Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is pleased to
announce its 2010 financial and operating results for the year ended December 31
2010 (all amounts in Canadian dollars unless noted):
YEAR 2010 HIGHLIGHTS:
-- Mart's share of proved Umusadege gross oil reserves increased by 55% to
9.6 million barrels of oil ("bbls") compared to 6.2 million bbls of oil
in 2009.
-- Mart's share of proved plus probable Umusadege gross oil reserves
increased by 37% to 12.9 million bbls compared to 9.4 million bbls in
2009.
-- Net income for the year ended December 31, 2010 totaled $8.1 million,
compared to a net loss of $26.3 million for the year ended December 31,
2009.
-- Funds flow from production operations after royalties were $48.2 million
for the year ended December 31, 2010 compared to $55.5 million for the
year ended December 31, 2009.
-- The average price received by Mart for oil in 2010 was USD $81.70 per
bbl (approximately CDN $84.07 per bbl), compared to USD $64.62 per bbl
(approximately CDN $72.20 per bbl) in 2009.
-- Total long-term debt including the current portion was reduced to $5.6
million at December 31, 2010, compared to $13.4 million at December 31,
2009.
-- Mart's share of Umusadege field oil production for the year ended
December 31, 2010 was 732,101 bbls compared to 1,154,958 bbls for the
year ended December 31, 2009. The main reason for the reduction in
production was the decrease in cost oil recovery from 97.5% to an
average rate of 66.6% during the year, the effects of oil export
pipeline disruptions during 2010 and other operational downtime.
-- Total gross Umusadege field oil production for the year ended December
31, 2010 was 1,075,927 bbls compared to 1,184,572 bbls for the year
ended December 31, 2009.
-- During 2010, the Umusadege field was shut-in for a total of 92 days due
mainly to disruptions in the export pipeline and maintenance and
modification of production facilities, compared to a total of 35 shut-in
days in 2009.
-- Mart's average daily oil production for 2010 was 2,005 barrels oil per
day ("bopd") compared to 2,996 bopd in 2009.
THREE MONTH PERIOD ENDED DECEMBER 31, 2010
-- The UMU-6 well was successfully drilled, tested and completed and was
put on production in December 2010.
-- Mart's share of Umusadege field oil production for the three months
ended December 31, 2010 ("Q410") was 104,255 bbls compared to 317,150
bbls for the three months ended December 31, 2009 ("Q409"). This
reflects the decrease in cost oil recovery from 97.5% in Q409 to an
average rate of 76.3% during the period and the effects of oil export
pipeline disruptions.
-- During Q410, the Umusadege field was shut-in for a total of 65 days due
mainly to disruptions in the oil export pipeline and maintenance and
modification of production facilities.
-- Mart's oil revenues were $10.1 million for Q410 compared to $24.2
million for Q409.
-- Funds flow from production operations of $6.7 million for Q410 compared
to $13.9 million for Q409.
-- Net income for Q410 was $9.2 million compared to a net loss of $24.6
million for Q409.
-- The average price received by Mart for oil in Q410 was USD $89.21 per
bbl (approximately CDN $96.86 per bbl) compared to USD $74.54 (CDN
$79.05 per bbl) for Q409.
-- Mart's daily oil production for Q410 was 1,158 bopd compared to 3,447
bopd for Q409.
-- Adopted an alternate tax status in Nigeria, resulting in an expected
reduction in past and future Nigerian tax liability. The benefit of this
change in tax status and the resultant change in the past and current
estimated tax liability was recorded in Q410.
FINANCIAL AND OPERATING RESULTS:
The following table provides a summary of Mart's selected financial and
operating results for the three and twelve month periods ended December 31, 2010
and 2009. Audited financial statements and corresponding Management's Discussion
and Analysis ("MD&A") are available on SEDAR at www.sedar.com and will be
available on the Company's website at www.martresources.com.
(CDN$) 3 months 3 months 12 months 12 months
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010 2009
----------------------------------------------------
Mart's share of the
Umusadege Field
Barrels of oil produced 104,255 317,150 732,101 1,152,989
Average sales price per
barrel $ 96.86 79.05 84.10 79.06
Mart's share of oil 76.3% 97.5% 66.6% 97.5%
Mart's share of oil
revenue after royalties $9,027,052 18,991,105 56,524,797 72,605,726
Funds flow from
production operations $6,677,197 18,904,745 48,235,615 55,485,284
(1)
Funds flow from production
operations per share
Basic $ 0.020 0.046 0.144 0.165
Diluted $ 0.020 0.046 0.142 0.165
Net income (loss) $9,214,125 (25,152,292) 8,080,808 (26,285,610)
Per share - basic $ 0.012 (0.001) 0.024 (0.078)
Per share - diluted $ 0.012 (0.001) 0.024 (0.078)
Total assets 123,144,294 82,143,164 123,144,294 82,143,164
Total bank debt $5,627,778 13,350,193 5,627,778 13,350,193
Shares outstanding - end
of period
Basic 335,548,201 335,548,201 335,548,201 335,548,201
Diluted 340,232,766 335,548,201 340,232,766 335,548,201
Note:
(1) Indicates non-GAAP measures. Non-GAAP measures are informative measures
commonly used in the oil and gas industry. Such measures do not conform to GAAP
and may not be comparable to those reported by other companies nor should they
be viewed as an alternative to other measures of financial performance
calculated in accordance with GAAP. For the purposes of this table, the Company
defines "Funds flow from production operations" as net oil sales less royalties,
community development costs and production costs. Funds flow from production
operations is intended to give a comparative indication of the Company's net
crude oil sales less production costs as shown in the following table:
(CDN$) 3 months 3 months 12 months 12 months
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2010 2009 2010 2009
----------------------------------------------------
Crude oil sales 10,098,585 20,548,395 61,549,645 78,956,947
Less: Royalties and (1,071,533) (1,557,290) (5,024,848) (6,351,221)
community development
costs
----------------------------------------------------------------------------
Net crude oil sales 9,027,052 18,991,105 56,524,797 72,605,726
Less: Production costs (2,349,855) (86,360) (8,289,182)(17,120,442)
----------------------------------------------------------------------------
Funds flow from 6,677,197 18,904,745 48,235,615 55,485,284
production operations
----------------------------------------------------------------------------
OUTLOOK:
The Company remains focused on the development of oil reserves from the
Umusadege field. As at December 31, 2010, the Umusadege field had proved and
probable reserves of 23.6 million barrels of oil, of which Mart's gross share is
12.9 million barrels of oil. These reserves justify further development drilling
on the Umusadege field, the cost of which is expected to be funded with Mart's
share of cash flows generated from the Umusadege field and, to the extent
necessary, bank debt facilities.
Mart and its co-venturers placed the UMU-7 well on long-term production on May
2, 2011 from two of the four sands tested at an aggregate initial rate of 3,352
bopd. This production rate is not necessarily indicative of future production
levels as work is still ongoing to stabilize and optimize long term production
rates from the well. The drilling rig has been moved to the UMU-8 location and
preparations are currently underway to drill the UMU-8 well from the same
drilling pad as the UMU-6 and UMU-7 wells.
The Umusadege field production is transported via export pipeline operated by
Agip Petroli SpA ("Agip"). Periodic disruptions were encountered in Q310 and
Q410. There is no assurance that there will not be disruptions in the future.
Should there be disruptions, production from the Umusadege field may be
partially or fully shut down.
During the first quarter of 2011 ("Q111"), the Umusadege field was shut down due
to maintenance and modification of production facilities, ongoing adjustments to
UMU-6 well production methodology, tie-in of the UMU-7 well for production
testing and disruptions of the export pipeline for a total of 17.7 days or
approximately 20% of Q111, with 7 of the 17.7 days shut down being required to
allow rig skidding and completion operations necessary for the ongoing drilling
program. Excluding these activities, shut downs in the Umusadege field have
returned to normal levels. Management considers this to be a typical aggregate
period of intermittent shutdown periods in a quarter. During the month of April
2011, the Umusadege field was shut down for 1.3 days for testing and production
facility modifications in relation to the UMU-7 well.
Mart's daily oil production for Q111 was approximately 4,853 bopd. Based on 72
actual production days in Q111, the Umusadege field average daily production was
approximately 7,551 bopd per producing day. The Umusadege wells had capacity to
produce at higher rates; however, the Umusadege field production was constrained
to these levels due to export capacity limitations into the export pipeline
system. The export pipeline operator (Agip) has confirmed an increase in the
export and production capacity from the Umusadege field. The increase in
production capacity, which commenced during the first week of May 2011, will be
shared amongst the existing three member production group currently delivering
to the export pipeline from several fields, which includes the Umusadege field.
Under existing agreements, pipeline capacity may be apportioned among the
production group and therefore the Umusadege field rate of production may be
subject to periodic adjustment. Mart's management anticipates that the Umusadege
field will be allocated sufficient export pipeline capacity to accommodate
production from the existing UMU-1, UMU-5, UMU-6 wells and the UMU-7 well.
Increases in export production capacity are also anticipated to accommodate
future production from the UMU-8 well, assuming the UMU-8 well is successful.
In addition, to mitigate risks relating to export pipeline capacity, Mart and
its co-venturers are evaluating new export pipeline and export options to
provide an alternative for future production capacity. The central production
facility at the Umusadege field is being upgraded to a design capable of
handling up to approximately 30,000 bopd.
Mart anticipates changing its reporting currency from Canadian dollars to United
States dollars in 2011.
CHAIRMAN'S COMMENT:
Wade Cherwayko, Chairman of Mart Resources, Inc. said, "The successful execution
of the initial appraisal and development drilling program on the Umusadege field
in 2010 resulted in record levels of proved plus probable reserves of 12.9
million bbls, first full year of profitability and substantial reduction of
debt. Mart and our co-venturers are well positioned for additional development
drilling in the Umusadege field. The recently announced UMU-7 well and increased
production at the Umusadege field shows the significant potential of the
Umusadege field. We are also looking forward to commencing drilling activities
on the UMU-8 well before the end of Q2 2011."
ABOUT MART RESOURCES:
Mart Resources Inc. is an independent, international petroleum company focused
on drilling, developing and producing oil and gas from proven petroleum
properties in Nigeria, West Africa. The Company is currently producing and
developing the Umusadege field along with Midwestern Oil and Gas Co. Plc (the
Operator of the field) and SunTrust Oil Ltd. Mart also owns two land drilling
rigs, has strong local relationships and experience and is evaluating additional
proven undeveloped opportunities in Nigeria.
Note: 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 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, the absence of
amendments to the FPSAs (as defined herein) in respect of the Umusadege field,
discussions regarding the impact of the adoption of IFRS (as defined herein) on
the Company's financial statements and its abilities to implement IFRS 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. The
forward-looking statements contained herein are expressly qualified by this
cautionary statement.
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.
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