mboe)
|
|
|
|
|
2,956
|
|
|
3,749
|
Company gross reserves
|
|
|
Natural Gas
|
|
|
Liquids
|
|
|
Oil
|
|
|
Total
|
Reserves Category
|
|
|
(mmcf)
|
|
|
(mbbls)
|
|
|
(mbbls)
|
|
|
(mboe)
|
Proved: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Producing
|
|
|
1,350
|
|
|
34
|
|
|
1,421
|
|
|
1,680
|
|
Proved Non-Producing & Proved Undeveloped (2)
|
|
|
1,100
|
|
|
27
|
|
|
1,066
|
|
|
1,276
|
Total Proved
|
|
|
2,450
|
|
|
61
|
|
|
2,487
|
|
|
2,956
|
Probable (3)
|
|
|
669
|
|
|
17
|
|
|
664
|
|
|
792
|
Total Proved Plus Probable (3)
|
|
|
3,119
|
|
|
78
|
|
|
3,150
|
|
|
3,748
|
Possible (4)
|
|
|
34
|
|
|
-
|
|
|
40
|
|
|
46
|
Total Proved Plus Probable Plus Possible (4)
|
|
|
3,153
|
|
|
78
|
|
|
3,190
|
|
|
3,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET PRESENT VALUE AFTER INCOME TAX (000'S)
|
|
|
Discount Factor
|
Reserves Category
|
|
|
0%
|
|
|
5%
|
|
|
10%
|
|
|
15%
|
Proved:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Producing
|
|
|
27,231
|
|
|
24,102
|
|
|
21,708
|
|
|
19,819
|
|
Proved Non-Producing & Proved Undeveloped (2)
|
|
|
22,925
|
|
|
17,518
|
|
|
13,866
|
|
|
11,294
|
Total Proved
|
|
|
50,156
|
|
|
41,620
|
|
|
35,574
|
|
|
31,113
|
Probable (3)
|
|
|
12,479
|
|
|
8,832
|
|
|
6,563
|
|
|
5,076
|
Total Proved Plus Probable (3)
|
|
|
62,635
|
|
|
50,452
|
|
|
42,137
|
|
|
36,189
|
Possible (4)
|
|
|
755
|
|
|
528
|
|
|
389
|
|
|
300
|
Total Proved Plus Probable Plus Possible (4)
|
|
|
63,389
|
|
|
50,980
|
|
|
42,526
|
|
|
36,489
|
Reserves and Netbacks
|
|
|
|
Proved
|
|
|
|
Proved Plus
Probable
|
2013 Capital expenditures ($000's)
|
|
|
|
6,736
|
|
|
|
6,736
|
Change in future development costs
|
|
|
|
(6,558)
|
|
|
|
(16,998)
|
|
|
|
|
|
|
|
|
|
Total costs
|
|
|
|
178
|
|
|
|
(10,262)
|
|
|
|
|
|
|
|
|
|
Net revisions (mboe)
|
|
|
|
(836)
|
|
|
|
(2,795)
|
|
|
|
|
|
|
|
|
|
2013 Netback ($/bbl)
|
|
|
|
32.04
|
|
|
|
32.04
|
Net Asset Value
|
|
|
|
|
2013
|
|
|
|
2012
|
Net present value of oil and gas reserves after income tax, discounted
at 10%
|
|
|
|
$
|
42,137
|
|
|
$
|
62,115
|
Working capital
|
|
|
|
$
|
9,931
|
|
|
$
|
6,143
|
Net asset value
|
|
|
|
$
|
52,067
|
|
|
$
|
68,258
|
Shares outstanding (000's)
|
|
|
|
|
376,459
|
|
|
|
376,459
|
Net asset value per share
|
|
|
|
$
|
0.14
|
|
|
$
|
0.18
|
The disclosures required in accordance with National Instrument 51-101
of the Canadian Securities Administrators are available on the
Company's Annual Information Form to be filed on the SEDAR website at www.sedar.com.
Reserve estimates have been calculated in compliance with the National
Instrument 51-101 Standards of Disclosure ("NI 51-101"). Under NI
51-101, proved reserves are defined as reserves that can be estimated
with a high degree of certainty to be recoverable with a target of a 90
percent probability that the actual reserves recovered over time will
equal or exceed proved reserve estimates, while probable reserves are
defined as having an equal (50%) probability that the actual reserves
recovered will equal or exceed the proved and probable reserve
estimates. In accordance with NI 51-101, proved undeveloped reserves
have been recognized in cases where plans are in place to bring the
reserves on production within a short, well defined time frame. Proved
undeveloped reserves often involve infill drilling into existing pools.
Of the net present value of the Company's reserves, 100 percent were
evaluated by an independent third party engineer, Ryder Scott Company,
Houston, Texas, U.S.A. ("Ryder Scott") in their report dated February
24, 2014.
Certain statements contained in this press release constitute
"forward-looking statements" as such term is used in applicable
Canadian and US securities laws. These statements relate to analyses
and other information that are based upon forecasts of future results,
estimates of amounts not yet determinable and assumptions of
management. In particular, statements concerning the 2014 drilling and
capital expenditure programs of the NW Gemsa, Shukheir Marine, south
Ramadan and South Disouq Concessions and the results referenced or
implied herein should be viewed as forward-looking statements.
Any statements that express or involve discussions with respect to
predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or are not statements of historical fact
and should be viewed as "forward-looking statements". All reserves
information contained herein as well as the net present value of such
reserves should be considered as forward looking statements. Such
forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such risks and other
factors include, among others, costs and timing of exploration and
production development, availability of capital to fund exploration and
development and political, social and other risks inherent in carrying
on business in Egypt. There can be no assurance that such statements
will prove to be accurate as actual results and future events could
vary or differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
statements contained in this news release.
Forward-looking statements are made based on management's beliefs,
estimates and opinions on the date the statements are made and the
Corporation undertakes no obligation to update forward-looking
statements and if these beliefs, estimates and opinions or other
circumstances should change, except as required by applicable law.
Although Sea Dragon has attempted to identify important factors that
could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other
factors that cause actions, events or results not to be as anticipated,
estimated or intended. Investors are cautioned that such
forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those currently anticipated. See
Sea Dragon's Annual Information Form for the year ended December 31,
2012 for a description of the risks and uncertainties associated with
the Company's business, including its exploration activities. The
forward-looking statements contained herein are expressly qualified by
this cautionary statement.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER
(AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE)
ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE RELEASE.
SOURCE Sea Dragon Energy Inc.