Caspian Energy Inc.
TSX : CEK

November 05, 2009 12:54 ET

Caspian Energy Inc. Announces Third Quarter 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 5, 2009) -

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Caspian Energy Inc. (the "Company" or "CEK") (TSX:CEK) announced today its financial results for the three and nine months ending September 30, 2009. Its interim unaudited financial statements for the period and related management's discussion and analysis have been filed with Canadian securities regulatory authorities and are available for viewing at www.sedar.com.

CEK's operations used $175,277 in cash during the three month period and provided $1,264,951 for the comparative quarter of 2008. At the close of 3Q 2009, Caspian had a working capital deficiency of $104,741.

Oil revenues before transportation costs during 3Q 2009 were $1,247,281 and for 3Q 2008 were $2,231,533. The Company sold an average 249 Bopd (3Q 2008 – 285 Bopd) at a price of $54.40 (3Q 2008 - $85.02), per barrel, net of ROK takes, during the quarter ended September 30, 2009.

For the quarter ended September 30, 2009 operating costs were $212,475 and for the 2008 comparative quarter, operating costs were $654,779 (a decrease of 68%), while transportation expenses were $544,637 and $768,939, respectively (a decrease of 29%). Administrative expenses for the same periods were $428,563 and $737,481 (a decrease of 42%), respectively.

For the three months ending September 30, 2009, CEK's net loss and comprehensive loss was $3,577,690 and for the three months ending September 30, 2008, CEK's net income and comprehensive income was $634,396. A $1,757,808 foreign exchange charge (prior period a gain of $1,340,899) was a major component of the quarter's loss. Caspian recorded charges of $572,734 (3Q 2008 - $514,532) pertaining to interest and $91,796 (3Q 2008 - $77,027) pertaining to accretion of the discount on its convertible debentures. Depletion, depreciation and accretion expenses were $1,214,960 and $258,050, respectively.

The Company's existing sources of financing and expected cash flow from operating activities are not sufficient to meet: (i) the repayment of the Loan payable of $3,228,347, which has no specified repayment terms; and (ii) the Convertible Debentures plus accrued interest, totalling $22,976,432 on September 30, 2009, which mature on March 2, 2011. 

On October 15, 2009, Caspian announced that it proposed to hold a special meeting of its shareholders on Tuesday, December 1, 2009 to consider and, if thought fit, approve certain amendments to the terms of the Secured Convertible Debentures of the Company dated as of March 1, 2006 in the aggregate principal amount of US$16,000,000. The Debentures bear interest at a rate of 10% per annum and mature on March 2, 2011. Interest accrues under the Debentures and is calculated on a monthly basis. The accrued interest is required to be either added to the principal amount owing under the Debentures on a quarterly basis; or at the election of the holder of a Debenture, paid out to such holder on a quarterly basis in the form of either cash or common shares.

Aral Petroleum Capital LLP, of which Caspian is a 50% stakeholder, has a potential commitment to expend USD 38.9 million during calendar 2009 to discharge its exploration obligations pursuant to its exploration license with the ROK. To date, the work program has not received final approval by the ROK. It is anticipated that the approval of the 2009 work program, to be received near calendar year-end, will contain an amendment to the work commitment such that the Company remains in compliance with the Program's expenditure constraints. To fund its ongoing obligations, the Company is pursuing a farmout or sale of the North Block, which will result in an up-front cash payment plus an undertaking of the exploration and development obligations to earn a portion of the Company's interest. Several parties have indicated interest and discussions are taking place, but the outcome of these discussions cannot be determined with certainty. The Company is concurrently seeking loan funds, via Aral, in Europe, to satisfy the exploration commitment. Updates to this circumstance will be press released as they are solidified.

The Company's ability to continue as a going concern is in substantial doubt and is dependent upon a successful outcome to the negotiations taking place with the debentures holders and a positive conclusion to either its farmout or loan-seeking activities.

CEK today filed on SEDAR interim unaudited financial statements and MD&A with respect to its September 30, 2009 second fiscal quarter.

The Company is an oil exploration and development corporation operating in the Republic of Kazakhstan.

CAUTIONARY NOTE

Some of the statements and information contained in this news release may include certain estimates, assumptions and other forward-looking information. The actual performance, developments and/or results of the Company may differ materially from any or all of the forward-looking statements, which include current expectations, estimates and projections, in all or in part attributable to general economic conditions, and other risks, uncertainties and circumstances partly or totally outside the control of the Company, including oil prices, imprecision of reserve estimates, drilling risks, future production of gas and oil, rates of inflation, changes in future costs and expenses related to the activities involving the exploration, development, production and transportation of oil, hedging, financing availability and other risks related to financial activities, and environmental and geopolitical risks. Further information which may cause results to differ materially from those projected in the forward-looking statements is contained in the Company's filings with Canadian securities regulatory authorities. The Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

Contact Information

  • Caspian Energy Inc.
    William Ramsay
    President and Chief Executive Officer
    020 7861 3232