Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is pleased to
announce its interim financial and operating results for the three and six month
periods ended June 30, 2011 ("Q211") (all amounts in Canadian dollars unless
noted):
HIGHLIGHTS: QUARTER ENDED JUNE 30, 2011
-- The Company reported $29.7 million of net income ($0.09 per share basic)
for the six months ended June 30, 2011 compared to $5.3 million for the
six months ended June 30, 2010.
-- 256% increase in total revenue to $47.7 million in Q211 compared to
$13.4 million in the second quarter of 2010 ("Q210").
-- 397% increase in cash flow from operating activities to $38.8 million
($0.12 per share basic) through the end of Q211 compared to $7.8 million
($0.02 per share basic) to Q210.
-- Funds flow from production operations of $41.1 million in Q211 compared
to $23.9 million in Q111 and $11.0 million in Q210 (see note regarding
non-IFRS measures under Financial and Operating Results).
-- Total bank indebtedness increased to $13.3 million on June 30, 2011
compared to $7.3 million at June 30, 2010.
-- Mart's share of Umusadege field petroleum production for Q211 was
530,056 barrels ("bbls") compared to 332,890 bbls in Q111.
-- The average price received for Umusadege production in Q211 was USD
$116.84 per barrel (approximately CDN $111.98 per barrel) compared to
USD $76.50 per barrel (CDN $79.06) for Q210.
-- Mart and its co-venturers commenced drilling operations on the UMU-8
well in June 2011, reached total depth in July 2011, and are in the
process of testing the well.
-- During Q211, the Umusadege field was shut-in for a total of 4.3 days,
all being required to allow rig skidding and completion operations
necessary for the ongoing drilling program.
FINANCIAL AND OPERATING RESULTS:
The following table provides a summary of Mart's selected financial and
operating results for the three and six month periods ended June 30, 2011 and
2010, and the twelve months ended December 31, 2010:
3 months 3 months 6 months 6 months 12 months
ended ended ended ended ended
Jun. 30, Jun. 30, Jun. 30, Jun. 30, Dec. 31,
(CDN$) 2011 2010 2011 2010 2010
------------------------------------------------------------
Mart's share of the
Umusadege Field:
Barrels of oil
produced 530,056 176,928 848,587 453,980 732,101
Average sales
price per
barrel $111.98 $80.92 $105.47 $80.26 $84.10
Mart's
percentage
share of total
Umusadege oil
produced during
the period 68% 64% 67% 67% 66%
Mart's share of
petroleum sales
after royalties $47,731,863 $13,416,154 $74,710,883 $33,666,384 $56,524,797
Funds flow from
production
operations (1) $41,162,412 $11,032,400 $65,110,730 $28,250,079 $46,674,341
Funds flow
from production
operations
per share
Basic $0.122 $0.033 $0.194 0.084 0.139
Diluted $0.120 $0.033 $0.189 0.083 0.137
Total
comprehensive
income $17,277,787 $3,140,755 $27,083,338 $7,317,570 $12,385,629
Per share -
basic $0.051 $0.009 $0.081 0.022 0.037
Per share -
diluted $0.050 $0.009 $0.079 0.022 0.036
Total assets $180,081,496 83,495,205 180,081,496 83,495,205 128,849,113
Total bank debt $13,258,227 7,341,462 13,258,227 7,341,462 5,627,778
Shares
outstanding
- end of
period
Basic 336,048,202 335,548,201 336,048,202 335,548,201 335,548,201
Diluted 344,111,826 339,385,106 344,111,826 339,385,106 340,232,766
Note:
(1) Indicates non-IFRS measures. Non-IFRS measures are informative
measures commonly used in the oil and gas industry. Such measures do
not conform to IFRS and may not be comparable to those reported by
other companies nor should they be viewed as an alternative to other
measures of financial performance calculated in accordance with IFRS.
For the purposes of this table, the Company defines "Funds flow from
production operations" as net petroleum sales less royalties,
community development costs and production costs. Funds flow from
production operations is intended to give a comparative indication of
the Company's net petroleum sales less production costs as shown in
the following table:
3 months 3 months 6 months 6 months 12 months
ended ended ended ended ended
Jun. 30, Jun. 30, Jun. 30, Jun. 30, Dec. 31,
(CDN$) 2011 2010 2011 2010 2010
----------------------------------------------------------------------------
Petroleum sales 55,531,242 14,574,001 85,627,756 36,477,139 61,549,645
Less: Royalties
and community
development
costs 7,799,379 1,157,847 10,916,873 2,810,755 5,024,848
----------------------------------------------------------------------------
Net petroleum
sales 47,731,863 13,416,154 74,710,883 33,666,384 56,524,797
Less: Production
costs 6,569,451 2,383,754 9,600,153 5,416,305 9,850,456
----------------------------------------------------------------------------
Funds flow from
production
operations 41,162,412 11,032,400 65,110,730 28,250,079 46,674,341
----------------------------------------------------------------------------
----------------------------------------------------------------------------
OUTLOOK AND OPERATIONS UPDATE:
Development drilling is continuing at the Umusadege field.
The UMU-8 well has been drilled and completed and production testing is
underway. Preparations are being made to drill the UMU-9 well. 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 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.
Negotiations are continuing with the third party operator of the export pipeline
to increase export capacity for the Umusadege field. Mart's management
anticipates that once the contractual terms for transportation of increased
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, UMU-7 and UMU-8 wells. Increases in export production capacity are
also anticipated to accommodate future production from the UMU-9 well. Pipeline
capacity may be apportioned among the shippers and therefore the Umusadege field
production rate may be subject to periodic adjustment.
To mitigate risks relating to export pipeline capacity, Mart and its
co-venturers are evaluating new export pipeline 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 60% completed.
The Umusadege field delivered an average of 7,206 bopd for the period August 1 -
25, 2011. During this period in August 2011, the Umusadege field experienced a
total of 3.2 days of production shutdown due mainly to third party export
pipeline operational issues. Production at the Umusadege field continues to be
curtailed while Mart and its co-venturers negotiate with the third party
pipeline operator to increase export pipeline capacity.
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 consisting of 65% allocated for cost
recovery and 17.5% allocated as profit oil 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 68% for Q211 compared to an
average of 64% in Q210 and 61.2% in Q111.
CHAIRMAN'S COMMENT:
Wade Cherwayko, Chairman & CEO of Mart Resources, Inc. said, "We are very
pleased to report record financial and operating results for the second quarter
of 2011 with $41.2 million of funds flow from production operations, which
amounts to $0.12 per share. This continues to demonstrate the significance of
the Umusadege field's production capacity, even with the current curtailment of
production while increases in available pipeline capacity are negotiated with
the third party pipeline operator. Once these negotiations are completed, it is
anticipated that Mart will see further increases in production and in cash flow
in the near term."
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 and under the Company's profile on
SEDAR at www.sedar.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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