CALGARY, Aug. 23, 2012 /CNW/ - Sea Dragon Energy Inc. ("Sea Dragon" or the "Company") (TSXV: SDX) is pleased to announce its 2012 second quarter financial and operating results (the "Quarter"). All dollar values are expressed in United States dollars unless otherwise stated.
- Achieved an average production rate of 1,147 bopd as compared to 1,094 bopd in the second quarter of 2011;
- Funds flow from operations for the Quarter of ($0.2) million compared to $0.4 million in the first quarter of 2012 and $0.9 million in the second quarter of 2011, mostly due to some payment delays reflected in increased working capital needs, which was offset subsequent to the Quarter end as indicated below; Net loss for the Quarter was ($1.4) million compared to ($0.8) million in the first quarter of 2012 and ($0.1) million in the second quarter of 2011.
- Operating costs for the Quarter were $8.36/bbl compared to $13.64/bbl in the first quarter of 2012 and $10.63/bbl in the second quarter of 2011.
- Generated netbacks of $39.25/bbl in the Quarter, compared to $41.93/bbl in the first quarter of 2012 and $38.68/bbl in the second quarter of 2011.
- Exited the Quarter with cash and cash equivalents of $7.2 million and working capital of $7.1 million, and $7.4 million of debt;
- Subsequent to Quarter end the Company collected $3.0 million in outstanding accounts receivable. This is a substantial improvement over the first quarter of 2012.
- Subsequent to the Quarter, the Company repaid $4.4 million of their tranche B facility.
FINANCIAL & OPERATING HIGHLIGHTS
The following table provides a summary of Sea Dragon's financial and operating results for the three and six months ended June 30, 2012 and 2011 and the three months ended March 31, 2012. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") are now available on the Company's website at www.seadragonenergy.com and on SEDAR at www.sedar.com.
|Fiscal Year||Prior Quarter (1)||Three months ended June 30||Six months ended June 30|
|Cash, end of period||4,285||7,179||10,027||7,179||10,027|
|Funds from operations||397||(213)||948||184||2,958|
|Common shares outstanding (000's)||376,459||376,459||376,459||376,459||376,459|
|Warrants outstanding (000's)||30,000||30,000||30,000||30,000||30,000|
|Oil sales (bbl/d)||1,019||1,147||1,094||1,083||1,135|
|Brent oil price ($/bbl)||118.47||108.44||116.84||113.42||111.27|
|Realized oil price ($/bbl)||115.10||103.90||111.77||109.17||105.76|
|Operating costs ($/bbl)||13.64||8.36||10.63||10.85||10.05|
(1) Denotes the three months March 31, 2012.
NORTH WEST GEMSA CONCESSION
During the second quarter of 2012, Sea Dragon participated in the drilling of one well (0.1 net) in the NW Gemsa Concession and completion of one additional well. The AASE-11 ST-1 development well was completed and placed on production. During the quarter, the AASE-12 well was drilled, completed and placed on production. Water injection in Al Amir SE is ongoing, with three injection wells at Al Amir SE-7 and Al Amir SE-8 and Al Amir-10. In the Geyad field injection is provided by the Geyad-5 well.
The NW Gemsa block is located in the Eastern Desert on the southwest part of the Gulf of Suez and comprises 4 fields: the Al Amir field (undeveloped heavy oil field), the Al Amir SE field, the Geyad field and the Al Ola field. Current production from the concession is running steady at around 9100 bopd gross of light crude oil (42 API) (910 bopd net to the Company). Cumulative oil production is 8.87 MMbbl gross (7.37 MMbbl from Al Amir/Al Ola and 1.50 MMbbl from Geyad). Sea Dragon has a 10% working interest in the Concession.
NW Gemsa is producing from the Shagar and Rahmi sands of the Kareem formation. Potential for additional oil has also been demonstrated in the Belayim, South Gharib, and Lower Rudeis Formations.
Al Amir SE Field
Currently, 10 productive wells and 3 injectors exist at Al Amir SE. Water is being injected in Al Amir SE-7 and Al Amir SE-8 and Al Amir SE-10 injectors at a rate of over 18,000 bwpd.
AASE-12 ST-1 Well:
This development well, located in the south eastern area of the field, was spud April 25, 2012. The primary objective was to produce oil from the Shagar and Rahmi reservoirs and appraise the shallower South Gharib and Belayim reservoirs.
The well was drilled to a total depth of 10,200 feet and was subsequently sidetracked to the northeast. The sidetrack was successfully drilled to a final total depth of 10,315 feet, encountering 15.5 feet of oil pay in the Shagar sand.
The Shagar sand was perforated in the interval 9,669 to 9,684.5 feet and flowed oil and gas on test at an average rate of 2,595 bopd and 4.7mmscf/d respectively, on a 48/64" choke. The well has now been placed on production at an initial flow rate of 1,038 bopd.
AASE-11 ST-1 Well:
This development well encountered 42 feet of oil pay in the Shagar reservoir and 22 feet in the Rahmi. The well was successfully completed in the Shagar reservoir in the interval 10,730 feet to 10,780 feet and placed on a production test on April 24, 2012. The well flowed at a maximum rate of 3,500 bopd on a one inch choke. The well was placed on production at a rate of 1,635 bopd on a half inch choke.
The well experienced increased water cuts shortly into its productive life. A review is ongoing in order to assess the water source and a means of water shut-off.
Currently there are 3 productive wells and 1 water injector well in the Geyad field. Water is being injected in the Geyad-5 at a total rate of 4,000 bwpd, in both the Shagar and Rahmi zones.
North West Gemsa Operations subsequent to the Quarter:
Al Ola-3 Well:
This injection well, located in the southern part of Al Amir SE field known as the Al Ola development lease, was spud on July 16, 2012. The primary objective of the well is to provide injection support to the Kareem sands in Al Ola area of the field. The Shagar and Rahmi sands were cored and the well was drilled to a total depth of 10,550 ft. The well is currently being logged.
KOM OMBO CONCESSION
During the second quarter of 2012 the Company participated in the drilling of 2 wells (net 1.0), West AB-2 and AB-16. During the quarter the company also participated in the recompletion of AB-11.
The Company's 2012 drilling program was launched in March 2012. The first exploration well, WAB-2, discovered oil in the shallow Abu Ballas Reservoir. The AB-16 development well, targeting the deeper Kom Ombo Sands, discovered oil in the Kom Ombo C and was placed on production. Additionally, the AB-11 well was worked over and recompleted in the Six Hills "F1" and resumed production.
This concession is located onshore in the southern part of Egypt some 1,000 km south of Cairo. It contains the Al Baraka oilfield, producing light oil from multiple reservoirs and an exploration area of 11,400 km². Sea Dragon has a 50% working interest in the Concession.
Production from the Al Baraka field is averaging approximately 575 bopd (287 bopd net to Sea Dragon).
West Al Baraka-2 Well:
The West Al Baraka-2 (WAB-2) exploratory well discovered oil in the shallow Abu Ballas Formation. The West Al Baraka structure, the second discovery on the Concession, is located 9 km to the southwest of the Al Baraka producing oil field.
The Abu Ballas reservoir was selectively perforated in the interval 2,085-2,164 feet and successfully fraced. During clean up the well tested 170 bopd. The well is currently shut in pending declaration of commerciality and preparation of a Development Lease application before being placed on production.
Al Baraka 16 Well (AB-16):
This development well was spud on April 30, 2012. The objective of AB-16 was to appraise the deeper Kom Ombo "sands". AB-16 was successfully drilled to a total depth of 7,590 feet in the Basement.
The well is located on Al Baraka development lease on a separate fault block, immediately southwest from the main Al Baraka field and 6 km up dip from the AB SE-1 well. The well encountered oil shows in the Six Hills F1, Kom Ombo "C "and Kom Ombo "A " sands.
Cores were cut in the Six Hills F1 Kom Ombo "A" and "B". Core analysis and petrophysical analysis indicate the well discovered 18 ft of oil pay in the Six Hills F1 and 60 ft in the Kom Ombo C and 4 ft in the Kom Ombo A.
The Kom Ombo "C" was selectively perforated in the interval 6,610-6,767 ft and tested with Nitrogen lift at a rate of up to 530 bopd with a 11% water cut. Upon placing the well on production the daily oil rates declined sharply, and water cut increased significantly. Reasons for the decline are being investigated.
Al Baraka 11 Well (AB-11):
Previously this well was standing as suspended in the Six Hills "E" Formation. Following the logging of Six Hills F1 oil pay in AB-16, the well was recompleted and perforated in the Six Hills "F1" interval 3,880-3,939 ft and successfully fraced. The well is currently contributing 55 bopd to Al Baraka production.
Kom Ombo Operations subsequent to the Quarter:
The second exploration commitment well, located 4.5 km south of Al Baraka oilfield was spud on June 26, 2012 and drilled to a total depth of 6,785 ft. The primary objective was to test the Kom Ombo Sands involved in a large faulted structure. The well encountered oil shows in both the Kom Ombo "C" and "A" sands, however it failed to produce oil on test and was subsequently plugged and abandoned.
Al Baraka 17 Well (AB-17)
This step out well to AB-16 well was spud on July 28, 2012. AB-17 is located approximately 650 m to the south of AB-16 and was successfully drilled to a total depth of 7,527 m in the Basement and logged. Oil shows were encountered in the Six Hills D, Kom Ombo "C" and "A" sands. Petrophysical analysis indicate the intervals are predominantly water bearing and the well was plugged and abandoned.
Commenting on these latest results, Company Chairman and CEO, Mr. Said Arrata "The performance of the NW Gemsa concession is continuing to exceed initial expectations with the water flooding scheme beginning to show good results. Although the results of our 2012 drilling campaign in Kom Ombo were somewhat disappointing, we are encouraged by the West Al Baraka exploration discovery and its potential for future development.
On the financial front, the company generated funds flow from operations before evaluation and exploration expense of $2.3 million for the six months ended June 30, 2012. The Company was also successful in collecting a significant portion of its outstanding receivables and repay $4.4 million of debt. The Company is continuing its efforts in search of economically attractive growth opportunities."
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 2012 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, 2011 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.
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SOURCE: Sea Dragon Energy Inc.
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