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Forza Petroleum 2021 Financial and Operational Results

16 March 2022

Calgary, Alberta, March 16, 2022


Forza Petroleum posts 129% increase in annual revenue driven by increased production and improved oil prices


Forza Petroleum Limited (“Forza Petroleum” or the “Corporation”) today announces its financial and operational results for the year ended December 31, 2021. All dollar amounts in this news release are in United States dollars.


2021 Financial Highlights:


  • Revenue of $187.8 million, consisting of an average realized sales price of $54.52/barrel of oil (“bbl”) on working interest oil sales of 2,885,300 bbl and $30.5 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 November 2021
  • Field operating costs, representing the Corporation’s working interest share of operating expenses, of $19.5 million ($6.78/bbl) versus $17.4 million ($6.93/bbl) in 2020
    • Field operating costs per bbl decreased 2% versus the comparable period as a 12% increase in costs was more than offset by a 15% increase in sales volumes
  • Profit of $10.3 million ($0.02 per common share) versus loss of $108.7 million in 2020 ($0.19 per common share)
    • Results include a non-cash impairment charge of $32.4 million compared to a net non-cash impairment charge of $117.3 million in 2020, in each case related to the Hawler license area
  • Net cash generated from operating activities was $51.2 million versus $22.1 million in 2020
  • Net cash used in investing activities was $34.7 million, including payments related to drilling and facilities work in the Hawler license area and related license costs
  • $24.7 million of cash and cash equivalents as at December 31, 2021


2021 Operations Highlights:


  • Average gross (100%) oil production of 12,200 bbl/d (working interest 7,900 bbl/d) versus 10,600 bbl/d (working interest 6,900 bbl/d) for the year ended December 31, 2020
  • Eight wells targeting Cretaceous or Tertiary reservoirs were drilled or spudded during 2021, including, four in the Zey Gawra field, three in the Demir Dagh field and one in the east fault block of the Banan field
  • Hawler facilities were further developed with construction of the river crossing for the gathering system to serve the western flank of the Hawler license area, civil works for drilling pads and a new location for Banan field facilities, along with additional flowlines throughout the area
  • Gross (working interest) year-end proved oil reserves of 13.1 million bbl, up from 10.3 million bbl at year-end 2020, as estimated by Netherland, Sewell & Associates, Inc.


2022 Operations Update:


  • Average gross (100%) oil production of 13,700 bbl/d (working interest 8,900 bbl/d) and 14,600 bbl/d (working interest 9,500 bbl/d) for January and February 2022, respectively
    • New production from recently drilled wells has more than offset declines from existing wells
  • With two drilling rigs under contract, the Corporation has drilled a sidetrack of the previously drilled Demir Dagh-10 well and the Zey Gawra-9 well, in each case targeting Cretaceous reservoirs
  • On February 12, 2022, Forza Petroleum spudded a sidetrack of the previously drilled Demir Dagh-3 well targeting the Cretaceous reservoir
  • For the balance of 2022, the Corporation plans to drill seven additional wells (including sidetracks of two previously drilled wells and a well in a previously undrilled structure west of the currently developed Zey Gawra field), to complete the Ain al Safra-2 well and, if needed, to complete two water disposal wells
  • Planning and installation of processing facilities and pipelines connecting each of the Banan field and the Zey Gawra field to the Hawler production facilities at the Demir Dagh field is progressing
  • 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


Liquidity Outlook:


  • The Corporation expects cash on hand as of December 31, 2021 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 allow it to fund its forecasted capital expenditures and operating and administrative costs through the end of March 2023. The Corporation has the ability to tailor its capital program to have the liquidity needed to settle the non-current purchase consideration following the end of the forbearance period on March 31, 2023.


CEO’s Comment


Commenting today, Forza Petroleum’s Chief Executive Officer, Vance Querio, stated:


“One of our most active years resulted in eight wells drilled during 2021 and an improved understanding of our producing reservoirs. The new contribution from successful wells has more than offset natural production declines and supported the year-end promotion of certain probable oil reserves to the proved oil reserves category, resulting in a proved reserves replacement ratio of 198% for the year.


We intend this year to be even busier than last and have already drilled three wells since the start of the year. An additional seven wells planned for 2022, including a well in a previously undrilled structure west of the currently developed Zey Gawra field, are expected to provide a further significant boost to production.


Based on forecast oil prices, we expect that our investments in 2022 will be funded entirely from cash generated from operating activities. Cash generation in excess of new investment is expected to put Forza Petroleum in a position to progress settlement of a significant liability that relates to our original acquisition of the Hawler license area in 2011. We expect the next twelve months to be a transformational period in the story of Forza Petroleum.”


Complete press release: