Serinus Announces Q3 2017 Financial and Operating Results, Contemplating AIM Listing
November 09 2017 - 6:23PM
Serinus Energy Inc. (“
Serinus”,
“
SEN” or the “
Company”) (TSX:SEN)
(WARSAW:SEN), is pleased to report its financial and operating
results for the three months ended September 30, 2017.
Q3 2017 Highlights
- Production in 2017 has been severely impacted due to labour
issues and social unrest in Tunisia. The Chouech Es Saida field has
been shut-in since February 28, 2017 initially due to labour
issues. In addition, the Sabria field was shut-in from May 22,
2017, due to continued social unrest in the southern part of the
country. The social unrest ended early September and the Company
has restarted production at Sabria resulting in average volumes of
88 boe/d in Q3 2017, a decrease of 91% from 1,008 boe/d in Q3
2016.
- The netback for Tunisia in Q3 2017 was ($29.25) per boe,
compared to $12.54 per boe in Q3 2016. The negative netback was due
to the production from the fields being shut-in for over two months
of the quarter.
- Funds generated from operations was an outflow of $0.6 million
for the three months ended September 30, 2017 compared to an
outflow of $3.2 million in Q3 2016. The improvement was primarily
attributable to lower G&A expenses in the current period,
partially offset by the lower production base. On a year to date
basis, funds from operations decreased by $0.6 million to an
outflow of $1.9 million, compared to an outflow of $1.3 million in
the nine months ended September 30, 2016, due to the disposition of
Ukraine and lower production volumes and operating cash flow,
partially offset by lower G&A.
- The net loss for the nine months ended September 30, 2017 was
$9.1 million, compared to a net loss of $13.1 million in the
nine-month period ended September 30, 2016.
- Serinus is concentrating on the development of the Moftinu-1001
gas discovery, which includes building surface facilities, for the
remainder of 2017. 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.
- Subsequent to September 30, 2017, the terms of the loan
facilities with the European Bank for Reconstruction and
Development (“EBRD”) have been restructured, which the Company
believes provides the appropriate balance to be able to meet the
debt servicing requirements while also being able to make the
capital investments necessary to grow the Company. The restructured
agreements provide for changes to specific terms of each loan
facility as well as to the financial ratio covenants. The key
points are that there is a deferral of repayments under the Senior
Loan until March 31, 2019, though a cash sweep provision remains in
effect. The convertible loan maturity has been extended and
repayments have been amortized over four years (2020 to 2023)
rather than one bullet payment in June 2021. In addition, the
restructuring provides for relief from all financial covenants for
one year until September 2018, and all requirements for covenants
at the Tunisia level have been removed permanently. The debt to
EBITDA ratio has been increased to a maximum of 10.0 times as at
September 30 and December 31, 2018 and then at 2.5 times
thereafter. The debt service coverage ratio, which is effective as
at December 31, 2018, is set at a minimum of 1.3 times and is now
only applicable to the Senior Loan.
- At September 30, 2017, Serinus was not in compliance with the
consolidated financial debt to EBITDA ratio, the consolidated debt
service coverage ratio and the Tunisian financial date to EBITDA
ratio on its debt held with the EBRD under the original loan
agreements, effective on that date. EBRD had formally waived
compliance with these ratios prior to September 30, 2017.
Notes: Serinus prepares its financial
results on a consolidated basis. Unless otherwise noted by the
phrases “allocable to Serinus”, “net to Serinus”, “attributable to
SEN shareholders” or “SEN WI”, all values and volumes refer to the
consolidated figures. Serinus reports in US dollars; all
dollar values referred to herein, whether in dollars or per share
values are in US dollars unless otherwise noted.
Summary Financial Results (US$ 000’s unless
otherwise noted)
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Three Months Ended September 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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382 |
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3,632 |
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(89 |
%) |
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Net Income
(Loss) from Continuing Operations |
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(7,043 |
) |
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(4,971 |
) |
|
(42 |
%) |
per share, basic and diluted |
|
|
|
(0.05 |
) |
|
|
(0.06 |
) |
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|
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|
|
|
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Funds from
Continuing Operations |
|
|
|
(585 |
) |
|
|
(3,186 |
) |
|
(82 |
%) |
per share, basic and diluted |
|
|
|
(0.00 |
) |
|
|
(0.04 |
) |
|
(90 |
%) |
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|
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Capital
Expenditures |
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|
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3,335 |
|
|
|
1,066 |
|
|
213 |
% |
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Average
Production (net to Serinus from continuing operations) |
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Oil |
(bbl/d) |
|
|
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65 |
|
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|
787 |
|
|
(92 |
%) |
Gas |
(Mcf/d) |
|
|
|
136 |
|
|
|
1,324 |
|
|
(90 |
%) |
BOE |
(boe/d) |
|
|
|
88 |
|
|
|
1,008 |
|
|
(91 |
%) |
|
|
|
|
|
|
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Average
Sales Price (from continuing operations) |
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|
Oil |
($/bbl) |
|
|
$ |
50.00 |
|
|
$ |
43.01 |
|
|
16 |
% |
Gas |
($/Mcf) |
|
|
$ |
6.71 |
|
|
$ |
4.26 |
|
|
58 |
% |
BOE |
($/boe) |
|
|
$ |
47.48 |
|
|
$ |
39.19 |
|
|
21 |
% |
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September 30 |
|
December 31 |
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2017 |
|
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2016 |
|
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Cash & Cash
Equivalents |
|
|
|
|
13,451 |
|
|
|
4,297 |
|
|
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Working Capital
(deficit) |
|
|
|
|
(2,119 |
) |
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(38,475 |
) |
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Long Term Debt |
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|
|
|
25,750 |
|
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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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150,652,138 |
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78,629,941 |
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General & Financial
Highlights
- Revenue, net of royalties, from Tunisia for the three and nine
months ended September 30, 2017 decreased to $0.34 million and
$4.19 million, compared to $3.25 million and $10.25 million in the
comparative periods of 2016. The decrease in 2017 was
attributable to lower production due to the shut-in of production
in Tunisia, partially offset by higher commodity prices and lower
royalty rates.
- Total royalties paid decreased from $0.38 million in Q3
2016 to $0.04 million in Q3 2017. Much of this decrease
was due to lower production due to the shut-in of production in
Tunisia, offset by higher average commodity prices.
- Serinus made capital expenditures of $3.34 million in Q3 2017,
of which $3.32 million was expended in Romania and $0.02
million was expended in Tunisia.
- At September 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 financial date to
EBITDA ratio on its debt held with the EBRD under the original loan
agreements, effective on that date. EBRD had formally waived
compliance with these ratios prior to September 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. Given that the
waiver from the EBRD was received prior to September 30, 2017, the
Company was not required to reclassify its long-term debt to
current in the financial statements, as it has done in recent
financial statements under accounting standards.
- Subsequent to September 30, 2017, the terms of the loan
facilities with the EBRD have been restructured, which the Company
believes provides the appropriate balance to be able to meet the
debt servicing requirements while also being able to make the
capital investments necessary to grow the Company. The restructured
agreements provide for changes to specific terms of each loan
facility as well as to the financial ratio covenants. The key
points are that there is a deferral of repayments under the Senior
Loan until March 31, 2019, though a cash sweep provision remains in
effect. The convertible loan maturity has been extended and
repayments have been amortized over four years (2020 to 2023)
rather than one bullet payment in June 2021. In addition, the
restructuring provides for relief from all financial covenants for
one year until September 2018, and all requirements for covenants
at the Tunisia level have been removed permanently. The debt to
EBITDA ratio has been increased to a maximum of 10.0 times as at
September 30 and December 31, 2018 and then at 2.5 times
thereafter. The debt service coverage ratio, which is effective as
at December 31, 2018, is set at a minimum of 1.3 times and is now
only applicable to the Senior Loan.
Operational Highlights
- During Q3 2017, production from Tunisia averaged 88 boe/d, a
decrease from 1,008 boe/d in Q3 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 and continues to be
shut-in due to social unrest in southern Tunisia. The Sabria field
was also shut-in from May 22, 2017, to September 3, 2017, due to
the social unrest.
- In Tunisia, the Company incurred $0.02 million of capital
expenditures for the three month period ended September 30, 2017.
In Romania, the Company incurred $3.32 million of capital
expenditures for the three month period ended September 30, 2017.
In Q3 2017 construction continued on the Moftinu gas
plant. Incurred costs included engineering, procurement,
and construction of the Moftinu Gas Project, 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
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. Construction of the project commenced in Q2 2017 and
continued in Q3 2017. The project consists of a gas plant with 15
MMcf/d of operational capacity with well tie-in and a sales gas
line tie-in to the Transgaz system (national natural gas
transmission pipeline system of Romania), 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 is currently focusing on
improving production from Sabria following the shut-in and 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,
having determined that production at its oil field can be restarted
in a safe and secure environment with sufficient comfort that there
will be no further production disruptions for the foreseeable
future. The Corporation views Sabria as a large development
opportunity longer term.
For the Chouech Es Saida field, the Company is
evaluating the restart of the field including timing and costs to
replace the electric submersible pump for the CS-3 well. The
Company views the level of activity pursued in Tunisia as dependent
on the following thresholds being achieved and maintained. In terms
of oil prices, incremental vertical wells become economic at Brent
oil prices of ~$45/bbl, with potential multi-leg horizontal wells
lowering the threshold to below $30/bbl in Sabria. The current
capacity of surface facilities would only allow for 1-3 incremental
wells for each of Sabria and Chouech Es Saida/Ech Chouech. As well
for Chouech Es Saida/Ech Chouech, the STEG El Borma gas plant is
nearly at its effective capacity. Further gas developments from
this concession may have to be delayed until the completion of the
Nawara Pipeline for material gas pipeline capacity to come
online.
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.
Contemplating AIM Listing
The Company is investigating the listing of its
shares on the Alternative Investment Market (“AIM”) of the London
Stock Exchange. Significant progress has been made towards this end
and the Company is currently considering the relevant regulatory
requirements of its existing listings.
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 Statements
This 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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