Dr. Sotirios Kapotas reports
STREAM ANNOUNCES SECOND QUARTER 2014 RESULTS
Stream Oil & Gas Ltd. has released its financial and operating results for
the three and six months ended May 31, 2014.
SECOND QUARTER SUMMARY OF RESULTS
($000s (U.S.), except as noted)
Three months ended Six months ended
May 31, May 31,
2014 2013 2014 2013
Financial
Revenue $8,565 $10,272 $16,098 $19,377
Revenue, net of mineral tax royalty 8,174 9,244 14,954 17,440
Net operating income 5,519 6,941 9,794 12,152
Funds from (used in) operations 3,980 5,027 11,034 11,044
Net income (loss) 1,174 441 2,951 186
Per share -- basic and diluted 0.02 0.01 0.04 0.00
Cash additions to property and equipment and
exploration and evaluation assets 4,851 3,935 12,413 9,295
Operating
Average production (boe/d)
Gross production 1,522 1,607 1,523 1,693
Albpetrol share 548 604 561 619
Net production (Stream's share) 973 1,003 954 1,074
Gross price ($/boe/d) 71.09 71.43 72.21 73.44
Netback ($/boe/d) 47.52 48.48 46.52 47.74
During the three and six months ended May 31, 2014, the company focused
its resources on stabilizing production in its oil fields, advancing
drilling of its gas field, addressing its financing constraints and
finalizing the amending agreements for the royalty neutralization with
Albpetrol.
The company was able to sustain its gross oil field production at 1,522
barrels per day, gross, while acquiring comprehensive understanding of weaknesses in
its existing operating practices, including field instrumentation
constraints, focusing to understand suboptimum utilization of the
installed equipment. The discrete knowledge, gained during the
operating practices audit, provides the company the basis for further
production operations improvements. Following the repairs and
improvement of select equipment, constrained to date by capital
availability, the company will be able to continue its oil field
production growth, leveraging the recently observed production levels
exceeding 1,200 bpd net, continuing toward the prior demonstrated
net levels of 2,400 barrels of oil equivalent per day.
The company commenced drilling its first horizontal well in its Delvina
gas field, spudding in April, 2014. Reaching the depth of approximately
750 metres, following casing and cementing, the company elected to
temporarily suspend drilling, to re-examine to-date execution and
incorporate any new information prior to recommencing. Fabrication of
speciality equipment required for the intervention of the existing
vertical well, to clear a tubing obstruction, is nearly complete,
enabling field execution in early August. The vertical well has produced in excess of 2.5 million cubic feet per day with 50 barrels per million cubic feet of
condensate.
Concurrent with advances in its fields, accounting for the capital
constraints, company's management committed considerable efforts
toward improving its balance sheet, including pursuing additional
capital by way of equity, debt and farm-out considerations. The
company continues its corporate development and fundraising focus,
expecting to enable the completion of the 2014 program as previously
contemplated.
Jointly with its partner Albpetrol (national oil company), the company
continued to finalize the amending agreements for the neutralization of
the royalty tax, including the elimination of the related share
production share obligation resulting from the temporary reversal of
the March, 2013, agreement. The agreements have been finalized and have
been submitted for final approval and ratification.
Second quarter highlights:
- Gross production remained stable at 1,522 barrels of oil equivalent per day in the three months ended
May 31, 2014.
- As a result of lower sales volumes, gross revenue decreased by 17 per cent to
$8.6-million compared with $10.3-million for the corresponding period in
2013 (net $8.2-million in 2014 compared with $9.3-million).
-
The company paid $700,000 to Albpetrol in service of the outstanding oil
production share liability.
Subsequent to the quarter:
- The company paid $4-million to Albpetrol in service of the outstanding
oil production share liability.
-
In support of its significant efforts focused on improving its working
capital, working with its lenders, the company received deferrals of
payments of the bank and prepayment facilities.
Outlook
Management's recent refocus to production growth at its oil fields, to
get back to previous demonstrated production levels, will be leveraged
once more as capital is available to drive further liquids growth in
addition to production from the gas field activities. Plans for the
balance of 2014 include the following activities:
- Management will continue its efforts on initiatives to address liquidity
concerns.
- Cakran-Mollaj:
- The company will maximize the jet pump systems' productivity by
revisiting a well by well planning and production management, including
revision and deployment of updated operating practices.
- It will install the
recently received in-country six hydraulic long-lift RRP systems, focus
on reduction of water production and evaluate alternative water
disposals, eliminating infield reinjection to reduce water
production. The objective is to return the field to previously demonstrated
production levels and then focus to bring more wells on-line to continue
the production growth.
- Gorisht-Kocul:
- Continue water flood infrastructure expansion along with
recompletions with PCPs and hydraulic RRP lift systems.
- Ballsh-Hekal:
- Finalize the takeover of the rest of the field,
revalidate primary targets and commence recompletion with PCPs.
- Delvina:
- Once drilling of D34H1 is completed and tested, the company will supply
increased gas volumes to Thermo's power project and monetize the
condensate production.
- The company will continue the evaluation and early preparations for the drilling of
infill wells in the oil fields, leveraging the deviated/horizontal
drilling approach to access more of the reservoir.
-
It will increase port storage facilities to enable larger export cargos with the
objective of increasing sales price through decreasing unit transport
costs and leveraging increased sales volume.
Additional information
Stream has filed its consolidated financial statements for the three
months ended May 31, 2014, and its related management's discussion and
analysis with Canadian securities regulatory authorities. Copies of
these documents may be obtained on SEDAR or the company's website.
We seek Safe Harbor.
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