CALGARY, May 25, 2012 /CNW/ - Shona Energy Company, Inc. (TSX-V: SHO) ("Shona" or the "Company"), today announced its financial results and operational highlights for the quarter ended March 31, 2012.
"Shona continues to sell gas under its two contracts, which resulted in positive cash flow and net income this quarter," said James L. Payne, Chairman and CEO of Shona Energy. "As we continue to optimize gas production and delivery from our Nelson gas asset, we intend to delineate other areas of the Esperanza block as well as the oil assets in our diverse portfolio."
- Gas volumes under the new contracts averaged 12.6 million cubic feet per day (Mmcf/d) for the first quarter of 2012;
- Shona generated $3.8 million in EBITDA, or $0.02 per share, and net income of $1.6 million;
- The Company Initiated a seismic program on the unevaluated acreage on the Eastern portion of the Esperanza block; and
- Subsequent to the end of the first quarter, Shona announced listing on OTCQX International under the symbol "SHOAF".
Shona anticipates the following activities to occur in the remainder of 2012:
- Advancing an ongoing 100 km2 3D seismic survey on the Esperanza Block to help determine potential for additional supply capacity;
- Initiating long-term production testing of the Boa Prospect, located in Block 102 in Peru, in May 2012;
- Continuing evaluation of options to the sell and market additional gas capacity;
- Evaluating new ventures in South America and internationally;
- Evaluating potential for mergers and acquisitions; and
- Possible drilling at the Serrania Block in first quarter of 2013.
Selected Financial and Operating Information
|Three Months Ended March 31,|
|Natural gas revenues||$||6,203,732||$||374,536|
|Income (loss) from operations||2,848,397||(3,193,869)|
|Net income (loss)||1,572,509||(3,738,956)|
|Per share (basic and diluted)||0.01||(0.02)|
|Common - voting||180,594,389||166,655,164|
|Common - non-voting||54,173,451||-|
|Series A 10% Convertible Preferred||190,796||175,939|
|Natural Gas - Mcf||1,150,577||92,373|
|Natural Gas - Mcf/d||12,644||1,026|
|Realized prices - $/Mcf||$||5.39||$||4.05|
|Operating Netback ($/Mcf)|
|Natural Gas Revenue||5.39||4.05|
The increase in revenues in the first quarter of 2012 compared with 2011 is attributable to higher sales volumes from the Nelson field which commenced on December 1, 2011 and higher gas prices received. Higher gas sales price due to the redetermination of the La Guajira price to $5.81 on August 1, 2011 and $5.80 on February 1, 2012 accounted for $1.5 million of incremental natural gas revenue for the three months ended March 31, 2012. The increased volumes added $4.3 million of additional revenue.
The increase in production expense in the first quarter of 2012 compared with 2011 is due to increased production from the Nelson field, which commenced sales in December 2011. The increased royalty expense in 2012 was due to higher sales revenues.
The average depletion, depreciation and amortization (DD&A) expense rate per Mcf decreased from $2.48 per Mcf in the first quarter of 2011 to $0.80 per Mcf in 2012 due to the commencement of sales from the Nelson field on December 1, 2011, which has larger natural gas reserves and consequently a lower amortization expense rate per Mcf than the older fields. Total DD&A increased $2.6 million in 2011 due to the increased sales which was partially offset by $1.9 million due to the lower DD&A rate per Mcf.
General and administrative expense decreased $0.7 million to $1.1 million in the first quarter of 2012. In 2012, the Colombian peso and Canadian dollar strengthened which resulted in a $0.4 million foreign currency gain compared to a $0.1 million loss in the 2011. In 2011, the Company recorded $0.2 million related to the 2011 annual bonus plan which is not in place in 2012.
In 2011, there was a $1.2 million expense related to an equity tax in Colombia. The tax was based on the equity of Shona's Colombian subsidiaries as of January 1, 2011, which will be paid over a four year period in equal payments each year.
At March 31, 2012, Shona had unrestricted cash of $16.9 million and current working capital of $16.5 million. The Company's debt at March 31, 2012 of $20.3 million consisted principally of the debt portion of the Preferred shares ($18.4 million) and the remaining balance of the loan for a seismic contract ($1.8 million).
Shona is an international oil and natural gas exploration, development and production company focusing on South America, specifically Colombia and Peru. The Company's assets currently include interests in the Company-operated Esperanza block located in Colombia's Lower Magdalena Basin, the non-operated Serrania, Los Picachos and Macaya Blocks in Colombia's Caguan Basin, and the non-operated Block 102 in Peru's Maranon Basin. The common shares of the Company trade on the TSX Venture Exchange under the stock symbol "SHO". More information on the Company is available at www.shonaenergy.com.
Certain information included in this press release constitutes forward-looking information under applicable securities legislation. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. Forward-looking information typically contains statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "propose", "project" or similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information in this press release may include, but is not limited to, expectations regarding future oil and gas production from the Company's properties, the production capacity of the Company's properties, the anticipated use of seismic data and exploration and development plans on properties in which the Company holds an interest. Forward-looking information is based on a number of factors and assumptions which have been used to develop such information but which may prove to be incorrect. Although Shona believes that the expectations reflected in such forward-looking information is reasonable, undue reliance should not be placed on forward-looking information because Shona can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this press release, assumptions have been made regarding and are implicit in, among other things: the ability of Shona to complete transactions described in this press release, the timely receipt of any required regulatory approvals, the performance of existing wells and success obtained in drilling new wells, anticipated expenses, cash flow and capital expenditures, the application of regulatory and royalty regimes and prevailing commodity prices and economic conditions. Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which have been used. Shona undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change, unless required by law. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., 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 relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.
All dollar references in this press release are to U.S. Dollars.
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 this press release.
For further information:
David Gian, Treasurer & Investor Relations
Shona Energy Company, Inc.
Shetal Mentlewski, VP Admin & Legal
Shona Energy Company, Inc.