Stream Announces Third Quarter 2013 Results
CALGARY, Oct. 29, 2013 /CNW/ - Stream Oil & Gas Ltd. (TSXV: SKO) (the "Company") is pleased to report its financial and operating results for the three months ended August 31, 2013.
Q3 2013 Summary of Results
|Three Months Ended||Nine Months Ended|
|Aug. 31,||Aug. 31,||Aug. 31,||Aug. 31,|
|(US$000s, except as noted)||2013||2012*||2013||2012*|
|Revenue, net of mineral tax royalty**||6,489||8,004||23,929||20,896|
|Net operating income||3,894||5,665||15,186||15,664|
|Funds from (used in) operations||6,115||5,567||17,158||8,773|
|Net income (loss)||1,713||1,522||1,899||3,429|
|Per share - basic & diluted||0.03||0.02||0.03||0.05|
|Additions to property, plant & equipment||7,586||7,528||16,882||26,624|
|Average production (boed):|
|Net production (Stream's share)||1,013||1,033||1,052||1,011|
|Gross average price ($/boed)||72.85||70.98||73.30||74.39|
|As at||Aug. 31, 2013||Nov. 30, 2012|
|Cash and cash equivalents||2,996||1,147|
|Weighted average shares outstanding - basic (#)||66,637,801||67,395,919|
* Restated to reflect deferred income tax expense
* Net of the 10% mineral tax royalty, which is to be added to the cost recovery pool as a neutralization under the Petroleum Sharing Agreement
In the third quarter of 2013, Stream continued upgrades to infrastructure and work process improvements for artificial lift systems operations in its oilfields. At the Delvina gas field, Stream completed the power generation tie-in and commenced minor workovers of the related wells in order to clear a tubing blockage caused by earlier gas production suspension. Notwithstanding these activities, production decreased in the quarter as a result of higher lift equipment failures along with delays in the natural gas off-take for power generation, which was outside of Stream's control. The mechanical failures of the lift equipment have now been resolved, while natural gas off-take issues are expected to be overcome soon. Stream was ready to spud the Delvina horizontal well during the third quarter; however, the delayed delivery of the drilling rig forced re-scheduling of the well to late December.
Production capacity continues to be approximately 2,730 gross boed (2,145 net boed to Stream); however, operations reliability is impacting the Company's ability to achieve this level of production. Stream is transitioning from a development to a production operations focus, which is forecast to improve results and return production to prior demonstrated capacity levels.
Third Quarter Highlights:
Average gross production declined to 1,598 boed compared to 1,714 boed
in the third quarter 2012 (net: 1,013 and 1,033, respectively).
Realized average crude price of $72.85 per barrel, a 3% increase over
$70.98 per barrel in the same period of 2012 due to higher average
Brent crude pricing.
Revenue decreased by 19% to $7.2 million compared to $8.9 million for
the corresponding period in 2012 as a result of lower sales volumes.
Funds from operating income increased to $6.1 million compared to $5.6
million in 2012.
- Net operating income decreased to $3.9 million from $5.7 million for the same period in 2012 due to reduced sales during the quarter, along with higher operating costs.
Subsequent to the Quarter:
- James Hodgson resigned as CFO, Director and Corporate Secretary of the Company effective October 1, 2013. Mr. Paul Plater, Vice President, Finance and Corporate Controller, has been appointed as interim Chief Financial Officer, and Ms. Susan Soprovich has been appointed as interim Corporate Secretary.
Having successfully demonstrated reserves and resources value while proving production capacity, Stream has now shifted its focus to exploit these defined reserves. As part of the transition from development to production, Management is reorganizing its operations and supporting functions to enable production operations excellence. Additionally, a dedicated team has been established to manage Delvina related projects, including off-take support (e.g. generation, re-injection, stabilization, etc.),drilling and exploration activities. These dedicated efforts will target immediate production growth in the oilfields and support gas field development.
- Cakran-Mollaj oilfield: while subsurface pumps have been installed for longer-stroke reciprocating rod pump systems, Stream is waiting for delivery of hydraulic jacks to complete installation. Subject to timely equipment arrival, Management expects to install six of the thirteen systems before the end of December 2013.
- Wells equipped with jet pump systems continue to operate at below acceptable online reliability due to the disjointed operation of integrated system components, disabling cohesive injection/production system joint operation. As part of its focused transition from development to production centric operations, Stream is securing the appropriate resources that are required to realize optimum operations of integrated jet pump systems. Management expects that sustained operations at high reliability will be established by the end of January 2014.
- Gorisht-Kocul oilfield: Sufficient capacity has been installed to support incremental volumes from ongoing interventions. Worn out progressive cavity and reciprocating rod pumps are scheduled for replacement by the end of December 2013. An additional fourteen re-completions are scheduled for the balance of 2014, which were delayed due to equipment deliveries.
- Ballsh-Hekal oilfield: Stream continues to operate the wells previously taken over from Albpetrol, with maintenance replacements of worn out progressive cavity pumps scheduled for this November.
- Recent changes in the Albanian Government as result of local federal elections, delayed Stream's full takeover of the Ballsh-Hekal field as transfer of assets was frozen in line with local governance requirements. Management's recent dialogue with the new administration of Albpetrol and the Government confirmed their desire to commence transferring the remaining assets subsequent to the next joint advisory committee meeting, which is scheduled for November. Confident in its timely takeover, Stream has tendered acquisition requirements to provide equipment for its 2014 development program, including several progressive cavity pump installations.
- Delvina field: the D12 well requires intervention work to release the tubing blockage, which is awaiting third-party service. Gas production start-up is scheduled for mid-November, once commissioning is completed. Site preparation for additional capacity installation up to 24 MW is complete, and the power producer has sourced the equipment necessary to convert additional Stream volumes. Installation is forecast for late in the first quarter of 2014.
- The gas re-injection compressor requires incremental cooling and power stabilization. Stream is working jointly with the thermal power generator and the local utility to realize stable power input, which will allow the re-injection of surplus gas quantities from the D12 well after stripping liquids. Start-up of the compressor is forecasted by the end of December 2013, subject to the timely receipt of incremental components.
- While required materials and casing are in Albania, the delay of the drilling rig has postponed spudding of the D34H1 horizontal well to late 2013.
- Delvina Block: the first exploration well is scheduled to spud post rig release from D34H1 drilling, forecast for late first quarter 2014.
Stream anticipates that its exit 2013 production guidance of approximately 2,150 net boed (1,650 bbls/d from the oilfields plus 700 mcf/d of gas and 35 bbls/d of condensate from Delvina) will not be reached as previously anticipated on November 30, 2013, due to the delays in (a) new equipment arrival in country due to international availability, (b) timing of gas production on-stream, and (c) the transfer of the Ballsh-Hekal field. Considering the demonstrated reservoir potential, Management is confident that the average expected production guidance will be attained in early 2014.
Stream has filed its Consolidated Financial Statements for the three month period ended August 31, 2013, and its related Management's Discussion and Analysis with Canadian securities regulatory authorities. Copies of these documents may be obtained via www.sedar.com or the Company's website, www.streamoilandgas.com.
Information in this news release respecting matters such as plans of development or exploration, reserves estimates, production estimates and targets, development costs, work programs and budgets constitute forward-looking information (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations. Such forward-looking information is based on certain assumptions, including the availability of funds for capital expenditures necessary to construct the infrastructure required for future development, a favorable political and economic operating environment, a consistent rate of well re-completions and costs, success rates, production performance and build-up periods for well re-completions that are consistent with or an improvement over historical levels.
The forward-looking statements contained herein are made as of the date of this release solely for the purpose of generally disclosing Stream's 2013 third quarter results and outlook for 2013. Investors are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. Such forward-looking information reflect management's current beliefs and are based on assumptions made by and information currently available to the Company, and involves known and unknown risks, uncertainties and other factors which may cause the actual costs and results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements. Such factors include, among others political and economic risks associated with foreign operations, general risks inherent in petroleum operations, risks associated with equipment procurement and equipment failure, availability of qualified personnel, risks associated with transportation, currency and exchange rate fluctuations and other general risks inherent in oil and gas operations.
Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause costs and timing of the Company's program or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances except as required under applicable securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses production and reserve volumes on a barrel of oil equivalent (Boe) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet of natural gas to one barrel of oil. Boe may be misleading particularly if used in isolation. A Boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based emerging oil and gas production, development and exploration company focused on the re-activation and re-development of three oilfields and a gas/condensate field in Albania. The Company's strategy is to use proven technology, incremental and enhanced oil recovery techniques to significantly increase production and reserves.
Neither 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 this release.
SOURCE Stream Oil & Gas Ltd.For further information:
Dr. Sotirios Kapotas President & Chief Executive Officer P: (403) 531-2358
Susan J. Soprovich, Interim Corporate Secretary P: (403) 874-2903