News

Oryx Petroleum 2017 Financial and Operational Results

07 March 2018

Calgary, Alberta, March 7, 2018

64% increase in Revenues; Receipt of full payment for oil export sales through November 2017; Re-commencement of appraisal drilling in the Hawler license area; Maturation of AGC Central license area

Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the year ended December 31, 2017. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

2017 Financial Highlights:

• Total revenues of $37.4 million on working interest sales of 779,200 barrels of oil (“bbl”) and an average realised sales price of $43.17/bbl for 2017
  - 64% annual increase in revenues versus 2016
  - Q4 2017 revenues increased 27% versus Q3 2017
  - The Corporation has received full payment in accordance with production sharing contract entitlements for all oil sale deliveries into the Kurdistan Export Pipeline through November 2017 
• Operating expenses of $15.5 million ($19.87/bbl) and an Oryx Petroleum Netback of $5.99/bbl
  - 7% decrease in operating expenses per barrel versus 2016
  - Oryx Petroleum Netback(1) increased by 43% to $12.92/bbl in Q4 2017 versus Q3 2017
• Net loss of $39.1 million ($0.11 per common share) in 2017 versus net loss of $65.7 million in 2016 ($0.31 per common share)
• Net cash used in operating activities was $9.7 million versus $11.5 million in 2016 comprised of negative Operating Cash Flow(2) of $5.4 million and a $4.3 million increase in non-cash working capital
• Net cash used in investing activities during 2017 was $22.3 million including payments related to drilling and facilities work in the Hawler license area, the settlement of the finance lease obligation related to the Demir Dagh production facilities, seismic processing and interpretation costs in the AGC Central license area, and reductions in accounts payable 
• $38.6 million of cash and cash equivalents as of December 31, 2017
• Total liabilities reduced by 20% versus year end 2016

 (1) Oryx Petroleum Netback is a non-IFRS measure. See the table below for a definition of and other information related to the term.
(2) Operating Cash Flow is a non-IFRS measure. See the table below for a definition of and other information related to the term.

2017 Operations Highlights:

• Average gross (100%) oil production of 3,300 bbl/d (working interest 2,100 bbl/d) for the year ended December 31, 2017 vs 2,500 bbl/d (working interest 1,600 bbl/d) for the year ended December 31, 2016
  - 32% increase in 2017 versus 2016
  - Successful re-completion of the ZAB-1 sidetrack (“ST”) well in the Cretaceous reservoir and increased production from the ZEG-1 ST well in the Cretaceous reservoir
• Gross (working interest) proved plus probable oil reserves of 122 million barrels as at December 31, 2017
• Processing and interpretation of 3D seismic data covering the AGC Central license area largely completed 
• Best estimate unrisked gross (working interest) prospective oil resources of 3,750 million barrels as at December 31, 2017
  - Upward revision of estimates for the AGC Central license area 
• Divestment/relinquishment of the OML 141 and AGC Shallow licences completed

2018 Operations Update:

• Average gross (100%) oil production of 3,600 bbl/d and 3,900 bbl/d in January and February 2018, respectively 
• The ZEG-2 appraisal well targeting the Cretaceous reservoir was spudded in January 2018 and drilled to a measured depth of 2,120 metres. The well is currently being logged and is expected to be completed as a producer in the coming weeks
• Preparations for drilling at the Banan field are underway with drilling expected to commence in Q2 2018
• Final interpretation of 3D seismic data covering the AGC Central license area is in advanced stages and is expected to be completed in the coming months with prospect selection and preparation for drilling to follow
• Recently accepted a non-binding offer to transfer the Corporation’s full interest in the Haute Mer B license area for cash consideration. 

2018 Forecasted Work Program and Capital Expenditures: 

• 2018 capital expenditure forecast of $48 million (versus $55 million budget). Most expenditures will be dedicated to further appraisal and early development of the Hawler license area in the Kurdistan Region of Iraq and finalisation of 3D seismic data and drilling preparation in the AGC Central license area. Forecast activities consist of:
  - $35 million dedicated to the Hawler license area: seven wells including one short-radius sidetrack well targeting the Demir Dagh Cretaceous reservoir, two wells targeting the Zey Gawra Cretaceous reservoir, re-entry of the existing Banan-2 well targeting the Banan Cretaceous reservoir and three wells targeting the Banan Tertiary reservoir; flowlines and required facilities modifications needed to accommodate incremental production
  - $13 million dedicated to the AGC Central license area including preparations for exploration drilling in 2019, and a contingent payment for 3D seismic acquisition and processing required upon the expected entry into the first renewal of the license’s exploration period in September 2018.

Liquidity Outlook:

• The Corporation expects cash on hand as of December 31, 2017 and cash receipts from net revenues and export sales exclusively through the Kurdistan Export Pipeline, will allow it to fund its forecasted cash expenditures and operating and administrative costs and to meet its obligations through the end of 2018. Beyond 2018, additional capital is likely required to fund further development of the Hawler license area and for drilling in the AGC Central license area. 

CEO’s Comment
Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:
“In 2017 we made significant progress in repositioning the company for the future. We increased production from the Hawler license area by 32% thanks to production from the Zey Gawra field. We also lowered per barrel operating costs which together with higher realised prices improved cash flow.
We matured our interests in the AGC Central license area. 3D seismic data acquired in late 2016 and early 2017 has been processed and interpretation is in advanced stages with final interpretation expected to be completed in the next couple of months. Based on initial interpretation, 11 prospects have been identified with best estimate unrisked gross (working interest) prospective oil resources of 3,450 million barrels.
During 2017 we completed a major recapitalisation of our balance sheet. We restructured and/or reduced all of our major liabilities and commitments and we raised equity capital from our major shareholders to fund our capital program through the end of 2018. We also made progress rationalising our license portfolio with the disposal of the OML 141 license area in Nigeria and the relinquishment of the AGC Shallow license area. In recent weeks we have accepted an offer to transfer our interest in the Haute Mer B license area in Congo (Brazzaville) for cash consideration and we expect that the disposal of our interest in the Haute Mer A license area in Congo (Brazzaville) will be completed in the coming months.
Our 2018 capital program is focused on our core license areas: the Hawler license area in the Kurdistan Region of Iraq, and the AGC Central license area offshore Senegal and Guinea Bissau. In the Hawler license area our program includes the drilling or re-entry of seven wells and has been designed to allow us to significantly increase production and better define the development potential of the three key fields in the license area. We recently finished drilling the first of the seven planned wells. The ZEG-2 well targets the Zey Gawra Cretaceous reservoir, and we expect to complete the well as a producer in the coming weeks. In the AGC Central license area, our forecasted capital expenditures include a final payment for the acquisition of 3D seismic data currently being interpreted, and preparations for exploration drilling planned in 2019.
We expect that cash on hand and cash receipts from net revenues will fund forecasted capital expenditures and operating and administrative costs through the end of 2018.
We look forward to implementing our plans in 2018 and achieving both higher production in the Hawler license area and preparing for an exciting exploration drilling program in the AGC Central license area in 2019.”