Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is pleased to
announce its interim financial and operating results for the three months ended
March 31 2011 ("Q111") (all amounts in Canadian dollars unless noted) and the
following operational update on the UMU-8 well and production:
HIGHLIGHTS: QUARTER ENDED MARCH 31, 2011
-- $9.8 million total comprehensive income for the period Q111 compared to
$4.2 million in the first quarter 2010 ("Q110").
-- 29% Increase in total revenue of $27.0 million Q111 compared to $21.0
million in Q110.
-- 61% Increase in cash flow from operating activities, $8.8 million in
Q111 compared to $5.6 million in Q110.
-- Funds flow from production operations of $23.9 million in Q111 compared
to $6.7 million in Q410 and $17.7 million in Q110 (please see Note (1)
below).
-- Total bank indebtedness reduced to $4.1 million on March 31, 2011
compared to $10.4 million on March 31, 2010.
-- Mart's share of Umusadege field oil production for Q111 was 332,890
barrels ("bbls") compared to 277,052 bbls in Q110.
-- The average price received for Umusadege oil in Q111 was USD $95.94 per
barrel (approximately CDN $94.62 per barrel) compared to USD $76.50 (CDN
$79.06) for Q110.
-- The deficit oil liability at December 31, 2010 was fully repaid during
Q111.
-- Mart commenced drilling operations on the UMU-7 well in February 2011,
reached total depth in mid-March 2011, and placed well on production in
early May 2011.
-- During Q111, the Umusadege field was shut-in for a total of 17.7 days,
with 7.7 days being required to allow rig skidding and completion
operations necessary for the ongoing drilling program and the balance of
10 days due to disruptions in the export pipeline.
FINANCIAL AND OPERATING RESULTS:
The following table provides a summary of Mart's selected financial and
operating results for the three months ended March 31, 2011 and 2010, and the
twelve months ended December 31, 2010:
3 months ended 3 months ended 12 months ended
(CDN$) Mar. 31, 2011 Mar. 31, 2010 Dec. 31, 2010
------------------------------------------------
Mart's share of the
Umusadege Field
Barrels of oil produced 332,890 277,052 732,101
Average sales price per
barrel $94.62 79.06 84.10
Mart's percentage share of
total Umusadege oil
produced during the period 61% 80% 66%
Mart's share of petroleum
sales after royalties $27,257,908 20,250,230 56,524,797
Funds flow from production
operations (1) $23,948,318 17,770,651 48,235,615
Funds flow from production
operations per share
Basic $0.072 0.053 0.144
Diluted $0.070 0.053 0.142
Total comprehensive income $9,805,556 4,176,814 14,046,437
Per share - basic $0.033 0.012 0.042
Per share - diluted $0.032 0.012 0.041
Total assets $131,020,971 78,608,573 128,849,113
Total bank debt $4,139,935 10,358,712 5,627,778
Shares outstanding - end of
period
Basic 336,048,202 335,548,201 335,548,201
Diluted 344,059,761 335,548,201 340,232,766
Note:
(1) Indicates non- IFRS measures. Non- IFRS measures are informative
measures commonly used in and gas industry. Such measures do not conform to
IFRS and may not be comparable to those reported by other companies nor
should they be viewed as an alternative to other measures of financial
performance calculated in accordance with IFRS. For the purposes of this
table, the Company defines "Funds flow from production operations" as net
petroleum sales less royalties, community development costs and production
costs. Funds flow from production operations is intended to give a
comparative indication of the Company's net petroleum sales less production
costs as shown in the following table:
3 months ended 3 months ended 12 months ended
(CDN$) Mar. 31, 2011 Mar. 31, 2010 Dec. 31, 2010
----------------------------------------------------------------------------
Petroleum sales 30,139,109 21,903,139 61,549,645
Less: Royalties and
community
development costs 3,160,089 1,652,909 5,024,848
----------------------------------------------------------------------------
Net petroleum sales 26,979,020 20,250,230 56,524,797
Less: Production costs 3,030,702 3,032,551 8,289,182
----------------------------------------------------------------------------
Funds flow from production
operations 23,948,318 17,770,651 48,235,615
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OUTLOOK AND OPERATIONS UPDATE:
The Company is continuing to develop oil reserves from the Umusadege field. As
at December 31, 2010 the Umusadege field had proved and probable reserves of
23.6 million bbls, of which Mart's gross share is 12.9 million bbls. These
reserves, and the recent successful drilling of UMU-7 well, justify further
development drilling on the Umusadege field, the cost of which is expected to be
funded with cash flows generated from the Umusadege field and, to the extent
necessary, debt facilities.
The UMU-8 well commenced drilling operations on June 9, 2011 and is currently
drilling ahead at approximately 5,000 feet. The UMU-8 well is being
directionally drilled from the same three-slot drilling pad as the recently
drilled and completed UMU-6 and UMU-7 wells.
Umusadege field deliveries in May 2011 averaged 10,525 bopd, however the
operator of the export pipeline recently restricted deliveries pending
finalization of contractual terms for transportation of production. The
Umusadege field delivered an average of 8,275 bopd for the period June 1 - 28,
2011. Mart's management anticipates that once the contractual terms for
transportation of production are finalized, 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. Pipeline capacity may be apportioned among the shippers and
therefore the Umusadege field rate of production may be subject to periodic
adjustment.
Mart's share of petroleum production varies from time to time depending upon
whether Mart is in a cost recovery period or a post-cost recovery period. Mart
moves in and out of cost recovery periods depending upon the level of activity
underway at any given time. During a cost recovery period, Mart is restricted to
a maximum of 82.5% of production revenues and, once Mart has recovered all of
its capital costs, all production revenues remaining after deduction of
royalties, income taxes, community development contributions, operating costs
and abandonment obligations are shared 50% to Mart and 50% to its co-venturers.
As a result of the Company moving in and out of capital cost recovery during the
quarter, Mart's share of revenue was an average of 61% for Q111 compared to an
average of 80% in Q110 and 76% in Q410.
During the months of April and May 2011, the Umusadege field was shut down for
4.3 aggregate days for rig skidding to the UMU-8 location and testing and
production facility modifications in relation to the UMU-7 well and other
maintenance requirements. During the period June 1 - 28, 2011 the Umusadege
field experienced one day of production shut down due to UMU-8 operational
activities with no shut down of exports during this period.
To mitigate risks relating to export pipeline capacity, Mart and its
co-venturers are evaluating new pipeline and export options to provide an
alternative for future production capacity. The upgrade of the central
production facility at the Umusadege field to a design capacity of approximately
30,000 bopd is approximately 50% completed.
A second three-slot drilling pad was constructed and is located south east of
the UMU-6, 7, 8 drilling pad. It is anticipated that the NRG Rig 201 will move
to this second pad after drilling and testing of the UMU-8 well is completed and
drilling operations will commence on the UMU-9 well. Two additional wells may be
drilled from the UMU-9 pad.
CHAIRMAN'S COMMENT:
Wade Cherwayko, Chairman & CEO of Mart Resources, Inc. said, "With $27 million
in revenue after royalties from three producing wells during the first quarter
of 2011, the Umusadege field continues to demonstrate its production capacity.
The fourth producing well, UMU-7, went on production in May 2011. With the UMU-8
well close to reaching target depth, Mart is well placed to see further
increases in production and in cash flow in the near term."
ANNUAL GENERAL MEETING WEBCAST:
Mart's Annual General Meeting ("AGM") will be webcast from Calgary, Alberta,
Canada at 2:00 pm (MST) on the 29th June 2011 for shareholders and others who
are unable to attend the meeting. To listen to the AGM and view the presentation
to be provided at the meeting, please visit the Company's website at
www.martresources.com and connect using the link under Corporate Presentations
on the Home Page. The webcast will also be available on the Company's website
for a period of time following the AGM.
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.
Additional information regarding Mart Resources, Inc. is available on the
company's website at www.martresources.com.
INVESTOR RELATIONS:
Investors are also welcome to contact one of the following investor relation's
specialists for all corporate updates and investor inquiries:
FronTier Consulting Ltd.
Mart toll free # 1-888-875-7485
Attn: Sam Grier
Caleb Gilani
Email: inquiries@martresources.com
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.
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.
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