Oryx Petroleum Q3 2019 Financial and Operational Results and 2019 Capital Budget
06 November 2019
Calgary, Alberta, November 6, 2019
62% increase in gross (100%) oil production and 22% increase in revenues versus Q3 2018
Oryx Petroleum Corporation Limited (“Oryx Petroleum” or the “Corporation”) today announces its financial and operational results for the three and nine months ended September 30, 2019. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.
Financial Highlights:
- Total revenues of $35.7 million on working interest sales of 698,600 barrels of oil (“bbl”) and an average realised sales price of $46.05/bbl for Q3 2019
- 22% increase in revenues versus Q3 2018
- The Corporation has received full payment in accordance with production sharing contract entitlements for all oil sale deliveries into the Kurdistan Oil Export Pipeline (“KOEP”) through July 2019 - Operating expenses of $7.2 million ($10.27/bbl) and an Oryx Petroleum Netback[1] of $12.1 million ($17.33/bbl) for Q3 2019
- 21% decrease in operating expenses per barrel versus Q3 2018 - Profit of $18.3 million ($0.03 per common share) in Q3 2019 versus loss of $5.2 million ($0.01 per common share) in Q3 2018
- Improvement primarily attributable to a non-cash gain from a change to the estimated fair value of contingent consideration obligation potentially payable to the vendor of the Hawler license area and to a higher Oryx Petroleum Netback1 - Net cash generated by operating activities in Q3 2019 was $9.7 million versus $4.9 million in Q3 2018 and is comprised of Operating Funds Flow[2] of $9.8 million partially offset by a $0.1 million increase in non-cash working capital
- Net cash used in investing activities during Q3 2019 was $7.5 million including payments related to drilling and facilities work in the Hawler license area, preparation for drilling in the AGC Central license area, and a decrease in non-cash working capital
- $20.4 million of cash and cash equivalents as of September 30, 2019
1 Oryx Petroleum Netback is a non-IFRS measure. See the table below for a definition of and other information related to the term.
2 Operating Funds Flow is a non-IFRS measure. See the table below for a definition of and other information related to the term.
Operations Update:
- Average gross (100%) oil production of 11,700 bbl/d (working interest 7,600 bbl/d) for Q3 2019 versus 7,200 bbl/d (working interest 4,700 bbl/d) for Q3 2018
- 62% increase in gross (100%) oil production in Q3 2019 versus Q3 2018; 4% increase in gross (100%) oil production in Q3 2019 versus Q2 2019
- Average gross (100%) oil production of 11,600 bbl/d in October 2019 with production curtailed during the first four days of the month due to the scheduled maintenance of the KOEP
- Higher production in Q3 2019 versus Q2 2019 a result of increased oil production from the Banan-6 well partially offset by expected decline of wells producing from the Zey Gawra Cretaceous reservoir, brief shut-ins of production of certain Banan wells in September due to other operations at the Banan field and the shutdown of the KOEP for scheduled maintenance during the last three days of September - The Banan-7 well targeting the Cretaceous reservoir was spudded in August 2019, was drilled to a measured depth of 1,468 metres and was completed and placed on production in late September
- The Banan-5 well was spudded in September 2019. The well was designed to obtain information to enhance understanding of both the Banan Tertiary and Cretaceous reservoirs and was drilled to a measured depth of 1,669 metres. The well was completed in the Cretaceous reservoir and placed on production in October 2019
- A pump was successfully installed in the Demir Dagh-8 well targeting the Cretaceous reservoir and the well was placed on production through the Demir Dagh production facility in late October 2019
- Efforts to facilitate oil production from the horizontal sidetrack of the Demir Dagh-5 well targeting the Cretaceous reservoir, including acid stimulation operations, have not yet been successful. Further efforts to stimulate or recomplete this well may be planned after further assessment of the behaviour of the Demir Dagh Cretaceous reservoir
- A horizontal sidetrack of the previously drilled Demir Dagh-3 well, targeting the Cretaceous reservoir, is currently being drilled
- Initial planning and preparations for an exploration drilling campaign in the AGC Central license area are ongoing. An environmental and social impact assessment and a geohazard assessment are near completion. The Corporation has requested that the First Renewal Period of its Production Sharing Contract (due to end on October 1, 2020) be suspended until Senegal and Guinea Bissau have agreed on a long term extension or renewal of the AGC accord
Q4 2019 Forecasted and 2020 Budgeted Capital Expenditures:
- Oryx Petroleum re-forecasted capital expenditures for Q4 2019 are $14 million and are primarily focused on the Hawler license area. Expenditures include those incurred relating to the recently completed Banan-7 and Banan-5 wells, the recently completed installation of artificial lift at the Demir Dagh-8 well, drilling of the Demir Dagh-3 horizontal sidetrack and a sidetrack of the Banan-1 well targeting the Cretaceous reservoir, and completion of infrastructure needed to facilitate increased production from the Banan field
- Oryx Petroleum budgeted capital expenditures for 2020 are $106 million:
- $63 million dedicated to the Hawler license area: 7 wells are planned including two horizontal wells targeting the Demir Dagh Cretaceous reservoir, one sidetrack of an existing well targeting the Zey Gawra Cretaceous reservoir, the completion of the previously suspended Ain Al Safra-2 well targeting the Triassic reservoir, two wells targeting the Banan Cretaceous reservoir, one well targeting the Banan Tertiary reservoir and one sidetrack of an existing well targeting the Zey Gawra Tertiary reservoir; processing facilities and a pipeline connecting the Banan field to the Hawler production facilities at the Demir Dagh field; storage tanks at the Hawler production facilities and pads, flowlines and infrastructure modifications needed to accommodate incremental drilling and production and to reduce operating costs
- $43 million dedicated to the AGC Central license area including studies, preparations for exploration drilling and the drilling of one exploration well
Liquidity Outlook:
- The Corporation expects cash on hand as of September 30, 2019 and cash receipts from net revenues and export sales will allow it to fund its forecasted operating and administrative costs and Hawler license area capital expenditures through the end of 2020. Additional capital is expected to be required to be able to both meet any contingent consideration obligations that become payable and to fund drilling in the AGC Central license area planned in 2020. Oryx Petroleum expects that the repayment of the principal amount due to AOG in July 2020, under the AOG Loan, will be restructured. The Corporation had $20.4 million of cash and cash equivalents as of September 30, 2019.
CEO’s Comment
Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:
“In recent months we continued to increase production in the Hawler license area and in the third quarter we achieved record average daily production.
In the Hawler license area two wells were drilled and completed in the Banan field that have provided information that enhances our understanding of both the Banan Tertiary and Cretaceous reservoirs. At the Demir Dagh field we installed artificial lift in the Demir Dagh-8 well in the Cretaceous reservoir and have placed the well on production through the production facilities in the Demir Dagh field. The early but encouraging results from the Demir Dagh-8 well provide us with more confidence in our planned development for the field which will utilize horizontal wells to avoid or minimize production of both associated natural gas and water. We are currently drilling a horizontal sidetrack from the previously drilled Demir Dagh-3 well targeting the Cretaceous reservoir and expect this operation to be complete in December.
In the AGC Central license area planning and preparation for an exploration drilling campaign continue with an environmental and social impact assessment and a geohazard assessment both nearing completion.
Our budgeted capital expenditures for 2020 are $106 million with additional drilling planned in the Hawler license area and exploration drilling planned in the AGC Central license area. In the Hawler license area the drilling or workover of seven wells are planned. In the AGC Central license area we expect to continue preparations for the drilling of our first exploration well in the license area which is currently planned in late 2020.
During Q3 2019 we generated operating funds flow which exceeded cash used in investing activities. We expect that cash on hand and cash receipts from net revenues and export sales will fund forecasted capital expenditures and operating and administrative costs in 2020, although additional capital may be required to fund contingent consideration obligations, should they become payable, and exploration drilling in the AGC Central license area planned in 2020.
We look forward to continuing to implement our plans in 2019 and 2020, achieving higher production in the Hawler license area and preparing for an exciting exploration drilling program in the AGC Central license area.”
Oryx_Petroleum_Press_Release_Q3_Results_2019_FINAL.pdf