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Forza Petroleum Q1 2022 Financial and Operational Results

13 May 2022

Calgary, Alberta, May 13, 2022


Forza Petroleum achieves another record quarter posting its highest oil sales volumes and revenue in company history


Forza Petroleum Limited (“Forza Petroleum” or the “Corporation”) today announces its financial and operational results for the three months ended March 31, 2022. All dollar amounts set forth in this news release are in United States dollars.


Financial Highlights:


  • Revenue of $82.4 million for Q1 2022, consisting of an average realized sales price of $81.07/barrel of oil (“bbl”) on working interest sales of 851,000 bbl and $13.4 million in recovery of carried costs
    • The Corporation has received full payment in accordance with production sharing contract entitlements for all oil sales to the Kurdistan Regional Government through January 2022
  • Field operating costs, representing the Corporation’s working interest share of operating expenses, of $5.6 million ($6.64/bbl) for Q1 2022 versus $4.0 million ($5.89/bbl) for Q1 2021
    • Field operating costs per bbl are up 13% versus the comparable period as a result of increased costs for security and diesel, partially offset by higher production
  • Profit of $22.2 million ($0.04 per common share) in Q1 2022 versus profit of $21.2 million in Q1 2021 ($0.04 per common share)
    • Profit in Q1 2021 included a one-time gain of $15.7 million on the deconsolidation of a subsidiary
  • Net cash generated from operating activities was $12.6 million in Q1 2022 versus $4.2 million in Q1 2021
  • Net cash used in investing activities during Q1 2022 was $20.6 million, including payments related to drilling and facilities work in the Hawler license area, versus $7.2 million in Q1 2021
  • $16.6 million of cash and cash equivalents as of March 31, 2022



Operations Update:


  • Average gross (100%) oil production of 14,600 bbl/d (working interest 9,500 bbl/d) in Q1 2022
  • Average gross (100%) oil production of 15,100 bbl/d (working interest 9,800 bbl/d) for April 2022
  • Three wells were drilled and completed during the first quarter of 2022. The Demir Dagh-10H and Zey Gawra-9H wells are on production and completion of the Demir Dagh-3H well has been suspended temporarily while on-going fluid and rock compatibility studies are completed.
  • The Demir Dagh-14 well targeting the Cretaceous reservoir of the Demir Dagh field was spudded on March 22, 2022 and total-depth of the pilot hole was reached on May 9, 2022. Drilling operations are somewhat behind schedule but the Corporation expects to complete the well later this month and turn it over to production in early June. A second drilling rig under contract with the Corporation has been demobilized from the Hawler license area for maintenance, inspection and recertification.
  • The worldwide outbreak of the COVID-19 virus, including within Iraq, has not directly impacted the Corporation’s operations and all extraordinary procedures and restrictions implemented by the Corporation to limit the risk of infection and illness among staff have been discontinued.



2022 Forecasted Work Program:


  • Forza Petroleum forecasts $72 million of capital expenditure for 2022, down from $81 million budgeted, resulting from the delay of certain activity into 2023 and decreased estimated costs for the pipeline connecting the Zey Gawra field to the Hawler production facilities at the Demir Dagh field
  • The Corporation continues to pursue the major elements of its 2022 work program including further development of the Demir Dagh Cretaceous reservoir with the drilling of the Demir Dagh-14 well, drilling one more new well targeting the Cretaceous reservoir, and side tracking and recompleting the existing Demir Dagh-9 well. Additional work in the program includes the completion of the Ain al Safra-2 well, drilling one new well in each of the Tertiary and Cretaceous reservoirs of the Zey Gawra field, conversion of an abandoned Zey Gawra well into a water disposal well, and spudding a well to appraise the potential of both the Tertiary and Cretaceous reservoirs in an undrilled structure west of the developed Zey Gawra field. The Corporation also intends to redrill the horizontal drain of the temporarily abandoned Zey Gawra-6 well in the Cretaceous reservoir.
  • 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 has been delayed by supply chain issues in acquiring the necessary line pipe


Liquidity Outlook:


  • The Corporation expects cash on hand as of March 31, 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 June 2023 and fund the $76.2 million in deferred purchase consideration that falls due in 2023 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:


We are extremely proud of our achievement in steadily increasing our production capacity over the past several years and we have produced more than 14,700 barrels per day on average since the beginning of 2022. As a result of this production, combined with the highest oil sales prices in more than seven years, Forza Petroleum posted a record $82.4 million of revenue for Q1 2022.


The execution of our work program proceeded according to plan during the first quarter of this year although some of the wells completed are not yet as productive as we had forecast, either because of unexpected geological circumstances or unanticipated complications with our completions. We are working to resolve these issues through revised completion procedures and relocation of horizontal drains in some reservoirs.


We continue to pursue a program that includes the completion of ten producing wells and the spudding of an eleventh well in 2022, as budgeted, but periodically adjust plans to align with available resources. Our program has incurred some relatively minor delay recently due to drilling issues in the Demir Dagh-14 pilot hole and we are not immune to the impediments caused by shortages of both services and materials that routinely occur in the oil and gas industry in the aftermath of rapidly increasing crude oil prices, exacerbated this time around by the lingering effects of COVID-19, especially in China, and the conflict in Ukraine.


We recognize that it will be challenging for us to maintain the aggressive schedule of development activities that we embarked on at the beginning of this year, but our robust cash flow will allow us to pursue our program at whatever pace is otherwise achievable. We look forward to delivering more oil to the Kurdistan Regional Government and more value to our shareholders during the remainder of 2022.


Complete press release: