/NOT FOR DISTRIBUTION TO U.S NEWSWIRE OR FOR DISSEMINATION IN THE UNITED STATES/
CALGARY, Nov. 23 /CNW/ -
Highlights of 2010 Q3 Results
November 23, 2010
$000s, except share and per share information
Prior | Three months ended September 30 | Nine months ended September 30 | ||||||
Quarter (1) | 2010 | 2009 | 2010 | 2009 | ||||
Restated (2) | Restated (2) | Restated (2) | Restated (2) | |||||
FINANCIAL | ||||||||
Cash, beginning of period | 5,201 | 21,239 | 3,557 | 2,309 | 18,612 | |||
Cash, end of period | 21,239 | 18,759 | 1,836 | 18,759 | 1,836 | |||
Working capital | 23,442 | 20,824 | 2,225 | 20,824 | 2,225 | |||
Funds from/(used in) operations | 668 | 766 | (1,427) | 1,481 | (2,978) | |||
per share | ||||||||
Net loss | 1,352 | 1,742 | 2,017 | 4,858 | 12,362 | |||
per share | 0.00 | 0.00 | 0.01 | 0.02 | 0.09 | |||
Capital expenditures | 45,701 | 3,982 | 609 | 51,088 | 9,794 | |||
Total assets | 83,011 | 83,210 | 8,023 | 83,210 | 8,023 | |||
Shareholders' equity | 83,049 | 79,108 | 7,644 | 79,108 | 7,644 | |||
Common shares outstanding (000's) | 375,704 | 375,959 | 144,509 | 375,959 | 144,509 | |||
Warrants outstanding (000's) | 30,255 | 30,000 | 9,088 | 30,000 | 9,088 | |||
OPERATIONAL | ||||||||
Oil production (bopd) | 1,032 | 1,190 | - | 1,003 | - | |||
Brent oil price ($/bbl) | 79.41 | 76.92 | - | 77.89 | - | |||
Realized oil price ($/bbl) | 75.83 | 72.01 | - | 72.57 | - | |||
Royalties ($/bbl) | 40.85 | 38.47 | - | 40.87 | - | |||
Operating costs ($/bbl) | 10.37 | 7.56 | - | 7.88 | - | |||
Netback ($/bbl) | 24.62 | 25.98 | - | 23.82 | - |
(1) | Denotes the three months ended June 30, 2010 |
(2) | Effective July 1, 2010, the Company changed its reporting and functional currency from Canadian dollars (CDN$) to United States dollars (US$), as significant portions of the Company's revenues, expenses and cash flows are denominated in US$. The change in reporting currency is to better reflect the Company's business activities and to improve investors' ability to compare the Company's financial results with other publicly traded businesses in the international oil and gas industry. |
Message to Shareholders
The Company had a very active Third Quarter (the "Quarter") with production increasing 15 percent from the prior Quarter. During the Quarter the Company drilled three wells (1.5 net) in Kom Ombo and one well (0.1 net) in NW Gemsa with an additional well in Kom Ombo reaching total depth subsequent to Quarter end.
In Kom Ombo, the Company is planning on having an active fourth quarter with a remaining work program including the drilling and completion of up to two development wells and one exploration well, and the recompletion and fracturing of up to three wells.
In NW Gemsa, water flooding operations are planned for the Al Amir SE field to provide pressure support for significant production and reserve increases in 2011 and 2012.
Third Quarter highlights:
- Exited the Quarter 2010 with $20.8 million in working capital, including cash of $18.8 million;
- Increased average oil production to 1,190 bopd from 1,032 bopd from the Prior Quarter;
- Placed Al Amir SE #6 on production at gross production of 1,100 bopd (110 bopd net) in NW Gemsa;
- Successfully drilled Al Ola X - 1 well to a total depth of 14,323 feet;
- Successfully drilled Al Baraka #5, Al Baraka #7, Al Baraka #9, with #5 and #7 placed on production and #9 awaiting completion;
- Completed a 475 km 2D seismic program in Kom Ombo to further delineate previously identified leads and prospects with the view of drilling an exploratory well outside of Al Baraka development lease before year-end;
- Secured a second rig for workover and completions, in order to accelerate operations in Kom Ombo which is now onsite.
Subsequent to Third Quarter highlights:
- Successfully drilled Al Baraka South East and Al Baraka #12 wells.
Financial review
The Company incurred a net loss during the Quarter of $1.7 million and generated funds from operations of $0.8 million. The Company exited the Quarter with no debt and working capital of $20.8 million including $18.8 million of cash. The Company will have sufficient funds to execute the remaining 2010 capital program from funds from operations and cash on hand.
Operations review
Kom Ombo Concession (Co-operated, 50% working interest)
Production
Production for the Quarter averaged approximately 600 bopd gross (300 bopd net) of light sweet oil with an average API of 37°.
Drilling and completions
Al Baraka #12 Well
The well was spud on November 4th and drilled to its total depth of 4,910 feet in the Six Hills Formation. Open hole logs were run and analyzed. The primary objective being the Six Hills "E" Formation was successfully encountered with 20 feet of oil pay. Casing was run and the drilling rig was released on November 14th. The well will be completed shortly using the work over rig.
Al Baraka SE Well
This step out well was spud on September 15th and drilled to its total depth of 8,750 feet in the Kom Ombo Formation. Petrophysical analysis of the open hole logs indicates 46 feet of potential oil pay in the Kom Ombo "A" and "C" Formations. The Kom Ombo "A" Formation was perforated in the intervals 8,499-8,511 feet and 8,448-8,456 feet and the well will be placed on production shortly. The testing of oil in the Kom Ombo sands is very encouraging as it could potentially result in additional development drilling and production from this southeastern extension of the Al Baraka Field.
Al Baraka #9 Well
The Abu Ballas and Sabaya Formations show 50 feet of potential oil pay. The well will now be recompleted in these formations as the Six Hills "E" sands showed non-commercial quantities of oil.
Al Baraka #6 Well
Recompletion operations were carried out in this well in the Six Hills "E" sands and the well was returned to production.
Seismic
During the Quarter, the Company completed a 400 km 2D Seismic program in the Kom Ombo Concession to delineate and firm up eight prospects. Processing has commenced with the view of potentially spudding an exploratory well before year-end. The Company completed an additional 75 km seismic program in the unexplored NW Basin of the Kom Ombo concession.
NW Gemsa (Non-operated, 10% working interest)
Production
Production for the Quarter averaged 8,900 bopd (890 bopd net) of light sweet oil with an average API of 41 degrees.
Al Amir SE #6
The Al Amir SE #6 well was completed in the Kareem Shagar Formation in the interval 9,805 ft to 9,835 ft. A flow test followed with a peak production of 4,630 bopd (460 bopd net) and 3.9 mmscf/d (0.4 mmscf/d net) recorded on a 48/64" choke. The well was shut in for a pressure build up and later placed on production at approximately 1,100 bopd (110 bopd net).
Al Ola X-1 exploratory well
The Al Ola X-1 well was drilled to its total depth of 14,323 feet in the Nukhul Formation. Open hole logs were run and the well was cased to total depth. The shallower Kareem oil producing formation encountered 25 ft of oil pay. The Rahmi member of the Kareem Formation was perforated in the interval 9,780-9,800 feet and placed on test. Preliminary results show a rate of 1,600 bopd on a 32/64" choke. The Lower Rudeis Formation, where strong gas shows were experienced, could not be adequately tested due to mechanical difficulties.
Sea Dragon's third quarter 2010 financial statements and management's discussion and analysis are available on Sea Dragon's website at http://www.seadragonenergy.com and will be available on SEDAR at http://www.sedar.com within 24 hours.
Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning the development of the Al Baraka field and exploration of the Kom Ombo Concession and events or projections referenced or implied herein should be viewed as forward-looking statements.
Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as "forward-looking statements". Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, costs and timing of exploration and production development, availability of capital to fund exploration and production development; political, social and other risks inherent in carrying on business in a foreign jurisdiction, the effects of a recessionary economy and such other business risks as discussed herein and other publicly filed disclosure documents. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.
Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.
This news release contains forward-looking statements based on assumptions, uncertainties and management's best estimates of future events. When used herein, words such as "intended" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on assumptions by and information available to the Company. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Actual results may differ materially from those currently anticipated. The forward-looking statements contained herein are expressly qualified by this cautionary statement.
Non-GAAP Measures. This press release contains the terms "funds from operations", and "netbacks" which are not recognised measures under Canadian GAAP. The Company uses these measures to help evaluate its performance.
Funds from operations. Funds from operations is a non-GAAP measure that represents funds generated from operating activities before changes in non-cash working capital. Funds from operations should not be considered an alternative to, or more meaningful than, cash flow from operating activities. Management uses funds from operations to analyse performance and considers it an indication of the Company's ability to generate the cash necessary to fund future capital investments and to repay debt. Sea Dragon's determination of funds from operations may not be comparable to that reported by other companies nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with Canadian GAAP.
Netback. Netback is a non-GAAP measure that represents sales net of all operating expenses and government royalties. Management believes that netback is a useful supplemental measure to analyse operating performance and provide an indication of the results generated by the Company's principal business activities prior to the consideration of other income and expenses. Management considers netbacks an important measure as it demonstrates the Company's profitability relative to current commodity prices. Netback may not be comparable to similar measures used by other companies.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE RELEASE.
%SEDAR: 00026905E
For further information:
Said Arrata | Tony Anton |
Chairman and CEO | President and COO |
(403) 457-5035 | (403) 457-5035 |
Scott Koyich | Graeme Dick |
President, Brisco Capital Partners | Brisco Capital Partners |
(403) 262-9888 | (403) 561-8989 |
[email protected] | [email protected] |
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