Antrim Energy Inc.
TSX VENTURE : AEN
AIM : AEY

Antrim Energy Inc.

May 28, 2015 19:00 ET

Antrim Energy Inc. Announces 2015 First Quarter Results

CALGARY, ALBERTA--(Marketwired - May 28, 2015) -

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

Antrim Energy Inc. ("Antrim" or "the Company") (TSX VENTURE:AEN)(AIM:AEY), an international oil and gas exploration company, today reported its financial results for the three month period ended March 31, 2015.

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

Highlights

  • Significant resource potential assigned to leads within the Skellig Licence (Antrim 25%), offshore Ireland
  • Prospect inventory prepared by Kosmos (operator of the Skellig Licence) in December 2014 includes several leads and highlights three prospects including two tilted, Jurassic fault blocks and a Cretaceous submarine fan
  • Strong working capital balance (US $14.2 million) at March 31, 2015
  • Continue to evaluate new opportunities for transformative upside potential

Ireland

Frontier Exploration Licence 1-13, Antrim 25%

Antrim acquired a Licensing Option in the 2011 Atlantic Margin Licensing Round covering an area of 1,409 km2 (the "Skellig Block"). Antrim licensed, reprocessed and interpreted 2-D seismic data over the blocks and identified a Cretaceous deep sea fan complex similar in seismic character to many of the recent Cretaceous oil discoveries offshore West Africa.

In April 2013, the Company farmed out a 75% interest in, and operatorship of, the Licensing Option to Kosmos Energy Ltd. ("Kosmos") in exchange for Kosmos carrying the full costs of a planned 3-D seismic program within the licence area and re-imbursement to Antrim of a portion of the exploration costs incurred on the blocks to date. Antrim retained a 25% interest. The transaction was approved by the Department of Communications, Energy and Natural Resources of Ireland ("DCENR"). On July 15, 2013, DCENR approved the conversion of the Licensing Option to a Frontier Exploration Licence ("FEL").

The 3-D seismic was acquired in 2013 and results from the 3-D seismic programme reinforced the interpretation based on 2-D seismic and strongly indicated the presence of Lower Cretaceous slope fan and channel deposits similar in geometry and seismic character to many of the recent Cretaceous oil discoveries offshore West Africa.

On July 29, 2014 Antrim announced the results of an independent prospective resources report for the Skellig Block. These prospective resources were evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") in accordance with National Instrument 51-101 in a report dated effective June 30, 2014. Prospective resources were assigned to 17 leads within the Skellig Block. See "Notes on Oil and Gas Disclosure" below.

The following table provides an aggregate summary of the Prospective Resources for the 17 independent leads evaluated within the entire property:

Prospective Resources (1) (2) (3) (4) (5) Property Antrim
Table 1 - Total All Leads Risked Risked
Mean Estimate Mean Estimate
Crude Oil (Mbbl) 59,396 14,849
Natural Gas (MMcf) 992,865 248,216
Condensate (Mbbl) 22,330 5,582
Cumulative Thousand Barrels of Oil Equivalent (Mboe) 247,203 61,800

The following table provides an aggregate risked mean estimate of the Prospective Resources for the two largest independent leads ("C" and "M-3") which represent 46.5% of the total risked mean property boe of Prospective Resources.

Prospective Resources (1) (2) (3) (4) (5)
Table 2 - Lead C and M-3 Lead C and M-3 Antrim
Risked Risked
Mean Estimate Mean Estimate
Crude Oil (Mbbl) 31,908 7,977
Natural Gas (MMcf) 439,970 109,993
Condensate (Mbbl) 9,661 2,415
Cumulative Thousand Barrels of Oil Equivalent (Mboe) 114,896 28,724

Notes:

(1) There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be economically viable or technically feasible to produce any portion of the resources.
(2) The columns marked as "Risked" 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. The chance of discovery assigned to each of the 17 leads ranged from 8% to 25% and averaged 12.56%.
(3) The "Antrim Risked Mean Estimate" reflects Antrim`s 25% working interest share of the gross prospective resource estimates shown in the "Property Risked Mean Estimate" column (Table 1); or the combined prospective resource estimates shown for the subsidiary "Lead C and M-3 Risked Mean Estimate" (Table 2). All other columns in the above table reflect the gross 100% prospective resources of the Licence (of which Antrim's current working interest is 25%).
(4) Gas was converted to barrels of oil equivalent ("boe") at a ratio of 6 Mcf to 1 bbl.
(5) The total risked mean is equal to the aggregate sum of the unrisked mean (arithmetic average) estimate for each lead multiplied by the chance of discovery for the lead.

The prospect inventory prepared by Kosmos in December 2014 includes several leads previously identified and highlights three prospects including two tilted Jurassic fault blocks and a Cretaceous submarine fan. Two of the three prospects were included as leads in the prospective resources evaluated by McDaniel. A second Jurassic prospect identified by Kosmos has yet to be reviewed by McDaniel pending receipt of additional information. Sophisticated additional detailed seismic analysis is planned for 2015 to mitigate drilling risk among the top three identified prospects including trace inversion, AVO mapping and modeling, spectral decomposition and attribute extraction.

FEL 1-13 has a 15 year term, with an initial three-year term followed by three four-year terms. At least three months before the end of the initial term a work programme for the second term must be proposed. That programme must include the drilling of an exploration well. At the end of the initial three-year term (July 4, 2016), 25% of the acreage must be relinquished.

Fyne Licence

P077 Block 21/28a - Fyne, Antrim 100%

The Company is in discussion with DECC with respect to relinquishment and possible reapplication for the licence. The carrying value of the Fyne Licence at March 31, 2015 is $nil (December 31, 2014 - $nil).

The Fyne Licence includes three suspended wells and the Erne Licence one suspended well. The estimated decommissioning obligation for these wells at March 31, 2015 is based on a stand-alone abandonment program to be completed in 2016. The Company is currently evaluating options to abandon these wells as part of a 2015 or 2016 multi-client, multi-well abandonment program which the Company believes could reduce the Company's net share of abandonment costs from $4.7 million to $2.8 million.

Erne Licence

P1875 Block 21/29d - Erne, Antrim 50%

The Erne Licence started in January 2011 and is a Promote Licence with a drill-or-drop commitment. The Erne wells drilled in late 2011 met all the commitments on the Licence. A discovery was made with the 21/29d-11 well and also in the up-dip side-track 21/29d-11z well. These discoveries are not commercial on their own, but may be economic to develop as tie-backs to an adjacent production facility if such a facility were available. The initial four year term of the Licence expired in January 2015 prior to which 50% of the Licence area was relinquished. The carrying value of the Erne Licence at March 31, 2015 is $nil (December 31, 2014 - $nil).

Financial Discussion of Continuing Operations

Three Months Ended
March 31
($000's except per share amounts) 2015 2014
Financial Results
Cash flow used in operations (1) 469 (1,179 )
Cash flow used in operations per share (1) 0.00 (0.01 )
Net income (loss) - continuing operations 461 (1,538 )
Net income (loss) per share - basic, continuing operations 0.00 (0.01 )
Net income (loss) 461 (8,461 )
Net income (loss) per share - basic 0.00 (0.05 )
Total assets 15,784 91,865
Working capital 14,249 (5,072 )
Capital expenditures - continuing operations 28 142
Common shares outstanding
End of period 184,731 184,731
Weighted average - basic 184,731 184,731
Weighted average - diluted 184,731 184,731
(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.

Cash Flow and Net Loss from Continuing Operations

In the first quarter of 2015 cash flow from operations was $0.5 million compared to cash flow used in operations of $1.2 million for the corresponding period in 2014. Cash flow increased due to a $1.2 million foreign exchange gain in the first quarter of 2015 as a result of a significant decline in the period in the value of the Canadian dollar relative to the US dollar. Excluding foreign exchange gains and losses, cash flow used in operations in the first quarter of 2015 was $0.8 million compared to $1.2 million for the corresponding period in 2014.

In the first quarter of 2015, Antrim had net income from continuing operations of $0.5 million compared to a net loss from continuing operations of $1.5 million for the corresponding period in 2014. Net income increased due to foreign exchange gains and lower general and administrative costs.

Financial Resources and Liquidity

Antrim had a working capital surplus at March 31, 2015 of $14.2 million compared to a working capital surplus of $15.1 million as at December 31, 2014. Working capital decreased due to general and administrative expenses incurred in the period.

Outlook

The Company will continue to evaluate and de-risk the Irish Skellig Licence with a view to farming down or otherwise reducing its interest before a well is drilled. Sophisticated additional detailed seismic analysis is planned for the remainder of 2015 to mitigate drilling risk among the top three identified prospects including trace inversion, AVO mapping and modeling, spectral decomposition and attribute extraction. When combined with prior structural and stratigraphic mapping, these analyses should provide significant insight and guidance with respect to any future drilling programme. In the context of low oil prices and inability to achieve first oil from the Fyne Licence prior to November 2016, the Company anticipates little capital spending in 2015 in the UKNS with the exception of well abandonment costs.

The Company intends to use its strong balance sheet and licence holding to acquire opportunities either asset specific or corporate where an acquisition or a corporate combination would enhance shareholder value. The Company has good access to international M&A opportunities and evaluated a number of opportunities in 2014 and the first quarter of 2015. The Company plans to look for additional opportunities and assess those opportunities based on, amongst other criteria, strategic fit, focus on near term appraisal / development, use of funds, transformative potential with upside potential for Antrim shareholders and current or near term cash flow.

The board of Antrim views the Company's strong financial position as a competitive advantage in the current volatile oil price environment and the Company will continue to seek ways to reduce the Company's G&A costs to further protect its financial position. G&A costs in 2015 are budgeted to be approximately 50% of G&A in 2014.

About Antrim

Antrim Energy Inc. is a Canadian, Calgary based junior oil and gas exploration company with assets in the UK North Sea and Ireland. Antrim is listed on the TSX Venture Exchange (AEN) and on the London AIM market (AEY). Antrim's first quarter 2015 interim report (including management's discussion and analysis and consolidated financial statements), is available on SEDAR and our website. Visit www.antrimenergy.com for more information.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Notes on Oil and Gas Disclosure

Prospective resources are defined as those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.

Estimates of resources always involve uncertainty, and the degree of uncertainty can vary widely between accumulations/projects and over the life of a project. Consequently, estimates of resources should generally be quoted as a range according to the level of confidence associated with the estimates. An understanding of statistical concepts and terminology is essential to understanding the confidence associated with resources definitions and categories. The range of uncertainty of estimated recoverable volumes may be represented by either deterministic scenarios or a probability distribution.

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.

The resource estimates contained herein are estimates only and the actual results may be greater than or less than the estimates provided herein. The estimates of resources for individual leads may not reflect the same confidence level as estimated resources for all leads, due to the effects of aggregation.

Positive aspects of exploration in the Skellig Block are: (i) similarity of basin geology to geology of the northern part of the Porcupine Basin and the Canadian North Atlantic basins on the conjugate margin where hydrocarbon discoveries have been made; and (ii) a working petroleum system with a proven Jurassic source and the possibility of mature Cretaceous shales. Potential concerns of exploration in the Skellig Block are: (i) the presence of significant quantities of reservoir quality sands at depths of 4,000 to 6,000 metres subsea; (ii) lateral seals in Cretaceous stratigraphic traps; and (iii) hydrocarbon migration into potential Cretaceous reservoirs.

Additionally, certain abbreviations are as follows:

Oil and Natural Gas Liquids

Bbls - barrels
Mbbls - thousand barrels
Mboe - thousand barrels of oil equivalent

Natural Gas

Mcf - thousand cubic feet
MMcf - million cubic feet

Forward-Looking and Cautionary Statements

This press release 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 press release 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 press release 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 press release and any documents incorporated by reference herein, contain specific forward-looking statements and information pertaining to the quantity of Antrim's resources of oil, natural gas liquids ("NGL") and natural gas. This press release may also contain specific forward-looking statements and information pertaining to Antrim's plans for exploring and developing its licences, including exploration of the Skellig block, commodity prices, foreign currency exchange rates and interest rates, capital expenditure programs and other expenditures, supply and demand for oil, NGLs 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 press release 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, the consideration received in the ARNIL Sale will not change materially as a result of post-closing adjustments, 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, 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 capital requirements, 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 risk that the consideration from the ARNIL Sale is reduced as a result of post-closing adjustments, the risk of adverse results from litigation and the accuracy of oil and gas resource estimates as they are affected by the Antrim's exploration and development drilling. 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, Ireland, 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 in Antrim's Annual Information Form for the year ended December 31, 2014. 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. Murray Chancellor, C. Eng., MICE and Managing Director, United Kingdom for Antrim, is the qualified person that has reviewed the technical information contained in this MD&A. Mr. Chancellor has over 25 years operating experience in the upstream oil and gas industry.

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