LONDON, March 2, 2015 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon" or the "Company") (TSX VENTURE: SDX), an oil & gas exploration and production company with assets in Egypt, is pleased to provide the following business update and outlook for 2015.
The Company completed the farm out of the South Disouq block in the Nile Delta. Under the Deed of Assignment, issued on 12 January 2015, Sea Dragon received the $1.9MM proceeds of the signature bonus recovery. In addition, the farminee replaced $6MM in work program guarantees originally posted by Sea Dragon. As a result, the Company debt will decrease by $6MM concurrently.
Sea Dragon will also be carried on the cost of the 1st Phase Commitment well when it is drilled after seismic acquisition and interpretation is completed. Post farmout completion, Sea Dragon Energy, remains the operator and retains a 55% working interest in the concession.
As previously communicated, and in line with the current oil market environment, Sea Dragon has been actively engaged in reducing its overall cost base and has achieved a number of key objectives, including:
- Improving operating cash flow generation
- Reducing General and Administrative by 30% year on year.
- Relinquishing the high fixed cost and loss making Shukheir Marine asset. An agreement was signed with EGPC on 26 February 2015 and is effective from 31 January 2015
- Deferring selected exploration expenditures
- Reducing debt from $10mm to $2.8mm following the completion of the South Disouq farm out
- Identifying business opportunities to capitalize on the improved business climate in Egypt.
Egypt continues to provide a positive business environment for Sea Dragon, operationally and financially, with no outstanding receivables. Looking ahead, the Company expects production for 2015 to average 10,000 boepd from North West Gemsa, of which 1,000 boepd will be net to Sea Dragon.
The activity for the streamlined 2015 work program represents an annual budget of $2mm financed internally, with the seismic campaign currently being evaluated:
- North West Gemsa
- Three development locations have been identified with incremental reserves in the central and updip portions of the field.
- 1 water injector well recompletion to sustain reservoir pressure.
- South Disouq
- 400km² of 3D seismic data to be acquired and interpreted in 2015, leading to the drilling of a well
- Tender process completed, with bids currently being evaluated.
- South Ramadan
- Existing 3D data is currently being reprocessed to better image the localized fault patterns.
- Area prospectivity is on track to be updated by year end with a subsequent well drilled in Q1 2016
Commenting, Paul Welch, CEO of Sea Dragon, said:
"The past few months has seen a significant review of Sea Dragon's activities, with continued focus on improving the efficiency of the business in the current oil price environment. Given the challenges the E&P sector is facing, relinquishing Shukheir Marine, which was a high operating cost block, was a positive strategic decision in reducing our cost base and improving further our operating cash flow generation. We are now well placed to drive the 2015 work program, particularly following the completion of the South Disouq farm out. Through the reduction of both debt and operating costs, against the backdrop of improved business environment in Egypt we are well placed to unlock the potential across the portfolio. I look forward to providing an update following publication of the 2014 Full Year Results by the end of March 2015."
About Sea Dragon Energy Inc.
Sea Dragon is an international exploration and development oil company with a focus on North Africa and the Middle East. Activities are currently concentrated in Egypt, with interest in 3 concessions with short and long term potential. For further information please see the website of the Company at www.seadragonenergy.com or the Company's filed documents at www.sedar.com.
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 should be viewed as forward-looking statements. In particular, statements concerning the 2014 drilling and capital expenditure programs of the NW Gemsa, Shukheir Marine, South Disouq and South Ramadan Concessions and the results referenced or implied herein 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. The forward-looking statements contained in this document are based on certain assumptions and although management considers these assumptions to be reasonable based on information currently available to it, undue reliance should not be placed on the forward-looking statements because the Company can give no assurances that they may prove to be correct. By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated 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. See Sea Dragon's Annual Information Form for the year ended December 31, 2012 for a description of the risks and uncertainties associated with the Company's business, including its exploration activities. The forward-looking statements contained in this press release are made as of the date hereof and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law.The forward-looking statements contained herein are expressly qualified by this cautionary statement.
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SOURCE Sea Dragon Energy Inc.
For further information: Sea Dragon Energy Inc.: Paul Welch, President and Chief Executive Officer, Tel: +44 203 219 5640; Olivier Serra, Chief Financial Officer and Director, Tel: +44 203 219 5640; Bell Pottinger (Financial PR), Philip Dennis / Joanna Boon, Tel: +44 (0) 207 861 3232