News

Oryx Petroleum First Quarter 2016 Financial and Operational Results

11 May 2016

Calgary, Alberta, May 11, 2016

Export sales via pipeline since mid-March with recent production exceeding 3,500 bbl/d

Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the three months ended March 31, 2016. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

Operations Highlights:

• Commencement of light oil production from the Demir Dagh Jurassic reservoir and pipeline export sales on March 14, 2016 with all sales via export pipeline since such time
  - Average export sales price per barrel of oil (“bbl”) significantly higher due to reduced nominal discount to average Brent oil price for pipeline sales ($12/bbl) versus previously trucked exports ($26/bbl)
  - The Corporation expects that most future production from the Hawler license area will be exported via pipeline
• Gross (100%) oil production of 69,100 bbl (working interest 44,900 bbl) for the three months ended March 31, 2016
  - 800 bbl/d (working interest 500 bbl/d) average oil production for the three months ended March 31, 2016
  - Limited production and oil sales in January and February 2016 due primarily to Turkey-Iraq border closures and restrictions on export by both trucking and pipeline
• Average gross (100%) oil production of 3,387 bbl/d in April 2016 from six wells at the Demir Dagh field
  - Average realisations in April 2016 of $30.15/bbl reflect a discount of $11.33/bbl to April’s monthly average Brent crude oil price
  - Realised discount lower than nominal discount of $12/bbl due to average API gravity of 30.7 degrees from blend of Cretaceous and Jurassic crude oil exceeding API gravity specifications in agreement 
• Negotiation of a contract with an affiliate of Zeg Oil and Gas Ltd (“Zeg Oil”) to complete the first phase of development of the Zey Gawra field is progressing
  - The contract is expected to be executed in the coming weeks with first Zey Gawra production expected to be achieved in the second half of 2016 
• Ongoing cost reductions from the implementation of the re-organisation announced on March, 1, 2016 
• The Agence de Gestion et de Cooperation (“AGC”) granted an extension of the first exploration period in the AGC Shallow license area to March 2018

Financial Highlights for the three months ended March 31, 2016:

• Revenues of $1.2 million on working interest sales of 53,300 bbl and an average realised sales price of $20.25/bbl
  - Transfer of the first payment from the Kurdistan Regional Government (“KRG”) for sales via export pipeline in March 2016 initiated with receipt of payment expected in the coming days 
• Net loss of $19.4 million ($0.13 per common share)
• Net cash used in operating activities was $7.8 million for the quarter including negative operating cash flow of $5.7 million and an increase in working capital
• Net cash used in investing activities was $7.9 million in the quarter including expenditures for the successful re-completion of the Demir Dagh-3 well in the Jurassic reservoir and payments under the finance lease obligation related to the Demir Dagh production facilities
• $30 million cash investment and proposed $20 million work commitment from Zeg Oil announced on March 1, 2016 
• $71.6 million of cash and cash equivalents as of March 31, 2016 including proceeds from the cash investment by Zeg Oil and another investor

2016 Forecasted Capital Expenditures, Liquidity and Outlook:

• 2016 cash capital expenditure forecast of $62 million announced on March 16, 2016 remains unchanged. Almost all expenditure in 2016 will be dedicated to the Hawler license area in the Kurdistan Region of Iraq with the initial development of the Zey Gawra field being the key focus 
• The Corporation expects cash on hand as of March 31, 2016 and cash receipts from net revenues to fund its forecasted cash expenditures into the third quarter of 2017
• Assuming the successful completion of 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 Chief Executive Officer, Vance Querio, stated:
“During Q1 2016 we achieved important progress. We successfully re-completed the Demir Dagh-3 well in the Jurassic reservoir and tied it in to our production facilities, restored all of our production wells completed in the Cretaceous reservoir, and commenced pipeline export sales. We have increased gross (100%) oil production to more than 3,500 bbl/d in recent weeks and expect to achieve further increases over the coming months. We also continued to implement cost reduction measures and secured a strategic investment to help fund our 2016 plans.

Commencement of pipeline export sales and addition of Jurassic crude to our blend have allowed us to realise an increase of more than $14/bbl in our sales price. This increase and recently increased international oil prices have improved our average realised sales prices and significantly increased our cash flow generation capability. Payment by the KRG for our first month of pipeline exports has been initiated with receipt expected in the coming days and we expect all of our future production to be sold via export pipeline. We continue to be encouraged by consistent monthly payments from the KRG to oil producers and recent increases in export levels from the region.
Our plans for the remainder of 2016 will focus on developing the Zey Gawra field. With the re-completion of previously drilled exploration wells and the 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 the continuing implementation of our plans.”