MENA Hydrocarbons Announces Financial and Operatiing Results for the First Quarter Ended March 31, 2012
May 30 2012 - 8:07AM
Marketwired Canada
MENA Hydrocarbons Inc. ("MENA" or the "Company") (TSX VENTURE:MNH) announced
financial and operating results for the three month period ended March 31, 2012.
All amounts are in United States dollars unless otherwise stated except for
common share amounts.
The Company has filed its unaudited consolidated financial statements as at and
for the three months ended March 31, 2012 (the "Q1 Financial Statements") and
related management's discussion and analysis ("MD&A") with Canadian securities
regulatory authorities. Copies of these documents may be obtained online at
www.sedar.com or the Company's website, www.menahydrocarbons.com.
First quarter financial results
Certain selected financial information is set out below and should be read in
conjunction with the Q1 Financial Statements and MD&A.
(000's except share amounts)
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Quarter-ended Quarter-ended
March 31, 2012 March 31, 2011
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Operations
Total revenue $ nil $ nil
Loss $ 2,226 $ 1,400
Comprehensive loss $ 2,245 $ 1,502
Cash used in operations $ 755 $ 933
Cash used in investing activities $ 1,004 $ 2,208
Net loss per share - basic and diluted $ 0.01 $ 0.01
Weighted average number of common shares
outstanding 230,947,021 154,800,018
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(000's except share amounts)
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Mar 31, 2012 Dec 31, 2011
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Financial position
Cash and cash equivalents $ 1,817 $ 1,431
Working capital / (deficiency) $ (2,421) $ 371
Total assets $ 45,393 $ 45,459
Total liabilities $ 4,747 $ 3,185
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Shareholders' equity $ 40,646 $ 42,274
Number of common shares outstanding 231,441,526 180,000,021
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Results from operations for the three months-ended March 31, 2012 were a loss of
$2,226,000 (Q1 2011: $1,400,000). This loss was primarily on account of:
-- General and administrative costs of $0.8 million (Q1 2011: $0.9
million);
-- Pre-exploration and evaluation expenditures of $0.7 million (Q1 2011:
$0.3 million);
-- Share based payment expenses of $0.2 million (Q1 2011: $0.1 million);
and
-- $0.5 million of net finance expenses (Q1 2011: $0.1 million)
Significant components of general and administrative costs for the year include
$0.4 million of salaries and consultant costs (Q1 2011: $0.2 million).
Additionally, legal and audit costs of $0.4 million (Q1 2011: $0.5 million) were
incurred on account of the ongoing transactions undertaken by the Company. Other
components of G&A included rent and office costs, travel, and TSX listing and
transfer agent fees.
Costs incurred in pre-exploration and evaluation expenditure include other
administrative costs of the Egyptian and Syrian interests, as well as costs of
evaluating new opportunities. The Company has been very active in evaluating new
venture prospects and as such has incurred costs beyond its ordinary course of
business.
The $0.2 million (Q1 2011: $0.1 million) charge for share-based payments was on
account of stock options and restricted share units issued by the Company to
employees and directors.
Significant components of net finance expenses of $0.5 million (Q1 2011: $0.1
million) include $1.6 million of realized net losses on the disposition of the
Company's investments in marketable securities (Q1 2011: $0) offset by $1.1
million of unrealized net gains on the investments in marketable securities (Q1
2011: $0). For the three months ended March 31, 2011 net finance expense is
composed of interest on promissory notes.
Financial outlook
The Company had a working capital deficiency of approximately $2.4 million as at
March 31, 2012 and approximately $5.2 million as at the date of this news
release due to the post-quarter end Lagia drill program. The Company's limited
cash resources and liquidity creates a material uncertainty about the Company's
ability to operate as a going concern in the near term. The Company's ability to
continue as a going concern is dependent upon the ongoing support of significant
shareholders and directors that have advanced funds to the Company to pay
expenses, obtaining necessary funds to meet its operating and capital
obligations through one or more financings, farm-out arrangements and asset
sales, and controlling outlays of cash until such time as funds are available.
While the Company is using its best efforts to complete one or more of these
transactions on acceptable terms, no assurances can be given that such efforts
will be successful or completed in the required time period to sustain current
and planned operations. In that regard, the board of directors has resolved not
to proceed with the previously announced private placement financing of units at
a price of $1,000 per unit for aggregate gross proceeds of up to $8.0 million.
The Company notes that it is in advanced stages of discussions with several
parties interested in providing replacement financing, which, if acceptable to
the Company, would provide sufficient liquidity to finance operations in the
short term. In the meantime, the Company is taking proactive steps to reduce its
cash outlay, including releasing the Lagia drilling rig as described below.
Please refer to the Q1 Financial Statements and MD&A available online at
www.sedar.com or the Company's website, www.menahydrocarbons.com for further
information.
Lagia operations update
Operations on the Lagia oil field development commenced March 16, 2012. Using
Petroservices Drilling Overseas' (PSDO) 750 HP rig Shams 1, the five well
programme consisting of working over two existing wells and the drilling of
three development wells is completed.
Wells Lagia 6 and 7, drilled in 2000, have been successfully re-perforated and
re-completed. They are currently flowing at flow rates averaging 10 bopd with
the help of a downhole progressive cavity pump. Rates are expected to increase
with steam injection into the nearby wells. The newly drilled wells Lagia 8, 9
and 10 are located near Lagia 6 and 7 and were completed with a thermal casing
and a sucker rod pump (SRP) in order to facilitate steam injection as part of a
cyclic steam soak pilot project. Well Lagia 9 has additionally been
hydraulically fracked in order to evaluate the potential production improvement
for wells under cold flow. The wells are currently cleaning up and the
artificial lift programme is being optimised. About 500 bbls oil have been
produced to date and stored in heated tanks at the field. Export is expected to
begin once all wells are tied into the production system and are flowing
continuously, with the help of steam injection. The produced oil is expected to
be transported by road tanker to the production facilities of the General
Petroleum Company (GPC) at Ras Gharib. The rig which is under a one year
contract has been farmed out for a 3-4 month drilling programme. The well
results from logs and cores will be evaluated in connection with the flow
performance in order to decide the further drilling programme, for the rig's
return in the 3rd or 4th quarter of 2012. The new wells drilled confirmed the
presence of heavy oil in a low permeability reservoir which are expected to be
best flowed under the steam injection scenario.
Lagia Oil Field
MENA is the sole participant in the joint venture company with EGPC, PetroSinai
which operates the Lagia Development Lease covering a 32 square kilometre block
of land located on the Sinai Peninsula, directly adjacent to the Gulf of Suez.
Within the lease, four wells have been drilled between the years 1949 to 2000
that have identified the Lagia oil field. Three producing oil fields, Sudr,
Matarma and Asl, are located as close as 26 km to the north of the Lagia oil
field.
About MENA Hydrocarbons
MENA Hydrocarbons is an international oil and gas company focused on growing an
asset base of production, development and high impact exploration in the Middle
East and North Africa region. In Egypt, MENA owns and operates the development
lease for the Lagia oil field, a 32 square kilometre onshore block located on
the Sinai Peninsula, directly adjacent to the Gulf of Suez. In Syria, MENA owns
a 30% participating interest in Block 9 in Syria, a 10,032 square kilometre
onshore block prospective for crude oil, natural gas and condensate. In the
United States, MENA owns 6,242 gross acres (with an 81.2% average working
interest) in Northwestern Montana with light/medium oil reserves, and 36,201
gross acres (with a 99.5% average working interest) in East-Central Utah
prospective for both commercial gas sand and coal bed methane. MENA's shares
currently trade on the TSX Venture Exchange under the symbol "MNH".
Forward looking information
This news release contains forward-looking information relating to the Company's
ability to operate as a going concern in the near term, maintaining the ongoing
support of significant shareholders and directors that have advanced funds to
the Company to pay expenses, obtaining necessary funds to meet its operating and
capital obligations through one or more financings, farm-out arrangements and
asset sales, and controlling outlays of cash until such time as funds are
available, and the completion of such transactions, ongoing and future plans and
activities regarding the development and appraisal of the Lagia oil field
development, including production therefrom, expected flow rates under the steam
injection scenario and other statements that are not historical facts. Such
forward-looking information is subject to important risks, uncertainties and
assumptions. The results or events predicated in this forward-looking
information may differ materially from actual results or events. As a result,
you are cautioned not to place undue reliance on these forward-looking
information.
Forward-looking information is based on certain factors and assumptions
regarding, among other things, the Company maintaining its stock exchange
listing; the availability of capital on acceptable terms or at all and the
timing such capital is needed; the impact of increasing competition; the general
stability of the economic and political environments in which the Company
operates or owns interests; the timely receipt of any required regulatory
approvals; the ability of the Company to obtain qualified staff, equipment and
services in a timely and cost efficient manner; drilling results; the ability of
the operator of the projects which the Company has an interest in to operate the
field in a safe, efficient and effective manner; the ability of the Company to
obtain financing on acceptable terms; field production rates and decline rates;
the ability to replace and expand oil and natural gas reserves through
acquisition, development of exploration; the timing and costs of pipeline,
storage and facility construction and expansion and the ability of the Company
to secure adequate product transportation; future oil and natural gas prices;
currency, exchange and interest rates; the regulatory framework regarding
royalties, taxes and environmental matters in the jurisdictions in which the
Company operates; and the ability of the Company to successfully market its oil
and natural gas products, and other similar matters. While the Company considers
these assumptions to be reasonable based on information currently available to
it, they may prove to be incorrect.
Forward looking-information is subject to certain factors, including risks and
uncertainties that could cause actual results to differ materially from what is
currently expected. These factors include risks associated with the Company's
ability to successfully maintain its stock exchange listing, the availability of
capital on acceptable terms or at all and the timing such capital is needed,
instability of the economic and political environments in which the Company
operates or owns interests, oil and gas exploration, development, exploitation,
production, marketing and transportation, loss of markets, volatility of
commodity prices, currency fluctuations, imprecision of reserve estimates,
environmental risks, competition from other producers, inability to retain
drilling rigs and other services, incorrect assessment of the value of
acquisitions, the inability to settle the definitive terms of the farmout
arrangements, failure to realize the anticipated benefits of acquisitions,
delays resulting from or inability to obtain required regulatory approvals and
ability to access sufficient capital from internal and external sources,
reliance on key personnel, regulatory risks and delays, including risks relating
to the acquisition of necessary licenses and permits, environmental risks and
insurance risks.
You should not place undue importance on forward-looking information and should
not rely upon this information as of any other date. While the Company may elect
to, the Company is under no obligation and does not undertake to update this
information at any particular time, except as required by law.
Advisories
The Company cautions readers that the production results to date are not
necessarily indicative of long-term performance or of ultimate recovery.