Antrim Energy Inc.

TSX : AEN
AIM : AEY


Antrim Energy Inc.

November 14, 2012 02:00 ET

Antrim Energy Inc. Announces 2012 Third Quarter Financial and Operational Results

CALGARY, ALBERTA--(Marketwire - Nov. 14, 2012) -

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, 2012.

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

HIGHLIGHTS:
  • Causeway first production commenced with initial gross production of approximately 4,500 bopd
  • Oil discovery on Contender exploration well in October 2012
  • Antrim signs Heads of Terms agreement with Teekay to lease an FPSO; Fyne development plans proceeding with targeted submission of an FDP in January 2013
  • Cyclone exploration well expected to commence drilling in the fourth quarter of 2012
  • Fionn Field development on track; first production anticipated for the middle of 2013
  • Completed sale of Antrim Argentina to Crown Point Ventures Ltd.

Overview of Continuing Operations

Causeway Licences

On November 12, 2012, Antrim announced that first oil production from Causeway had commenced with initial gross production of approximately 4,500 barrels of oil per day ("bopd") on a 53% choke. Initial production rates are currently being impacted by longer than anticipated clean-up and commissioning due to the long horizontal nature of the well. The installed electric submersible pumps are anticipated to contribute to increased production rates in the first half of 2013.

The Causeway Field includes one production well with a planned water injection well to be completed in early 2013. Oil is transported by pipeline to and processed at the North Cormorant production platform operated by TAQA Britani Limited ("TAQA") before being exported to the Sullom Voe terminal via the Brent Pipeline System for sale to BP Oil International Limited ("BP"). Antrim's remaining development costs for its 35.5% working interest are estimated at $19.1 million in 2012 and $13.8 million in 2013.

As part of the sale of the 30% working interest in the Causeway Licences to Valiant Petroleum plc ("Valiant") in October 2011, Antrim entered into a DLA giving Valiant the right to produce and sell 6.25% of Antrim's share of oil produced, without liability for operating costs and expenses. Antrim's share of oil produced will be reduced to 29.25% until a cumulative value of $8.9 million of oil is received by Valiant.

Fionn Field first production is anticipated for the middle of 2013. Valiant has completed the early installation of subsea infrastructure for the development of the Fionn Field. A field development plan ("FDP") for the Fionn Field was approved by the Department of Energy and Climate Change ("DECC") in August 2012. Fionn Field production will be combined with the Causeway Field production and transported for processing to the North Cormorant platform. Antrim's share of the development costs for the Fionn Field, including the pre-investment costs, is estimated to be approximately $22 million.

Contender Licence

On October 22, 2012, Antrim announced the discovery of oil at well 211/21-N94 (the "Contender Well") in UK Northern North Sea Licence P201 Block 211/22a Contender Area (the "Contender Block", Antrim interest 8.4%). The Contender Well was drilled to a total drilling depth of 16,903 feet (11,550 feet true vertical depth). Revised estimates indicate a net oil pay of 73 feet (true vertical), with greater than expected porosity and hydrocarbon saturation. TAQA is in the process of filing an FDP with DECC under the name 'Cormorant East.' Production would be processed through the North Cormorant platform with an anticipated start date of late 2012. Under the terms of the farm-out agreement with TAQA, 100% of the drilling, completion and tie in costs will be completely funded by TAQA. Antrim's working interest share of the completion costs and tie in will be recovered from production revenue.

Kerloch Licence

With the successful drilling of the Contender exploration well, TAQA also earned a 35% working interest in the adjacent Licence P201 Block 211/22a Kerloch Area, reducing Antrim's working interest from 21% to 13.65%.

Fyne Licence

On November 12, 2012, Antrim signed a Heads of Terms agreement with Hummingbird Production Limited, a subsidiary of Teekay Corporation ("Teekay") to lease the "Hummingbird Spirit" Floating Production, Storage and Offloading vessel ("FPSO") for the development of the Fyne Field. Based on the Heads of Terms, fully termed agreements will be developed, which will be subject to approval of an FDP by DECC. Antrim expects to submit the Fyne FDP to DECC for approval in January 2013. First oil would be anticipated in the fourth quarter of 2014, contingent on the timing of the redeployment of the Hummingbird Spirit from its current location.

A reserves estimate for the Fyne Field was recently updated by McDaniel and Associates Consultants Ltd. ("McDaniel"), incorporating the results of well 21/28a-11 drilled earlier this year in the East Fyne area. Proved plus Probable reserves in the Fyne Field are estimated by McDaniel as at September 30, 2012 to be 11.7 million barrels of oil.

Antrim continues to seek financing and/or joint venture partners to participate in the development of Fyne and the other Greater Fyne Area licences.

In June 2012, Antrim received approval from DECC to acquire a 39.9% working interest, associated reserves, and operatorship from Premier and an additional 25% working interest and associated reserves from First Oil at no cost. This follows notice from both Premier and First Oil of their intention to withdraw from the Fyne Licence. Antrim's increased ownership in Fyne of 100%, on execution by all parties of the final completion documents, will allow Antrim sole control over development; however, increased ownership could increase the risk that the development of Fyne will not proceed as expected.

If Antrim is to continue with the Fyne Licence, an FDP for the Fyne Field will need to be submitted ready for approval by the January 11, 2013 extended deadline. Approval of the FDP by DECC is required for Antrim to proceed with the development and first oil production by November 2014. If an FDP is not submitted ready for approval by January 11, 2013, the Fyne Licence could be revoked.

Greater Fyne Area Licences

On October 2, 2012, DECC agreed to waive the seismic and contingent well obligations on Licence P1563 Blocks 21/28b & 21/29c which allows the Company to relinquish the licence in its entirety. Accordingly, the Company plans to relinquish the Licence in its entirety in the fourth quarter of 2012. The Licence was a 25th round licence issued February 12, 2009 and is scheduled to expire February 12, 2013.

Cyclone Prospect

Licence P1784 Block 21/7b (Antrim 30%) is located in the Central North Sea, north of the Greater Fyne Area. The block contains the "Cyclone" and the "Typhoon" Tertiary Cromarty prospects at approximately 5,000 and 5,600 feet respectively. The licence was acquired jointly with Premier (70%, operator) with a firm well commitment. The joint venture partners have approved an exploration well on the Cyclone prospect and signed a contract for use of a semi-submersible drilling rig to drill the well. Drilling is anticipated to start in the fourth quarter of 2012.

Ireland

In 2011, Antrim was awarded a Frontier Licence Option by the Department of Communications, Energy and Natural Resources of Ireland, under the Irish 2011 Atlantic Margin Licensing Round. The Licence option area covers Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14, 44/15, an area of approximately 1,409 square km located in the Porcupine Basin approximately 110 km off the southwest coast of Ireland. The option allows Antrim two years to qualify the blocks for a full Exploration Licence. Antrim has licenced 2D seismic and is currently reprocessing and interpreting the data which will continue into early 2013.

Tanzania

Antrim holds an option to acquire a 20% interest in the production sharing agreement for the Pemba-Zanzibar exploration licence offshore and onshore Tanzania (the "P-Z PSA") following the pre-drilling (seismic) phase and an additional 10% interest to be exercised up to 180 days following receipt of the initial drilling results. Should Antrim exercise the initial option, costs for the seismic phase associated with Antrim's acquired interests would be repaid from future production. RAK Gas, the operator, has submitted a proposal for a revised work programme to the federal government of Tanzania. Environmental impact assessment work has commenced, with seismic operations expected to proceed in the near future.

On October 29, 2012, an announcement was made of an agreement between the federal government of Tanzania and the government of Zanzibar on the sharing of any future hydrocarbon revenues, potentially ending a moratorium which has long-delayed exploration projects. The agreement has still to be ratified by cabinet and final details are still to be agreed. It is not yet known what, if any, impact this agreement will have on the P-Z PSA.

Financial and Operating Results from Continuing Operations (unaudited)
Three Months Ended
September 30
Nine Months Ended
September 30
2012 2011 2012 2011
Financial Results ($000's except per share amounts)
Cash deficiency from operations (1) - continuing operations 472 894 5,251 2,914
Cash deficiency from operations per share (1) 0.00 0.00 0.03 0.02
Net loss - continuing operations 5,240 36,800 67,704 39,749
Net loss 5,396 36,281 67,389 38,178
Net loss per share - basic, continuing operations 0.03 0.20 0.37 0.23
Total assets 148,338 247,259 148,338 247,259
Working capital 21,013 52,674 21,013 52,674
Capital expenditures 21,526 2,093 36,263 4,483
Bank debt - - - -
Common shares outstanding (000's)
End of period 184,731 184,103 184,731 184,103
Weighted average - basic 184,433 184,100 184,273 170,590
Weighted average - diluted 185,450 185,419 185,519 172,004
(1) Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to "Non-IFRS Measures" in Management's Discussion and Analysis.

Outlook

Production from Causeway has started with initial gross production of approximately 4,500 bopd. The installed electronic submersible pumps are anticipated to contribute to increased production rates in the first half of 2013. A planned water injection well is to be completed in early 2013. Development of the Fionn Field is proceeding with production startup expected in the middle of 2013.

On October 22, 2012, Antrim announced the successful oil discovery at Contender. TAQA is in the process of filing an FDP with DECC under the name 'Cormorant East.' Production would be processed through the North Cormorant platform with an anticipated start date of late 2012.

A well is expected to be drilled in the fourth quarter of 2012 to test the Cyclone prospect in Block 21/7b.

Antrim is actively pursuing a development plan for the Fyne Licence. The review includes an evaluation of the costs and time requirements for the engineering design process, fabrication, deployment and hook up, the ability to attract additional partners into the licence including a recognized production operator, the availability of third party financing to fund the company's share of the project costs, and the probability of delivering first production before the November 2014 extension deadline.

Antrim will continue studies on the blocks covered by the Frontier Licence Options awarded to the Company in the Irish 2011 Atlantic Margin Licensing Round. Antrim has licenced 2D seismic and is currently reprocessing and interpreting the data.

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 Ireland. 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 and Cautionary 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 Antrim's plans for the developing of its Fyne property, including anticipated timing thereof, future drilling plans with respect to Contender and Cyclone, expected production rates for Causeway, anticipated first production date and development plans for Fionn, 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.

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 obtain additional drilling rigs and other equipment in a timely manner, obtain regulatory approvals (including in respect of the Fyne FDP), 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 Antrim's reliance on industry partners for the development of some of its properties, 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 such as the risk that drilling operations may not be successful, unanticipated delays with respect to the development of Antrim's properties, 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 (including the development of its Fyne property), Antrim's reliance on industry partners for the development of some of its properties, 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, Fionn and Fyne Fields in the UK North Sea. 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, 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 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.

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, 2011. 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. Mr. Fulton has over 30 years operating experience in the upstream oil and gas industry.

Antrim Energy Inc.
Consolidated Balance Sheet
As at September 30, 2012 and December 31, 2011 (unaudited)
(Amounts in US$ thousands)
September 30
2012
December 31
2011
Assets
Current assets
Cash and cash equivalents 25,372 47,105
Restricted cash 404 17,249
Accounts receivable 425 5,294
Prepaid expenses 1,091 240
Assets held for sale - 31,651
27,292 101,539
Property, plant and equipment 51,903 15,207
Exploration and evaluation assets 69,143 122,431
148,338 239,177
Liabilities
Current liabilities
Accounts payable and accrued liabilities 6,279 17,214
Liabilities held for sale - 4,180
6,279 21,394
Asset retirement obligations 8,534 3,595
Contingent consideration - 7,000
14,813 31,989
Commitments and contingencies
Subsequent event
Shareholders' equity
Share capital 361,922 361,587
Contributed surplus 20,157 19,579
Accumulated other comprehensive income (loss) 4,499 (5,971 )
Deficit (253,053 ) (168,007 )
133,525 207,188
148,338 239,177
Antrim Energy Inc.
Consolidated Statement of Comprehensive Loss
For the three and nine months ended September 30, 2012 and 2011 (unaudited)
(Amounts in US$ thousands, except per share data)
Three Months Ended September 30 Nine Months Ended
September 30
2012 2011 2012 2011
Revenue - - - -
Expenses
General and administrative expenses 1,225 1,243 4,250 3,462
Depreciation 24 55 70 138
Share-based compensation 430 187 613 697
Exploration and evaluation expenditures 1,185 26 1,312 247
Impairment 2,304 35,605 57,004 35,605
Reduction in the fair value of financial assets - - 10,040 -
Gain on disposal of Argentina assets - - (5,894 ) -
5,168 37,116 67,395 40,149
Finance income (94 ) (238 ) (302 ) (614 )
Finance costs 40 174 182 392
Foreign exchange loss (gain) 126 (252 ) 429 (178 )
Loss from continuing operations before income taxes 5,240 36,800 67,704 39,749
Income tax expense - - - -
Loss from continuing operations after income taxes 5,240 36,800 67,704 39,749
Loss (income) from discontinued operations 156 (519 ) (315 ) (1,571 )
Net loss for the period 5,396 36,281 67,389 38,178
Other comprehensive loss (income)
Foreign currency translation adjustment 5,193 (8,796 ) 13,683 (2,651 )
Foreign currency translation adjustment - disposal of assets - - (3,213 ) -
Other comprehensive loss (income) for the period 5,193 (8,796 ) 10,470 (2,651 )
Comprehensive loss for the period 10,589 27,485 77,859 35,527
Net loss (income) per common share
Basic & diluted - continuing operations 0.03 0.20 0.37 0.23
Basic & diluted - discontinued operations 0.00 (0.00 ) (0.00 ) (0.01 )
Antrim Energy Inc.
Consolidated Statement of Cash Flows
For the three and nine months ended September 30, 2012 and 2011 (unaudited)
(Amounts in US$ thousands)
Three Months Ended
September 30
Nine Months Ended
September 30
2012 2011 2012 2011
Operating Activities
Loss from continuing operations after income taxes 5,240 36,800 67,704 39,749
Items not involving cash:
Depreciation 24 55 70 138
Share-based compensation 430 187 613 697
Accretion of asset retirement obligations 22 61 96 181
Foreign exchange loss (gain) 1,988 (2 ) 524 214
Impairment 2,304 35,605 57,004 35,605
Reduction in the fair value of financial assets - - 10,040 -
Gain on disposal of Argentina assets - - (5,894 ) -
(472 ) (894 ) (5,251 ) (2,914 )
Changes in non-cash working capital items - continuing operations (1,140 ) 1,277 (6,916 ) 1,012
Cash (used in) provided by operating activities - continuing operations (1,612 ) 383 (12,167 ) (1,902 )
Cash (used in) provided by operating activities - discontinued operations (156 ) 233 (365 ) 4,378
Cash (used in) provided by operating activities (1,768 ) 616 (12,532 ) 2,476
Financing Activities
Issue of common shares 116 31 186 52,421
Share issue expenses - - - (2,999 )
Cash provided by financing activities 116 31 186 49,422
Investing Activities
Capital expenditures (21,526 ) (2,093 ) (36,263 ) (4,483 )
Restricted cash (404 ) (20,266 ) 16,845 (20,266 )
Cash proceeds from the disposal of Argentina assets - - 9,976 -
Cash used in investing activities - continuing operations (21,930 ) (22,359 ) (9,442 ) (24,749 )
Cash used in investing activities - discontinued operations - (280 ) (1,121 ) (2,076 )
Cash used in investing activities (21,930 ) (22,639 ) (10,563 ) (26,825 )
Effects of foreign exchange on cash and cash equivalents 1,380 (3,091 ) 1,176 (2,384 )
Net (decrease) increase in cash and cash equivalents (22,202 ) (25,083 ) (21,733 ) 22,689
Cash and cash equivalents - beginning of period 47,574 73,422 47,105 25,650
Cash and cash equivalents - end of period 25,372 48,339 25,372 48,339
Interest received 94 238 302 614
Interest paid 10 10 60 98
Antrim Energy Inc.
Consolidated Statement of Changes in Equity
For the nine months ended September 30, 2012 and 2011 (unaudited)
(Amounts in US$ thousands)
Number of common shares Share capital Contributed
surplus
Accumulated other comprehensive income
Deficit

Total
Balance, December 31, 2010 135,571,542 312,062 18,377 (4,119 ) (115,037 ) 211,283
Net loss for the period - - - - (38,178 ) (38,178 )
Other comprehensive income - - - (2,651 ) - (2,651 )
Issuance of common shares 48,191,700 52,297 - - - 52,297
Share issuance costs - (2,999 ) - - - (2,999 )
Share-based compensation - - 1,021 - - 1,021
Stock options exercised 339,503 208 (84 ) - - 124
Balance, September 30, 2011 184,102,745 361,568 19,314 (6,770 ) (153,215 ) 220,897
Balance, December 31, 2011 184,116,078 361,587 19,579 (5,971 ) (168,007 ) 207,188
Net loss for the period - - - - (67,389 ) (67,389 )
Capital distribution - - - - (17,657 ) (17,657 )
Other comprehensive income - - - 10,470 - 10,470
Share-based compensation - - 727 - - 727
Stock options exercised 614,998 335 (149 ) - - 186
Balance, September 30, 2012 184,731,076 361,922 20,157 4,499 (253,053 ) 133,525

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