Oryx Petroleum 2014 Financial and Operational Results
18.03.2015 | CNW
2014 a year of significant progress setting stage for growth in 2015 and beyond
CALGARY, March 18, 2015 /CNW/ - Oryx Petroleum Corporation Ltd. ("Oryx Petroleum" or the "Corporation") today announces its financial and operational results for the year ended December 31, 2014. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.
2014 Operations Highlights:
2014 Financial Highlights:
2015 Operations Update:
2015 Capital Expenditure Forecast:
CEO's Comment
Commenting today, Oryx Petroleum's Chief Executive Officer, Michael Ebsary, stated:
"2014 was a year for Oryx Petroleum characterized by a high level of activity in an increasingly complex operating environment. The decline in international oil prices, security developments in Northern Iraq and consequent changes in local crude oil market dynamics all impacted our operations. Notwithstanding these challenges, we achieved significant progress in 2014, primarily in the Kurdistan Region of Iraq.
We made a discovery at Banan which drove a 27% increase in our proved plus probable oil reserves in 2014. Our proved plus probable oil reserves have now increased 65% since the March 2013 independent evaluation of our reserves completed in preparation for our initial public offering. We achieved first production from the Demir Dagh field in approximately 15 months from the original discovery. We drilled nine appraisal and development wells at Demir Dagh where we now have gross wellhead production capacity of over 25,000 barrels per day. And we are on track to commission our early production facility and tie-in line to an expanded Kurdistan Region-Turkey international export pipeline.
In 2015, our focus will remain in the Kurdistan Region of Iraq where we will complete the development drilling and facilities construction expected to facilitate achievement of our production target of 35,000 to 45,000 barrels per day by year end. We continue to pursue all avenues to improve our market access for crude oil sales. Upgrades to regional export infrastructure are nearing completion and we are optimistic that this should improve both local and export market access for all producers in the Kurdistan Region. Meanwhile, a regional marketer has recently commenced liftings of crude from Hawler.
With our cash on hand at year end and the borrowings recently made available by The Addax & Oryx Group we have more than sufficient liquidity to help us fund our 2015 program and navigate through near-term uncertainty to the better days we believe lie ahead."
Selected Financial Highlights
Financial results are prepared in accordance with International Financial Reporting Standards ("IFRS") and the reporting currency is US dollars. References in this news release to the "Group" refer to Oryx Petroleum and its subsidiaries. The following table summarises selected financial highlights for Oryx Petroleum for the three and twelve month periods ended December 30, 2014 and December 30, 2013:
| Three Months Ended | Twelve Months Ended | ||||||||||||
| ($ in millions unless otherwise indicated) | 2014 | 2013 | 2014 | 2013 | |||||||||
| Revenue | 7.8 | - | 19.6 | - | |||||||||
| Working Interest Production (bbls) | 168,000 | - | 346,000 | - | |||||||||
| Average WI Production per day (bbl/d) | 1,800 | - | 1,800(1) | - | |||||||||
| Normalised WI Production per day (bbl/d) | 4,100(2) | 3,900(2) | |||||||||||
| Working Interest Sales (bbls) | 122,000 | - | 295,000 | - | |||||||||
| Average Sales Price ($/bbl) | 53.61 | - | 55.69 | - | |||||||||
| Operating Expense | 1.9 | - | 6.7 | - | |||||||||
| Field production costs ($/bbl)(3) | 11.84 | - | 17.24 | - | |||||||||
| Field Netback(4) ($/bbl) | 14.36 | - | 9.96 | - | |||||||||
| Operating expenses ($/bbl) | 15.48 | - | 22.55 | - | |||||||||
| Oryx Petroleum Netback(5) ($/bbl) | 21.11 | - | 15.46 | - | |||||||||
| Net Loss | 1.9 | 35.2 | 19.0 | 185.8 | |||||||||
| Loss per Share ($/sh) | 0.02 | 0.35 | 0.17 | 2.04 | |||||||||
| Operating Cash Flow(6) | 1.1 | (8.3) | (3.2) | (20.4) | |||||||||
| Net Cash used in operating activities | 17.9 | 1.9 | 28.5 | 8.7 | |||||||||
| Net Cash used in investing activities | 62.2 | 69.5 | 374.3 | 234.1 | |||||||||
| Capital Expenditures(7) | 65.5 | 74.8 | 325.9 | 200.2 | |||||||||
| License Acquisition Costs | 2.0 | - | 23.6 | 48.2 | |||||||||
| Cash and Cash Equivalents | 109.9 | 306.0 | 109.9 | 306.0 | |||||||||
| Total Assets | 1,138.2 | 976.2 | 1,138.2 | 976.2 | |||||||||
| Total Equity | 960.6 | 766.0 | 960.6 | 766.0 | |||||||||
| (1) | Commercial production at the Hawler license area began on June 19, 2014. Per day figure has been calculated on the basis of 196 days. |
| (2) | Normalised production has been calculated by excluding interruption periods. Per day figures have been calculated using 62 and 135 days, respectively, for the three month period and twelve month period ended December 31, 2014. |
| (3) | Field production costs represent Oryx Petroleum's working interest share of gross production costs and exclude the partner share of production costs carried by Oryx Petroleum, |
| (4) | Field Netback is a non-IFRS measure that represents the Group's working interest share of oil sales net of the Group's working interest share of royalties, the Group's working interest share of operating expenses and the Group's working interest share of taxes. Management believes that Field Netback is a useful supplemental measure to analyse operating performance and provides an indication of the results generated by the Group's principal business activities prior to the consideration of production sharing contract and joint operating agreement financing characteristics, and other income and expenses. Field Netback does not have a standard meaning under IFRS and may not be comparable to similar measures used by other companies. |
| (5) | Oryx Petroleum Netback is a non-IFRS measure that represents Field Netbacks adjusted to reflect the impact of carried costs incurred and recovered through the sale of cost oil during the reporting period. Management believes that Oryx Petroleum Netback is a useful supplemental measure to analyse the net cash impact of the Group's principal business activities prior to the consideration of other income and expenses. Oryx Petroleum Netback does not have a standard meaning under IFRS and may not be comparable to similar measures used by other companies. |
| (6) | Operating Cash Flow is a non-IFRS measure that represents cash generated from operating activities before changes in non-cash working capital and changes in the retirement benefit obligation balance. The term Operating Cash Flow should not be considered an alternative to or more meaningful than "cash flow from operating activities" as determined in accordance with IFRS. Management considers Operating Cash Flow to be a key measure as it demonstrates the Group's ability to generate the cash flow necessary to fund future growth through capital investment. Operating Cash Flow does not have any standardised meaning prescribed by IFRS and therefore may not be comparable to similar measures used by other companies. |
| (7) | Excludes license acquisition costs. |
As of December 31, 2014 total common shares outstanding were 120,767,916. Upon vesting in 2015 and 2016, Long Term Incentive Plan awards outstanding as of December 31, 2014 will result in the issuance of up to an additional 842,389 common shares. As part of the credit facility provided by AOG on March 11, 2015, AOG has received warrants to purchase one million common shares and, provided the Group draws down the full $100 million facility, AOG will receive warrants to purchase an additional 11 million common shares.
The following tables summarise the Group's capital expenditure incurred by activity and by license area for the three and twelve month periods ended December 31, 2014 and December 31, 2013.
| License Area | Three months ended | Twelve months ended | |||||||||||
| December | December | December | December | ||||||||||
| ($ million) | ($ million) | ($ million) | ($ million) | ||||||||||
| Middle East | |||||||||||||
| Exploration drilling | 3.7 | 23.9 | 61.2 | 85.9 | |||||||||
| Appraisal and development drilling | 25.3 | 24.3 | 92.2 | 30.5 | |||||||||
| Facilities | 22.8 | - | 88.1 | - | |||||||||
| Seismic acquisition | 3.2 | - | 16.4 | 9.6 | |||||||||
| Studies and administrative | 5.6 | 4.2 | 32.9 | 11.1 | |||||||||
| Sub-Total Middle East | 60.6 | 52.4 | 290.8 | 137.1 | |||||||||
| West Africa | |||||||||||||
| Exploration drilling | (0.1)(1) | 18.8 | 16.1 | 49.6 | |||||||||
| Seismic acquisition | 0.3 | 0.1 | 4.3 | 0.8 | |||||||||
| Studies and administrative | 4.6 | 3.2 | 12.9 | 10.5 | |||||||||
| Property, plant & equipment | - | - | - | 0.1 | |||||||||
| Sub-Total West Africa | 4.8 | 22.1 | 33.3 | 61.0 | |||||||||
| Corporate | 0.1 | 0.3 | 1.8 | 2.1 | |||||||||
| Total capital expenditures | 65.5 | 74.8 | 325.9 | 200.2 | |||||||||
| (1) Based on updated information from the operator of the Haute Mer A License Area, the Group has recorded a $0.6 million recovery of drilling expenditures during the fourth quarter of 2014 which has been partially offset by other exploration drilling expenditures | |
| Note: The above table excludes license acquisition costs |
| License Area | Three months ended | Twelve months ended | |||||||||||
| December | December | December | December | ||||||||||
| ($ million) | ($ million) | ($ million) | ($ million) | ||||||||||
| Middle East | |||||||||||||
| Hawler | 60.4 | 51.9 | 289.8 | 129.0 | |||||||||
| Wasit | 0.2 | 0.5 | 1.0 | 4.1 | |||||||||
| Sindi Amedi | - | - | - | 4.0 | |||||||||
| Sub-Total Middle East | 60.6 | 52.4 | 290.8 | 137.1 | |||||||||
| West Africa | |||||||||||||
| AGC Shallow | 1.5 | 0.8 | 6.4 | 2.8 | |||||||||
| AGC Central | 0.2 | - | 0.2 | - | |||||||||
| OML 141 | 0.5 | 0.4 | 2.7 | 16.7 | |||||||||
| Haute Mer A | 0.4 | 20.9 | 16.6 | 41.5 | |||||||||
| Haute Mer B | 2.2 | - | 7.4 | - | |||||||||
| Sub-Total West Africa | 4.8 | 22.1 | 33.3 | 61.0 | |||||||||
| Corporate | 0.1 | 0.3 | 1.8 | 2.1 | |||||||||
| Total capital expenditures | 65.5 | 74.8 | 325.9 | 200.2 | |||||||||
| Note: The above table excludes license acquisition costs |
Cash and cash equivalents decreased to $109.9 million at December 31, 2014 from $190.0 million at September 30, 2014 reflecting the impact of Operating Cash Flow, capital expenditures, and movements in working capital. Oryx Petroleum had no borrowings as of December 31, 2014.
On March 11, 2015 AOG committed to provide $100 million of funding to Oryx Petroleum in the form of an unsecured credit facility in order to ensure Oryx Petroleum has financial flexibility in undertaking its work program for 2015.
A summary of key terms of the credit facility is set out below:
| Summary of Key Terms | |||
| Size: | $100 mm Total Commitment drawable in two $50 million tranches | ||
| Tenor: | 36 months | ||
| Repayment: | Full drawn amount plus accrued interest paid at Maturity (36 Months) | ||
| Coupon: | 10.5% per annum (interest accrues until Repayment) | ||
| Security: | Unsecured | ||
| Number of Warrants: | Up to 12.0 million if full commitment drawn | ||
| Warrant Exercise Price: | 10% premium to 10-day historical volume weighted average price (VWAP) of Oryx Petroleum shares traded on Toronto Stock Exchange at time of issue | ||
| Warrant Duration: | 36 months from issue |
Selected Operational Highlights
Kurdistan Region of Iraq
Production and Sales
Productive Capacity
Appraisal / Development Drilling
Facilities and Export Sales Infrastructure
West Africa
Congo (Brazzaville)
AGC
2015 Capital Expenditure Forecast
Oryx Petroleum announced a capital expenditure forecast for 2015 on March 11, 2015. The forecast capital expenditure for 2015 is now $140 million, of which $125 million is proposed for use in the Hawler license area, comprising:
2015 Liquidity Outlook
Oryx Petroleum believes current cash and cash equivalents, and the undrawn credit facility provided by AOG provide the Corporation with the liquidity needed to fund its forecasted 2015 capital expenditure program and general and administrative costs. The Corporation retains the flexibility to adjust its capital expenditure plans for the remainder of 2015 in response to positive or negative changes in the operating environment. Beyond 2015 the Corporation currently intends to synchronise expenditure levels with cash flow generation.
Summary Reserves and Resources
As announced in early February, the following is a summary of NSAI's evaluation of the Corporation's reserves and resources as at December 31, 2014 with comparatives to NSAI's evaluation as at December 31, 2013:
Oil Reserves and Resources and Future Net Revenue Summary Table
| December 31, 2013 | December 31, 2014 | ||||||||||||||
| Proved Plus Probable | Proved Plus Probable | ||||||||||||||
| Gross(5) Oil | Gross(5) Oil | ||||||||||||||
| Reserves | Future Net | Reserves | Future Net | ||||||||||||
| Oil Reserves(1) | (MMbbl) | (USD $ million) | (MMbbl) | (USD $ million) | |||||||||||
| Iraq | |||||||||||||||
| Kurdistan Region-Hawler | 213 | 1,287 | 271 | 1,815 | |||||||||||
| Best Estimate 2C | Best Estimate 2C | ||||||||||||||
| Gross(5) Oil (Working Interest) | Gross(5) Oil (Working Interest) | ||||||||||||||
| Resources | Future Net | Resources | Future Net | ||||||||||||
| Contingent Oil Resources(2) | (MMbbl) | (USD $ million) | (MMbbl) | (USD $ million) | |||||||||||
| Iraq | |||||||||||||||
| Kurdistan Region-Hawler | 217 | 697 | 182 | 424 | |||||||||||
| Congo (Brazzaville) | |||||||||||||||
| Haute Mer A(7) | 6 | - | 6 | - | |||||||||||
| Total Contingent Oil Resources | 223 | 697 | 188 | 424 | |||||||||||
| Best Estimate | Best Estimate | ||||||||||||||
| Gross(5) Oil (Working Interest) | Gross(5) Oil (Working Interest) | ||||||||||||||
| Prospective Oil Resources(3) | Unrisked | Risked(8) | Unrisked | Risked(8) | |||||||||||
| Iraq | (MMbbl) | (MMbbl) | |||||||||||||
| Kurdistan Region-Hawler | 238 | 50 | 111 | 16 | |||||||||||
| Wasit Province-Wasit | 404 | 78 | 404 | 78 | |||||||||||
| West Africa | 524 | 81 | 414 | 59 | |||||||||||
| Total Prospective Oil Resources(6) | 1,167 | 209 | 929 | 153 | |||||||||||
| (1) | The oil reserves data is based upon evaluations by NSAI, with effective dates as at December 31, 2013 and December 31, 2014, as indicated. Volumes are based on commercially recoverable volumes within the life of the production sharing contract. |
| (2) | The contingent oil resources data is based upon evaluations by NSAI, and the classification of such resources as "contingent oil resources" by NSAI, with effective dates as at December 31, 2013 and December 31, 2014, as indicated. The figures shown are NSAI's best estimate using deterministic methods. Once all contingencies have been successfully addressed, the probability that the quantities of contingent oil resources actually recovered will equal or exceed the estimated amounts is 50% for the best estimate. Contingent oil resources estimates are volumetric estimates prior to economic calculations. |
| (3) | The prospective oil resources data is based upon evaluations by NSAI, and the classification of such resources as "prospective oil resources" by NSAI, with effective dates as at December 31, 2013 and December 31, 2014, as indicated. The figures shown are NSAI's best estimate, using a combination of deterministic and probabilistic methods and are dependent on a petroleum discovery being made. If a discovery is made and development is undertaken, the probability that the recoverable volumes will equal or exceed the unrisked estimated amount is 50% for the best estimate. Prospective oil resources estimates are volumetric estimates prior to economic calculations. |
| (4) | After-tax net present value of related future net revenue based upon evaluations by NSAI using forecast prices and costs and a 10% discount rate. Future net revenue is after deducting operating expenses, abandonment costs, capital costs, and PSC taxes, including payments to be carried interests. Gross proved plus probable oil reserves estimates and gross contingent oil resource estimates used to calculate future net revenue are estimated based on economically recoverable volumes within the development/exploitation period specified in the production sharing contract, risk exploration contract or fiscal regime applicable to each license area. The estimated values disclosed do not represent fair market value. |
| (5) | Use of the word "gross" to qualify a reference to reserves or resources means, in respect of such reserves or resources, the total reserves or resources prior to the deductions specified in the production sharing contract, risk exploration contract or fiscal regime applicable to each license area. |
| (6) | Individual numbers provided may not add to total due to rounding. |
| (7) | An economic evaluation has not been performed by NSAI on the contingent oil resources in the Haute Mer A license area because the field development plan is still under consideration. |
| (8) | These are partially risked prospective resources that have been risked for chance of discovery, but have not been risked for chance of development. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development. |
Regulatory Filings
This announcement coincides with the filing with the Canadian securities regulatory authorities of Oryx Petroleum's audited consolidated financial statements for the year ended December 31, 2014 and the related management's discussion and analysis thereon. Copies of these documents filed by Oryx Petroleum may be obtained via www.sedar.com, and the Corporation's website, www.oryxpetroleum.com.
ABOUT ORYX PETROLEUM CORPORATION LIMITED
Oryx Petroleum is an international oil exploration, development and production company focused in Africa and the Middle East. The Corporation's shares are listed on the Toronto Stock Exchange under the symbol "OXC". The Oryx Petroleum group of companies was founded in 2010 by The Addax and Oryx Group P.L.C. and key members of the former senior management team of Addax Petroleum Corporation. Oryx Petroleum has interests in seven license areas, two of which have yielded oil discoveries and five of which management of Oryx Petroleum believe are prospective for oil. The Corporation is the operator or technical partner in five of the seven license areas. Two license areas are located in the Kurdistan Region and the Wasit governorate (province) of Iraq and five license areas are located in West Africa in Nigeria, the AGC administrative area offshore Senegal and Guinea Bissau, and Congo (Brazzaville). Further information about Oryx Petroleum is available at www.oryxpetroleum.com or under Oryx Petroleum's profile at www.sedar.com.
Reader Advisory Regarding Forward-Looking Information
Certain statements in this news release constitute "forward-looking information", including statements related to the Corporation's reserves and resources estimates and potential, drilling plans, development plans and schedules and chance of success, results of exploration activities, future drilling of new wells, ultimate recoverability of current and long-term assets, possible commerciality of our projects, future expenditures, and statements that contain words such as "may", "will", "could", "should", "anticipate", "believe", "intend", "expect", "plan", "estimate", "potentially", "project", or the negative of such expressions and statements relating to matters that are not historical fact, constitute forward-looking information within the meaning of applicable Canadian securities legislation.
In addition, information and statements in this news release relating to reserves and resources are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated, and that the reserves and resources described can be profitably produced in the future. See "Reserves and Resources Advisory" below.
Although Oryx Petroleum believes these statements to be reasonable, the assumptions upon which they are based may prove to be incorrect. For more information about these assumptions and risks facing the Corporation, refer to the Corporation's annual information form dated March 12, 2014 available at www.sedar.com and the Corporation's website at www.oryxpetroleum.com. The Corporation will file an annual information form for the year ended December 31, 2014. Further, statements including forward-looking information in this news release are made as at the date they are given and, except as required by applicable law, Oryx Petroleum does not intend, and does not assume any obligation, to update any forward-looking information, whether as a result of new information, future events or otherwise. If the Corporation does update one or more statements containing forward-looking information, it is not obligated to, and no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking information. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.
Reserves and Resources Advisory
Oryx Petroleum's reserves and resource estimates have been prepared and evaluated in accordance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities and the Canadian Oil and Gas Evaluation Handbook.
Proved oil reserves are those reserves which are most certain to be recovered. There is at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved oil reserves. Probable oil reserves are those additional reserves that are less certain to be recovered than proved oil reserves. There is at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable oil reserves. Possible oil reserves are those additional reserves that are less certain to be recovered than probable oil reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible oil reserves.
Contingent oil resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that it will be commercially viable to produce any portion of the contingent oil resources.
Prospective oil resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective oil resources have both a chance of discovery and a chance of development. There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources.
Use of the word "gross" to qualify a reference to reserves, resources or production means, in respect of such reserves, resources or production, the total reserves, resources or production prior to the deductions specified in the production sharing contract, risked exploration contract or fiscal regime applicable to each license area. Reference to 100% indicates that the applicable reserves, resources or production are volumes attributed to the discovery or prospect as a whole and do not represent Oryx Petroleum's working interest in such reserves, resources or production.
Contact
about Oryx Petroleum, please contact: Craig Kelly, Chief Financial Officer, Tel.: +41 (0) 58 702 93 23, craig.kelly@oryxpetroleum.com; Scott Lewis, Head of Corporate Finance, Tel.: +41 (0) 58 702 93 52, scott.lewis@oryxpetroleum.com