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Oryx Petroleum Q3 2018 Financial and Operational Results and 2019 Capital Budget

13 November 2018

Calgary, Alberta, November 13, 2018

 

Oryx Petroleum Q3 2018 Financial and Operational Results and 2019 Capital Budget

 

Sizable increases in production, revenues and operating funds flow[1] with two wells added in recent months; Agreed to restructure key obligations and secured access to additional liquidity

 

Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the three and nine months ended September 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 $29.4 million on working interest sales of 430,900 barrels of oil (“bbl”) and an average realised sales price of $61.33/bbl for Q3 2018
    -     198% increase in revenues versus Q3 2017; 64% increase in revenues versus Q2 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 August 2018. Oryx Petroleum’s entitlement share of amounts receivable from oil sale deliveries for the months of September and October 2018 is $14.0 million
  • Operating expenses of $5.6 million ($12.93/bbl) and an Oryx Petroleum Netback[2] of $23.83/bbl for Q3 2018
    -     17% decrease in operating expenses per barrel versus Q3 2017; 7% decrease in operating expenses per barrel versus Q2 2018
    -     Oryx Petroleum Netback2 in Q3 2018 highest on record
  • Net loss of $5.2 million ($0.01 per common share) in Q3 2018 versus net loss of $5.9 million in Q3 2017 ($0.01 per common share)
  • Operating Funds Flow1 for Q3 2018 was positive $8.4 million compared to negative $0.6 million for Q3 2017 and positive $4.1 million for Q2 2018
  • Net cash generated in operating activities was $4.9 million in Q3 2018 versus net cash used in operating activities of $4.6 million in Q3 2017. Net cash used in operating activities for Q3 2018 was comprised of positive Operating Funds Flow1 of $8.4 million partially offset by a $3.5 million increase in non-cash working capital
  • Net cash used in investing activities during Q3 2018 was $9.2 million including payments related to drilling and facilities work in the Hawler license area and seismic interpretation costs in the AGC Central license area
  • $17.0 million of cash and cash equivalents as of September 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 10,000 bbl/d in October 2018 and 7,200 bbl/d for Q3 2018 versus 3,600 bbl/d for Q3 2017 and 4,400 bbl/d for Q2 2018
  • Average gross (working interest) oil production of 4,700 bbl/d for Q3 2018 versus 2,300 bbl/d for Q3 2017 and 2,900 bbl/d for Q2 2018
    -     104% increase in Q3 2018 versus Q3 2017 and 62% increase versus Q2 2018
  • The Banan-4 appraisal well targeting the Tertiary reservoir was spudded in August 2018, drilled to a measured depth of 810 metres utilising a horizontal well design, completed in open hole, and placed on extended well test in late September
    -     Average gross (100%) oil production of approximately 2,600 bbl/d for the month of October 2018
    -     Gravity of stock tank oil has been measured at 27 degrees API with sulphur measured at 4%
  • The Zey Gawra-4 appraisal well targeting the Cretaceous reservoir was spudded in September 2018, drilled to a measured depth of 2,271 metres utilising a horizontal well design. In recent days the well has been completed and placed on extended well test
  • Infrastructure work needed to enable drilling of additional wells at the Banan and Zey Gawra fields and to enable transport from the Banan field to the Hawler processing facilities was completed during Q3 2018
  • A workover of the Demir Dagh-8 well targeting the Cretaceous reservoir is planned during December 2018
  • Further interpretation of 3D seismic data covering the AGC Central license area and prospect ranking and well site selection is in advanced stages with preparation for drilling to follow

 

Q4 2018 Forecasted and 2019 Budgeted Capital Expenditures:

  • Oryx Petroleum re-forecasted capital expenditures for Q4 2018 are $11 million and are primarily focused on the Hawler license area. Expenditures include those incurred relating to the recently completed Zey Gawra-4 and Banan-4 wells and the planned workover of the Demir Dagh-8 well scheduled for December 2018.
  • Oryx Petroleum budgeted capital expenditures for 2019 are $52 million:
    -     $41 million dedicated to the Hawler license area: 8 wells are planned including one short-radius sidetrack well targeting the Demir Dagh Cretaceous reservoir, one sidetrack of an existing well targeting the Zey Gawra Cretaceous reservoir, the testing of the previously suspended Ain Al Safra-2 well targeting the Jurassic and Triassic reservoirs, two new wells targeting the Banan Cretaceous reservoir, two new wells targeting the Banan Tertiary reservoir, one of which will be used as a water surveillance well, and one sidetrack of an existing well targeting the Zey Gawra Tertiary reservoir; a pipeline connecting the Banan field to the Hawler production facilities at the Demir Dagh field; and pads, flowlines and minor infrastructure modifications needed to accommodate incremental drilling and production
    -     $11 million dedicated to the AGC Central license area including preparations for exploration drilling and studies 

 

Liquidity Outlook:

  • The Corporation had $17.0 million of cash and cash equivalents as of September 30, 2018
  • 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 is expected to close during the fourth quarter of 2018, pending receipt of government approvals. Upon closing, Oryx Petroleum expects to receive cash consideration of $8.0 million plus $5.3 million reimbursement of costs incurred by Oryx Petroleum in 2018 in relation to the interest
  • On November 13, 2018, the Corporation entered into an agreement with AOG and Zeg Oil and Gas whereby AOG and Zeg Oil and Gas will make available to Oryx Petroleum an interim credit facility of $7.5 million. Any drawn balance of the interim credit facility will be payable upon the earlier of receipt of proceeds from the sale of the Corporation’s interest in the Haute Mer B license and March 31, 2019. The balance is repayable in cash or through the issuance of common shares of Oryx Petroleum.
  • On November 13, 2018, the Corporation also entered into an agreement with AOG to amend the AOG Credit Facility providing for an extension of the maturity date from July 1, 2019 to July 1, 2020, and the issuance of 3.6 to 6.9 million warrants to AOG to purchase common shares of Oryx Petroleum
  • The Interim Credit Facility and the amendment to the AOG Credit Facility are subject to approval by the Toronto Stock Exchange
  • The Corporation has agreed with the vendor of the Hawler license area to amend certain terms of the contingent consideration obligation. Execution of the agreement is expected in the coming days with a payment of $11.4 million to the vendor of the Hawler license area upon execution
  • The Corporation expects cash on hand as of September 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, drawdowns on the recently secured $7.5 million interim credit facility to fund its forecasted cash expenditures and to meet its obligations through the end of 2019

 

CEO’s Comment

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

“In recent months we continued to increase production bringing new wells online in the Hawler license area and we continued to refine and prioritise our AGC Central exploration prospect inventory.

Gross (100%) oil production from the Hawler licence area averaged 7,200 bbl/d in Q3 2018 and 10,000 bbl/d in October 2018 versus an average of 3,600 bbl/d in Q3 2017 and 4,400 bbl/d in Q2 2018. All oil production has been sold via the export pipeline and payments for export sales through the end of August 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 continued to be active with the drill bit in recent months. We spudded and successfully completed the Banan-4 appraisal well in the Tertiary reservoir at the Banan West field. The well was put on extended test with average daily production of 2,600 bbl/d in October with further increases expected in the coming weeks. We also spudded andsuccessfully completed the Zey Gawra-4 well and very recently placed it on extended well test.

We plan to complete a workover of the Demir Dagh-8 well targeting the Cretaceous reservoir in December 2018.

Our budgeted capital expenditures for 2019 are $52 million with further appraisal and early development drilling planned in the Hawler license area and continued preparation for exploration drilling planned in the AGC Central license area. In the Hawler license area we are planning to drill or workover eight additional wells. In the AGC Central license area we are in the final stages of interpretation and prospect selection and expect to complete an environmental impact assessment and well engineering work over the coming months as we prepare for the drilling of exploration wells.

In recent weeks we have reached agreements to restructure a number of key liabilities and secured an interim credit facility to ensure we can manage our cash flows through the coming year and beyond. Overall we expect revenues from sales, proceeds from the pending sale of our interest in the Haute Mer B license and, if needed, borrowing available under the interim credit facility to fund our planned expenditures and obligations through the end of 2019. 

We look forward to continuing to implement our plans in 2018 and 2019, achieving higher production in the Hawler license area and preparing for an exciting exploration drilling program in the AGC Central license area.”

 

Oryx_Petroleum_Press_Release_Q3_Results_2018_FINAL.pdf