News

Oryx Petroleum 2015 Financial and Operational Results

16 March 2016

Calgary, Alberta, March 16, 2016

Early Progress in 2016 with Commencement of Pipeline Exports

Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the year ended December 31, 2015. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

2015 Financial Highlights:

• Total revenues of $20.5 million on working interest sales of 588,200 barrels of oil (“bbl”) and an average realised sales price of $29.20/bbl for 2015
• Net loss of $423.6 million ($3.43 per common share) in 2015 versus a net loss of $19.0 million ($0.17 per common share) in 2014, including an aggregate of $397.5 in impairment charges during 2015 related to the Hawler, Wasit, OML 141 and Haute Mer A license areas
• Capital expenditure of $108.7 million in 2015, including $105.5 million in the Hawler license area, versus capital expenditure of $325.9 million in 2014
• $54.2 million of cash and cash equivalents as of December 31, 2015 
• $100.0 million credit facility provided by The Addax & Oryx Group P.L.C. (“AOG”) in March 2015 fully drawn at December 31, 2015
• Restructuring of contingent consideration payable to the vendor of the Hawler license area upon declaration of a second commercial discovery such that any amounts payable will be paid in annual instalments over four years with first payment of $14 million expected in 2017

2015 Operations Highlights:

• Gross (100%) oil production of 922,000 bbl (working interest 599,000 bbl) for the year ended December 31, 2015 versus gross (100%) oil production of 553,000 bbl (working interest 346,000 bbl) for the year ended December 31, 2014
  - 2,500 bbl/d (working interest 1,600 bbl/d) average oil production for the year ended December 31, 2015
  - Production curtailed beginning in April 2015 in order to manage higher than expected water production
• Five wells capable of production from the Demir Dagh Cretaceous reservoir as of December 31, 2015 with gross (100%) productive capacity estimated to total 2,000 to 4,000 bbl/d 
• Completion and commissioning of the Demir Dagh production facilities in September 2015 representing gross (100%) capacity of 40,000 bbl/d with two trains to process Cretaceous and Jurassic crude production streams 
• Gross (working interest) proved plus probable oil reserves of 238 million barrels as at December 31, 2015 versus 271 million barrels as at December 31, 2014
• Identification of a new prospect and re-mapping of previously identified prospects in the Haute Mer B license area based on 3D seismic data acquired and processed in 2014 and 2015

2016 Operations Update:

• Successful re-completion of the Demir Dagh-3 well in the Jurassic reservoir in January 2016
  - Flowed at 1,000 bbl/d for 7 days before being shut-in due to full storage; production successfully processed through Train 2 of the Demir Dagh production facilities
  - Samples indicated 40° API oil with 2 - 4% water cut
• - Expected gross (100%) productive capacity of 2,000 to 3,000 bbl/d from the Jurassic
• Limited production and oil sales in January and February 2016 due to temporary Turkey-Iraq border closures and restrictions on export by trucking
• Completion of tie-in and commissioning of pipeline infrastructure to export oil via the Kurdistan Export Pipeline to Turkey in early March 2016
• Commencement of pipeline export sales on March 14, 2016
  - Current gross (100%) production of 1,700 bbl/d from three wells with expectation to increase to full productive capacity of 4,000 bbl/d to 7,000 bbl/d in the coming weeks
  - Expectation that most future production will be exported via pipeline
  - Revenues to be based on realisations of Brent crude less a $10-$15 per barrel discount for transportation and quality differentials versus comparable discount of $26 per barrel for previous trucking exports
• $30 million cash investment and proposed $20 million work commitment from Zeg Oil and Gas Ltd (“Zeg Oil”) announced on March 1, 2016 (the “Zeg Oil Strategic Investment”)(See the section titled “Strategic Investment ” below)
• Implementation of re-organisation announced March, 1, 2016 to result in substantial cost savings
  - Vance Querio, previously Chief Operating Officer, appointed to assume Michael Ebsary’s responsibilities as Chief Executive Officer effective March 16, 2016 and will retain the responsibilities of the Chief Operating Officer
  - Overall headcount to be reduced from 245 as of June 30, 2015 to 104 upon expiration of notice periods, and headcount in Geneva, Switzerland to be reduced from 72 to 15
  - General & administrative and technical support expenditures to be approximately 50% lower in 2016 versus 2015 with further reductions expected in 2017

2016 Forecasted Capital Expenditures, Liquidity and Outlook: 

• 2016 cash capital expenditure forecast of $62 million (versus $90 million budget). Almost all of expenditures will be dedicated to the Hawler license area in the Kurdistan Region of Iraq with the development of the Zey Gawra field the key focus 
• The Corporation expects cash on hand as of December 31, 2015, proceeds and funding from the Zeg Oil Strategic Investment, and cash receipts from net revenues in 2016 assuming a $35 per barrel average Brent crude price and export sales exclusively through the pipeline, to fund its forecasted cash expenditures into the second quarter of 2017
• Assuming the successful completion of all planned activities, the Corporation expects gross (100%) oil production from the Hawler license area to exceed 10,000 bbl/d by the end of 2016

CEO’s Comment
Commenting today, Oryx Petroleum’s outgoing Chief Executive Officer, Michael Ebsary, stated:
“2015 was a challenging year for Oryx Petroleum. The precipitous decline in oil prices, the ongoing security and economic crisis in Northern Iraq and Syria as well as higher than expected water production at our Demir Dagh field limited our ability to achieve our objectives. But amidst these challenges we nevertheless achieved meaningful progress: we secured market access for our crude production via an agreement with a regional marketer in March; we completed our production facilities at the Demir Dagh field in September; and, most importantly, we developed a revised plan for development of the Cretaceous reservoir at Demir Dagh that still contains over 100 million barrels of gross (100%) proved plus probable oil reserves.
We have also made significant progress in improving our financial position. We have reduced planned capital expenditures and staffing levels, restructured contingent consideration liabilities and, most recently, secured a cash investment and a proposed work commitment from Kurdistan-based Zeg Oil which means that our planned 2016 cash expenditures are fully funded.”

Also commenting today, Oryx Petroleum’s newly appointed Chief Executive Officer, Vance Querio, stated:
"I appreciate the confidence that the Board of Oryx Petroleum has expressed by appointing me to lead our organisation and thank Mike and others departing for their valuable service to Oryx Petroleum. In terms of operations, in late 2015 we resumed drilling operations at Demir Dagh and in early 2016 successfully re-completed the Demir Dagh-3 well in the Jurassic reservoir. With the restoration of the Demir Dagh-2 well to production and the addition of light oil production from the Jurassic reservoir at the Demir Dagh-3 well, we currently estimate that the Demir Dagh field has the capacity to deliver some 4,000 to 7,000 bbl/d of production. Importantly, we also recently completed and commissioned the tie-in of the Demir Dagh production facilities to the Kurdistan Export Pipeline to Turkey and agreed crude oil pricing terms with the government. Two days ago we commenced pipeline exports and we now expect that most of our oil production will be exported via pipeline.
Our plans for the remainder of 2016 will focus on developing the Zey Gawra field with the proceeds of the Zeg Oil Strategic Investment. With the recompletion of existing wells and drilling of new wells at Zey Gawra we expect the productive capacity of our fields in the Hawler license area to exceed 10,000 bbl/d by the end of 2016.
Overall, we believe we are well positioned for 2016 and beyond and are confident in and very much look forward to continuing the implementation of our 2016 plan.”