Forza Petroleum Q3 2022 Financial and Operational Results
08 November 2022
Calgary, Alberta, November 8, 2022
A record year continues to develop with the support of stable production and high oil prices during the third quarter
Forza Petroleum Limited (“Forza Petroleum” or the “Corporation”) today announces its financial and operational results for the three and nine months ended September 30, 2022. All dollar amounts set forth in this news release are in United States dollars.
Financial Highlights:
- Revenue of $85.1 million for Q3 2022, consisting of an average realized sales price of $79.11/barrel of oil (“bbl”) on working interest oil sales of 900,800 bbl and $13.8 million in recovery of carried costs
- Field operating costs, representing the Corporation’s working interest share of operating expenses, of $5.9 million ($6.54/bbl) for Q3 2022 versus $4.7 million ($6.57/bbl) for Q3 2021
- Field operating costs per bbl are stable versus the comparable period with increases in security, diesel and consumable costs offset by a 25% increase in sales volumes
- Profit of $23.7 million ($0.04 per common share) in Q3 2022 versus $7.6 million ($0.01 per common share) in Q3 2021 primarily attributable to an increase in net revenue resulting from increased realized sales price and recovery of carried costs, and higher sales volumes
- Net cash generated from operating activities was $25.4 million in Q3 2022 versus $13.9 million in Q3 2021
- Net cash used in investing activities during Q3 2022 was $15.3 million, including payments related to drilling and facilities work in the Hawler license area, versus $7.7 million in Q3 2021
- $53.6 million of cash and cash equivalents as of September 30, 2022
- Payment of $20.6 million for oil sales into the Kurdistan Oil Export Pipeline during June 2022 was received after September 30, 2022
Operations Update:
- Average gross (100%) oil production of 15,100 bbl/d (working interest 9,800 bbl/d) in Q3 2022.
- A sidetrack of the previously drilled Demir Dagh-9H well targeting the Cretaceous reservoir reached total depth on July 2, 2022. The well is on production.
- The Zey Gawra-9 well targeting the Cretaceous reservoir reached total depth on October 1, 2022. The well was completed and is currently producing.
- Activity during the third quarter of 2022 also included the conversion of the previously drilled Zey Gawra-2 well to a water disposal well and workover operations on the Demir Dagh-13 well to replace a leased jet pump with a progressive cavity pump owned by the Corporation.
- One rig has recently started redrilling the horizontal drain of the temporarily abandoned Zey Gawra-6 well in the Cretaceous reservoir and another is being mobilized now to complete the Ain al Safra-2 well in the Triassic reservoir. The undeveloped Ain al Safra field is east of and in the same structure as the Zartik wells in the Baeshiqa PSC area, where production commenced in mid-June from the Zartik-1 well. The Corporation plans to finish its 2022 work program later this year by completing the Ain al Safra-1 well in the Jurassic reservoir and spudding a new well to be completed early next year in the Tertiary reservoir in the southern part of the Zey Gawra field.
- Planned facilities’ work for the balance of 2022 includes installation of flowlines to connect the Banan field to the Hawler production facilities at the Demir Dagh field. Commissioning of the lines is forecast for the end of the current year after which transportation of oil from the Banan field by road tankers will be discontinued.
2022 Forecasted Capital Expenditures:
- Forza Petroleum forecasts $67 million of capital expenditure for 2022, down from $72 million forecast on May 13, 2022, due to timing issues.
Liquidity Outlook:
- The Corporation expects cash on hand as of September 30, 2022 and cash receipts from net revenues from sales, exclusively made to the Kurdistan Regional Government at the tie-in to the Kurdistan Oil Export Pipeline, will fund its forecasted capital expenditures and operating and administrative costs through the end of December 2023 and the $76.2 million in deferred purchase consideration, falling due at end of March 2023, owing in connection with the original acquisition of the Hawler license area.
CEO’s Comment
Commenting today, Forza Petroleum’s Chief Executive Officer, Vance Querio, stated:
“Operations during the third quarter resulted in a modest increase in oil production rate and contributed to a $10.2 million increase in the Corporation’s balance of cash and cash equivalents at period-end. The cash and cash equivalents balance of $53.6 million at period-end is supplemented by a $36.5 million increase in the trade and other receivables balance to $71.0 million. The Corporation’s liquidity permits continuation of an active work program for the balance of 2022 and into 2023.
We are happy to be mobilizing a drilling rig to the Ain al Safra field, which was evacuated due to the invasion of ISIS in 2014. We look forward to completing the previously drilled AAS-1 and AAS-2 wells in the Jurassic and Triassic reservoirs, respectively, and to assessing the productive capacity of these completions.
Forza Petroleum remains on track to achieve what should be its most successful year yet.”
Complete press release:
PR-Q32022_Results.pdf