|By PR Newswire||
|August 19, 2013 02:11 AM EDT||
CALGARY, Alberta, August 19, 2013 /PRNewswire/ --
Caracal Energy Inc. ("Caracal", the "Company", or the "Group") is pleased to announce its half year results for the six months ended June 30, 2013.
2013 Half-yearly results summary
Caracal had a successful first half of 2013. The Badila development project was completed in early June. The Group was able to test new reservoir horizons successfully, and apply modern 3D seismic techniques over the Badila and Mangara developments and surrounding exploration opportunities. The Group continues to undertake intensive analysis of the exploration portfolio opportunities. Caracal achieved a significant milestone with the admission of its common shares to the premium list on the London Stock Exchange on July 9, 2013.
- Completed construction and commissioning of the first phase of the modular production facilities and gathering system at Badila,
- Completed construction and commissioning of the 17 kilometre pipeline from the Badila facilities to the TOTCO-COTCO export line,
- Completed the interconnection with the TOTCO-COTCO export line,
- Completed and tied-in the Badila-1 and Badila-2 wells,
- Completed a 3D seismic survey covering the Badila field and the adjoining Bitanda Ridge exploration prospect. Bitanda Ridge exploration prospect is targeting 277 million bbls unrisked P mean, 648 million bbls unrisked P10,
- Filed an application for the 25 year development license for the Kibea field,
- Drilled the Badila-3 well to a total depth of 2,150 meters, with test results indicating production of approximately 2,400 bopd,
- Drilled and cased the Mangara-5 development well, then deepened it to explore and test the lower Cretaceous E sands,
- Spudded the Krim exploration target on August 6, 2013,
- Received delivery of a second drilling rig (Rig-96) in Chad and spud Badila-4 on August 8, 2013.
- Admitted to the premium listing segment of the Official List of the Financial Conduct Authority and began trading July 9, 2013 on the London Stock Exchange's main market for listed securities,
- Completed the Farm-in Agreement with GlencoreXstrata plc ("Glencore"),
- Increased net entitlement proven plus probable reserves ("2P") by 59 percent to 50.6 million barrels of light oil and proven plus probable plus possible reserves ("3P") by 41 percent to 89.8 million barrels of light oil,
- Increased mean unrisked gross lease prospective resources to 4.1 billion barrels and mean risked gross lease prospective resources to 833 million,
- Increased Caracal's 2P Net Present Value to US$1,413 million (discounted at 10% after tax) and 3P to US$2,533 million (discounted at 10% after tax),
- The Group's convertible bonds issued in September 2012 were admitted to the official list of the Luxembourg Stock Exchange and have been admitted to trading on the Euro MTF market,
- Appointed Peter Dey as independent director,
- Exited the second quarter with working capital of US$178.2 million including cash and cash equivalents of US$78.6 million,
- Achieved a UK Classification by the FTSE Nationality Committee for purposes of Caracal's application to be included on the FTSE index series.
- Bitanda exploration target well to spud in the third quarter of 2013;
- Complete the testing of the Cretaceous E sands at Mangara-5 well,
- Complete and commission the Southern Processing Terminal ("SPT"). The SPT will remove any remaining water or sediment from Mangara production just prior to allocation measurement and blending with Badila oil production. The terminal construction is underway and expected to be completed and commissioned in Q4 2013,
- Complete and commission the blending and shipping facilities required to bring Mangara onstream,
- Exit 2013 at a forecasted gross production rate of 20,000 to 23,000 barrels oil per day.
Caracal has full 3D coverage of the Badila field, and the results of the initial processing of the 3D seismic are incorporated in the mid-year reserves update. The results suggest extension of the Cretaceous D sands to the east of the previously understood field limits, and this extension will be confirmed by further drilling commencing with the Badila-4 well. The Badila-4 was spudded on August 8 and is expected to take 20 - 25 days to drill.
Badila-3 was drilled to test the flank of the field structure at the Cretaceous C and D levels. Drilling and petrophysical analysis suggested the Cretaceous D sands may contain additional moveable oil, therefore, three additional well tests were added. Results are encouraging, and suggest economic reserves may be produced from the C1a, C3, D6 and D8 zones as follows:
ZONE COMMINGLED TESTING INDIVIDUAL TESTING POTENTIAL RATE WITH ESP Fluid Rate Oil Cut Fluid Rate Oil Cut Fluid Rate Oil Rate (BBL/day) % (BBL/day) % (BBL/day) (BBL/day) C1a 1,734 6% 697 11% 311 99 C3 1,438 5% 4,446 218 D4, D5 1,492 0% 7,500 0 D6 1,655 36% 6,834 2,434 D8 854 22% 2,641 585
Notes: Productivity Index was estimated from swab tests, and used to estimate ESP (Electric Submersible Pump) rates at an intake pressure of 1,350 psi (~35% drawdown)
The oil gravity of the D6 and D8 zones is ~36 degrees API. With only the D6 and D8 zones completed with an electric submersible pump, the well is capable of ~2,400 barrels of oil per day commingled from these two zones. However, since this oil comes with ~5,100 barrels of water per day, these zones will be produced when additional processing and water injection facilities are available.
The first phase of the modular Badila production facilities was completed on schedule at the end of May 2013. President Idriss Déby inaugurated the Badila facilities on June 9, 2013 by opening the production shipping valve. First production from Badila is expected imminently.
The Mangara-4 development well spudded on March 13, 2013 and was drilled to a total depth of 2,471 meters. Petro-physical results show 40-60 meters of estimated oil pay in the lower Cretaceous C & D sands. The well was suspended due to hole instability, and will be re-entered in the near future and completed as a producer. Depending on the testing results of Mangara-5, Mangara-4 may be deepened and completed as a dedicated lower Cretaceous E sands producer.
The Mangara-5 development well was drilled and cased as a lower Cretaceous C & D sands producer. The well was also deepened to 3,339 meters to test the Cretaceous E sands, a new exploration horizon below the Mangara field.
Recent 3D seismic acquired over Mangara, which has been subjected to specialized processing and interpretation techniques, suggests the sands within the lower Cretaceous E could hold significant hydrocarbons. From drilling and petrophysical analysis, preliminary Mangara-5 results suggest this well has a potential range of 150-230 meters of estimated net oil pay in the Cretaceous E sands. The first of a series of planned tests was across a 25 meter interval and achieved a maximum oil rate during this period of 815 bopd. The interval produced a total of 200 barrels of 39 degree API oil with no water over the 16-½ hour test period. Testing of the additional identified pay is ongoing with results expected in early September.
Caracal completed a 3D seismic program covering 320 km of the Badila field, as well as the adjoining Bitanda ridge, where multiple exploration prospects had previously been identified on 2D seismic.
The 3D seismic confirmed closure of the Bitanda structure against a basin bounding fault, moving the priority of this exploration prospect near the top of the Group's drilling sequence. The Bitanda prospect is scheduled to spud in Q3 2013 targeting unrisked mean prospective resources of 277 million bbls as per the Group's recent reserves and resources evaluation dated effective June 30, 2013 from McDaniel & Associates Consultants Ltd. (the "Competent Persons Report", or "CPR").
On August 6, 2013 Caracal spudded the Krim exploration well targeting unrisked mean prospective resources of 29 million bbls exploration based on the CPR. The Krim prospect is immediately adjacent to the Mangara field, with the implication that a discovery here could be brought on stream in an expedited manner.
Caracal filed an Exclusive Exploitation Authorization ("EXA") application on April 25, 2013 and was deemed conditionally approved on May 25, 2013 pending submission of an Environmental Impact Assessment ("EIA"). The EIA is underway, and potential pipeline routes are being surveyed. A 3D seismic survey over the Kibea field and nearby exploration prospects is scheduled to commence in the 4th Quarter of 2013 or 1st Quarter of 2014. Based on well drilling sequence and concentration on west side of the E sands in the Mangara structure, the Kibea appraisal well that was originally scheduled for Q4 2013/Q1 2014 may be delayed until Q3 2014, after the rainy season. The appraisal well will test deeper horizons and obtain core and fluid samples for development planning and facilities design.
The first half of 2013 has been transformational for Caracal. With the closing of the Glencore transaction and with production commencing in the very short term, Caracal is in a position to develop its existing world class asset base while pursing accretive opportunities. Caracal is forecasting to exit 2013 in the range of 20,000 to 23,000 bopd (gross).
Under the terms of its individual production sharing contracts ("PSC's") the Group has committed to various work programmes. The agreed-upon minimum work requirement amounts to US$115.0 million for the three PSCs over five years. As at June 30, 2013, US$76.8 million is yet to be spent with three more years remaining in the agreements.
Other commitments consist of training of Chadian Nationals and employees of the Energy Ministry as well as office lease commitments in both N'Djamena, Chad and Calgary, Alberta.
The Group's available cash resources as at June 30, 2013 and 2012 were $78.6 million and US$100.7 million respectively. The Group exited the second quarter with working capital of US$178.2 million. The Group entered into the Glencore Farm-in agreement in 2012 which closed in June 2013. This transaction provided approximately $330.8 million in liquidity and reduces future capital requirements by reducing the Group's working interest in the PSCs.
Historically, the Group financed its capital resource needs through the sale of its common shares, convertible bonds and farm-outs with the objective of the acquiring prospective oil and gas assets and maximizing long-term financial returns to its shareholders. The Group may consider additional debt, the issuance of equity and other farm-outs in the future, if available on reasonable terms, in order to accelerate exploration drilling on its existing lands or pursue accretive opportunities.
Principal risks and uncertainties
Information regarding the Group's risk factors may be found under the headings "Risk Factors" in the Group's final Canadian prospectus dated July 2, 2013 available under the Caracal's profile on SEDAR (http://www.sedar.com) and the final UK prospectus dated June 28, 2013 available on the Group's website (to non-Canadian viewers).
The strategy of the Group is to increase shareholder value through sustained growth in production, cash flow and reserves. Reserves growth targets include optimum development of six known discoveries on lands in Chad, as well as reinvestment of cash flow for exploration of 80 identified prospects on lands in these licenses.
The Group intends to lead the development and operate infrastructure in the regions in which it develops and produces oil and gas. The PSCs offer significant near-term production and long-term exploration opportunities with substantial resource potential. The combination of the Group's existing asset base and experienced technical management team will contribute significantly to the Group's growth and aim of being a leading independent international oil Group. The Group is able to manage expenditures on its development of Mangara and Badila, through the completion of the $330.8 million Farm-in with Glencore. The Group remains focused on bringing Mangara on production and have commenced the engineering of the expansion of both the Badila and Mangara facilities. These two fields will provide the Group the required cash flow to fund its exploration program.
UK Classification for FTSE UK Index Series Inclusion
On August 13, the FTSE Nationality Committee allocated Caracal a UK classification for FTSE UK index series inclusion purposes. As part of its application to be indexed, Caracal agreed to commit to adhere to the UK Takeover Code to the extent reasonably practicable. At the next shareholder meeting, Caracal will amend its articles of incorporation to include this commitment. With this classification determined, the FTSE Committee will consider Caracal's application to be included in the FTSE index at its quarterly meeting on September 11, 2013.
About Caracal Energy Inc.
Based in Canada, Caracal Energy Inc. is an international exploration and development company focused on oil and gas exploration, development and production activities in the Republic of Chad, Africa. In 2011, the Company acquired three production sharing contracts ("PSCs") from the government of the Republic of Chad. These PSCs provide exclusive rights to explore and develop reserves and resources over a combined area of 26,103 km2 in southern Chad. The PSCs cover two world-class oil basins with development opportunity, oil discoveries, and numerous exploration prospects.
Certain information contained in this press release constitutes forward-looking information or statements including, without limitation, information and statements respecting: drilling operations, anticipated cash flow, future investment objectives, anticipated oil and gas pricing, expected inflation and future foreign exchange rates. Statements relating to "reserves" and "resources" are forward-looking information as they involve the implied assessment, based on certain estimates and assumptions that, among others, the reserves and resources described exist in the quantities predicted or estimated. Forward-looking information and statements are often, but not always, identified by the use of words such as "anticipate", "seek", "believe", "expect", "hope", "plan", "intend", "forecast", "target", "project", "guidance", "may", " might", "will", "should", "could", "estimate", "predict" or similar words or expressions suggesting future outcomes or language suggesting an outlook. By their very nature, forward-looking information and statements involve inherent risks and uncertainties, both general and specific, and risks that predictions, forecasts, projections and other forward-looking information and statements will not be achieved. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to vary materially from the forward-looking information or statements. These factors include, but are not limited to: the volatility of oil and gas prices; production and development costs; capital expenditures; the imprecision of reserve and resource estimates and estimates of recoverable quantities of oil, natural gas and liquids; the Company's ability to replace and expand oil and gas reserves; environmental claims and liabilities; incorrect assessments of value when making acquisitions or dispositions; increases in debt service charges; the loss of key personnel; the marketability of production; defaults by third party operators; unforeseen title defects; fluctuations in foreign currency and exchange rates; inadequate insurance coverage; compliance with environmental laws and regulations; changes in tax and royalty laws; the Company's ability to access external sources of debt and equity capital; and the Company's ability to obtain equipment in a timely manner to carry out development activities. Further information regarding these factors may be found under the headings "General Advisory", "Reserves and Resources Advisory" and "Risk Factors" in the Company's final Canadian prospectus dated July 2, 2013 available under the Company's profile on SEDAR (http://www.sedar.com) and the final UK prospectus dated June 28, 2013 available on the Company's website (to non-Canadian viewers). Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive. When relying on these forward-looking statements to make decisions with respect to the Company, investors and others should also carefully consider information set forth in the section "Forward-Looking Statements" of the Company's prospectuses respecting the assumptions upon which the Company bases certain forward-looking information and the uncertainties inherent in such assumptions. The Company does not assume responsibility for the accuracy and completeness of the forward-looking information or statements and such information and statements should not be taken as guarantees of future outcomes. Subject to applicable securities laws, the Company does not undertake any obligation to revise this forward-looking information or these forward-looking statements to reflect subsequent events or circumstances. This cautionary statement expressly qualifies the forward-looking information and statements contained in this press release.
For further information:
Caracal Energy Inc.
Gary Guidry, President and Chief Executive Officer
Trevor Peters, Chief Financial Officer
Longview Communications - Canadian Media Enquiries
Alan Bayless +1-604-694-6035
Joel Shaffer +1-416-649-8006
FTI Consulting - UK Media Enquiries
Ben Brewerton / Ed Westropp