CEO's Message

Forza Petroleum had a productive first quarter, generating more than $18 million from operating activities. A new well in the Zey Gawra field was completed and turned over to production, while another new well, targeting the Cretaceous reservoir in the Demir Dagh field, reached total depth before the end of the quarter. The team also successfully progressed construction of the West Hawler Gathering System, the commissioning of which is expected later this month. The use of these facilities reduce reliance on road tankers, improving the safety, environmental impact, and costs associated with operations in this part of the Hawler license area.

Unfortunately, the achievements during the quarter were overshadowed with news of the shut-in of the Kurdistan Oil Export Pipeline at the end of the period. Absent any immediately available alternative sales channels, and with our own storage quickly nearing capacity, we were forced to shut in substantially all production from the Hawler license area.

We are encouraged by news of progress being made by the Kurdistan Regional Government and the Iraqi Federal Government towards restarting the Kurdistan Oil Export Pipeline, and consider the pipeline shut-in and related pause in settlement of receivables for oil sales to be temporary. While steps have already been taken to reduce operating costs across the business, Forza Petroleum is maintaining operational readiness and the ability to restart production and deliveries to the Kurdistan Oil Export Pipeline within 48 hours following the restart of pipeline operations.

To preserve liquidity, the Corporation’s work program for the balance of 2023 has been largely suspended. Our investment plans will be reassessed once oil production and deliveries have restarted, any changes to oil sales terms are clarified, and receipt of payments for oil sales has regularized.

In the meantime, we remain closely engaged with all stakeholders regarding the pipeline restart and will continue to monitor the situation and take further actions as necessary.

Shane Cloninger     

Chief Executive Officer     

May 9, 2023