Oryx Petroleum Second Quarter 2016 Financial and Operational Results
03 August 2016
Calgary, Alberta, August 03, 2016
Average production of 3,100 bbl/d during the quarter with positive netback and reduced expenditures; First phase development of Zey Gawra has commenced
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, 2016. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.
Operations Highlights:
- Average gross (100%) oil production of 3,100 barrels per day (“bbl/d”) for Q2 2016 from the Demir Dagh field
- Production achieved on all days in the quarter with all production sold via export pipeline
- Average realisation on sales of $34.15/bbl reflecting a discount of $11.22/bbl to average Brent crude oil price - Average gross (100%) oil production of 3,000 bbl/d in July 2016 at the Demir Dagh field
- Average realisations on sales of $34.39/bbl reflecting a discount of $10.71/bbl to average Brent crude oil price - First phase of development of the Zey Gawra field has commenced
- Security infrastructure has been mobilised and a letter of intent has been executed with a rig operator with mobilisation expected in early September. The Corporation plans to use the rig for re-entry and completion of two wells targeting Tertiary and Cretaceous reservoirs before the end of 2016.
- Engineering work related to the installation of temporary production facilities required to accommodate production from the two wells is underway. The facilities will be leased and are expected to be available in early Q4 2016 with crude to be transported by truck to the Demir Dagh field for pipeline entry
- First production from the Zey Gawra field is expected in October 2016
Financial Highlights for the three months ended June 30, 2016:
- Revenues of $7.1 million on working interest sales of 186,000 bbl of oil and an average realised sales price of $34.15/bbl
- Payments received during the quarter from the Kurdistan Regional Government (“KRG”) for sales via export pipeline for March and April. Payment for May sales is expected in the coming days with payment for June sales to follow - Operating expenses of $3.2 million ($17.37/bbl) and positive Oryx Petroleum Netback1 of $3.09/bbl
- 31% and 18% decrease in operating expenses in absolute and per barrel terms, respectively, versus Q2 2015
- First positive quarterly Oryx Petroleum Netback since Q2 2015 and highest since 2014 - General and administrative expenses of $2.1 million
- 57% reduction versus Q2 2015 and 21% reduction versus Q1 2016 - Net loss of $11.4 million ($0.05 per common share)
- Net cash used in operating activities was $0.9 million versus $4.2 million in Q2 2015 including negative Operating Cash Flow2 of $1.2 million and a small decrease in working capital
- Net cash used in investing activities was $13.9 million including payments related to the finance lease obligation related to the Demir Dagh production facilities, capital investment in prior periods and technical support costs
- $56.4 million of cash and cash equivalents as of June 30, 2016
2016 Forecasted Capital Expenditures, Liquidity and Outlook:
- 2016 cash capital expenditure forecast of $62 million announced on March 16, 2016 has been revised to $32 million reflecting the lower estimated expenditure to be incurred during the first phase development of the Zey Gawra field
- The Corporation expects cash on hand as of June 30, 2016 and cash receipts from net revenues to fund the forecasted cash expenditures needed to sustain its operations and meet license commitments through the end of 2017
- Assuming the successful completion of planned activities, the Corporation expects gross (100%) oil production from the Hawler license area to approximate 8,000 to 9,000 bbl/d by the end of 2016
1 Oryx Petroleum Netback is a non-IFRS measure. See the below table for a definition of and other information related to the term.
2 Operating Cash Flow is a non-IFRS measure. See the below table for a definition of and other information related to the term.
CEO’s Comment
Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:
“During Q2 2016 we achieved uninterrupted production and sales. Gross (100%) oil production averaged approximately 3,100 bbl/d in Q2 2016, and all production is being sold via the export pipeline. We achieved positive netbacks during Q2 2016 for the first time since Q2 2015 and reduced our operating cash outflow. The improvements are due to increases in international oil prices and the impact of structural cost reduction measures implemented during the past year.
We have been working to prepare for the first phase of development of the Zey Gawra field and have decided to defer both the construction of permanent facilities and the drilling of new wells at Zey Gawra. The first phase of development will consist of the re-entry and completion of the ZAB-1 well, the completion of the Zey Gawra-1 well, and the installation of leased production facilities from which oil will be trucked to the existing Hawler tanker terminal, pumped to storage tanks at the Demir Dagh facilities, and then sold via the export pipeline along with Demir Dagh production. The revised plan will allow us to achieve production in Q4 2016, reduce near term capital expenditures and observe well performance before committing to a full development program.
We have commenced engineering work on the facilities and work overs, mobilised security infrastructure, and executed a letter of intent with a rig operator with the expectation that a rig will be mobilised to the Zey Gawra field in early September. First production is expected in October 2016. If the two planned wells at the Zey Gawra field are successful, we expect to achieve production levels from the Hawler license area of 8,000 to 9,000 bbl/d by the end of 2016.
Overall, we are confident in achieving our objectives for 2016 and beyond.”