Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is
pleased to announce its interim financial and operating results for
the three and nine month periods ended September 30, 2011 ("Q311")
(all amounts in Canadian dollars unless noted):
THREE MONTH PERIOD ENDED SEPTEMBER 30, 2011
-- Net income for the three months ended September 30, 2011 was $21.0
million ($0.06 per share basic), compared to $1.2 million ($0.004 per
share basic) for the three months ended September 30, 2010.
-- 237% increase in total revenue to $46.8 million in Q311 compared to
$13.9 million in the third quarter of 2010 ("Q310").
-- 917% increase in cash flow from operating activities to $64.1 million
($0.19 per share basic) in Q311 compared to $6.3 million ($0.02 per
share basic) in Q310.
-- Funds flow from production operations of $42.1 million in Q311 compared
to $9.4 million in Q310 (see note regarding non-IFRS measures under
Financial and Operating Results).
-- Mart's share of Umusadege field petroleum produced and sold for Q311 was
446,981 barrels ("bbls").
-- The average price received for Umusadege production in Q311 was US
$112.54 per barrel (approximately CDN $114.79 per barrel) compared to US
$79.04 per barrel (CDN $75.83) for Q310.
-- In Q311 the UMU-8 well was completed and tested at a total combined rate
of 7,661 barrels of oil per day ("bopd").
-- During Q311, the Umusadege field was shut-in for a total of
approximately 11 days, due to injection restrictions, pipeline space
constraints, export pipeline vandalism and operational issues including
time required to allow rig skidding and completion operations necessary
for the ongoing drilling program.
NINE MONTH PERIOD ENDED SEPTEMBER 30, 2011
-- The Company reported $50.7 million of net income ($0.15 per share basic)
for the nine months ended September 30, 2011 compared to $6.6 million
($0.02 per share basic) for the nine months ended September 30, 2010.
-- 150% increase in total revenue to $121.7 million for the nine months
period ended September 30, 201 compared to $48.6 million for the same
period in 2010.
-- 630% increase in cash flow from operating activities to $102.9 million
($0.31 per share basic) for the nine months period ended September 30,
2011 compared to $14.1 million ($0.04 per share basic) for the nine
months period ended September 30, 2010.
-- Funds flow from production operations of $107.2 million for the nine
months period ended September 30, 2011 compared to $37.6 million for the
same period in 2010 (see note regarding non-IFRS measures under
Financial and Operating Results).
-- Mart's share of Umusadege field petroleum produced and sold for the nine
months ended September 30, 2011 was 1,344,611 bbls.
-- The average price received for Umusadege production for the nine months
ended September 30, 2011 was US $100.05 per barrel (approximately CDN
$102.05 per barrel) compared to US $81.05 per barrel (CDN $78.21) for
the same period in 2010.
-- For the nine months ended September 30, 2011, the Umusadege field was
shut-in for a total of approximately 33 days due to injection
restrictions, pipeline space constraints, export pipeline vandalism and
operational issues including time required to allow rig skidding and
completion operations necessary for the ongoing drilling program.
FINANCIAL AND OPERATING RESULTS:
The following table provides a summary of Mart's selected
financial and operating results for the three and nine month
periods ended September 30, 2011 and 2010, and the twelve months
ended December 31, 2010:
3 months 9 months 9 months
ended ended ended
3 months ended Sept 30, Sept 30, Sept 30,
(CDN$) Sept 30, 2011 2010 2011 2010
--------------------------------------------------------
Mart's share of the Umusadege
Field:
Barrels of oil
produced and sold
(1) 446,981 197,356 1,344,611 657,903
Average sales price
per barrel $114.791 $75.873 $102.049 $78.205
Mart's percentage
share of total
Umusadege oil
produced and sold
during the period
(1) 63% 59% 67% 73
Mart's share of
petroleum sales
after royalties $46,775,443 $13,831,361 $121,486,326 $47,497,745
Funds flow from
production
operations (2) $42,090,881 $9,394,286 $107,201,711 $37,644,365
Funds flow from
production operations
per share (2):
Basic $0.125 $0.028 $0.319 0.112
Net income $20,957,249 $1,229,201 $50,677,352 6,571,281
Per share - basic $0.062 $0.004 $0.151 0.020
Per share - diluted $0.062 $0.004 $0.149 0.019
Total assets $196,041,590 86,359,565 196,041,590 86,359,565
Total bank debt $6,371,553 5,044,320 $6,371,553 5,044,320
Shares outstanding - end of
period:
Basic 336,048,202 335,548,201 336,048,202 335,548,201
Diluted 340,325,747 342,351,534 340,325,747 342,351,534
12 months
ended
Dec 31,
(CDN$) 2010
---------------
Mart's share of the
Umusadege Field:
Barrels of oil
produced and sold
(1) 764,673
Average sales price
per barrel $80.491
Mart's percentage
share of total
Umusadege oil
produced and sold
during the period
(1) 65%
Mart's share of
petroleum sales
after royalties $56,524,797
Funds flow from
production
operations (2) $46,674,341
Funds flow from production
operations per share (2):
Basic 0.139
Net income 12,350,628
Per share - basic 0.037
Per share - diluted 0.036
Total assets 128,849,113
Total bank debt 5,627,778
Shares outstanding
- end of period:
Basic 335,548,201
Diluted 340,232,766
Notes:
(1) Barrels of oil produced and sold represents the volumes of
petroleum delivered to the purchaser and excludes oil volumes that
represent deficit oil.
(2) Indicates non-IFRS measures. Non-IFRS measures are
informative measures commonly used in the oil and gas industry.
Such measures do not conform to IFRS and may not be comparable to
those reported by other companies nor should they be viewed as an
alternative to other measures of financial performance calculated
in accordance with IFRS. For the purposes of this table, the
Company defines "Funds flow from production operations" as net
petroleum sales less royalties, community development costs and
production costs. Funds flow from production operations is intended
to give a comparative indication of the Company's net petroleum
sales less production costs as shown in the following table:
3 months 3 months 9 months 9 months
(CDN$) ended ended ended ended
Sept 30, 2011 Sept 30, 2010 Sept 30, 2011 Sept 30, 2010
----------------------------------------------------------------------------
Petroleum sales 51,309,293 14,973,921 137,216,871 51,451,060
Less: Royalties and
community
development costs 4,533,850 1,142,560 15,730,545 3,953,315
----------------------------------------------------------------------------
Net petroleum sales 46,775,443 13,831,361 121,486,326 47,497,745
Less: Production
costs 4,684,462 4,437,075 14,284,615 9,853,380
----------------------------------------------------------------------------
Funds flow from
production
operations 42,090,981 9,394,286 107,201,711 37,644,365
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(CDN$) 12 months
ended
Dec 31, 2010
----------------------------------
Petroleum sales 61,549,645
Less: Royalties and
community
development costs 5,024,848
----------------------------------
Net petroleum sales 56,524,797
Less: Production
costs 9,850,456
----------------------------------
Funds flow from
production
operations 46,674,341
----------------------------------
----------------------------------
OUTLOOK AND OPERATIONS UPDATE:
Development drilling is continuing at the Umusadege field with
the commencement of drilling UMU-9 on November 19, 2011. To date,
13 3/8 inch casing has successfully been cemented at a depth of
approximately 4,000 feet. Drilling in the intermediate 12 1/4 inch
hole section has commenced and is anticipated to be drilled to
approximately 8,300 feet, followed by running 9 5/8 inch casing.
The bottom hole deviated section is then scheduled to be drilled
with a 8 1/2 inch hole to total measured depth of approximately
11,000 feet.
The main objectives for the UMU-9 well are:
i. To appraise the extension of the shallower reservoirs discovered and
producing in the main culmination of the UMU-1, UMU-5, UMU-6, UMU-7 and
UMU-8 wells. These sands will be intersected in the drilling of the
vertical section of the well, which will then be cased prior to drilling
ahead to the deeper targets.
ii. To deviate and explore the deeper untested targets while running a
measurement while drilling tool followed by a logging while drilling
tool to evaluate the potential hydrocarbon bearing zones.
The UMU-8 well was drilled to a depth of approximately 8,600
feet and completed with a dual tubing string configuration allowing
for multiple zones to be produced from the same well bore. Five
identified oil zones were tested on the UMU-8 well, with three of
the oil zones (the XIIa, XIIb, and XV sands) flowing at a combined
test rate of 7.661 bopd. The well has been tied into the production
facilities.
Negotiations are ongoing with Agip, the Nigerian operator of the
export pipeline, to increase export capacity for the Umusadege
field. Mart's management anticipates that once an agreement is
reached 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 other exporters into the pipeline 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.
Crude oil deliveries into the export pipeline from the Umusadege
field for the month of October 2011 averaged 7,209 barrels of oil
per day (bopd). Umusadege field downtime for October 2011 was
approximately 4 days due mainly to export pipeline operational
shutdowns and export facility capacity curtailments. The Umusadege
field delivered an average of 9,053 bopd for the period November 1
- 15, 2011. During this period in November 2011, the Umusadege
field export pipeline experienced no production downtime.
Production at the Umusadege field continues to be curtailed while
Mart and its co-venturers finalize negotiations 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 63%
for Q311 compared to an average of 59% in Q310. Mart's share of
revenue for the nine month period ended September 30, 2011 was an
average of 67% compared to an average of 73% for the same period in
2010.
Subsequent to September 30, 2011, the Company entered into
agreements with its Umusadege co-venturers which affirmed the
relationship and the responsibilities of the Company as service
provider and Midwestern as field operator and clarified tax
obligations of co-venturers effective April 26, 2007. The
contractual relationships established pursuant to these agreements
are now collectively referred to as the Risk Service
Agreements.
CHAIRMAN'S COMMENT:
Wade Cherwayko, Chairman & CEO of Mart said, "We are very
pleased to report another period of record financial and operating
results for the third quarter of 2011 with $42.1 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. Negotiations to increase export
pipeline deliveries are nearing completion. Once an agreement is
reached, management anticipates the Umusadege field will have
increases in production and cash flow. Development is continuing on
the Umusadege field with the recent commencement of drilling on
UMU-9."
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 a land drilling rig,
has strong local relationships and experience and is evaluating
additional proven undeveloped opportunities in Nigeria.
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 or 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 Risk Service Agreements in respect of the
Umusadege field, the success, express or implied, of the UMU-9 well
drilling program or that the UMU-9 well will be able to
successfully appraise the extensions of the shallower reservoirs as
contemplated or successfully deviate and explore deeper untested
targets, 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.
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.
Contacts: Mart Resources, Inc. - London, England Wade Cherwayko
+44 207 351 7937Wade@martresources.com Mart Resources, Inc.
Investor Relations Toll Free:
1-888-875-7485www.martresources.com
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