Sea Dragon Energy Inc. First Quarter News Release
/NOT FOR DISTRIBUTION TO U.S NEWSWIRE OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, May 31 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon") (TSX VENTURE:SDX) today filed its unaudited interim consolidated financial statements and related management's discussion and analysis ("MD&A") for the three months ended March 31, 2010 with Canadian securities regulatory authorities.
Copies of the filed documents may be obtained through Sea Dragon's web site at www.seadragonenergy.com, through SEDAR at www.sedar.com.
Sea Dragon Energy Inc. is a Calgary-based, growth-oriented oil and gas exploration and development company focused on the Middle East/North Africa region with production operations in the Arab Republic of Egypt.
During the first quarter of 2010 the company attained the following milestones:
- On January 20, 2010 the Company announced that Geyad 2 well in NW
Gemsa tested 3,850 bopd oil and 4.62 MMscfd of solution gas. On
February 4, 2010 Geyad 2 was put into production at 1,475 bopd oil.
- On January 25, 2010 the Company issued 22,730,000 special warrants
("the Special Warrant Offering") for gross proceeds of $12,501, less
the Underwriters' fee of $625 and $236 in other expenses. Each
special warrant entitled the holder thereof to receive one common
share on the exercise of the special warrant for no additional
consideration, subject to an adjustment whereby if the Company was
not qualified to issue the common shares under this offering by
April 1, 2010, each warrant would be exercisable for 1.05 common
shares for no additional consideration. The Company qualified to
issue the common shares on April 13, 2010 and as a result 23,866,500
common shares were issued upon the exercise of the special warrants
on April 13, 2010.
- On January 29, 2010, Sea Dragon paid an initial instalment of
$US10,000 to Dana Gas Egypt ("DGE") pursuant to the terms of a
farmout agreement ("the Farmout Agreement") with DGE that it had
entered into on December 31, 2009, through its wholly-owned
subsidiary, Sea Dragon Energy (Kom Ombo) Ltd., ("SD Kom Ombo"). Under
the Farmout Agreement SD Kom Ombo is to acquire a fifty (50%) percent
participating interest in the Kom Ombo Concession, Egypt for
aggregate consideration of US$45,000 (subject to working capital
adjustments). The CEO of the Sea Dragon is an independent director of
Dana Gas PJSC (the parent company of Dana Gas Egypt). The effective
date of the Kom Ombo Acquisition is July 1, 2009. Sea Dragon Energy
(Kom Ombo) Ltd. received the Deed of Assignment for the 50%
participating interest on January 28, 2010.
The initial deposit on January 29, 2010 was funded through the net
proceeds of the Special Warrant Offering. The balance of the farmout
consideration was paid by a remittance of $US28,477 to DGE on April
29, 2010 and a final remittance of $US2,089 made on May 19, 2010. The
remittances in April and May were paid using a portion of the net
proceeds of the April 2010 Common Share Offering, described below.
In addition, SD Kom Ombo is required to pay $US4,000 of DGE's share
of costs incurred after the Effective Date and also provide a Letter
of Guarantee of up to $US4.5 million. Under the terms of the Farmout
Agreement, approximately $US16.2 million of the aggregate
consideration may be fully cost recoverable by SD Kom Ombo out of
future production proceeds generated from the Kom Ombo Concession.
For accounting purposes, the acquisition of the Kom Ombo working
interest is considered to have occurred on April 29, 2010, when the
consideration for the acquisition was substantially paid. At March
31, 2010 Sea Dragon owed the remainder consideration of $30.5
million, which was funded from the proceeds of the April 2010
Offering, described below. As at March 31, 2010 the Company could not
be certain that it would have the funds to complete the acquisition
and, consequently, the recognition of the acquisition was deferred
until April 29, 2010. Accordingly, these financial statements for the
quarter ended March 31, 2010 do not include revenues from the sale of
crude oil from the Kom Ombo joint venture, nor expenses for
operations or overhead costs nor capital expenditures. Any net
remittances during the quarter have been added to the acquisition
deposit and will adjust the acquisition price and allocation when it
is reported in the second quarter.
The Company filed a Business Acquisition Report for this acquisition
on April 12, 2010 which may be viewed on SEDAR.
- On February 4, 2010 the Company signed an alliance agreement with
Tanmia Petroleum Company ("TPC"), a Company incorporated in Egypt and
owned one hundred percent by the Egyptian General Petroleum
Corporation. Under the terms of this agreement, the Company and TPC
will have the exclusive right to jointly appraise, develop and
produce hydrocarbons from certain undeveloped and under-developed oil
and natural gas opportunities located in the Arab Republic of Egypt.
- On March 8, 2010 the Company announced Al Amir 5x well on the NW
Gemsa concession tested 6,150 bopd and 6.9 MMscfd solution gas on a
full choke. On March 14, 2010 the well went into production at 1,500
bopd oil.
- On March 26, 2010 the Company announced it had obtained an
independent engineering report published by Ryder Scott effective
December 31, 2009 on its interest in NW Gemsa. According to the Ryder
Scott report, the Company's share of P1 and P2 barrels for NW Gemsa
stood at 1,674,46 bbls of oil with a value of $US20,773 net to the
Company with a 10% discount.
- On April 19, 2010, Sea Dragon completed an issuance of 142,500,000
Common Shares ("the April 2010 Common Share Offering") on a bought
deal basis pursuant to a short form prospectus at a price of $0.40
per common share for gross proceeds of approximately $57 million less
the Underwriters fee of $2,850 and other expenses of the Offering
estimated to be $375. The net proceeds of the Offering will primarily
be used by the Company to fund the balance of consideration of
approximately $US34,500 for the acquisition of a fifty (50%) percent
participating interest in the Kom Ombo concession, described above.
- On May 8, 2010 Sea Dragon commenced spudding Al Baraka 6, the first
of its 30 well program on Kom Ombo. Sea Dragon intends to drill up to
10 development wells during 2010.
Selected quarterly information
$C 000, except
share and per
share
information 2010 2009
------------------------------------------------------------
1st Qtr 4th Qtr 3rd Qtr 2ndt Qtr 1st Qtr
-------------------------------------------------------------------------
Average Daily
Production
volumes (Bopd) 786 614 - - -
Average Price
($US/Bopd) 75.94 72.39 - - -
Oil production,
gross (bbls) 70,699 6,143 - - -
Cash balance at
end of period 5,283 2,092 1,969 2,118 5,885
Working capital
(deficiency) 4,272 3,432 6,729 1,839 (9,386)
Restricted cash
and deposits 115 325 4,442 6,613 18,678
Total assets 35,637 22,229 8,602 10,639 26,902
Shareholders'
equity 32,005 21,168 8,196 10,237 11,286
Share capital 56,087 54,942 44,522 44,444 44,444
Common shares
outstanding
Basic 208,429,858 206,131,405 144,702,905 144,509,405 144,509,405
Diluted 274,231,108 253,607,742 161,991,076 158,491,076 158,491,076
Weighted
average
common
shares
outstanding
Basic 225,337,118 153,717,257 144,517,039 144,509,405 144,509,405
Diluted 227,040,167 153,738,451 158,978,255 158,491,076 158,491,076
Retained
earnings
(Deficit) (41,684) (39,848) (38,033) (35,818) (34,678)
Cash flow
from
operations(1) 28 (2,309) (1,567) (1,028) (836)
Basic, per
share(1)(2) (0.00) (0.01) (0.01) (0.01) ($0.01)
Capital
expenditures 8,939 802 668 564 17,098
Net loss (1,836) (1,814) (2,215) (1,141) (11,665)
Basic, per
share(2) (0.01) (0.01) (0.01) (0.01) ($0.08)
(1) See discussion concerning non-GAAP measures in the MD&A for the
period ended March 31, 2010 as posted on SEDAR.
(2) Funds flow from operations per share and Net income (loss) per share
are not calculated on a diluted basis as they are anti-dilutive.
For further information please see the website of the Company at www.seadragonenergy.com or the Company's filed documents at www.sedar.com.
Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading Risk Factors and elsewhere in the Company's filings with Canadian securities regulators. Specifically that there is no assurance that any hydrocarbon reserves will be discovered nor is there any assurance that any hydrocarbons encountered will be in commercially recoverable quantities. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not assume any obligation to update any forward-looking statements, save and expect as may be required by applicable securities laws.
The TSX.V Venture Exchange has neither approved nor disapproved of the information contained herein.
The TSX.V Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
For further information: Said Arrata, President, CEO and Director, (403) 457-5035; David Thompson, Senior Vice President and Director, (403) 457-5035; Scott Koyich, President, Brisco Capital Partners, (403) 262-9888, [email protected]; Graeme Dick, Brisco Capital Partners, (403) 561-8989, [email protected]
Share this article