Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is pleased to
announce its financial and operating results (all amounts in United States
dollars unless noted) for the three and six months ended June 30, 2013 ("Q2
2013"):
THREE MONTHS ENDED JUNE 30, 2013
-- Mart's share of average daily oil produced and sold for the three months
ended 30 June 2013 ("Q2 2013") from the Umusadege field was 5,070
barrels of oil per day ("bopd") compared to 4,491 bopd for the three
months ended June 30, 2012 ("Q2 2012").
-- On June 26, 2013 Mart declared a quarterly dividend of Canadian dollars
("CAD") $0.05 per common share. The quarterly dividend was paid on July
18, 2013 for an aggregate amount of $17.0 million (CAD $17.8 million).
-- Net income for Q2 2013 was $19.1 million ($0.054 per share) compared to
net income of $2.4 million ($0.007 per share) for Q2 2012.
-- Funds flow from production operations was $31.7 million ($0.089 per
share) for Q2 2013 compared to $21.4 million ($0.064 per share) for Q2
2012 (see Note 1 to the Financial and Operating Results table on page 3
hereof regarding Non-IFRS measures).
-- Mart's share of Umusadege field oil produced and sold in Q2 2013 was
461,329 barrels of oil ("bbls") compared to 408,638 bbls for Q2 2012.
-- The average price received by Mart for oil in Q2 2013 was $109.30 per
barrel of oil ("bbl") compared to $103.05 per bbl for Q2 2012.
-- Mart's share of pipeline and export facility losses for Q2 2013 is
estimated to be 85,750 bbls, or approximately 16% of crude deliveries
from the Umusadege field for the period. The pipeline operator has not
yet reported the losses for May and June 2013. Mart has estimated losses
of 16% for the two months based upon average losses during preceding
periods. During Q2 2013, the Umusadege field was shut down for a total
of 28 days (Q2 2012: 9 days) due to various disruptions, repairs and
maintenance of the export pipeline.
SIX MONTHS ENDED JUNE 30, 2013
-- Mart's share of average daily oil produced and sold for the six months
ended June 30, 2013 from the Umusadege field was 3,827 bopd compared to
5,713 bopd for the six months ended June 30, 2012. During the six month
ended June 30, 2013, the Umusadege field was shut down for a total of 74
days (2012: 27 days) due to various disruptions, repairs and maintenance
of the export pipeline.
-- During the six months ended June 30, 2013, Mart has declared total
dividends of CAD $0.10 per common share for an aggregate amount of CAD
$35.6 million (2012: CAD $35.6 million).
-- Net income for the six months ended June 30, 2013 was $21.0 million
($0.059 per share) compared to net income of $40.3 million ($0.120 per
share) for the six months ended June 30, 2012. The lower net income
during the period was due to the export pipeline shutdowns in Q1 2013
caused by repairs and maintenance that resulted in decreased revenue.
-- Funds flow from production operations was $44.8 million ($0.126 per
share) for the six months ended June 30, 2013 compared to $76.4 million
($0.227 per share) for the six months ended June 30, 2012 (see Note 1 to
the Financial and Operating Results table on page 3 hereof regarding
Non-IFRS measures).
-- Mart's share of Umusadege field oil produced and sold for the six months
ended June 30, 2013 was 692,713 bbls compared to 1,039,840 bbls for the
six months ended June 30, 2012. The decrease in oil produced and sold
was primarily attributable to Umusadege field shutdowns during the first
half of 2013.
-- The average price received by Mart for oil for the six months ended June
30, 2013 was $109.53 per bbl compared to $107.05 per bbl for the six
months ended June 30, 2012.
-- Mart's share of estimated pipeline and export facility losses for the
six months ended June 30, 2013 totaled 136,903 bbls, or approximately
16% of crude deliveries from the Umusadege field for the period. The
pipeline operator has not yet reported the losses for May and June 2013.
Mart has used 16% as the estimated losses for these two months based
upon average losses during preceding periods.
FINANCIAL AND OPERATING RESULTS
The following table provides a summary of Mart's selected financial and
operating results for the three and six months ended June 30, 2013 and 2012 and
the twelve months ended December 31, 2012:
USD $ 000's
(except oil
produced and
sold, share,
per share 3 months 3 months 6 months 6 months 12 months
amounts, and ended June ended June ended June ended June ended Dec.
oil prices) 30, 2013 30, 2012 30, 2013 30, 2012 31, 2012
---------------------------------------------------------------------------
Mart's share of
the Umusadege
Field:
Barrels of oil
produced and
sold 461,329 408,638 692,713 1,039,840 1,844,389
Average sales
price per
barrel $109.30 $103.05 $109.53 $107.05 $103.43
Mart's
percentage
share of total
Umusadege oil
produced and
sold during the
period 69.8% 52.0% 63.6% 66.0% 66.7%
Mart's share of
petroleum sales
after
royalties,
content
development
levy and
community
development
costs $43,214 $27,824 $63,036 $89,708 $161,390
Funds flow from
production
operations (1) $31,705 $21,432 $44,844 $76,392 $137,743
Per share -
basic $0.089 $0.064 $0.126 $0.227 $0.398
Net income $19,088 $2,354 $20,997 $40,265 $58,046
Per share -
basic $0.054 $0.007 $0.059 $0.120 $0.168
Per share -
diluted $0.053 $0.007 $0.058 $0.115 $0.163
Total assets $267,116 $245,621 $267,116 $245,621 $281,506
Total bank debt
(2) $23,425 Nil $23,425 Nil Nil
Weighted average
shares
outstanding for
periods ended:
Basic 356,574,869 337,031,536 356,436,287 336,892,067 345,715,889
Diluted 358,717,631 350,351,187 359,379,004 349,636,416 355,617,583
Note:
(1) Indicates non-IFRS measures. Non-IFRS measures are informative measures
commonly used in the oil and gas industry. Such measures do not conform
to IFRS and may not be comparable to those reported by other companies
nor should they be viewed as an alternative to other measures of
financial performance calculated in accordance with IFRS. For the
purposes of this table, the Company defines "Funds flow from production
operations" as net petroleum sales less royalties, content development
levy, community development costs and production costs. Funds flow from
production operations is intended to give a comparative indication of
the Company's net petroleum sales less production costs as shown in the
following table:
3 3 6 6 12
months months months months months
ended ended ended ended ended
June June June June Dec.
30, 30, 30, 30, 31,
USD $ 000's 2013 2012 2013 2012 2012
---------------------------------------------------------------------------
Petroleum sales 50,423 30,888 75,873 103,862 190,761
Less: Royalties, content development
levy and community development
costs 7,209 3,064 12,837 14,154 29,371
---------------------------------------------------------------------------
Net petroleum sales 43,214 27,824 63,036 89,708 161,390
Less: Production costs 11,509 6,392 18,192 13,316 23,647
---------------------------------------------------------------------------
Funds flow from production
operations 31,705 21,432 44,844 76,392 137,743
---------------------------------------------------------------------------
(2) Bank indebtedness was $25 million of which $1.6 million related to
borrowing costs (consistent with IFRS), resulting in the reported the
bank debt is $23.4 million.
OUTLOOK AND OPERATIONS UPDATE:
Dividend
On June 26, 2013, Mart declared a quarterly cash dividend of CAD $0.05 per
common share that was paid to shareholders on July 18, 2013 for an aggregate
amount of CAD $17.8 million.
UMU-10 Well
The Company announced on November 5, 2012 that the UMU-10 well encountered 479
feet of gross hydrocarbon pay in 20 sands. The results of the well tests
conducted have been previously press released.
The operator of the Umusadege field plans to return to the UMU-10 well after
drilling the UMU-11 well (discussed below) to carry out the remaining testing
operations on the XXb and XIX sands in the long string with a coiled tubing
unit. Multirate flow testing will then be performed on all sands completed in
the long string: XIX, XXb, and XXI.
UMU-11 Well
The UMU-11 well commenced drilling operations on August 14, 2013 and is
currently at a depth of 1,100 feet in the 16-inch upper hole section. The
16-inch upper hole section is anticipated to be drilled to a depth of
approximately 5,000 feet. The next activity will include running and cementing
13 3/8 inch casing in the upper hole section. Once completed, drilling will then
continue with a 12 1/4 inch section to a total measured depth of approximately
8,700 feet, followed by running a 9 5/8 inch casing.
The main objectives for the UMU-11 well are to appraise and produce proven oil
reservoirs encountered but not completed in the UMU-9 and UMU-10 wells. These
sands (XIIb, XIIc, XVIa, and XVIb) were previously logged and sampled. The
UMU-11 objective is to test four of these oil-bearing sands, and if successful,
complete these sands for production.
After completion of the UMU-11 well, an exploration/appraisal well is planned to
be drilled on the East exploration structure of the Umusadege field.
Second Drilling Rig
A tender for a second drilling rig was successfully completed, and after site
preparation the second drilling rig is expected to start drilling a water
disposal well in September 2013. After completion of the water disposal well,
the rig is planned to be used to re-entry UMU-8 well. Following the activities
at UMU-8, the drilling rig will move to the UMU-4 location to drill a re-entry
horizontal development well in Q1 2014. Mart and its co-venturers plan to drill
several additional horizontal wells.
Umugini Pipeline Construction Update
Construction of the Umugini pipeline has been completed from the location near
the Umusadege field to a point approximately 17 kilometers into the 51-kilometer
pipeline. Construction operations are being delayed due to weather conditions
and heavy rains in the area that required the construction contractor to shut
down operations. It is now expected that pipeline construction will be completed
in the first quarter of 2014.
The Umugini pipeline has two segments. The first segment is from the Umusadege
field south to the Ogini flow station on OML 26. This section is 23 kilometers
in length and is where the 17 kilometers of pipeline construction has been
completed. The second segment is from the Ogini flow station west to the Eriemu
flow station. This section of the pipeline will be constructed along an existing
right of way and will be twinning the existing pipeline currently operating
between the Ogini flow station and the Eriemu flow station. The Umugini pipeline
will provide a second independent export pipeline for Umusadege field
production. The Umugini pipeline's gross transportation capacity will be
approximately 45,000 barrels per day and it will connect the Umusadege field to
the Trans Forcados export pipeline. The Trans Forcados export pipeline will
deliver crude oil from Umusadege field to the Forcados export terminal operated
by Shell.
Production Update
Umusadege field production during July 2013 averaged 10,800 bopd. Umusadege
field downtime during July 2013 was approximately 4.5 days due to sporadic
shutdowns required for commissioning and testing of the new central processing
facility and operations connected to preparation for drilling of the UMU-11
well. The average field production based on producing days was 13,200 bopd in
July 2013, which is the highest average production rate for a calendar month
based on production days.
Total net crude oil deliveries into the export pipeline from the Umusadege field
for July 2013 were approximately 347,100 bbls before pipeline losses. Pipeline
and export facility losses for May 2013, June 2013 and for July 2013 have not
yet been reported by Nigerian Agip Oil Company ("Agip"), the export pipeline
operator. In the past, Agip has reported pipeline and export facility losses one
month after the final reporting of each month's injection totals, but for the
past two months the pipeline losses have not been reported. Mart and its
co-venturers have requested the loss information from Agip and will publicly
disclose this information when it is received.
As a result of negotiations with Agip, the Umusadege field has been allocated an
additional pipeline reserved production capacity of up to 4,500 bopd. An
increase in oil shipments from the Umusadege field will be achieved after more
powerful pumps are obtained and installed by Agip.
CHAIRMAN'S COMMENT:
Wade Cherwayko, Chairman & CEO of Mart, said, "In the second quarter of 2013
Mart resumed normal production operations, after experiencing shutdowns in the
first quarter that were far above normal due to maintenance and repairs to the
export pipeline performed by the pipeline operator. This resulted in much
improved production and revenue in Q2 2013 compared to Q1 2013 and Mart's
revenue for Q2 2013 was $43.2 million with a net income after taxes of $19.1
million.
The export pipeline resumed normal operations on April 17, 2013, and production
and injection into the export pipeline has continued at levels at or nearing the
maximum allocation. The Umusadege field's production capacity remains strong,
and the potential of the field continues to be very positive. The Company
continues to work towards maximizing production and increasing reserves. The
construction of the additional export pipeline will also enable the Umusadege
co-venturers to fully exploit the potential of the Umusadege field. The new
Central Production Facility ("CPF") was commissioned in the beginning of July
2013 at the Umusadege field and all production is being processed by new
facility. Current capacity of the CPF is 35,000 barrels per day and is
expandable to handle future production increases as needed. The drilling of
UMU-11 well began in August 2013. Additional development drilling activities are
planned for the remainder of 2013. The Company declared a quarterly cash
dividend of CAD $0.05 per common share that was paid to shareholders on July 18,
2013 for an aggregate amount of CAD $17.8 million."
Mart will hold a conference call to discuss the operational and financial
results for the quarter ended June 30, 2013. The conference call is scheduled
for August 16, 2013 at 10:00 AM Mountain Daylight Time (12:00 Eastern Daylight
Time). Wade Cherwayko, Chairman & CEO of Mart, and Dmitri Tsvetkov, Chief
Financial Officer of Mart, will host the call and be available during the
question-and-answer session. To access the conference call, please dial
1-866-225-2055 or 416-340-8061. An instant replay of the call will be available
until August 23, 2013 by dialing 1-800-408-3053 or 905-694-9451 and entering
pass code 5224100.
Additional information regarding Mart is available on the Company's website at
www.martresources.com and under the Company's profile on SEDAR at www.sedar.com.
Notes: Except where expressly stated otherwise, all production figures set out
in this press release, including bopd, reflect gross Umusadege field production
rather than production attributable to Mart. Mart's share of total gross
production before taxes and royalties from the Umusadege field fluctuates
between 82.5% (before capital cost recovery) and 50% (after capital cost
recovery).
Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking
statements" as such term is used in applicable Canadian and US securities laws.
Any statements that express or involve discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions or future
events or are not statements of historical fact and should be viewed as
"forward-looking statements". These statements relate to analyses and other
information that are based upon forecasts of future results, estimates of
amounts not yet determinable and assumptions of management. Such forward looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
In particular, statements (express or implied) contained herein or in Mart's
Management's Discussion and Analysis ("MD&A") regarding the following should be
considered forward-looking statements: the Company's goals and growth strategy,
estimates of reserves and future net revenues, exploration and development
activities in respect of the Umusadege field, the Company's ability to finance
its drilling and development plans with cash flows from operations, the ability
of the Company to successfully drill and complete future wells, the ability of
the Company to commercially produce, transport and sell oil from the Umusadege
field, future anticipated production rates, export pipeline capacity available
to the Company, the expectation of the Company that production and export
pipeline disruptions will not have a lasting impact on the Company's future
production, timing of completion of the Company's upgrading of the central
production facility, the construction and completion of an alternative export
pipeline, the acceptance of the Company's tax filings by the Nigerian taxing
authorities, treatment under government regulatory regimes including royalty and
tax laws, projections of market prices and costs, supply and demand for oil,
timing for receipt of government approvals, and the ability of the Company to
satisfy its current and future financial obligations to its banks and other
creditors.
There can be no assurance that such forward-looking statements will prove to be
accurate as actual results and future events could vary or differ materially
from those anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements contained in this news release.
This cautionary statement expressly qualifies the forward-looking statements
contained herein.
Forward-looking statements are made based on management's beliefs, estimates and
opinions on the date the statements are made and the Company undertakes no
obligation to update forward-looking statements and if these beliefs, estimates
and opinions or other circumstances should change, except as required by
applicable law.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THE RELEASE.
FOR FURTHER INFORMATION PLEASE CONTACT:
Mart Resources, Inc.-London, England office
Wade Cherwayko
+44 207 351 7937
Wade@martresources.com
Mart Resources, Inc.-London, England office
Dmitri Tsvetkov
+44 207 351 7937
dmitri.tsvetkov@martresources.com
Mart Resources, Inc.-Canada
Sam Grier
403-270-1841 or toll free 1-888-875-7485
www.martresources.com
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