Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is pleased to
announce its financial and operating results for the three and nine months ended
September 30, 2012 ("Q312") (all amounts in Canadian dollars unless noted):
THREE MONTHS ENDED SEPTEMBER 30, 2012
-- On August 29, 2012, Mart declared a dividend of $0.05 per common share
that was paid to shareholders on October 2, 2012 for an aggregate amount
of $17.8 million.
-- Mart's working capital position at September 30, 2012 was $36.9 million
(after taking into account the dividend paid on October 2, 2012).
-- Net income for the three months ended September 30, 2012 ("Q312") was
$21.5 million ($0.061 per share) compared to net income of $18.7 million
($0.056 per share) for the three months ended September 30, 2011
("Q311"). The increase in net income was due to an increase in the
number of barrels produced and sold during Q312 compared Q311.
-- Funds flow from production operations of $44.8 million ($0.127 per
share) for Q312 compared to $42.1 million ($0.125 per share) for Q311
(see Note 1 to the Financial and Operating Results table below regarding
Non-IFRS measures).
-- Mart's share of Umusadege field oil produced and sold in Q312 was
615,686 barrels of oil ("bbls") compared to 446,981 bbls for Q311. The
increase in volumes is primarily attributable to Mart's overall increase
in production year over year.
-- The average sales price in Q312 was approximately USD $108.40 per bbl
(CDN $106.58 per bbl) compared to USD $112.54 per bbl (CDN $114.79 per
bbl) for Q311.
-- Mart's average share of daily oil produced and sold for Q312 from the
Umusadege field was 6,692 barrels of oil per day ("bopd") compared to
4,858 bopd for Q311, again higher primarily because Mart's year over
year production increases.
-- During Q312, the Umusadege field was shut-in for 5 days (Q311 - 11 days)
due to disruptions in the export pipeline, well testing activities and
maintenance and modification of production facilities.
-- Pipeline and export facility losses for September 2012 as reported by
Nigerian Agip Oil Company ("AGIP"), the operator of the export pipeline,
were 40,018 bbls or approximately 11.6% of total crude deliveries.
Losses for Q312 totaled 148,020 bbls, or approximately 13.1% of total
crude deliveries. Pipeline and export facility losses as reported by
pipeline operator from the beginning of the year to end of September
2012 are approximately 13.1% of total crude deliveries during this nine
month period.
NINE MONTHS ENDED SEPTEMBER 30, 2012
-- On June 28, 2012, Mart declared a dividend of $0.10 per common share
that was paid to shareholders on August 8, 2012 for an aggregate amount
of $35.6 million.
-- Net income for the nine months ended September 30, 2012 was $62.0
million ($0.181 per share) compared to net income of $47.3 million
($0.141 per share) for the nine months ended September 30, 2011.
-- Funds flow from production operations of $121.7 million ($0.356 per
share) for the nine months ended September 30, 2012 compared to $107.2
million ($0.319 per share) for the same period in 2011 (see Note 1 to
the Financial and Operating Results table page 3 regarding Non-IFRS
measures).
-- Mart's share of Umusadege field oil produced and sold for the nine
months ended September 30, 2012 was 1,655,526 bbls compared to 1,344,611
bbls for the nine months ended September 30, 2011.
-- The average sales price received by Mart for oil for the nine months
ended September 30, 2012 was approximately USD $104.49 per bbl (CDN
$102.73) compared to USD $100.05 per bbl (CDN $102.05 per bbl) for the
comparable period in 2011.
-- Mart's average share of daily oil produced and sold from the Umusadege
field was 6,042 bopd for the nine months ended September 30, 2012
compared to 4,925 bopd for the nine months ended September 30, 2011.
-- During the first nine months of 2012, the Umusadege field was shut-in
for a total of 32 days compared to 33 days for the comparable period in
2011 due to disruptions in the export pipeline, well testing activities
and maintenance and modification of production facilities.
FINANCIAL AND OPERATING RESULTS
The following table provides a summary of Mart's selected financial and
operating results for the three months and nine months ended September 30, 2012
and 2011 and the twelve months ended December 31, 2011:
CDN $ 000's 3 months ended 3 months ended
(except oil produced and sold,
share, oil prices and per share
amounts) September 30, 2012 September 30, 2011
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Mart's share of the Umusadege Field:
Barrels of oil produced and sold 615,686 446,981
Average sales price per barrel $ 106.58 $ 114.79
Mart's percentage share of total
Umusadege oil produced and sold
during the period 63% 63%
Mart's share of petroleum sales
after royalties $ 53,251 $ 46,776
Funds flow from production
operations (1) $ 44,842 $ 42,092
Per share - basic $ 0.127 $ 0.125
Net income (2) $ 21,450 18,690
Per share - basic (2) $ 0.061 $ 0.056
Per share - diluted (2) $ 0.060 $ 0.055
Total assets (2) $ 246,676 $ 177,402
Total bank debt $ Nil $ 6,372
Weighted average shares outstanding for period:
Basic 352,804,579 336,048,202
Diluted 357,922,013 342,682,678
12 months
CDN $ 000's 9 months ended 9 months ended ended
(except oil produced and sold,
share, oil prices and per share September 30, September 30, December 31,
amounts) 2012 2011 2011
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Mart's share of the Umusadege
Field:
Barrels of oil produced and sold 1,655,526 1,344,611 1,803,459
Average sales price per barrel $ 102.73 $ 102.05 $ 102.08
Mart's percentage share of total
Umusadege oil produced and sold
during the period 65% 67% 71%
Mart's share of petroleum sales
after royalties $ 143,470 $ 121,487 $ 162,431
Funds flow from production
operations (1) $ 121,667 $ 107,202 $ 144,129
Per share - basic $ 0.356 $ 0.319 $ 0.429
Net income (2) $ 61,969 $ 47,304 $ 71,801
Per share - basic (2) $ 0.181 $ 0.141 $ 0.214
Per share - diluted (2) $ 0.175 $ 0.138 $ 0.209
Total assets (2) $ 246,676 $ 177,402 $ 198,021
Total bank debt $ Nil $ 6,372 $ Nil
Weighted average shares outstanding for period:
Basic 342,233,799 335,920,607 336,084,275
Diluted 353,826,708 343,809,907 344,318,066
Notes:
(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 & other 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.
(2) For comparative purposes, net income for the three months ended September
30, 2011 and the nine months ended September 30, 2011 includes adjustments for
corrections to general and administrative, share-based compensation,
depreciation, depletion, income tax expense, deferred income tax expense,
foreign currency translation gains (losses), net income, total comprehensive
income, earnings per share - basic and earnings per share - diluted. Each of the
first three quarters of 2011 contains adjustments to correct the foregoing
items. The audited Consolidated Financial Statements for the years ended
December 31, 2011 and December 31, 2010 are unaffected by these adjustments and
remain unchanged. Details of these changes are set out in Note 11 of the
unaudited Condensed Consolidated Financial Statements for the three months and
nine months ended September 30, 2012.
3 months 3 months 9 months 9 months 12 months
ended ended ended ended ended
September September September September Dec. 31,
CDN $ 000's 30, 2012 30, 2011 30, 2012 30, 2011 2011
----------------------------------------------------------------------------
Petroleum sales $ 65,620 $ 51,309 $ 170,074 $ 137,217 $ 184,100
Less: Royalties and
community development
contributions 12,369 4,533 26,604 15,730 21,669
----------------------------------------------------------------------------
Net petroleum sales 53,251 46,776 143,470 121,487 162,431
Less: Production costs 8,409 4,684 21,803 14,285 18,302
----------------------------------------------------------------------------
Funds flow from
production operations $ 44,842 $ 42,092 $ 121,667 $ 107,202 $ 144,129
----------------------------------------------------------------------------
----------------------------------------------------------------------------
DISCUSSION OF Q312 RESULTS:
Production in the third quarter of 2012 remained steady and there were no
unusual shutdowns of the pipeline or production facilities. There were five
liftings of oil from the Umusadege field in Q312. Mart's Q312 petroleum sales
before royalties and community development contributions were $ $65.6 million,
compared to $51.3 million in Q311. Mart's share of petroleum produced and sold
from the Umusadege field for Q312 was 615,686 bbls, compared to 446,981 bbls for
Q311. Mart's average sale price per barrel for Q312 decreased by CDN $8.21 per
bbl to CDN $106.58 compared to the average sales price of CDN $114.79 for Q311.
Mart's petroleum sales for the nine months ended September 30, 2012 before
royalties and community development contributions were $170.1 million, compared
to $137.2 million for the same period in 2011. Mart's share of petroleum
produced and sold from the Umusadege field for the first nine months of 2012 was
1,655,526 bbls, compared to 1,344,611 bbls for the first nine months of 2011.
Mart's average sales price per barrel for the nine months ended September 30,
2012 increased by CDN $0.68 per bbl to CDN $102.73 compared to the average sales
price of CDN $102.05 for the nine months ended September 30, 2011.
At the end of the third quarter, Mart's share in an over-nominated oil position
was 25,000 bbls. Over-nominated oil is oil that had been nominated, but not paid
for and not delivered. The price of oil on September 30, 2012 was USD 110.17 per
bbl.
The increase in Mart's net income from Q311 to Q312 is primarily attributable to
increased revenues and lower income tax expense. The increase in funds flow from
operations is due to production increases outpacing the increase of related
expenses.
Mart's share of production sold from the Umusadege field under its agreement
with its co-venturers varies from 50% to 82.5% of production. In the third
quarter Mart's average share of total Umusadege oil produced and sold was 63%
(compared to 63% in Q311 and 52% in Q212).
Mart and its co-venturers bear their proportionate share of pipeline losses, but
these line losses are determined by the pipeline operator. For oil delivered in
the third quarter, the pipeline owner attributed losses of oil delivered through
the AGIP pipeline at approximately 13%. Mart and its co-venturers continue to
work to obtain additional information with respect to these losses, including
assessing the accuracy of volume reconciliations, and the accuracy of the
metering and reporting processes. However, Mart and its co-venturers rely on the
pipeline operator to provide this information. The significance of these line
losses underscores the importance to Mart and its co-venturers of continuing to
advance the construction of a new pipeline for delivery of the oil produced from
Umusadege.
DECLARATION OF DIVIDEND:
Mart is pleased to announce that its Board of Directors declared a quarterly
cash dividend of $0.05 per common share. The dividend is payable on January 8,
2013 to shareholders of record at the close of business on December 21, 2012.
The ex-dividend date is December 19, 2012.
Pursuant to the Company's dividend policy, the declaration of regular quarterly
dividends is determined quarterly based on Mart's cash flows, liquidity, capital
expenditure budgets, earnings, financial condition and other factors as the
Board of Directors may consider appropriate from time to time.
OUTLOOK AND OPERATIONS UPDATE:
On August 29, 2012, Mart declared a quarterly cash dividend of $0.05 per common
share that was paid to shareholders on October 2, 2012 for an aggregate amount
of $17.8 million.
The UMU-10 well commenced drilling on July 4, 2012 reached a total drilling
depth of approximately 9,757 feet at the beginning of October 2012. UMU-10 is an
appraisal well targeting the sands encountered in the UMU-9 exploration/step-out
well, including the deep sand discoveries. Based upon logging results, the
UMU-10 well encountered a total of 479 feet of gross pay in 20 sands. The
reservoirs encountered are consistent with those encountered in the UMU-9 well,
with one additional oil-bearing discovery in the UMU-10 well that was wet in
UMU-9. The five deep sand discoveries encountered in UMU-9, along with the
additional oil reservoir encountered in UMU-10, have not previously been flowed
to surface. These are the primary testing and completion targets for the UMU-10
well.
Downhole pressure and fluid sample tests were taken over all reservoirs.
Preliminary evaluations for the UMU-10 well indicate 19 light oil reservoirs and
one gas/condensate reservoir. These conclusions are consistent with results of
tests on the UMU-9 well. The down-hole fluid samples have confirmed hydrocarbon
type, and will provide critical information for reservoir management and field
development planning.
The completion program and production testing operations on the UMU-10 well will
continue through November 2012. Six of the sands, XVIIa & XVIIb (commingled),
XVIIIa, XIX, XXb, and XXI, will be perforated, tested, and completed for
production. Any two of these zones can be produced simultaneously using dual
string sliding sleeve completion technology. The sands completed in UMU-10 will
access 161 feet of the total 479 feet of gross pay in the well.
Umusadege field production during the month of October 2012 averaged 10,217
bopd. Umusadege field downtime during October 2012 was six days. The average
field production based on producing days was 12,669 bopd. Total crude oil
deliveries into the export storage tanks from the Umusadege field for the month
of October 2012, before pipeline losses, were approximately 317,000 bbls. AGIP
has reported approximately 40,000 bbls of pipeline losses during the month of
October, 2012 or approximately 11.6% of total crude deliveries. The pipeline
losses experienced in Q312 and to date in Q312 are approximately 13%.
Mart and its co-venturers are continuing discussions with an affiliate of Royal
Dutch Shell plc, ("Shell") to complete a crude handling agreement that will
enable plans to move forward to provide a second independent export pipeline for
Umusadege field production. Mart and its co-venturers will then gain access to
Shell's export facilities and a 50 kilometer pipeline will be constructed.
AGIP, the export pipeline operator, temporarily closed its export pipeline on
October 30, 2012 due to leakages. AGIP advised Mart that as a result of local
flooding, it was unable to inspect the export pipeline for damage, or commence
repairs for two weeks following the shutdown. AGIP has advised that it has
commenced repair works on the damaged sections of the pipeline.
The Brass River Export Terminal, where oil production from the Umusadege field
is shipped, also experienced loading delays due to extreme flooding in the area.
As a consequence, AGIP declared force majeure on loadings at the Brass River
Export Terminal until the flooding situation was rectified. AGIP has advised
that the situation is improved.
As a consequence of the foregoing, all Umusadege field production shipped
through the AGIP export pipeline has been shut-in pending AGIP's ability to
access, inspect and repair the export pipeline and rectify the flooding
situation at the Brass River Export Terminal.
CHAIRMAN'S COMMENT:
Wade Cherwayko, Chairman and CEO of Mart said, "Mart has experienced strong
financial and operating results through the first nine months of 2012 with $62
million of net income year to date or $0.18 per share. These results reflect the
ongoing growth of the Umusadege field's production capacity and the Company's
continuing efforts to work towards maximizing production and efficiency. On the
operational front, drilling of the UMU-10 well proceeded during the quarter and
was completed shortly following the end of Q3. I am pleased with the preliminary
results of UMU-10 well, which have confirmed the significant undeveloped
reserves potential in the eastern extension of the field. The geology of the
Umusadege field continues to provide new and exciting opportunities for future
development and exploration. The third quarter also saw significant progress
being made on negotiations with an affiliate of Royal Dutch Shell to complete a
crude handling agreement. The signing of the crude handling agreement will
enable Mart and its co-venturers to proceed with plans to construct a new export
pipeline connecting the Umusadege field to Shell's affiliate's export pipeline
in Eriemu.
"During October 2012, Mart and its co-venturers continued to enjoy steady
production from the Umusadege field with 317,000 bbls of oil nominated and
delivered in early November 2012. Unfortunately, damage to the AGIP export
pipeline and flooding in the Niger Delta resulted in the pipeline operator
shutting down the pipeline on October 30, 2012. Mart has been advised by AGIP
that it has recently been able to inspect the pipeline and to commence repairs
on the damaged sections. Loading delays due to flooding have also been
experienced subsequent to Mart's latest lifting at the Brass River Export
Terminal, though it is Mart's understanding that this situation has now been
largely rectified. Pipeline losses have continued, amounting to approximately
13% of total crude deliveries to date through Q312. Mart and its co-venturers
are continuing to monitor this situation.
"We were very pleased to have paid an initial $0.10 per share dividend to
shareholders in early August and a second $0.05 per share quarterly dividend in
early October, 2012. Despite the recent challenges, Mart continues to enjoy a
strong balance sheet and cash position and is pleased to announce a quarterly
dividend of $0.05 per share payable in January 2013 in accordance with our
dividend policy."
For more information, please contact Wade Cherwayko / Dmitri Tsvetkov at Mart's
London, England office # +44 207 351 7937 or e-mail: Wade@martresources.com /
dmitri.tsvetkov@martresources.com. Mart's Condensed Consolidated Financial
Statements (unaudited) for the nine months ended September 30, 2012 and 2011 and
the accompanying Management's Discussion and Analysis are available on the
company's website at www.martresources.com and under the Company's profile on
SEDAR at www.sedar.com.
Email: 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 and will be resolved within the
timeframes indicated, 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, and the ability of the
Company to satisfy its current and future financial obligations to its banks and
other creditors. In addition, Mart cannot predict the extent of any pipeline
losses that may occur and be borne by Mart in the future, and the effect these
will have on net income and cash flow.
There is no assurance that future dividends will be declared or the timing or
amount of any future dividend. The payments of dividends or distributions in the
future are within the discretion of Mart's Board of Directors and are dependent
on numerous factors including the Company's cash flow, capital expenditure
budgets, earnings, financial condition, the satisfaction of the applicable
solvency test in the Company's governing statute (the Business Corporations Act
(Alberta)), and such other factors as the Board of Directors may consider
appropriate from time to time. Mart's ability to continue to pay dividends in
the future is also subject to many other factors including falling commodity
prices, repatriation restrictions, disruptions or reductions in production or
collection of receivables following sales of production. Dividend payments to
shareholders will be subject to applicable statutory deductions and tax
withholdings prescribed by applicable law.
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Investors are also welcome to contact one of the following
investor relations specialists for all corporate updates and
investor inquiries: INVESTOR RELATIONS
FronTier Consulting Ltd., Attn: Sam Grier or Timea Carlsen
Mart toll free # 1-888-875-7485
inquiries@martresources.com
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