Serinus Announces Q2 2017 Financial and Operating Results
August 10 2017 - 6:10PM
Serinus Energy Inc. (TSX:SEN)
(WARSAW:SEN) (“
Serinus”,
“
SEN” or the “
Company”), is
pleased to report its financial and operating results for the three
months ended June 30, 2017.
Q2 2017 Highlights
- During Q2 2017, production from Tunisia averaged 329 boe/d, a
decrease from 1,206 boe/d in Q2 2016. Lower production during 2017
was due to the shut-in of fields in Tunisia. Chouech Es Saida field
has been shut-in since February 28, 2017, due to labour issues. In
addition, from May 22, 2017 the Sabria field was also shut-in due
to continued social unrest in the southern part of the
country. Both fields currently remain shut-in.
- The netback for Tunisia in Q2 2017 was $2.00 per boe, compared
to $11.71 per boe in 2016. The lower netback was driven by lower
production driving up costs on a boe basis.
- Funds from operations was an outflow of $1.5 million for Q2
2017 (2016: $0.7 million) comprised of a loss from operations in
Tunisia of $1.0 million and a corporate loss from operations of
$0.6 million, partially offset by funds from operations in Romania
of $0.1 million, resulting in total negative funds from operations
for the quarter. On a year to date basis, funds from
operations was an outflow of $1.3 million, as compared to an inflow
of $2.0 million in the comparative period of 2016. Funds from
operations from Tunisia was $0.0 million and Romania $0.1 million,
which when offset by the corporate loss of $1.4 million, resulted
in negative funds from operations year to date. The sale of
Ukraine in 2016 and lower production in Tunisia in 2017 contributed
to the decrease in funds from operations.
- The net loss for the six month period ended June 30, 2017 was
$2.1 million, compared to a net loss from continuing operations of
$8.1 million in Q2 2016.
- On May 9, 2017, the Company signed an Engineering, Procurement,
Construction and Commissioning Contract (“EPCC”) with Confind
S.R.L., a Romanian company, for the construction of a gas facility
and associated flowlines and pipelines for Moftinu development in
Romania. Construction commenced in Q2 2017 with anticipated
first gas in Q1 2018.
- At June 30, 2017, the Company was not in compliance with the
consolidated financial debt to EBITDA ratio, the consolidated debt
service coverage ratio and the Tunisian debt service coverage ratio
on its debt held with EBRD. Subsequent to June 30, 2017, EBRD
formally waived compliance with these ratios for the period ended
June 30, 2017. The implication of this waiver is that the
debt repayments will follow their original scheduled repayment
terms and the bank will not be acting on its security as a result
of the breach.
Summary Financial Results (US$ 000’s unless
otherwise noted)
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Three Months Ended June 30 |
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2017 |
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2016 |
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Change |
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Oil and Gas
Revenue |
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1,342 |
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4,080 |
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(67 |
%) |
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Net Income
from Continuing Operations |
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31 |
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(3,994 |
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101 |
% |
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per share, basic and diluted |
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0.00 |
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(0.05 |
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Funds from
Continuing Operations |
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(1,463 |
) |
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(714 |
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105 |
% |
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per share, basic and diluted |
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(0.01 |
) |
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(0.01 |
) |
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7 |
% |
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Capital
Expenditures |
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1,453 |
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611 |
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138 |
% |
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Average
Production (net to Serinus from continuing operations) |
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Oil |
(Bbl/d) |
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244 |
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882 |
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(72 |
%) |
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Gas |
(Mcf/d) |
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509 |
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1,942 |
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(74 |
%) |
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BOE |
(boe/d) |
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329 |
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1,206 |
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(73 |
%) |
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Average
Sales Price (from continuing operations) |
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Oil |
($/Bbl) |
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$ |
47.25 |
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$ |
41.25 |
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15 |
% |
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Gas |
($Mcf) |
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$ |
6.32 |
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$ |
4.35 |
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45 |
% |
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BOE |
($/boe) |
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$ |
44.85 |
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$ |
37.18 |
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21 |
% |
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June 30 |
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December 31 |
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2017 |
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2016 |
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Cash & Cash
Equivalents |
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16,019 |
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4,297 |
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Working Capital
(deficit) |
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(23,319 |
) |
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(38,475 |
) |
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Long Term Debt |
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- |
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- |
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Shares Outstanding |
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150,652,138 |
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78,629,941 |
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Average
for Period |
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150,650,674 |
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78,629,941 |
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General & Financial Highlights
- Revenue, net of royalties, from Tunisia for the three and six
months ended June 30, 2017 decreased to $1.2 million and $3.6
million, compared to $3.8 million and $7.0 million in the
comparative periods of 2016. The decrease in 2017 was
attributable to lower production, partially offset by higher
commodity prices and lower royalty rates.
- Total royalties paid decreased from $0.5 million in Q2
2016 to $0.1 million in Q2 2017. Much of this decrease
was due to lower production offset by higher average commodity
prices.
- Serinus made capital expenditures of $1.5 million in Q2 2017,
of which $1.4 million was expended in Romania and $0.1 million
was expended in Tunisia.
- At June 30, 2017, the Company was not in compliance with the
consolidated financial debt to EBITDA ratio, the consolidated debt
service coverage ratio and the Tunisian debt service coverage ratio
on its debt held with EBRD. Subsequent to June 30, 2017, EBRD
formally waived compliance with these ratios for the period ended
June 30, 2017. The implication of this waiver is that the
debt repayments will follow their original scheduled repayment
terms and the bank will not be acting on its security as a result
of the breach. However, given the covenant was breached as at June
30, 2017, Serinus has reclassified its long-term debt to current in
the financial statements, as required under accounting
standards. There is a risk that the Company will continue to
violate certain financial covenants relating to its debt held with
EBRD, particularly given the current commodity prices and the
shut-in of production in Tunisia. Although the EBRD has previously
provided waivers for covenant breaches there is no certainty this
will occur in the future. If these covenants are not met, the
debt may therefore become payable on demand.
- In June 2017, the Company closed the sale of its indirect
wholly owned subsidiary that held an interest in Syria Block 9, for
which Force Majeure had been declared on July 16, 2012 due to
conditions arising from the instability in the country. The
impact of this sale was that payables in the amount of $2.2 million
relating to this asset have been reversed through the income
statement and presented as a gain on sale. This represents
management’s ongoing initiative to strengthen the Company’s balance
sheet through the divesture of non-core assets.
Operational Highlights
- During Q2 2017, production from Tunisia averaged 329 boe/d, a
decrease from 1,206 boe/d in Q2 2016. Lower production during 2017
was due to the shut-in of fields in Tunisia. Chouech Es Saida field
has been shut-in in since February 28, 2017, due to labour issues.
In addition, from May 22, 2017 the Sabria field was also shut-in
due to continued social unrest in the southern part of the
country. Both fields currently remain shut-in.
- In Tunisia, the Company incurred $0.1 million of capital
expenditures for the three month period ended June 30, 2017. In
Romania, the Company incurred $1.4 million of capital expenditures
for the three month period ended June 30, 2017. In Q2 2017
construction commenced on the Moftinu gas plant. Incurred
costs included permitting and licencing, land rentals and ongoing
engineering study costs as well as costs associated with the
Bucharest office.
Outlook
The Company is focusing on Romania as the
impetus for growth over the next several years. The Moftinu gas
development project is a near-term project that is expected to
begin producing from the gas discovery wells Moftinu-1001 and
Moftinu-1000 in early 2018. The Company signed an EPCC contract on
May 9, 2017 and has commenced construction in Q2 2017 of a gas
plant with 15 MMcf/d of operational capacity, with expected first
gas production in the first quarter of 2018.
The Company is also developing the drilling
program to meet work commitments for the extension and plans to
drill two additional development wells (Moftinu-1003 and 1004) with
a potential third well in 2018. The Corporation sees potential
production from these wells being able to bring the gas plant to
full capacity in late 2018.
In Tunisia, the Company’s plans to focus on
carrying out low cost incremental work programs to increase
production from existing wells, including the Sabria N-2 re-entry
and installing artificial lift on another Sabria well, are
dependent on resolution of the social issues in Tunisia and the
Company being able to restart production in a safe and sustainable
environment. The Corporation views Sabria as a large development
opportunity longer term.
Production volumes decreased in the second
quarter to 329 boe/d, as compared to 1,206 boe/d in the comparable
period of 2016. In Q2 2017, the decrease in production is
attributable to the shut-in of the Chouech Es Saida field since
February 28, 2017 and the Sabria field since May 22, 2017.
The shut-in of these fields was due to social unrest in southern
Tunisia that has stopped all oil & gas production in the
region.
Full production in Tunisia for 2017 is dependent
on the successful resolution of the social unrest in southern
Tunisia and the associated security and safety issues this unrest
has created.
Supporting Documents
The full Management Discussion and Analysis
(“MD&A”) and Financial Statements have been
filed in English on www.sedar.com and in Polish and English via the
ESPI system, and will also be available on
www.serinusenergy.com.
Abbreviations
bbl |
Barrel(s) |
bbl/d |
Barrels per day |
boe |
Barrels of Oil Equivalent |
boe/d |
Barrels of Oil Equivalent per day |
Mcf |
Thousand Cubic Feet |
Mcf/d |
Thousand Cubic Feet per day |
MMcf |
Million Cubic Feet |
MMcf/d |
Million Cubic Feet per day |
Mcfe |
Thousand Cubic Feet Equivalent |
Mcfe/d |
Thousand Cubic Feet Equivalent per day |
MMcfe |
Million Cubic Feet Equivalent |
MMcfe/d |
Million Cubic Feet Equivalent per day |
Mboe |
Thousand boe |
Bcf |
Billion Cubic Feet |
MMboe |
Million boe |
Mcm |
Thousand Cubic Metres |
CAD |
Canadian Dollar |
USD |
U.S. Dollar |
Cautionary Statement:
BOEs may be misleading, particularly if used in
isolation. A BOE conversion ratio of 6 Mcf:1 bbl is
based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead.
About SerinusSerinus is an
international upstream oil and gas exploration and production
company that owns and operates projects in Tunisia and Romania.
For further information, please refer to the
Serinus website (www.serinusenergy.com) or contact the
following:
Serinus Energy
Inc.Calvin BrackmanVice President, External
Relations & StrategyTel.: +1-403-264-8877
cbrackman@serinusenergy.com |
|
Serinus Energy
Inc. Jeffrey AuldChief Executive OfficerTel.:
+1-403-264-8877 jauld@serinusenergy.com |
Translation: This news
release has been translated into Polish from the English
original.
Forward-looking
StatementsThis release may contain forward-looking
statements made as of the date of this announcement with respect to
future activities that either are not or may not be historical
facts. Although the Company believes that its expectations
reflected in the forward-looking statements are reasonable as of
the date hereof, any potential results suggested by such statements
involve risk and uncertainties and no assurance can be given that
actual results will be consistent with these forward-looking
statements. Various factors that could impair or prevent the
Company from completing the expected activities on its projects
include that the Company's projects experience technical and
mechanical problems, there are changes in product prices, failure
to obtain regulatory approvals, the state of the national or
international monetary, oil and gas, financial , political and
economic markets in the jurisdictions where the Company operates
and other risks not anticipated by the Company or disclosed in the
Company's published material. Since forward-looking statements
address future events and conditions, by their very nature, they
involve inherent risks and uncertainties and actual results may
vary materially from those expressed in the forward-looking
statement. The Company undertakes no obligation to revise or update
any forward-looking statements in this announcement to reflect
events or circumstances after the date of this announcement, unless
required by law.
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