SEA DRAGON ENERGY GENERATES RECORD FUNDS FLOW FROM OPERATIONS

CALGARY, May 31, 2011 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon" or the "Company") (TSXV: SDX) is pleased to announce its 2011 first quarter financial and operating results (the "Quarter").   All dollar values are expressed in United States dollars unless otherwise stated.

Highlights:

  • Achieved an average production rate of 1,178 bopd as compared to 995 bopd in the fourth Quarter of 2010 and 786 bopd in the first quarter of 2010;
  • Generated funds flow from operations of $2.0 million, as compared to $0.1 million in the fourth quarter of 2010 and $nil in the first quarter of 2010;
  • Earnings for the first quarter were $0.5 million compared to a loss of $0.7 million in the fourth quarter of 2010 and a loss of $0.8 in the first quarter of 2010;
  • Increased operating netback to $4.6 million compared to $2.6 million in the fourth quarter of 2010, and $1.4 million in the first quarter of 2010;
  • Increased operating netback to $43.71 per barrel from $28.26 per barrel in the fourth quarter of 2010, and $19.28 per barrel in the first quarter of 2010;
  • Operating costs during the Quarter averaged $9.51 per barrel compared to $13.85 per barrel in the fourth quarter of 2010 and $5.02 per barrel in the first quarter of 2010;
  • Drilled 4 wells (1.6 net) and tested 2,847 boe/d (85 percent oil) from Geyad #3 well subsequent to Quarter end;
  • Exited the Quarter with cash and cash equivalents of $11.5 million and working capital of $14.7 million and no debt;
  • Closed the Quarter with sufficient funds to execute the 2011 capital program;
  • Converted to International Financial Reporting Standards ("IFRS") effective January 1, 2011.
  • Subsequent to Quarter end collected $2.2 million in outstanding accounts receivable.

FINANCIAL & OPERATING HIGHLIGHTS

The following table provides a summary of Sea Dragon's financial and operating results for the three months ended March 31, 2011 and 2010 and the three months ended December 31, 2010. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") are now available on the Company's website at www.seadragonenergy.com and on SEDAR at www.sedar.com.

        Three months ended
    Prior Quarter (1) March 31
Financial $000's       2011   2010
    (restated)     (restated)
Cash, end of period       14,751        11,534          5,202
Working capital/(deficiency)       15,670        14,670          4,388
Funds from operations            127          2,010                29
   per share                 -            0.01                 -  
Net income/(loss)           (711)             487            (822)
   per share                 -                 -                   -  
Capital expenditures       5,545          2,914         1,404
Total assets       86,282        87,234        35,602
Shareholders' equity       81,007        81,669        32,026
Common shares outstanding (000's)   376,459      376,459      208,430
Warrants outstanding (000's)       30,000        30,000        32,185
             
Operational            
Oil sales (bbl/d)         995          1,178             786
Brent oil price ($/bbl)   87.34        105.87   77.37
Realized oil price ($/bbl)   82.34        100.12   68.68
Royalties ($/bbl)   40.23          46.90   44.38
Operating costs ($/bbl)   13.85            9.51   5.02
Netback ($/bbl)   28.26          43.71   19.28
             
(1)  Denotes the three months ended December 31, 2010          

IFRS Advisory

Sea Dragon's financial data disclosed above have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board that was adopted by the Corporation on January 1, 2011, with an effective date of January 1, 2010. Previously, Sea Dragon prepared its annual and interim financial statements in accordance with Canadian Generally Accepted Accounting Principles then applicable to publically accountable enterprises. Comparative information described above has been restated to comply with the requirements of IFRS. The adoption of IFRS does not impact the underlying economics of Sea Dragon's operations. Further details are described in the "Accounting Policy Changes" section of the Management's Discussion & Analysis portion of the 2011 First Quarter Report.

Chairman and CEO's Message:

Fellow Shareholders,

The first quarter of 2011 was predominately focused on continued development drilling in the NW Gemsa and Kom Ombo concessions. As well, a set of geotechnical studies commenced in Kom Ombo aimed at integrating the results of all wells drilled to date in our geological and geophysical models in order that we may better define the location of future exploratory and development wells.

Our work programs for 2011 continue as planned with the impending commencement of our water flooding operations and solution gas conservation in NW Gemsa and the resumption of drilling operations in Kom Ombo. The recent success in drilling the Geyad-3C well will contribute to increased production from the NW Gemsa concession. In Kom Ombo, detailed geotechnical work and seismic reprocessing is underway with plans to spud the first exploration well in the fall along with several development wells and with the intent of transforming the large oil in place resources into production and cash flow.  As previously disclosed, unrisked undiscovered resources within the Kom Ombo block were determined probabilistically by Ryder Scott Company, Petroleum Consultants as at December 31, 2010. Using the available well data, seismic data and information obtained from the Al Baraka field, Ryder Scott determined Oil in place volumes of 375 (P50) mmbbls and 640 (P10) mmbls for the five prospects and three leads identified on the block.

Throughout the Quarter, the Company spent a considerable amount of time and effort reviewing and evaluating several potential acquisitions that are accretive to the shareholders both within and outside Egypt.  As you are undoubtedly aware, international opportunities are larger, more complex but with considerable potential, however they do take longer to capture.  The Company is excited about the numerous opportunities it has reviewed and hopes to capture one or more of these opportunities in the near future.

The Company has established a strong and stable production platform and an excellent technical and management team and is fully committed to a growth strategy with profitable returns to its shareholders.

Signed "Said Arrata"

Said Arrata

Chairman and CEO

Operations:

North West Gemsa:

Al Amir SE #8 Well:  The well was spud on May 20, 2011 and is now drilling below 5,100 feet. The Al Amir SE #8 well is located 2.9 km south of Al Amir SE #7 well, and as with the Al Amir SE #7 well, is targeting the western edge of the field to be completed as a peripheral water injector.

Geyad #3C Well:  The Geyad-3C well was spud on April 22nd, 2011, drilled to a total depth of 5,635 feet and completed as an oil producer in the Shagar member of the Kareem Formation.  The well is located some 1.4 km to the southeast of the Geyad-1X ST well and 2.9 km southeast of the Geyad-2 ST well within the Geyad Development Lease. The oil bearing Shagar sands were encountered 122 feet higher than prognosis with 14 feet of net oil pay.

The well is currently undergoing testing operations, flowing oil to surface at a rate of 2,430 bopd and 2.53mmscf/d on a 32/64 choke size. The well is already connected to the Geyad production system and upon completion of testing operations, will immediately be placed on continuous production. The Belayim sands were also encountered in the Geyad-3C well with an indicated 5 feet of oil pay.

The Geyad-3C has now confirmed the south easterly extension of the Geyad field. It is the first of two wells to be drilled in 2011 in the Geyad development lease. The next well will be Geyad-5C to be located 1.1 km west-south-west of Well Geyad-1X ST and 1.4 km south of Geyad-2 ST, in the western edge of the field near the oil water contact and used as a water injector.

Al Amir SE #7 Well: The Al Amir SE #7 well was successfully drilled to its total depth of 15,600 feet. The primary objectives of the well were to delineate the western limits of the Kareem Formation in the Al Amir SE field and determine the areal extent of the Lower Rudeis gas/condensate reservoir previously tested in the adjacent Al Amir SE #6 well and also encountered in the Al Ola X-1 well. Both objectives were met, the Kareem formation was found wet and significant gas shows were encountered while drilling through the Lower Rudeis Formation. Log analysis indicate six feet of pay in the Lower Rudeis Formation, unfortunately the pay zone could not be tested due to mechanical problems. In addition potential pay was also logged in the south Gharib and Belayim formations potentially extending the Al Amir Heavy oil accumulation to the west. The well was plugged back to 11,180 feet and was completed as a water injector in both the Shagar and Rahmi members of the Kareem Formation. The Shagar reservoir was completed with 33 feet of perforations while the Rahmi reservoir was completed with 37 feet of perforations.

Water injection is expected to commence in early August. This marks the beginning of the water flood project which will result in significant increase in recoverable reserves and production levels from the field.

Facilities: A new central processing facility was designed and is currently under construction. As well, a new 8" gas pipeline for transporting associated gas to a nearby gas plant is being installed and should become operational by year-end. This will allow the company to conserve and sell the gas as well as to strip the hydrocarbon liquids (condensates and LPG's) from the gas stream.

Kom Ombo:

Seismic reprocessing and geological mapping:  Geological, geophysical and engineering work and studies are continuing. The work includes a remapping of the Al Baraka field and exploratory prospects. This work will be complemented by the results of other geotechnical studies now underway to firm up locations for the two exploratory wells and AB-17, AB-18 and AB-19 development wells planned for the fourth quarter, 2011.  The Company is high grading both the development and more importantly the exploration prospects within the Concession with the intent of exploiting the large oil in place volumes.  Additional production from the Concession could have a material impact on the Company's cashflow.  In the current price environment and with the excellent fiscal terms in Kom Ombo, the Concession generated netbacks of greater than $50 per barrel in the Quarter.

First Quarter drilling:  During the Quarter, the Company drilled three wells in Kom Ombo, two development wells and one exploration well.  Both development wells were placed on production subsequent to Quarter end with the exploration well plugged and abandoned during the Quarter.  The Memphis-1 exploratory well was spud on December 27, 2010 and drilled to its total depth of 5,200 feet in the basement. Excellent reservoir quality rocks were encountered in the Abu Ballas and Six Hills Formations; however, no commercial hydrocarbons were observed in the well.

Annual General Meeting:

Sea Dragon's Annual General Meeting will be held at the Calgary Petroleum Club, McMurray Room, 319 - 5th Avenue SW, Calgary, Alberta on the 28th day of June, 2011 at 3:30 p.m. (Calgary time).

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. 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. In particular, statements concerning the 2011 drilling and capital expenditure programs of the NW Gemsa and Kom Ombo Concessions and the results referenced or implied herein should be viewed as forward-looking statements.

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".  All reserves information contained herein as well as the net present value of such reserves should be considered as forward looking statements. 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.  Such risks and other factors include, among others, costs and timing of exploration and production development, availability of capital to fund exploration and development and political, social and other risks inherent in carrying on business in Egypt.  There can be no assurance that such 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.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Corporation 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. Although Sea Dragon has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Investors are cautioned that such forward-looking statements involve risks and uncertainties.  Actual results may differ materially from those currently anticipated.  See Sea Dragon's Annual Information Form for the year ended December 31, 2010 for a description of the risks and uncertainties associated with the Company's business, including its exploration activities. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

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. 

 

SOURCE Sea Dragon Energy Inc.

For further information:

Said Arrata
Chairman, CEO and Director
(403) 457-5035      
          Tony Anton
President, COO and Director
(403) 457-5035
             
Scott Koyich
President, Brisco Capital Partners
(403) 262-9888
skoyich@briscocapital.com    
          Graeme Dick
Brisco Capital Partners
(403) 561-8989
graeme@briscocapital.com

 

Profil de l'entreprise

Sea Dragon Energy Inc.

Renseignements sur cet organisme


FORFAITS PERSONNALISÉS

Jetez un coup d’œil sur nos forfaits personnalisés ou créez le vôtre selon vos besoins de communication particuliers.

Commencez dès aujourd'hui .

ADHÉSION À CNW

Remplissez un formulaire d'adhésion à CNW ou communiquez avec nous au 1-877-269-7890.

RENSEIGNEZ-VOUS SUR LES SERVICES DE CNW

Demandez plus d'informations sur les produits et services de CNW ou communiquez avec nous au 1‑877-269-7890.