NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A
VIOLATION OF U.S. SECURITIES LAWS.
Greenfields Petroleum Corporation (the "Company" or "Greenfields") (TSX
VENTURE:GNF)(TSX VENTURE:GNF.DB), an independent exploration and production
company with producing assets in Azerbaijan, is pleased to announce its
financial results and operating highlights for the third quarter and
year-to-date 2013.
Third Quarter and Year-to-Date 2013 Financial Results and Operating Highlights
-- The Company's entitlement sales volumes from production for its net
interest in the Bahar Project averaged 573 bbl/d and 6,334 mcf/d or
1,628 boe/d in the third quarter and 524 bbl/d and 4,807 mcf/d or 1,325
boe/d year-to-date.
-- Through its interest in Bahar Energy, the Company realized average
netback oil prices of $104.20/bbl for the third quarter and $101.01/bbl
year-to-date. Realized gas prices have remained constant during 2013 at
$3.96/mcf.
-- Development drilling continued with the drilling of the Gum Deniz 714
well which was spudded on August 2, 2013 and reached total depth in 59
days, 30 days ahead of schedule and $3.0 million lower in cost compared
to the prior Gum Deniz 716 well. Production casing was run and the well
prepared for testing and completion at the end of the third quarter.
-- The PSG-3 drilling rig was in the process of being rigged up for
drilling on Platform 208 as the Bahar Project's second development
drilling rig.
-- The Company recorded a net loss of $58,000 and EPS of ($0.00) for the
third quarter and a net loss of $3.3 million and EPS of ($0.21) year-to-
date.
Operating Highlights and Plans
-- Gross field production for the third quarter averaged 2,017 bbl/d of oil
and 22,052 mcf/d of natural gas or approximately 5,984 boe/d, an
increase of 23% over second quarter production. This increase was due to
successful workovers and recompletions along with oil production from
the new Gum Deniz 716 well.
-- With additional oil and gas workovers scheduled and increased production
from 2013 new well drilling in the Gum Deniz Field, Bahar Energy
anticipates reaching the contractual production target of 6,944 boe/d
(TPR1) by the end of the fourth quarter 2013. The Bahar Project is
currently producing approximately 7,731 boe/d and over the last 43 days
has averaged production rates of 6,949 boe/d, or the equivalent to 48%
towards the 90 days TPR1 production target.
-- The Gum Deniz 714 well that commenced drilling August 2, 2013 reached
total depth of 3,005 meters on September 24, 2013. The well was logged
with total net pay of 220 meters. After running production casing, the
well was prepared for testing and completion. After initial testing of
the SP formation, the well is scheduled for completion in the X
formation in November 2013.
-- Rigging up the PSG-3 rig continues on Platform 208 with delays due to
weather and some required structural reinforcement work on the platform
which was identified during rig mobilization. The additional platform
work has likely delayed the commencement of drilling operations until
January 2014.
-- Bahar Energy tendered and awarded a contract for a 200 square kilometer
3D seismic survey to cover the Gum Deniz Field area to PGS-Khazar
earlier this year. The Contractor has completed the mobilization of
vessels and equipment, which were delayed due to customs issues and bad
weather in the north Caspian. The customs issues were resolved and PGS-
Khazar personnel, two cable laying vessels, recording vessel, seismic
shooting vessel, and support vessel have arrived in Baku and have begun
work. Cables are being laid and the 3D seismic acquisition is expected
to begin by the end of November 2013. The program is expected to take
approximately 6 months after which the data will be processed for
interpretation and integration with the well control for future
development well selection.
-- Under the ERDPSA, the initial term of the Bahar-2 exploration area was
for a period of three years commencing on October 1, 2010, which expired
on September 30, 2013. At the end of the exploration period, SOCAR, at
its sole discretion, may terminate this agreement with respect to the
exploration area. At this time SOCAR has not exercised its right to
terminate the agreement and has indicated it would consider an extension
request should Bahar Energy propose the drilling of an exploration well
based on the new interpretation over the Bahar-2 area on recently
acquired 3D seismic data.
-- The review and interpretation of the 3D seismic survey over the Bahar-2
exploration area, located immediately south of the Bahar Gas Field in
the ERDPSA area, is being finalized. A Vertical Seismic Profile was
acquired in the Bahar 164 well to aid in the calibration of the 3D
seismic data to the well control and evaluate a number of anomalous
amplitudes seen on the new data. The integration of this data is in
progress. If the interpretation demonstrates an attractive exploration
prospect or prospects, Bahar Energy will develop an appropriate
exploration drilling strategy to evaluate the commerciality of the
prospects and propose to SOCAR for approval and extension of the
exploration area.
Selected Information
On January 1, 2013, the Company changed accounting for its interest in Bahar
Energy Limited, a joint venture, from proportionately consolidated to the equity
method of accounting. This was required under IFRS 11, "Joint Arrangements",
issued on May 12, 2011, which replaces IAS 31, "Interest in Joint Ventures". The
standard is effective for annual periods beginning on or after January 1, 2013.
See Note 3 - "Changes in Accounting Policies" and Note 8 - "Investment in Joint
Ventures" in the Company's condensed consolidated financial statements for the
three and nine months ended September 30, 2013 for more information.
The selected information below is from the Greenfields' Management Discussion &
Analysis for the three and nine months ended September 30, 2013. The Company's
complete financial statements as of and for the three and nine months ended
September 30, 2013 and 2012 with the notes thereto and the related Management's
Discussion & Analysis can be found either on Greenfields' website at
www.Greenfields-Petroleum.com or on SEDAR at www.sedar.com. All amounts below
are in thousands of US dollars unless otherwise noted.
Greenfields Petroleum Corporation
--------------------------------------------------------------------
(US$000's,except as noted)
Three months
ended Nine months ended
September 30 September 30
------------------------------------
2013 2012 (4) 2013 2012 (4)
Financial
--------------------------------------------------------------------
Revenues (1) 575 733 1,946 1,907
Net loss (58) (482) (3,344) (10,141)
Per share, basic and diluted ($0.00) ($0.03) ($0.21) ($0.66)
Capital Items
--------------------------------------------------------------------
Cash and cash equivalents 3,986 19,720
Total Assets 44,477 49,832
Working capital (2) 3,525 23,445
Convertible debt and
Shareholders' equity (3) 42,244 46,974
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Revenues for the three and nine months ended September 30, 2013 and 2012
reflect change from proportionate consolidation to equity method of accounting
for the Company's investment in Bahar Energy Limited. 2012 financial results
have been restated to reflect the change in accounting policy effective January
1, 2013.
(2) The September 30, 2012 working capital balance has been restated to exclude
the Company's share of Bahar Energy Limited working capital due to the change to
equity method accounting noted above.
(3) Convertible debt is combined with shareholders' equity at September 30, 2013
due to the Company's right to settle this debt by issuing shares.
(4) These figures were restated to comply with the adoption of IFRS impacting
the accounting for the joint venture. See Note 3 of the Condensed Consolidated
Financial Statements for the three and nine months ended September 30, 2013.
Bahar Energy Limited (a Joint Venture)
----------------------------------------------------------------------------
Total Joint Venture Company's share
----------------------------------------
(US$000's,except as noted) Three months ended September 30
----------------------------------------
2013 2012 2013 2012
----------------------------------------------------------------------------
Financial
Revenues 24,671 18,671 8,223 6,223
Net income 4,734 5,518 1,578 1,839
----------------------------------------------------------------------------
Operating
----------------------------------------------------------------------------
Average Entitlement Sales Volumes
(1)
Oil and condensate (bbl/d) 1,718 1,368 573 456
Natural gas (mcf/d) 19,005 12,646 6,334 4,215
Barrel oil equivalent (boe/d) 4,886 3,477 1,628 1,159
Average Oil Price
Oil price ($/bbl) $ 106.39 $ 103.51 $ 106.39 $ 103.51
Net realization price ($/bbl) $ 104.20 $ 101.63 $ 104.20 $ 101.63
Brent oil price ($/bbl) $ 110.23 $ 109.61 $ 110.23 $ 109.61
Natural gas price ($/mcf) $ 3.96 $ 3.96 $ 3.96 $ 3.96
Capital Items
----------------------------------------------------------------------------
Total Assets 165,362 93,957 55,115 31,316
Total Liabilities 50,456 25,499 16,817 8,499
----------------------------------------------------------------------------
Net Assets 114,906 68,458 38,298 22,817
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Joint Venture Company's share
------------------------------------------
(US$000's,except as noted) Nine months ended September 30
------------------------------------------
2013 2012 2013 2012
----------------------------------------------------------------------------
Financial
Revenues 63,417 52,121 21,137 17,372
Net income (loss) 1,833 (6,139) 611 (2,046)
----------------------------------------------------------------------------
Operating
----------------------------------------------------------------------------
Average Entitlement Sales
Volumes(1)
Oil and condensate (bbl/d) 1,572 1,233 524 411
Natural gas (mcf/d) 14,423 11,995 4,807 3,998
Barrel oil equivalent (boe/d) 3,976 3,231 1,325 1,077
Average Oil Price
Oil price ($/bbl) $ 103.09 $ 104.08 $ 103.09 $ 104.08
Net realization price ($/bbl) $ 101.01 $ 102.06 $ 101.01 $ 102.06
Brent oil price ($/bbl) $ 108.28 $ 112.17 $ 108.28 $ 112.17
Natural gas price ($/mcf) $ 3.96 $ 3.96 $ 3.96 $ 3.96
Capital Items
----------------------------------------------------------------------------
Total Assets 165,362 93,957 55,115 31,316
Total Liabilities 50,456 25,499 16,817 8,499
----------------------------------------------------------------------------
Net Assets 114,906 68,458 38,298 22,817
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Daily volumes represent the Company's share of the Contractor Parties
entitlement volumes net of 5% compensatory petroleum and the government's share
of profit petroleum.
About Greenfields Petroleum Corporation
Greenfields is a junior oil and natural gas Company focused on the development
and production of proven oil and gas reserves principally in the Republic of
Azerbaijan. The Company plans to expand its oil and gas assets through further
farm-ins, and acquisitions of Production Sharing Agreements from foreign
governments containing previously discovered but under-developed international
oil and gas fields, also known as "greenfields". More information about the
Company may be obtained on the Greenfields website at
www.greenfields-petroleum.com.
Forward-Looking Statements
This press release contains forward-looking statements. More particularly, this
press release may include, but is not limited to, statements concerning:
increased average production, drilling and completion plans and the expected
timing thereof, securing the production and operating period of the Bahar
Contract and seismic acquisition. In addition, the use of any of the words
"initial, "scheduled", "can", "will", "prior to", "estimate", "anticipate",
"believe", "should", "forecast", "future", "continue", "may", "expect", and
similar expressions are intended to identify forward-looking statements. The
forward-looking statements contained herein are based on certain key
expectations and assumptions made by the Company, including, but not limited to,
expectations and assumptions concerning the success of optimization and
efficiency improvement projects, the availability of capital, current
legislation, receipt of required regulatory approval, the success of future
drilling and development activities, the performance of existing wells, the
performance of new wells, general economic conditions, availability of required
equipment and services, weather conditions and prevailing commodity prices.
Although the Company believes that the expectations and assumptions on which the
forward-looking statements are based are reasonable, undue reliance should not
be placed on the forward-looking statements because the Company can give no
assurance that they will prove to be correct.
Since forward-looking statements address future events and conditions, by their
very nature they involve inherent risks and uncertainties most of which are
beyond the control of Greenfields. Should one or more of these risks or
uncertainties materialize, or should assumptions underlying the forward-looking
information prove incorrect, actual results, performance or achievements could
vary materially from those expressed or implied by the forward-looking
information. These risks include, but are not limited to, risks associated with
the oil and gas industry in general (e.g., operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty of
reserve estimates; the uncertainty of estimates and projections relating to
production, costs and expenses, and health, safety, political and environmental
risks), commodity price and exchange rate fluctuations, changes in legislation
affecting the oil and gas industry and uncertainties resulting from potential
delays or changes in plans with respect to exploration or development projects
or capital expenditures. Additional risk factors can be found under the heading
"Risk Factors" in Greenfields' Annual Information Form and similar headings in
Greenfields' Management's Discussion & Analysis which may be viewed on
www.sedar.com.
The forward-looking statements contained in this press release are made as of
the date hereof and Greenfields undertakes no obligation to update publicly or
revise any forward-looking statements or information, whether as a result of new
information, future events or otherwise, unless so required by applicable
securities laws. The Company's forward-looking information is expressly
qualified in its entirety by this cautionary statement.
Notes to Oil and Gas Disclosures
Barrels Oil Equivalent or "boe" may be misleading, particularly if used in
isolation. Other than with respect to sales volumes, the volumes disclosed in
this press release under the headings "Third Quarter and Year-to-Date 2013
Financial Results and Operating Highlights" and "Operating Highlights and Plans"
uses a 5.559 mcf: 1bbl conversion ratio as the Bahar Contract (ERDPSA) uses a
5.559 mcf: 1bbl conversion ratio to measure total field production in
calculating the 6,944 boe production threshold to earn the full 25 year initial
term of the Bahar Contract.
The volumes disclosed in this press release as sales volumes, including the
volumes under the heading "Selected Information", uses a 6mcf: 1bbl, as such is
typically used in oil and gas reporting and is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent
a value equivalency at the wellhead. The Company uses a 6mcf: 1bbl ratio to
calculate its share of entitlement sales from the Bahar Project for its
financial reporting and reserves disclosure, but, for greater clarity, not for
the purposes of the information under the headings "Third Quarter and
Year-to-Date 2013 Financial Results and Operating Highlights" in this press
release.
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 this release.
FOR FURTHER INFORMATION PLEASE CONTACT:
Greenfields Petroleum Corporation
John W. Harkins
Chief Executive Officer
(832) 234-0836
Greenfields Petroleum Corporation
A. Wayne Curzadd
Chief Financial Officer
(832) 234-0835
info@greenfieldspetroleum.com
www.greenfields-petroleum.com
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