Antrim Energy Inc.
TSX : AEN
AIM : AEY

Antrim Energy Inc.

November 11, 2010 02:00 ET

Antrim Energy Inc. Announces 2010 Third Quarter Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Nov. 11, 2010) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S.

Antrim Energy Inc. ("Antrim" or "the Company")(TSX:AEN) (AIM:AEY), an international oil and gas exploration and production company, today reported its financial and operational results for the three and nine month periods ended September 30, 2010.

All financial figures are unaudited and in US dollars unless otherwise noted

HIGHLIGHTS:

  • Antrim forms joint venture in UK Fyne Area with Premier Oil
  • Two new UK North Sea licences acquired
  • Argentina 2010 drilling program completed – eight wells cased for production
  • Average gas price in Argentina increased 23% to $1.83 per mcf over Q3 2009
  • Financial flexibility with strong cash position of $24.4 million, positive cash flow from operations and no bank debt

In the nine months of 2010, average production in Argentina was 1,792 barrels of oil equivalent per day ("boepd") compared to 1,790 boepd in the same period of 2009. These production figures take into account production added from new wells drilled in Tierra del Fuego in 2010 and the sale of the Puesto Guardian Field in early 2010. Oil and gas revenue increased to $9.8 million for the nine months ended September 30, 2010 compared to $9.6 million for the same period in 2009. Higher gas sales volumes and higher product prices were offset by lower oil sales volumes.

Antrim generated cash flow from operations of $1.9 million for the nine months ended September 30, 2010 compared to cash flow of $0.3 million in 2009. Cash flow increased due to higher revenue, higher interest and other income, and lower operating costs offset by higher general and administrative costs. 

Antrim's average gas price for the third quarter of 2010 was $1.83 per mcf compared to $1.49 for the same period in 2009, a 22.8% increase. For the third quarter, oil prices averaged $49.98 per barrel compared to $42.18 per barrel for the same period in 2009, an 18.5% increase.

On October 6, 2010, Antrim announced the signing of an Earn-In Agreement ("EIA") with Premier Oil UK Limited ("Premier") to jointly explore development options for the Fyne Area. Premier paid Antrim $2 million in initial consideration for an option to acquire a 39.9% interest in the Fyne licence (Block 21/28a) in return for up to a $50 million carried contribution, less the initial consideration, towards the pre-development and development costs of the Fyne Field. The EIA also provides Premier with the option to participate up to 50% alongside Antrim in a planned drilling program in the Greater Fyne Area. 

During the third quarter, the Company completed a ten well drilling program on its Tierra del Fuego Argentina concession. The program targeted the liquid-rich gas bearing sandstone reservoirs of the Springhill Formation. Of the ten wells drilled in 2010, eight were cased and two were plugged and abandoned. Three cased wells have been completed and tied-in, one well has been completed and is awaiting tie-in and four wells will be tied-in after fracture stimulation, which is scheduled for the first quarter of 2011.

Financial and Operating Results (unaudited)
  Three Months Ended September 30 Nine Months Ended September 30
  2010 2009 2010 2009
Financial Results ($000's except per share amounts)        
Revenue 4,015 4,236 9,845 9,581
Cash flow from operations(1) 1,509 744 1,911 311
Cash flow from operations per share (1) 0.01 0.01 0.01 0.00
Net (loss) (1,150) (1,751) (5,281) (6,489)
Net (loss) per share – basic (0.01) (0.01) (0.04) (0.05)
Total assets 284,827 287,794 284,827 287,794
Working capital 26,333 33,725 26,333 33,725
Expenditures on petroleum and natural gas properties 3,009 1,052 6,447 5,330
Bank debt - - - -
         
Common shares Outstanding (000's)        
End of period 135,420 135,281 135,420 135,281
Weighted average – basic 135,355 135,281 135,361 135,281
Weighted average – diluted 136,933 135,281 136,939 135,281
         
Production        
Oil, natural gas and NGL production (boe per day) (2) 1,803 2,011 1,792 1,790

(1) Cash flow from operations and cash flow from operations per share are Non-GAAP Measures. Refer to "Non-GAAP Measures" in Management's Discussion and Analysis. 

(2) The 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.

OVERVIEW OF OPERATIONS

United Kingdom

Fyne Field

On October 6, 2010, Antrim announced the signing of an EIA with Premier Oil UK Limited to jointly explore development options for the Fyne Area. Premier paid Antrim $2 million in initial consideration for an option to acquire a 39.9% interest in the Fyne licence (Block 21/28a) in return for up to a $50 million carried contribution, less the initial consideration, towards the pre-development and development costs of the Fyne Field. The EIA also provides Premier with the option to participate up to 50% alongside Antrim in a planned drilling program in its surrounding licences (the "Greater Fyne Area", Antrim 100%). Following completion of the transaction, Antrim will retain a 35.1% working interest in the Fyne Field. 

Antrim's initial floating production storage and offloading ("FPSO") provider withdrew its available capacity in the third quarter of 2010. Antrim is working with Premier on the identification of alternative subsea tieback schemes. The production system is being engineered to handle up to 20,000 barrels of oil per day ("bopd") directly from the Fyne Field, with potential capacity add-ons to handle additional volume from the satellite fields. 

Antrim and Premier intend to select the optimum Fyne development scheme and prepare a Field Development Plan ("FDP") for submission in the latter part of 2011 with first production anticipated in early 2013. In addition to the Fyne development, Antrim has identified five high priority drilling prospects in the Greater Fyne Area. Antrim expects to schedule exploration drilling in 2011. 

26th UK Offshore Licensing Round

On October 28, 2010, Antrim announced that it had been notified by the UK Department of Energy and Climate Change ("DECC") that it had been offered two new blocks in the UK North Sea in the 26th Licensing Round. 

Block 21/29d is located in Antrim's core Greater Fyne Area in the Central North Sea, and has been offered as a promote licence (Antrim 100%). The block contains several exploration targets defined by 3-D seismic, including the "Carra" Eocene Tay Prospect at 5,000 feet drilling depth and the "Erne" Eocene Tay Prospect at 5,200 feet drilling depth. The block falls within the joint venture area with Premier.

Block 21/7b is also located in the Central North Sea and has been offered as a traditional licence (Antrim 30%). The block contains the "Typhoon" Eocene Balder Prospect at 5,600 feet on trend with the recent Scolty oil and condensate discovery. The licence was acquired jointly with Premier (70%, operator) with a bid comprising a firm well.

Causeway Field

Antrim signed a Conditional Letter Agreement with Valiant Petroleum plc ("Valiant") to sell a 30% interest in Causeway in March 2010. In return, Antrim will receive up to $21.75 million carried contribution to the development costs of bringing the field to production startup. Completion of the transaction is subject to several conditions, including sanction of the FDP by DECC. As part of the transaction, Antrim will transfer related tax losses and has transferred operatorship of the field to Valiant. Following completion of the transaction, Antrim will retain a 35.5% working interest in the Causeway Field. 

Valiant, as the new operator, is progressing with a review of development options and plans to finalize a revised FDP for submission to DECC in late 2010 or early 2011. The operator is also reviewing the timing of first production.

Argentina

During the third quarter, the Company completed a ten well drilling program on its Tierra del Fuego Argentina concession. The program targeted the liquid-rich gas bearing sandstone reservoirs of the Springhill Formation. Of the ten wells drilled in 2010, eight were cased for production and two were plugged and abandoned. Three cased wells have been completed and tied-in, one well has been completed and is awaiting tie-in and four wells will be tied-in after fracture stimulation which is scheduled for the first quarter of 2011. With the tie-in of the additional wells, Antrim's daily production is expected to average approximately 1,900 boepd in 2011. 

Antrim's average gas price for the third quarter of 2010 was $1.83 per mcf compared to $1.49 for the same period in 2009, a 22.8% increase. For the third quarter, oil prices averaged $49.98 per barrel compared to $42.18 per barrel for the same period in 2009, an 18.5% increase. 

Antrim sells all of its oil production and approximately 80% of its natural gas production from Tierra del Fuego to the Argentine mainland. These sales generate value-added tax ("VAT") of 21%, which is retained by Antrim due to favourable tax laws pertaining to Tierra del Fuego. VAT of $1.7 million (2009 - $1.2 million) is reported as interest and other income and is not included in Antrim's per unit sales prices.

Antrim's field netbacks in Argentina, based on sales, were $11.97 (2009 - $8.83) and $9.52 (2009 - $6.72) per boe for the three and nine month periods ended September 30, 2010. The increase in the 2010 field netbacks, as compared to 2009, was due to the lower operating costs and higher sales prices partially offset by higher royalty expenses. 

The Company applied for "Gas Plus" pricing incentives for new gas that will be produced from the wells being drilled in 2010. If approved by the federal authorities, this will permit Antrim to sell its gas in the higher-priced industrial market on the mainland. 

In February 2010, Antrim sold its non-operated 40% working interest in Puesto Guardian effective January 1, 2010, for consideration in the form of a $1.4 million non-interest bearing promissory note. The Puesto Guardian field was reaching the end of its economic life and the purchaser retained responsibility of all abandonment and environmental remediation work on the concession.

Effective February 25, 2010, Antrim relinquished its non-operated 70% working interest in Medianera and its non-operated 70% working interest in Tres Nidos Sur. Medianera production, as previously reported, was shut-in in February 2009. Well abandonment and seismic and drilling obligations on the properties were assumed by the operator of both concessions.

Antrim's Argentine operations are self-sustaining thereby enabling the Company to evaluate other opportunities in Argentina using the cash flow generated from the Tierra del Fuego properties.

Outlook

Antrim's strong financial position, which includes unrestricted cash available of $24.4 million and no bank debt, provides Antrim with financial and operational flexibility.

With the conditional sale of 30% of Causeway and the recently announced joint venture with Premier in Fyne, Antrim's other North Sea activity will be weighted towards adding value by exploring for new hydrocarbons and appraising existing discoveries.

Antrim's daily production in Argentina is expected to average approximately 1,800 net boepd in 2010, increasing to 1,900 boepd in 2011. 

Antrim intends to grow the Argentine operation primarily through new in-country opportunities using the cash flow from existing Argentine operations.

Antrim is also considering other global exploration opportunities. Antrim views its bilateral strategy of balancing longer term and capital-intensive investments in the UK North Sea with shorter investment cycle on-shore exploration and production opportunities as central to its corporate development.

About Antrim

Antrim Energy Inc. is a Canadian, Calgary based high-growth junior oil and gas exploration and production company with assets in the UK North Sea and Argentina. Antrim is listed on the Toronto Stock Exchange (AEN) and on the London Stock Exchange's Alternative Investment Market (AEY). Visit www.antrimenergy.com for more information. 

Forward-Looking Statements

This MD&A and any documents incorporated by reference herein contain certain forward-looking statements and forward-looking information which are based on Antrim's internal reasonable expectations, estimates, projections, assumptions and beliefs as at the date of such statements or information. Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", "targeting", "forecast", "achieve" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. These statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements and information. Antrim believes that the expectations reflected in those forward-looking statements and information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements and information included in this MD&A and any documents incorporated by reference herein should not be unduly relied upon. Such forward-looking statements and information speak only as of the date of this MD&A or the particular document incorporated by reference herein and Antrim does not undertake any obligation to publicly update or revise any forward-looking statements or information, except as required by applicable laws.

In particular, this MD&A and any documents incorporated by reference herein, contain specific forward-looking statements and information pertaining to the quality of and future net revenues from Antrim's reserves of oil, natural gas liquids ("NGL") and natural gas production levels. This MD&A may also contain specific forward-looking statements and information pertaining to commodity prices, foreign currency exchange rates and interest rates, capital expenditure programs and other expenditures, supply and demand for oil, NGL's and natural gas, expectations regarding Antrim's ability to raise capital, to continually add to reserves through acquisitions and development, the schedules and timing of certain projects, Antrim's strategy for growth, Antrim's future operating and financial results, treatment under governmental and other regulatory regimes and tax, environmental and other laws and the start up of production from the Causeway or Fyne fields in the UK North Sea.

With respect to forward-looking statements contained in this MD&A and any documents incorporated by reference herein, Antrim has made assumptions regarding Antrim's ability to finalize the sale of a portion of Causeway to Valiant, Premier exercising its option to acquire a portion of the Fyne licence, obtain access to sub-sea or floating facilities including transportation and production storage offloading providers in the UK North Sea for production from Fyne and Causeway, obtain additional drilling rigs and other equipment in a timely manner, obtain regulatory approvals, future oil and natural gas production levels from Antrim's properties and the price obtained from the sales of such production, the level of future capital expenditure required to exploit and develop reserves, the ability of Antrim's partners to meet their commitments as they relate to the Company and more specifically the ability of Valiant to honour its commitments are identified in the Conditional Letter Agreement. Antrim's ability to obtain financing on acceptable terms, the general stability of the economic and political environment in which Antrim operates and the future of oil and natural gas pricing. In respect to these assumptions, the reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect.

Antrim's actual results could differ materially from those anticipated in these forward-looking statements and information as a result of assumptions proving inaccurate and of both known and unknown risks, including risks associated with the exploration for and development of oil and natural gas reserves, operational risks and liabilities that are not covered by insurance, volatility in market prices for oil, NGLs and natural gas, changes or fluctuations in oil, NGLs and natural gas production levels, changes in foreign currency exchange rates and interest rates, the ability of Antrim to fund its substantial capital requirements and operations, risks associated with ensuring title to the Company's properties, liabilities and unexpected events inherent in oil and gas operations, including geological, technical, drilling and processing problems, the accuracy of oil and gas reserve estimates and estimated production levels as they are affected by the Antrim's exploration and development drilling and estimated decline rates, in particular the future production rates at the Causeway and Fyne fields in the UK North Sea and at the Tierra del Fuego properties in Argentina. Additional risks include the ability to effectively compete for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of acquisitions, Antrim's success at acquisition, exploitation and development of reserves, changes in general economic, market and business conditions in Canada, North America, Argentina, South America, the United Kingdom, Europe and worldwide, actions by governmental or regulatory authorities including changes in income tax laws or changes in tax laws, royalty rates and incentive programs relating to the oil and gas industry and more specifically, changes to the capped market price in Argentina, changes in environmental or other legislation applicable to Antrim's operations, and Antrim's ability to comply with current and future environmental and other laws, adverse regulatory rulings, order and decisions and risks associated with the nature of the Common Shares.

Statements relating to "resources" are deemed to be forward-looking statements. The estimates of remaining recoverable prospective resources have been risked for chance of discovery, but have not been risked for chance of development. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development.

Many of these risk factors, other specific risks, uncertainties and material assumptions are discussed in further detail throughout the MD&A and in Antrim's management discussion and analysis for the year ended December 31, 2009. Readers are specifically referred to the risk factors described in this MD&A under "Risk Factors" and in other documents Antrim files from time to time with securities regulatory authorities. Copies of these documents are available without charge from Antrim or electronically on the internet on Antrim's SEDAR profile at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The calculation of barrels of oil equivalent ("boe") is based on a conversion rate of six thousand cubic feet of natural gas ("mcf") to one barrel of crude oil ("bbl"). Boe's 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.

In accordance with AIM guidelines, Mr. Kerry Fulton, P. Eng and Vice President, Operations for Antrim, is the qualified person that has reviewed the technical information contained in this MD&A.

Antrim Energy Inc.
Consolidated Balance Sheets
As at September 30, 2010 and December 31, 2009 (unaudited)
(U.S. Dollars)
 
  2010 $ 2009 $
Assets    
     
Current assets    
Cash and cash equivalents 24,426,082 31,168,669
Restricted cash 100,000 -
Accounts receivable 4,138,661 3,278,166
Inventory and prepaid expenses 494,119 937,513
  29,158,862 35,384,348
     
Petroleum and natural gas properties 253,361,193 248,012,987
Office equipment 472,555 447,160
Investments and other non-current assets 1,833,903 1,274,384
  284,826,513 285,118,879
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities 2,470,703 3,424,596
Loan from Valiant 355,551 -
  2,826,254 3,424,596
     
Asset retirement obligation 5,529,123 5,696,945
  8,355,377 9,121,541
     
Commitments and contingencies    
     
Shareholders' equity    
Share capital 311,981,756 311,946,244
Contributed surplus 17,439,893 15,605,999
Deficit (54,867,923) (49,586,859)
Accumulated other comprehensive income (loss) 1,917,410 (1,968,046)
  276,471,136 275,997,338
  284,826,513 285,118,879
Consolidated Statements of Loss and Deficit For the Periods Ended September 30, 2010 and 2009 (unaudited)(U.S. Dollars)    
  Three Months Ended September 30 Nine Months Ended September 30
  2010 $ 2009 $ 2010 $ 2009 $
         
Revenue        
Oil and gas 4,014,569 4,236,161 9,845,487 9,581,360
Royalties (469,884) (595,886) (1,348,896) (1,236,982)
Export tax (46,509) (50,327) (113,874) (72,497)
    3,498,176 3,589,948 8,382,717 8,271,881
Interest and other income 769,612 613,477 1,771,179 1,442,887
    4,267,788 4,203,425 10,153,896 9,714,768
           
Expenses        
Operating 1,291,152 1,823,486 3,636,335 4,956,551
General and administrative 1,459,545 1,306,950 4,565,688 4,069,057
Stock-based compensation 503,510 676,412 1,427,354 2,468,364
Depletion and deprecation 2,110,125 1,737,660 5,431,268 4,410,534
Accretion of asset retirement obligations 78,931 156,702 234,218 435,130
Foreign exchange (gain) loss (28,174) 255,257 81,214 (29,246)
    5,415,089 5,956,467 15,376,077 16,310,390
           
Loss for the period before income taxes (1,147,301) (1,753,042) (5,222,181) (6,595,622)
           
Income tax expense (recovery)        
Current 3,024 4,503 58,883 81,532
Future - (6,112) - (188,220)
    3,024 (1,609) 58,883 (106,688)
Net loss for the period (1,150,325) (1,751,433) (5,281,064) (6,488,934)
Deficit – beginning of period (53,717,598) (41,764,769) (49,586,859) (37,027,268)
Deficit – end of period (54,867,923) (43,516,202) (54,867,923) (43,516,202)
           
Net loss per common share        
  Basic (0.01) (0.01) (0.04) (0.05)
  Diluted (0.01) (0.01) (0.04) (0.05)
           
Consolidated Statements of Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) For the Periods ended September 30, 2010 and 2009 (unaudited)(U.S. Dollars) Three Months Ended September 30 Nine Months Ended September 30
  2010 $ 2009 $ 2010 $ 2009 $
         
Net loss for the period (1,150,325) (1,751,433) (5,281,064) (6,488,934)
   
Comprehensive income (loss)        
Unrealized gain on translation of consolidated financial statements 4,125,512 14,363,044 3,885,456 24,013,129
Comprehensive income (loss) 2,975,187 12,611,611 (1,395,608) 17,524,195
         
         
Accumulated other comprehensive income (loss) – beginning of period (2,208,102) (24,607,331) (1,968,046) (31,318,787)
Change in accounting policy - - - (2,938,629)
Other comprehensive income 4,125,512 14,363,044 3,885,456 24,013,129
Accumulated other comprehensive income (loss) – end of period 1,917,410 (10,244,287) 1,917,410 (10,244,287)
         
Consolidated Statements of Cash Flows For the Periods ended September 30, 2010 and 2009 (unaudited)(U.S. Dollars) Three Month Ended September 30 Nine Months Ended September 30
  2010 $ 2009 $ 2010 $ 2009 $
Cash provided by (used in):        
         
Operating Activities        
Net loss for the period (1,150,325) (1,751,433) (5,281,064) (6,488,934)
Items not involving cash:        
  Depletion and depreciation 2,110,125 1,737,660 5,431,268 4,410,534
  Accretion of asset retirement obligations 78,931 156,702 234,218 435,130
  Stock-based compensation expense 503,510 676,412 1,427,354 2,468,364
  Foreign exchange (gain) loss (33,613) (69,507) 99,350 (325,831)
  Future income taxes - (6,112) - (188,220)
  1,508,628 743,722 1,911,126 311,043
Change in non-cash working capital items (1,179,459) (762,341) (1,399,353) (1,489,758)
  329,169 (18,619) 511,773 (1,178,715)
         
Financing Activities        
Issue of common shares 14,913 - 21,136 (6,859)
  14,913 - 21,136 (6,859)
Investing Activities        
Office equipment (12,949) (34,075) (206,518) (108,525)
Petroleum and natural gas properties (3,009,230) (1,051,706) (6,447,045) (5,330,470)
Restricted cash - - (100,000) -
Other non-current assets (5,738) (127,190) (604,865) (110,384)
         
Change in non-cash working capital items 286,678 36,559 (186,444) (1,029,048)
  (2,741,239) (1,176,412) (7,544,872) (6,578,427)
Effect of foreign exchange translations on cash flow 417,132 1,841,319 269,376 3,710,882
Net (decrease) increase in cash and cash equivalents (1,980,025) 646,288 (6,742,587) (4,053,119)
Cash and cash equivalents – beginning of period 26,406,107 30,637,600 31,168,669 35,337,007
Cash and cash equivalents – end of period 24,426,082 31,283,888 24,426,082 31,283,888

Contact Information

  • Antrim Energy Inc.
    Stephen Greer
    President & CEO
    (403) 264-5111
    (403) 264-5113 (FAX)
    greer@antrimenergy.com
    or
    Antrim Energy Inc.
    Douglas Olson
    Chief Financial Officer
    (403) 264-5111
    (403) 264-5113 (FAX)
    olson@antrimenergy.com
    or
    Antrim Energy Inc.
    Scott Berry
    Manager, Investor Relations
    (403) 264-5111
    (403) 264-5113 (FAX)
    berry@antrimenergy.com