Arawak announces Q3 2007 results and operations review



    TSX TRADING SYMBOL: ABG

    ANGUILLA, British West Indies, Nov. 15 /CNW/ -

    
    HIGHLIGHTS:
    -----------
    (In US dollars unless otherwise stated)
    -   Arawak has enjoyed a successful third quarter, with significant
        exploration success complementing strong production growth,
        especially in Kazakhstan.
    -   Average production reached 11,125 boepd during the third quarter of
        2007, an increase of 27% over the corresponding quarter of 2006 and
        20% over the second quarter of 2007. Current production is close to
        12,000 boepd.
    -   Sales of $56.6 million in the third quarter (2006: $39.6 million)
        generated record quarterly net income of $7.8 million (2006:
        $5.8 million) and funds from operations of $19.3 million (2006:
        $14.0 million).
    -   Arawak's aggressive drilling campaign has continued in Kazakhstan,
        with 18 new wells drilled at Besbolek (including 11 exploration
        wells) and 15 new wells at Akzhar of which eight have been completed
        as commercial producers.
    -   Total capital expenditure excluding acquisitions in the third quarter
        was $15.7 million (2006: $13.9 million).
    -   The Company has commenced production from its Alimbai block in
        Kazakhstan, acquired in December 2005. The first workover well on
        this block tested at a stabilized flow rate of 125 bopd. Two further
        wells will be drilled before year end.
    -   The signature of a long term transportation contract with the
        Munaitas pipeline company in Kazakhstan not only results in immediate
        cost savings of $1 per barrel for production from the Company's
        Akzhar field, but also allows the Company to choose a shorter and
        less expensive pipeline route from the Akzhar field. Once
        commissioned, this pipeline will improve netbacks for Akzhar crude by
        further a $3 per barrel before tax.
    -   In Russia, a third well has been drilled in the newly discovered
        north pool of the North Irael block, increasing gross production for
        Recher-Komi to over 2,000 bopd.


    FINANCIAL HIGHLIGHTS
    --------------------
    (In thousands, except per share amounts)

    For the three months ended September 30                   2007      2006
    -------------------------------------------------------------------------
    Crude oil sales                                        $56,619   $39,638
    Net income                                              $7,761    $5,841
      Per share - basic                                     $0.045    $0.034
      Per share - diluted                                   $0.044    $0.034
    Funds from operations(*)                               $19,293   $13,804
      Per share - basic                                     $0.111    $0.080
      Per share - diluted                                   $0.110    $0.079

    Capital expenditure                                    $15,692   $13,878
    Shareholders' equity                                  $143,700  $129,729
    Shares outstanding - basic                             173,592   171,140
    Shares outstanding - diluted                           174,699   171,980
    Weighted average shares - basic                        173,592   173,285
    Weighted average shares - diluted                      174,711   174,125
    -------------------------------------------------------------------------
    (*) Funds from operations is a non-GAAP measure that represents cash
    generated from operating activities before changes in non-cash working
    capital.


    OPERATIONAL HIGHLIGHTS
    ----------------------

    For the three months ended September 30                   2007      2006
    -------------------------------------------------------------------------
    Production - boe                                     1,023,523   808,747
    Average daily production - boe                          11,125     8,791
    Sales - boe                                          1,018,824   804,301

    Revenue and expenses per boe sold
    ---------------------------------
    Crude oil and gas sales                                 $55.57    $49.28
    Interest and other income                                $0.73     $2.16
    Royalties and taxes                                    ($10.51)  ($11.80)
    Production costs                                        ($5.53)   ($3.60)
    Transportation and selling expenses                     ($5.31)   ($5.37)
    Net operating income                                    $34.95    $30.67
    -------------------------------------------------------------------------
    

    FINANCIAL AND OPERATIONAL REVIEW
    --------------------------------

    Arawak Energy Corporation ("Arawak" or the "Company") enjoyed an increase
in production of 27% to 11,125 barrels of oil equivalent per day ("boepd") on
average in the third quarter of 2007 compared with the corresponding quarter
of 2006, and up 20% over the second quarter of 2007. This figure includes
production of 215 boepd from Azerbaijan net to Arawak.
    Sales volumes increased 43% from 712,296 barrels of oil equivalent
("boe") in the second quarter of 2007 to 1,018,824 boe in the third quarter.
    Oil and gas sales revenues reached a record level of $56.6 million in the
third quarter of 2007 (compared with $39.6 million in the corresponding
quarter of 2006 and $30.7 million in the second quarter of 2007). Net income
was $7.8 million (compared with $5.8 million in the third quarter of 2006 and
$0.3 million in the second quarter of 2007) after accruing for higher overall
taxation in Kazakhstan as the producing fields move to the excess profit tax
environment, following increases in production and profit. Income tax for the
quarter was $12.0 million compared to $2.3 million for the previous quarter,
with $10.3 million accounted for in Kazakhstan. Funds from operations were
$19.3 million in the third quarter of 2007 and capital expenditure was
$15.7 million excluding acquisitions.
    Arawak continues to recognise its share of the income and expenditure of
the Azerbaijani operations in Arawak's own consolidated income and expenditure
statement. In the third quarter of 2007, the Azerbaijani operations
contributed a loss of $0.2 million to the consolidated result of Arawak for
the period.
    The Company's aggressive drilling program in Kazakhstan continued to meet
with success with new discoveries in both the Besbolek and the Akzhar blocks.
    At Besbolek, well 60, tested at 125 bopd, continuing the trend of
discoveries in the new pool at the south of the block. Well 62 also discovered
oil accumulations in the west wing which have yet to be fully quantified. The
final well of the 18 well Besbolek appraisal and exploration program, well 56,
has identified 12 metres of net pay in the target Triassic zone, extending the
fault block at the east of the contract territory. In all, 11 of the 18 wells
have been successful.
    At Akzhar, well 81 was drilled in a previously untested area between the
two wings of the original 3.8 sq km blocks, and this has now tested oil at
125 bopd. A follow up well, well 82, has also encountered pay on logs but has
yet to be tested. A further exploration well, well 80, drilled in an untested
fault wedge has tested 50 bopd of heavy oil. So far, 15 wells have been
drilled at Akzhar in 2007, of which 8 have been completed as commercial
producers. A further well is being completed. Four more wells will be drilled
before the end of the year.
    At Alimbai, the first of two workovers of existing wells has been
undertaken, and test data obtained. Flow rates from the old well of 125 bopd
have been obtained on pump from a depth of approximately 400 metres, and the
Company now plans to re-perforate this well. A second well is in the process
of being worked over and is showing signs of oil. The results of the workover
prove up reserves in a block where currently no proved or probable reserves
have been assigned. The company remains on track to drill two new wells in
Alimbai before the year end.
    Also in Kazakhstan, the Company has signed a contract with Munaitas, the
Chinese-Kazakhstani joint venture company which owns the line from Kenkiyak to
Atyrau. Consequently, the Company will enjoy immediate transportation cost
savings of almost $1 per bbl for export of Akzhar crude. Furthermore,
following the signing of this contract, the route for the Akzhar pipeline has
been changed to the shorter route to Kenkiyak, resulting in a lower capital
cost of approximately $20 million compared to the original proposed route cost
of approximately $50 million. The pipeline, which is planned for 2008, will
result in further cost savings of over $3 per bbl as well as improvements in
operational efficiency.
    In Russia, development drilling has continued as planned. At the North
Irael block licensed to Recher-Komi, in which the Company has a 50% interest,
a third well has been completed in the new pool discovered in 2006. With this
well now flowing at a rate of over 500 bopd production from Recher-Komi is in
excess of 2,000 bopd. 3D seismic will be shot over this block in December 2007
and January 2008 with interpretation scheduled to be available mid 2008.
    In Azerbaijan, the operator has faced further operational difficulties
with gas production, as a consequence of which gross production dropped to
19,770 boe from 26,626 boe in the second quarter 2007. 2D seismic acquisition
over the central and north blocks have now been completed, and this seismic
will be interpreted together with 3D on the coast block which has now been
processed with results expected mid 2008.
    A copy of Arawak's consolidated financial statements and management's
discussion and analysis for the three months ended September 30, 2007 as well
as additional information on Arawak is available on the Company's web-site at
www.arawakenergy.com and on Sedar at www.sedar.com

    The TSX does not accept responsibility for the adequacy or accuracy of
    this release.

    Arawak's common shares are listed for trading on the TSX under the symbol
"ABG". The Company is engaged in the exploration, development and production
of oil and natural gas in Kazakhstan, Russia and Azerbaijan. The Company's
three producing fields and two exploration blocks in Kazakhstan are held
through its 100% wholly-owned subsidiary Altius Energy Corporation ("Altius").
Altius' main producing field is Akzhar, extended in 2006 from 3.8 to 71.5 sq
km, with smaller fields at Besbolek and Karataikyz. The two exploration
blocks, Alimbai and East Zharkamys III, are also situated in western
Kazakhstan. Arawak's assets in Russia are held through ZAO PechoraNefteGas
("PNG") and LLC NK Recher-Komi ("Recher-Komi") in which Arawak has a 50%
interest with the remaining interest being held by Lundin Petroleum AB. Also
in Russia, Arawak holds a 100% interest in the Kymbozhyuskaya exploration
block. In the Azerbaijan Republic, the Company's asset is its interest in the
South West Gobustan Exploration Development and Production Sharing Agreement
(the "EDPSA"). Commonwealth Gobustan Limited ("CGL"), in which Arawak has a
37.17% interest, holds an 80% interest in the EDPSA with the remaining 20%
owned by SOCAR Oil Affiliate.

    This press release includes "forward looking statements", which are based
on the opinions and estimates of management at the date the statements are
made, and are subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ materially from
those projected in the forward looking statements. These risks and
uncertainties include, but are not limited to, risks associated with the oil
and gas industry (including operational risks in development, exploration and
production; delays or changes in plans with respect to exploration or
development projects or capital expenditures; the uncertainty of reserve
estimates; the uncertainty of estimates and projections in relation to
production, costs and expenses and health, safety and environmental risks),
the risk of commodity price and foreign exchange rate fluctuations, the
uncertainty associated with commercial negotiations and negotiating with
foreign governments and risks associated with international activity. Although
Arawak believes that its expectations represented by these forward-looking
statements are reasonable, there can be no assurance that such expectations
will prove to be correct. Additionally, the estimates of reserves and future
net revenue for individual properties may not reflect the same confidence
level as estimates of reserves and future net revenue for all properties, due
to the effects of aggregation. Due to the risks, uncertainties and assumptions
inherent in forward-looking statements, prospective investors in the Company's
securities should not place undue reliance on these forward-looking
statements. For a detailed description of the risks and uncertainties facing
Arawak, readers should refer to Arawak's Annual Information Form as filed at
www.sedar.com.





For further information:

For further information: Alastair D. McBain, President & Chief Executive
Officer, Phone: +(44) 20 7973 4285, Fax: +(44) 20 7824 8466; Charles R. A.
Carter, Chief Financial Officer, Phone: +(44) 20 7973 4285, Fax: +(44) 20 7824
8466; E-mail: info@arawakenergy.com; www.arawakenergy.com

Organization Profile

Arawak Energy Limited

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890