News

Oryx Petroleum Q2 2018 Financial and Operational Results

08 August 2018

Calgary, Alberta, August 8, 2018

Sizable increases in production, revenues and operating funds flow with three wells added in recent months

Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the three and six months ended June 30, 2018. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

Financial Highlights:

• Total revenues of $17.9 million on working interest sales of 262,000 barrels of oil (“bbl”) and an average realised sales price of $61.51/bbl for Q2 2018
  - 152% increase in revenues versus Q2 2017; 29% increase in revenues versus Q1 2018
  - The Corporation has received full payment in accordance with production sharing contract entitlements for all oil sale deliveries into the Kurdistan Region-Turkey Export Pipeline through April 2018. Oryx Petroleum’s entitlement share of amounts receivable from oil sale deliveries for the months of May, June and July 2018 is $13.7 million 

• Operating expenses of $3.6 million ($13.86/bbl) and an Oryx Petroleum Netback of $23.00/bbl for Q2 2018
  - 42% decrease in operating expenses per barrel versus Q2 2017
  - Oryx Petroleum Netback2 in Q2 2018 highest on record for a quarter

• Net loss of $3.5 million ($0.01 per common share) in Q2 2018 versus net loss of $9.2 million in Q2 2017 ($0.03 per common share)
• Operating Funds Flow1 for Q2 2018 was $4.1 million compared to negative $2.1 million for Q2 2017 and positive $2.0 million for Q1 2018. The Corporation’s improved Operating Funds Flow1 is primarily due to higher production and a higher Oryx Petroleum Netback2 which have contributed cash in excess of cash general and administrative expenditures
• Net cash used in operating activities was $1.6 million in Q2 2018 versus $1.2 million in Q2 2017. Net cash used in operating activities for Q2 2018 was comprised of positive Operating Funds Flow1 of $4.1 million and a $5.7 million increase in non-cash working capital
• Net cash used in investing activities during Q2 2018 was $5.0 million including payments related to drilling and facilities work in the Hawler license area and seismic interpretation costs in the AGC Central license area
• $21.3 million of cash and cash equivalents as of June 30, 2018

1. Operating Funds Flow is a non-IFRS measure. See the table below for a definition of and other information related to the term
2. Oryx Petroleum Netback 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 6,100 bbl/d in July 2018 and 4,400 bbl/d (working interest 2,900 bbl/d) for Q2 2018 vs 2,900 bbl/d (working interest 1,900 bbl/d) for Q2 2017
  - 52% increase in Q2 2018 versus Q2 2017 and 16% increase versus Q1 2018
• The Banan-3 appraisal well targeting the Tertiary reservoir was spudded in May 2018, drilled to a measured depth of 500 metres, completed in open hole, and placed on extended test in early June
  - Average gross (100%) oil production of approximately 1,600 bbl/d for the month of July 2018
  - Gravity of stock tank oil has been measured at 26 degrees API with sulphur measured at 4%
  - The well demonstrates the productivity of the Tertiary reservoir at the Banan West field and management expects that oil reserves will be booked in this reservoir for the first time in 2018 
• The Zey Gawra-3 appraisal well targeting the Cretaceous reservoir was spudded in May 2018, drilled to a measured depth of 2,100 metres utilising a horizontal well design, completed, stimulated, and placed on extended test in late June
  - Average gross (100%) oil production of approximately 800 bbl/d for the month of July 2018 and 1,700 bbl/d over the past 10 days
  - Gravity of stock tank oil has been measured at 35 degrees API
  - Horizontal well design enabled an isolation of the producing interval from overlying gas and underlying water in the reservoir
• Completion of the Banan-2 well in the Cretaceous reservoir was successfully completed and placed on extended test in late July 2018
  - Average gross (100%) oil production of approximately 1,100 bbl/d over the last 5 days with rate increases expected in the coming days
  - Gravity of stock tank oil has been measured at 21 degrees API 
• Four additional new wells and one workover are planned for the remainder of 2018 targeting the Cretaceous reservoir at the Zey Gawra field, the Tertiary reservoir at the Banan field, and the Cretaceous reservoir at the Demir Dagh field, subject to performance of existing wells and funding availability
  - Infrastructure work needed to enable drilling of additional wells at the Banan and Zey Gawra fields has commenced
• Further interpretation of 3D seismic data covering the AGC Central license area and prospect ranking is ongoing with preparation for drilling to follow
• Sale of the Corporation’s 30% interest in the Haute Mer B license offshore Congo (Brazzaville) (“Haute Mer B”) to a subsidiary of Total SA, concluded in April 2018, is expected to close during the third quarter of 2018
  - Upon closing, Oryx Petroleum expects 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 agreement

2H 2018 Forecasted Work Program and Capital Expenditures: 

2018 capital expenditures are forecasted to be $51 million versus previous forecast of $52 million. Capital expenditures for the second half of 2018 are forecasted to be $36 million. Most expenditures will be dedicated to further appraisal and early development of the Hawler license area in the Kurdistan Region of Iraq and 3D seismic data processing and interpretation in the AGC Central license area. Planned expenditures for the second half of 2018 include wells not previously scheduled: a new well targeting the Zey Gawra Cretaceous reservoir and a workover of the Demir Dagh-8 well targeting the Cretaceous reservoir.

Liquidity Outlook: 

The AOG Credit Facility, which matures in July 2019, is expected to be restructured/rescheduled such that no cash outflow arises before 2020.
The expanded discretionary drilling program planned for the second half of 2018 is conditional upon availability of sufficient funding. If existing and internally generated funds are insufficient, the Corporation’s major shareholders have indicated that additional debt or equity capital could be made available in the range of $10-$15 million in order to commit to the drilling program as envisaged.
The Corporation expects cash on hand as of June 30, 2018, cash receipts from export sales exclusively through the Kurdistan Region-Turkey Export Pipeline, expected net proceeds from the sale of its interest in the Haute Mer B license area, and, if needed, additional debt or equity capital of $10 - $15 million will allow it to fund its forecasted cash expenditures and to meet its obligations through the end of 2019, with the exception of the repayment of the AOG Credit Facility, which is expected to be restructured. Further capital is likely required in late 2019 and beyond to fund expected drilling in the AGC Central license area.

CEO's Comment

Commenting today, Oryx Petroleum's Chief Executive Officer, Vance Querio, stated:
“In recent months we have significantly increased production bringing three new wells online in the Hawler license area and we continued to mature our AGC Central exploration prospects.
Gross (100%) oil production from the Hawler licence area averaged 4,400 bbl/d in Q2 2018 and 6,100 bbl/d in July 2018 versus an average of 2,900 bbl/d in Q2 2017 and 3,800 bbl/d in Q1 2018. All oil production has been sold via the export pipeline and payments for export sales through the end of April 2018 have been received in full. Higher realised oil prices and lower operating expenses helped us achieve our highest quarterly netback and operating funds flow on record.
We have been very active with the drill bit in recent months. We spudded and successfully completed the Banan-3 appraisal well targeting the Tertiary reservoir at the Banan West field. The well is on extended test with average daily production of 1,600 bbl/d in July. We also spudded and successfully completed the Zey Gawra-3 well targeting the Cretaceous reservoir at Zey Gawra. A horizontal well design was utilised for the first time in the Hawler license area and this enabled the successful isolation of the oil producing interval from the underlying aquifer and the free gas in the natural gas cap. The Zey Gawra-3 well has produced at an average rate of 1,700 bbl/d over the past 10 days. Most recently, we completed the Banan-2 well, drilled in 2014 but suspended due to security developments in 2014, in the Cretaceous reservoir at the Banan West field. The Banan-2 well has been producing at an average rate of approximately 1,100 bbl/d over the past 5 days but we intend to increase the production rate in the coming days now that all drilling equipment has been demobilised from the well site.
We have an active drilling program planned for the remainder of 2018. We are planning to drill or workover five additional wells: two wells targeting the Demir Dagh Cretaceous, two targeting the Banan Tertiary and one targeting the Zey Gawra Cretaceous.
During Q2 2018 we also continued to study the AGC Central license area with additional interpretation and prospect selection ongoing and drilling preparation to follow as we prepare to begin exploration drilling.
We look forward to continuing to implement our plans in 2018 and achieving higher production in the Hawler license area and preparing for an exciting exploration drilling program in the AGC Central license area.”