Home > News



Forza Petroleum Q2 2023 Financial and Operational Results

25 July 2023

Calgary, Alberta, July 25, 2023


Results significantly impacted by the continuing shutdown of the Kurdistan Oil Export Pipeline; production operations partially restarted in July to support local oil sales


Forza Petroleum Limited (“Forza Petroleum” or the “Corporation”) today announces its financial and operational results for the three and six months ended June 30, 2023. All dollar amounts set forth in this news release are in United States dollars.


Financial Highlights:


  • Revenue of $1.3 million for Q2 2023, consisting of an average realized sales price of $28.28/barrel of oil (“bbl”) on working interest oil sales of 39,300 bbl and $0.2 million in recovery of carried costs.
    • The Corporation has received full payment in accordance with production sharing contract entitlements for all oil sales into the Kurdistan Oil Export Pipeline through September 2022, with a $63 million balance outstanding for oil sales from October 2022 through March 2023.
    • Payment for local oil sales completed during the quarter were settled by buyers in advance.
  • Field operating costs, representing the Corporation’s working interest share of operating expenses, of $4.4 million for Q2 2023 versus $6.0 million for Q2 2022.
    • Field operating costs decreased versus the comparable period because of decreases in facilities, security, diesel and equipment costs resulting primarily from reduced operations.
  • Loss of $131.3 million ($0.22 per common share) in Q2 2023 versus profit of $31.5 million ($0.05 per common share) in Q2 2022 primarily the result of impairment expense and a decrease in net revenue.
  • Net cash used in operating activities was $5.8 million in Q2 2023 versus net cash generated from operating activities of $45.6 million in Q2 2022.
  • Net cash used in investing activities during Q2 2023 was $2.6 million, primarily consisting of costs related to drilling commitments, versus $18.7 million in Q2 2022.
  • $71.2 million of cash and cash equivalents as of June 30, 2023.



Operations Update:


  • Average gross (100%) oil production of 605 bbl/d (working interest 400 bbl/d) in Q2 2023, exclusively from the Banan-4 well in the Banan West fault block which was being produced at a restricted rate rather than shut-in to minimize risk of damage to well facilities.
  • Given the previously announced suspension of the Corporation’s work program for the balance of 2023, activity was limited during the second quarter of 2023.
  • Installation of a pipeline connecting the Banan field to the Hawler production facilities at the Demir Dagh field is nearing completion with commissioning expected during the third quarter of 2023.
  • The Corporation’s work program for the balance of 2023 remains suspended pending reopening of the Kurdistan Oil Export Pipeline and clarity regarding collection of overdue payments for oil sales and the terms applicable for future oil sales.



Liquidity Outlook:


  • The Corporation expects cash on hand as of June 30, 2023, cash receipts from oil sales, and, if required, up to $15 million in funding from the Corporation’s principal shareholder, will fund its forecasted capital expenditures and operating and administrative costs through the end of September 2024 and the $76.2 million in deferred purchase consideration due and payable in connection with the original acquisition of the Hawler license area.



CEO’s Comment


Commenting today, Forza Petroleum’s Chief Executive Officer, Shane Cloninger, stated:


“With the Kurdistan Oil Export Pipeline (KOEP) closed for the entire second quarter, production from the Hawler license area remained substantially shut-in. The Corporation was limited in its ability to generate revenue, primarily from the sale of oil-in-inventory to the local market.


Concerning the reopening of the KOEP, there continues to be a lack of clarity surrounding the steps towards a resolution among the Kurdistan Regional Government, the Federal Government of Iraq and officials in the Republic of Turkey. No timeline has been provided to the Corporation regarding when exports will resume.


Due to the above and the ongoing delay in collection of overdue payments for oil sales, Forza Petroleum’s work program for the balance of 2023 remains suspended. Additional efforts have been made to reduce operating and administrative costs, as well as renegotiating facilities, equipment, and security expenditures. Further cost cutting will be required in the event the export pipeline does not reopen in the near-term.


In the meantime, the Corporation has pursued oil sales to the local market to cover necessary costs. In early July, OP Hawler Kurdistan Limited, the Corporation’s operating subsidiary in the Kurdistan Region, entered a 31-day contract to sell gross (100%) 8,000 bbl/d at $29/bbl. Full payment in accordance with production sharing contract entitlements was received from the buyer in advance.

A strong balance sheet, lean cost structure, and a supportive principal shareholder enable Forza Petroleum to endure an extended closure of the KOEP. We remain hopeful that meetings between the relevant governments will result in a prompt reopening of exports and resolution of all matters relating to the sale of oil produced from the Kurdistan Region.”


Complete press release: