CALGARY,
Oct. 29, 2013 /CNW/ - Stream Oil
& Gas Ltd. (TSXV: SKO) (the "Company") is pleased to report its
financial and operating results for the three months ended
August 31, 2013.
Q3 2013 Summary of Results
|
Three Months Ended |
Nine Months Ended |
|
Aug.
31, |
Aug. 31, |
Aug.
31, |
Aug. 31, |
(US$000s, except as noted) |
2013 |
2012* |
2013 |
2012* |
Financial |
|
|
|
|
|
Revenue |
7,210 |
8,893 |
26,588 |
23,217 |
|
Revenue, net of mineral tax royalty** |
6,489 |
8,004 |
23,929 |
20,896 |
|
Net operating income |
3,894 |
5,665 |
15,186 |
15,664 |
|
Funds from (used in) operations |
6,115 |
5,567 |
17,158 |
8,773 |
|
Net income (loss) |
1,713 |
1,522 |
1,899 |
3,429 |
|
|
Per share - basic & diluted |
0.03 |
0.02 |
0.03 |
0.05 |
|
Additions to property,
plant & equipment |
7,586 |
7,528 |
16,882 |
26,624 |
Operating |
|
|
|
|
|
Average production (boed): |
|
|
|
|
|
|
Gross production |
1,598 |
1,714 |
1,662 |
1,713 |
|
|
Pre-existing obligations |
585 |
681 |
610 |
702 |
|
|
Net production (Stream's share) |
1,013 |
1,033 |
1,052 |
1,011 |
|
Gross average price ($/boed) |
72.85 |
70.98 |
73.30 |
74.39 |
|
Netback ($/boed) |
47.91 |
48.58 |
46.83 |
50.85 |
|
|
|
|
|
As at |
|
|
Aug. 31, 2013 |
Nov. 30, 2012 |
Cash and cash equivalents |
|
|
2,996 |
1,147 |
Shareholders' equity |
|
|
29,108 |
26,946 |
Weighted average shares outstanding -
basic (#) |
|
|
66,637,801 |
67,395,919 |
*
Restated to reflect deferred income tax expense
* Net of the 10% mineral tax royalty, which is to be added to
the cost recovery pool as a neutralization under the Petroleum
Sharing Agreement |
|
In the third quarter of 2013, Stream continued
upgrades to infrastructure and work process improvements for
artificial lift systems operations in its oilfields. At the Delvina
gas field, Stream completed the power generation tie-in and
commenced minor workovers of the related wells in order to clear a
tubing blockage caused by earlier gas production
suspension. Notwithstanding these activities, production
decreased in the quarter as a result of higher lift equipment
failures along with delays in the natural gas off-take for power
generation, which was outside of Stream's control. The
mechanical failures of the lift equipment have now been resolved,
while natural gas off-take issues are expected to be overcome
soon. Stream was ready to spud the Delvina horizontal well
during the third quarter; however, the delayed delivery of the
drilling rig forced re-scheduling of the well to late December.
Production capacity continues to be approximately
2,730 gross boed (2,145 net boed to Stream); however, operations
reliability is impacting the Company's ability to achieve this
level of production. Stream is transitioning from a development to
a production operations focus, which is forecast to improve results
and return production to prior demonstrated capacity levels.
Third Quarter Highlights:
- Average gross production declined to 1,598 boed compared to
1,714 boed in the third quarter 2012 (net: 1,013 and 1,033,
respectively).
- Realized average crude price of $72.85 per barrel, a 3% increase over
$70.98 per barrel in the same period
of 2012 due to higher average Brent crude pricing.
- Revenue decreased by 19% to $7.2
million compared to $8.9
million for the corresponding period in 2012 as a result of
lower sales volumes.
- Funds from operating income increased to $6.1 million compared to $5.6 million in 2012.
- Net operating income decreased to $3.9
million from $5.7 million for
the same period in 2012 due to reduced sales during the quarter,
along with higher operating costs.
Subsequent to the Quarter:
- James Hodgson resigned as CFO,
Director and Corporate Secretary of the Company effective
October 1, 2013. Mr.
Paul Plater, Vice President, Finance
and Corporate Controller, has been appointed as interim Chief
Financial Officer, and Ms. Susan
Soprovich has been appointed as interim Corporate
Secretary.
Outlook
Having successfully demonstrated reserves and
resources value while proving production capacity, Stream has now
shifted its focus to exploit these defined reserves. As part
of the transition from development to production, Management is
reorganizing its operations and supporting functions to enable
production operations excellence. Additionally, a dedicated
team has been established to manage Delvina related projects,
including off-take support (e.g. generation, re-injection,
stabilization, etc.),drilling and exploration
activities. These dedicated efforts will target immediate
production growth in the oilfields and support gas field
development.
- Cakran-Mollaj oilfield: while subsurface
pumps have been installed for longer-stroke reciprocating rod pump
systems, Stream is waiting for delivery of hydraulic jacks to
complete installation. Subject to timely equipment arrival,
Management expects to install six of the thirteen systems before
the end of December 2013.
-
- Wells equipped with jet pump systems continue to operate at
below acceptable online reliability due to the disjointed operation
of integrated system components, disabling cohesive
injection/production system joint operation. As part of its focused
transition from development to production centric operations,
Stream is securing the appropriate resources that are required to
realize optimum operations of integrated jet pump systems.
Management expects that sustained operations at high reliability
will be established by the end of January
2014.
- Gorisht-Kocul oilfield: Sufficient capacity
has been installed to support incremental volumes from ongoing
interventions. Worn out progressive cavity and reciprocating
rod pumps are scheduled for replacement by the end of December 2013. An additional fourteen
re-completions are scheduled for the balance of 2014, which were
delayed due to equipment deliveries.
- Ballsh-Hekal oilfield: Stream continues to
operate the wells previously taken over from Albpetrol, with
maintenance replacements of worn out progressive cavity pumps
scheduled for this November.
-
- Recent changes in the Albanian Government as result of local
federal elections, delayed Stream's full takeover of the
Ballsh-Hekal field as transfer of assets was frozen in line with
local governance requirements. Management's recent dialogue
with the new administration of Albpetrol and the Government
confirmed their desire to commence transferring the remaining
assets subsequent to the next joint advisory committee meeting,
which is scheduled for November. Confident in its timely
takeover, Stream has tendered acquisition requirements to provide
equipment for its 2014 development program, including several
progressive cavity pump installations.
- Delvina field: the D12 well requires
intervention work to release the tubing blockage, which is awaiting
third-party service. Gas production start-up is scheduled for
mid-November, once commissioning is completed. Site
preparation for additional capacity installation up to 24 MW is
complete, and the power producer has sourced the equipment
necessary to convert additional Stream volumes. Installation
is forecast for late in the first quarter of 2014.
-
- The gas re-injection compressor requires incremental cooling
and power stabilization. Stream is working jointly with the
thermal power generator and the local utility to realize stable
power input, which will allow the re-injection of surplus gas
quantities from the D12 well after stripping liquids. Start-up
of the compressor is forecasted by the end of December 2013, subject to the timely receipt of
incremental components.
- While required materials and casing are in Albania, the delay of the drilling rig has
postponed spudding of the D34H1 horizontal well to late 2013.
- Delvina
Block: the first exploration well is scheduled
to spud post rig release from D34H1 drilling, forecast for late
first quarter 2014.
Stream anticipates that its exit 2013 production
guidance of approximately 2,150 net boed (1,650 bbls/d from the
oilfields plus 700 mcf/d of gas and 35 bbls/d of condensate from
Delvina) will not be reached as previously anticipated on
November 30, 2013, due to the delays
in (a) new equipment arrival in country due to international
availability, (b) timing of gas production on-stream, and (c) the
transfer of the Ballsh-Hekal field. Considering the
demonstrated reservoir potential, Management is confident that the
average expected production guidance will be attained in early
2014.
Additional Information
Stream has filed its Consolidated Financial
Statements for the three month period ended August 31, 2013, and its related Management's
Discussion and Analysis with Canadian securities regulatory
authorities. Copies of these documents may be obtained via
www.sedar.com or the Company's website,
www.streamoilandgas.com.
_______________
Forward-Looking Statements
Information in this news release respecting
matters such as plans of development or exploration, reserves
estimates, production estimates and targets, development costs,
work programs and budgets constitute forward-looking information
(collectively, "forward-looking statements") under the meaning of
applicable securities laws, including Canadian Securities
Administrators' National Instrument 51-102 Continuous Disclosure
Obligations. Such forward-looking information is based on certain
assumptions, including the availability of funds for capital
expenditures necessary to construct the infrastructure required for
future development, a favorable political and economic operating
environment, a consistent rate of well re-completions and costs,
success rates, production performance and build-up periods for well
re-completions that are consistent with or an improvement over
historical levels.
The forward-looking statements contained herein
are made as of the date of this release solely for the purpose of
generally disclosing Stream's 2013 third quarter results and
outlook for 2013. Investors are cautioned that these
forward-looking statements are neither promises nor guarantees, and
are subject to risks and uncertainties that may cause future
results to differ materially from those expected. Such
forward-looking information reflect management's current beliefs
and are based on assumptions made by and information currently
available to the Company, and involves known and unknown risks,
uncertainties and other factors which may cause the actual costs
and results of the Company and its operations to be materially
different from estimated costs or results expressed or implied by
such forward-looking statements. Such factors include, among others
political and economic risks associated with foreign operations,
general risks inherent in petroleum operations, risks associated
with equipment procurement and equipment failure, availability of
qualified personnel, risks associated with transportation, currency
and exchange rate fluctuations and other general risks inherent in
oil and gas operations.
Although the Company has attempted to take into
account important factors that could cause actual costs or results
to differ materially, there may be other factors that cause costs
and timing of the Company's program or results not to be as
anticipated, estimated or intended. There can be no assurance that
such statements will prove to be accurate as actual results and
future events could differ materially from those anticipated in
such statements. Accordingly, readers should not place undue
reliance on forward-looking information. These forward-looking
statements are made as of the date hereof and the Company does not
assume any obligation to update or revise them to reflect new
events or circumstances except as required under applicable
securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses
production and reserve volumes on a barrel of oil equivalent (Boe)
basis whereby natural gas volumes are converted at the ratio of six
thousand cubic feet of natural gas to one barrel of oil. Boe may be
misleading particularly if used in isolation. A Boe conversion
ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
About Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based
emerging oil and gas production, development and exploration
company focused on the re-activation and re-development of three
oilfields and a gas/condensate field in Albania. The Company's strategy is to use
proven technology, incremental and enhanced oil recovery techniques
to significantly increase production and reserves.
Neither 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 release.
SOURCE Stream Oil & Gas Ltd.