Forza Petroleum Q1 2021 Financial and Operational Results
06 May 2021
Calgary, Alberta, May 6, 2021
Increased revenue and collection of overdue receivables strengthen Forza Petroleum’s financial outlook
Forza Petroleum Limited (“Forza Petroleum” or the “Corporation”) today announces its financial and operational results for the three months ended March 31, 2021. All dollar amounts set forth in this news release are in United States dollars.
Financial Highlights:
- Revenue of $35.7 million for Q1 2021, consisting of an average realized sales price of $44.44/barrel of oil (“bbl”) on working interest sales of 673,400 bbl and $5.8 million in recovery of carried costs
- Except for a $10.1 million outstanding balance for historical oil sales, the Corporation has now received full payment in accordance with production sharing contract entitlements for all oil sales into the Kurdistan Oil Export Pipeline through February 2021
- Field production costs, representing the Corporation’s working interest share of operating expenses, of $4.0 million ($5.89/bbl) for Q1 2021 versus $5.9 million ($6.97/bbl) for Q1 2020
- Field production costs per bbl are down 15% versus the comparable period as a result of decreased costs for security and diesel, and savings achieved through the Banan-4 well workover, partially offset by lower production
- Profit of $21.2 million ($0.04 per common share) in Q1 2021, which includes a one-time gain of $15.7 on the deconsolidation of a subsidiary, versus loss of $249.6 million in Q1 2020 ($0.45 per common share)
- Loss in Q1 2020 primarily attributable to a non-cash impairment charge of $238.2 million related to the Hawler license area, resulting from significantly lower forecast oil prices at that time
- Net cash generated from operating activities was $4.2 million in Q1 2021 versus $6.8 million in Q1 2020
- Net cash used in investing activities during Q1 2021 was $7.2 million, including payments related to drilling and facilities work in the Hawler license area, versus $8.5 million in Q1 2020
- $10.2 million of cash and cash equivalents as of March 31, 2021
Operations Update:
- Average gross (100%) oil production of 11,500 bbl/d (working interest 7,500 bbl/d) in Q1 2021
- Average gross (100%) oil production of 12,400 bbl/d (working interest 8,000 bbl/d) for April 2021, increased from Q1 2021 primarily as a result of the incremental contribution from the Zey Gawra-5 well completed and put on production in February 2021
- The Banan-8 well targeting the Cretaceous reservoir of the Banan field east of the Great Zab river was spudded on April 14, 2021. The well has reached total depth in a planned pilot hole and evaluation of the Cretaceous reservoir is underway. Recently completed evaluation of the shallow Tertiary Pila Spi reservoir revealed that there is no oil column in the reservoir at this location. The Corporation continues to analyze the results to determine where the Tertiary reservoir can be successfully developed east of the Great Zab river and how the recently obtained data may impact reserves that were attributed to the Banan Pila Spi reservoir at December 31, 2020
- The worldwide outbreak of the COVID-19 virus, including within Iraq, has not significantly impacted operations. The Corporation has taken precautions to protect its employees and contractors but does not at this time expect that the virus outbreak will restrict operations
2021 Forecasted Work Program:
- For the balance of 2021, the Corporation plans to complete the Ain al Safra-2 well and drill at least three further wells, including one in the Zey Gawra field targeting the Cretaceous reservoir, one in the Banan field east of the Great Zab river targeting the Tertiary reservoir and a well in the Demir Dagh field targeting the Cretaceous reservoir
- The Corporation also plans to install a gathering system to eliminate trucking in the western part of the Hawler license area to reduce environmental impact and operating expense, and to undertake other facilities and maintenance projects
Liquidity Outlook:
- The Corporation expects cash on hand as of March 31, 2021 and cash receipts from net revenues from export sales exclusively through the Kurdistan Oil Export Pipeline to fund its forecasted capital expenditures and operating and administrative costs through the end of March 2022, and to settle all payables currently due to suppliers. The contingent consideration obligation is anticipated not to become payable before 2022.
CEO’s Comment
Commenting today, Forza Petroleum’s Chief Executive Officer, Vance Querio, stated:
“The resumption of our development drilling program on January 1, 2021, which started bearing fruit in the form of new production before the end of February, along with recovering prices for oil, has resulted in the Corporation realizing nearly $36 million of revenue for Q1 2021, one of our best quarters ever. The Ministry of Natural Resources of the Kurdistan Region of Iraq continues to make monthly payments against both current and overdue receivables and Forza Petroleum continues to build a strong financial foundation to support a full work program for 2021.
After drilling the Banan-8 well targeting the Cretaceous reservoir in the eastern area of the Banan field, we plan to use the drilling rig we have under contract to drill three more wells. We also plan to complete the Ain al Safra-2 well and to install a gathering system to eliminate trucking in the western part of the Hawler production area to reduce environmental impact and operating expense. Additional development activity that can be completed and funded this year is being considered. We continue to forecast that our 2021 work program can be funded entirely from internally generated cash flow.
Momentum continues to build after the successful completion of the Zey Gawra-5 well in February. Our small but dedicated staff and our directors are all enthusiastic about the progress we expect to make in 2021.”
FPL_Q12021_Results_PR.pdf