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Oryx Petroleum Q1 2018 Financial and Operational Results

08 May 2018

Calgary, Alberta, May 8, 2018

 

11% increase in Revenues versus Q4 2017; Lower Operating Expenses; Positive Operating Cash Flow2; Agreement to sell interests in the Haute Mer B license area

Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the three months ended March 31, 2018. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

 

Financial Highlights:

  • Total revenues of $13.9 million on working interest sales of 222,700 barrels of oil (“bbl”) and an average realised sales price of $56.31/bbl for Q1 2018
    - 76% increase in revenues versus Q1 2017; 11% increase in revenues versus Q4 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 January 2018. Oryx Petroleum’s entitlement share of amounts receivable from oil sale deliveries for the months of February, March and April 2018 is $5.4 million 
  • Operating expenses of $3.1 million ($14.04/bbl) and an Oryx Petroleum Netback(1) of $19.70/bbl for Q1 2018
    - 44% and 18% decrease in operating expenses per barrel versus Q1 2017 and Q4 2017, respectively
    - Oryx Petroleum Netback(1) increased by 52% to a quarterly record in Q1 2018 versus Q4 2017
  • Net loss of $4.3 million ($0.01 per common share) in Q1 2018 versus net profit of $4.1 million in Q1 2017 ($0.02 per common share)
  • Operating Cash Flow(2) for Q1 2018 was $2.0 million compared to negative $2.4 million for Q1 2017 and negative $0.3 million for Q4 2017. The Corporation's improved Operating Cash Flow(2) is primarily due to higher Oryx Petroleum Netbacks(1) which have contributed cash in excess of cash general and administrative expenditures
  • Net cash used in operating activities was $2.6 million versus $2.2 million net cash generated in Q1 2017 comprised of positive Operating Cash Flow(2) of $2.0 million offset by a $4.6 million increase in non-cash working capital
  • Net cash used in investing activities during Q1 2018 was $8.0 million including payments related to drilling and facilities work in the Hawler license area, seismic interpretation costs in the AGC Central license area, and cash calls to fund the Haute Mer B license area that will be reimbursed upon closing of the Corporation's transfer of its interests in the Haute Mer B license area
  • $27.9 million of cash and cash equivalents as of March 31, 2018

(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.

 

Operations Update:

  • Average gross (100%) oil production of 3,800 bbl/d (working interest 2,500 bbl/d) for Q1 2018 vs 2,900 bbl/d (working interest 1,900 bbl/d) for Q1 2017
    - 31% increase in Q1 2018 versus Q1 2017 and unchanged versus Q4 2017
    - Average gross (100%) oil production of 4,000 bbl/d in April 2018
  • The Zey Gawra-2 appraisal well targeting the Cretaceous reservoir was spudded in January 2018, drilled to a measured depth of 2,120 metres, logged, completed, and is now producing on extended well test 
  • New wells targeting the Cretaceous reservoir at the Zey Gawra field and the Tertiary reservoir at the Banan field are expected to spud in Q2 2018. The well targeting the Zey Gawra Cretaceous will be drilled earlier than previously planned and will be the first well drilled in the Hawler license area utilising a horizontal well design
  • Final interpretation of 3D seismic data covering the AGC Central license area and prospect selection is ongoing with preparation for drilling in 2019 to follow
  • Farmout Agreement entered with a subsidiary of Total SA, operator of the Haute Mer B license offshore Congo (Brazzaville) (“Haute Mer B”), providing for the transfer of the Corporation's 30% participating interest in the Haute Mer B license area to the Total subsidiary or an affiliate.
    - Upon closing, Oryx Petroleum to receive cash consideration of $8.0 million plus $5.3 million reimbursement of costs incurred by Oryx Petroleum between January 1, 2018 and the date of the Farmout Agreement
    - Total has agreed to carry the Corporation's share of costs from the date of the Farmout Agreement to the closing of the transaction
    - The Farmout Agreement is subject to, among other conditions, (i) waiver of pre-emptive rights held by other partners in Haute Mer B, and (ii) the consent of such partners and the government of the Republic of Congo, to the transfer of the Oryx Petroleum interests
    - Closing of the transaction is expected before the end of June 2018

 

2018 Reforecasted Work Program and Capital Expenditures: 

  • 2018 capital expenditure have been reforecast to $52 million versus previous forecast of $48 million. 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.

 

Liquidity Outlook:

  • The Corporation expects cash on hand as of March 31, 2018, cash receipts from net revenues and export sales exclusively through the Kurdistan Region-Turkey Export Pipeline, and expected net proceeds from the transfer of its interests in the Haute Mer B license will allow it to fund its forecasted cash expenditures and operating and administrative costs and to meet its obligations through the end of 2018. Additional capital is likely required in the first half of 2019 to fund further development of the Hawler license area, the drilling in the AGC Central license area, and to meet its obligations.

 

CEO’s Comment
Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:

“In Q1 2018, production from the Hawler license was steady, we resumed our drilling program in the Hawler license, we continued to mature our exciting AGC Central exploration license, and we progressed divestment of our remaining non-core assets.

Gross (100%) oil production from the Hawler licence area averaged 3,800 bbl/d in Q1 2018 and 4,000 bbl/d in April 2018 versus an average of 2,900 bbl/d in Q1 2017 and 3,800 bbl/d in Q4 2017. All production has been sold via the export pipeline and payments for export sales through the end of January 2018 have been received in full.  Higher realised oil prices and lower operating expenses helped us achieve our highest quarterly netback and operating cash flow on record.

After a period of uncertainty following the Kurdistan Region independence referendum we resumed our drilling program by drilling the Zey Gawra-2 well targeting the Cretaceous reservoir. The well was successfully completed as a producer and is currently on extended well test. In recent weeks we have been working to optimise surface level processing facilities and production from existing wells.

The rig that drilled the Zey Gawra-2 well is now preparing to spud the Zey Gawra-3 well also targeting the Cretaceous reservoir. This will be the first well we drill in the Hawler license area with a horizontal well design. We expect such a design to result in higher oil production rates and better isolation from water and natural gas than we have achieved with vertical well designs to date. We are also mobilising a rig to drill a new well targeting the Banan Tertiary reservoir. Following those wells, the drilling or re-entry of four additional wells is planned in the Hawler license area in 2018.

During Q1 2018 we also continued to mature our interests in the AGC Central license area. Final interpretation and prospect selection are ongoing and drilling preparation will follow as we prepare for exploration drilling in 2019.

Recently we announced that we had entered into a definitive agreement to transfer our interest in the Haute Mer B license area in Congo (Brazzaville) to a subsidiary of Total SA for cash consideration and we expect the transaction to close during Q2 2018. We also expect to complete disposal of our interest in the Haute Mer A license area in Congo (Brazzaville), the last remaining non-core asset in our portfolio, in the coming months.

We expect that cash on hand, cash receipts from net revenues and the proceeds from the disposition of our interests in the Haute Mer B license will fund forecasted capital expenditures and operating and administrative costs through the end of 2018.

We look forward to continuing to implement 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.” 

 

Oryx_Petroleum_Press_Release_Q1_Results_2018.pdf