CALGARY, ALBERTA--(Marketwired - March 28, 2014) -
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 2013 year-end financial and operational results. The results include a summary and evaluation of reserves that have been independently assessed by McDaniel & Associates Consultants Ltd. in accordance with the standards specified by National Instrument 51-101.
All financial figures are unaudited and in US dollars unless otherwise noted.
On February 7, 2014 the Company announced that it entered into an agreement (the "Agreement") with First Oil Expro Limited ("FOE") pursuant to which, subject to the terms and conditions of the Agreement, FOE has agreed to purchase from the Company (the "Transaction") all of the issued and outstanding shares in the capital of Antrim's UK subsidiary, Antrim Resources (N.I.) Limited ("ARNIL") for $53 million in cash, plus the assumption of certain liabilities and adjusted working capital, from which Antrim will settle on closing all outstanding obligations under its Payment and Oil Swap agreements. The economic date of the proposed transaction is January 1, 2014 and a $5 million deposit was received from FOE to be applied towards the purchase price. Should the Transaction be completed in April 2014, Antrim expects to have approximately $17 - $18 million in working capital after repayment of the Payment and Oil Swap.
The Board of Directors of Antrim, after consultation with its financial and legal advisors, unanimously approved entering into the Agreement and recommends that Antrim shareholders approve the Transaction at a special meeting of shareholders to be held on April 4, 2014 (the "Meeting"). Full details of the Transaction are included in a management information circular (the "Circular") mailed to Antrim shareholders on February 28, 2014. Two leading independent proxy advisory firms have both recommended that Antrim shareholders vote FOR the proposed special resolution to approve the Transaction. See Going Concern on page 1 of Management's Discussion and Analysis for additional information.
Antrim believes that certain factors necessitate Antrim monetizing its interest in ARNIL at the present time and without delay. Antrim is or expects to be in breach of certain covenants under its Payment and Oil Swap agreements. To date, Antrim's counterparties to these agreements have not been willing to assume additional risk that would result from granting Antrim more time to meet the covenants which are or are expected to be in breach. In the event that Antrim is unable to remedy these covenant breaches and expected covenant breaches in a manner satisfactory to Credit Suisse, Credit Suisse may declare that Antrim is in breach of its obligations and they may become due and payable in full. If this result were to occur, it would likely have serious financial consequences for Antrim. Antrim believes that the ARNIL sale delivers an attractive price for the ARNIL assets and is a fair offer. Antrim thoroughly and exhaustively considered numerous alternatives generated in conjunction with Antrim's financial advisor, Carlingford. See the Circular filed on SEDAR at www.sedar.com for further details.
If the ARNIL sale is completed, Antrim will have no debt and will be able to continue to operate as a going concern, engaged in the oil and gas business, with greater financial resources and an opportunity to further develop Antrim's remaining assets as well as greater opportunities to raise capital or seek other strategic alternatives, including a possible business combination, to maximize shareholder value. It is possible that following completion of the ARNIL sale, Antrim will no longer meet the minimum listing requirements of the TSX, specifically the requirement that the Company have proved developed reserves associated with one or more of its oil and gas properties. Accordingly, the Company has applied for a listing on the TSXV to be effective on or about the Completion Date (in the event that the Company no longer meets the minimum listing requirements of the TSX). In addition to further development of its remaining properties, Antrim continues to consider various international exploration opportunities where Antrim believes such opportunities will create value for Antrim Shareholders.
Your vote is important. Regardless of the number of shares you own, we encourage every shareholder to participate. To be effective, proxies must be voted in advance of the meeting and, in the case of non-registered or beneficial shareholders, no later than 3:00 p.m. (Calgary Time) on April 2, 2014. For further details, refer to the management proxy circular filed on SEDAR at www.sedar.com. Shareholders who require assistance in voting their proxy may direct their inquiry to Antrim's proxy solicitation agent, CST Phoenix Advisors, toll-free in North America at 1-800-311-0721 or by email at email@example.com.
Financial Resources, Liquidity and Going Concern
There are a number of material uncertainties that raise significant doubts as to the Company's ability to continue as a going concern, including compliance with debt covenants, the performance of producing wells and related infrastructure, oil prices, ability to finish the planned development program for Causeway within budget, ability to secure additional financing and settlement of contingencies. See Going Concern on page 1 and Risk Factors on page 16 of Management's Discussion and Analysis for additional information.
As a result of the decision to divest, the majority of the Company's UK segment assets and liabilities have been reclassified as held for sale and the operations have been accounted for as discontinued operations. Comparative figures have been reclassified to conform with this presentation (see note 4 of the consolidated audited financial statements).
Antrim had a working capital surplus at December 31, 2013 of $0.8 million compared to a working capital deficiency of $10.7 million as at December 31, 2012. Without the reclassification of assets and liabilities held for sale, Antrim had a working capital deficiency at December 31, 2013 of $24.0 million, including bank debt (after discount) of $20.2 million and financial derivative (after discount) of $8.2 million. The reported bank debt and financial derivative amounts on the balance sheet at December 31, 2013 are after discount. The actual principal amount of bank debt outstanding at December 31, 2013 is $24.7 million compared to a balance sheet amount of $20.2 million. If the Company were to have settled the financial derivative at December 31, 2013 the payment amount would have been $10.6 million compared to a balance sheet amount of $8.2 million.
Overview of Continuing Operations
P077 Block 21/28a - Fyne, Antrim 100%
In late March 2013 the Company announced that it would not proceed with development of the Fyne Field with an FPSO following a significant escalation of expected future development costs. The Company subsequently signed a joint development agreement with Enegi Oil Plc ("Enegi") and Advanced Buoy Technology ("ABTechnology") to undertake engineering studies and preparation of a Field Development Plan ("FDP") using buoy technology. The terms of the agreement include that there will be no costs to the Company prior to FDP approval. During the second half of 2013 Enegi-ABTechnology worked with contractors to engineer the production facility for Fyne. The environmental statement is now due to be submitted during March 2014. Engineering work is now expected to continue during the summer with FDP approval to be sought prior to August 31, 2014. Upon approval of the FDP by DECC, Enegi-ABTechnology will earn the right to acquire 50% working interest in the licence. Antrim will remain operator.
DECC has agreed to amend the terms of the Fyne Licence to allow for a FDP for the Fyne Field to be submitted no later than August 31, 2014. DECC's consent to the amendment includes conditions, amongst other things, that the FDP submission is in its final form, the environmental statement is cleared, the Company is approved as a production operator, there is satisfactory evidence of project financing, and first production is achieved prior to November 25, 2016. If these conditions are not met, or if extensions from DECC are not obtained, potential consequences to Antrim could include the expiry of the Fyne Licence in accordance with its terms.
The independent evaluation of Antrim's oil and gas properties for the year ended December 31, 2013 prepared by McDaniel & Associates Consultants Ltd. and dated March 22, 2014 (the "McDaniel Report") did not assign any reserves to the Fyne Field compared to 11.8 million barrels proved plus probable reserves assigned to the Fyne and Crinan fields at December 31, 2012. The decrease is attributed to relinquishment in July 2013 of the Crinan Prospective Area and uncertainty as to the development of the Fyne Field.
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 well (21/29d-11 and 11z) 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 that transpires. The initial four year term of the Licence expires in January 2015 at which time there is a requirement to relinquish 50% of the Licence area. Erne has never been assigned any proved, probable or possible reserves or contingent resources.
Frontier Exploration Licence 1-13, Antrim 25%
Antrim acquired a Licensing Option in the 2011 Atlantic Margin Licensing Round which included Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14 and 44/15 covering an area of 1,409 km2 (the "Skellig Block"). Antrim licensed, reprocessed and interpreted 2D seismic data over the blocks and identified a Cretaceous deep sea fan complex similar in seismic character to many of the recent Cretaceous 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 3D 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"). FEL 1-13 has a 15 year term, with an initial three-year term followed by three four-year terms, following a mandatory 25% relinquishment of the Licensing Option area. The remaining licence area is 1,051.75 km2.
The approved work programme for the initial three year term of the FEL involves acquisition of 3D seismic over the FEL area followed by seismic processing, interpretation and geological studies. Seismic acquisition commenced on July 10, 2013 and was completed by the end of September 2013. Processing and interpretation of the seismic data is in progress.
Overview of Discontinued Operations
Licence P201 Block 211/22a South East Area and P1383 Block 211/23d, Antrim 35.5%
Production from the Causeway Field averaged 2,178 gross barrels of oil per day ("bopd") (Antrim net 637 bopd) in 2013 compared to an average of 4,081 gross bopd (Antrim net 1,194 bopd) from November to December 31, 2012. In 2013 production was interrupted for 11.5 weeks due to platform shutdowns and well tie-in operations related to another field. Production averaged 1,714 gross bopd (Antrim net 501 bopd) for the three months ended December 31, 2013 compared to 1,439 gross bopd (Antrim net 421 bopd) in the third quarter of 2013. Scheduled maintenance of the North Cormorant platform interrupted oil production for 21 days in the fourth quarter compared to 33 days in the third quarter. Oil production is transported by pipeline to the North Cormorant production platform where it is processed before being exported to the Sullom Voe terminal via the Brent Pipeline System for sale.
Anticipated startup of the downhole ESP and water injection well is now scheduled by the operator for late April 2014 following ongoing delays in completing required platform modification and water injection riser installation work. Until startup of the ESP oil is being produced in cycles to allow for sufficient pressure buildup between cycles.
Delays in completing the Causeway ESP and water injection facilities together with additional significant capital cost overruns on the project caused the Company to record a $12.1 million impairment charge in the third quarter of 2013. Following the agreement to sell all of the issued and outstanding shares in ARNIL, the Company recorded a $14.6 million impairment charge in the fourth quarter of 2013.
The McDaniel Report effective December 31, 2013 assigned the Causeway Field gross proved plus probable reserves of 4.957 million barrels (1.76 million net to Antrim) representing a 14% decrease from December 31, 2012 due to 2013 production.
P201 Block 211/22a Contender Area, Antrim 8.4%
On January 14, 2013, Antrim announced that first oil production had been achieved from the Cormorant East Field 85 days after discovery of the field. Production is processed through the North Cormorant platform before being exported to the Sullom Voe terminal. The Cormorant East Field is initially being produced under primary depletion with a single production well (the "Contender well"), with the potential to run an electrical submersible pump and to install a water injection scheme and/or additional production wells at a later date. A future drilling location has been identified and is scheduled to be drilled mid 2014.
Under the terms of the farm-out agreement with the operator, 100% of the drilling, completion and tie in costs of the Contender Well were funded by the operator. Antrim will receive its share of production after Antrim's working interest share of the completion and tie in costs plus 10% are recovered from production revenue.
Production from the Cormorant East Field has been constrained for mechanical reasons and averaged 457 gross bopd (Antrim net 38 bopd) in 2013 compared to nil in 2012. Production from the Cormorant East Field averaged 377 gross bopd (Antrim net 32 bopd) for the three months ended December 31, 2013 compared to 508 bopd (Antrim net 43 bopd) in the third quarter of 2013.
The McDaniel Report effective December 31, 2013 assigned the Cormorant East Field gross proved plus probable reserves of 7.1 million barrels (0.6 million net to Antrim) representing a 2% decrease from December 31, 2012 due to 2013 production.
Financial Discussion of Continuing Operations
All amounts reported in this press release related to the three month periods ended December 31, 2013 and 2012 are unaudited.
| ||Three Months Ended|| ||Year Ended|| |
| ||December 31,|| ||December 31,|| |
| ||2013|| ||2012|| ||2013|| ||2012|| |
|Financial Results ($000's except per share amounts)|| || || || || || || || |
|Cash flow used in operations (1)||(1,836||)||(8,137||)||(8,526||)||(13,388||)|
|Cash flow used in operations per share (1)||(0.01||)||(0.04||)||(0.05||)||(0.07||)|
|Net loss - continuing operations||(2,377||)||(67,131||)||(9,445||)||(134,805||)|
|Net loss per share - basic, continuing operations||(0 .01||)||(0.36||)||(0.05||)||(0.73||)|
|Net loss per share - basic||(0.11||)||(0.36||)||(0.21||)||(0.73||)|
|Total assets||91,836|| ||96,520|| ||91,836|| ||96,520|| |
|Working capital (deficiency)||788|| ||(10,734||)||788|| ||(10,734||)|
|Capital expenditures - continuing operations||239|| ||(582||)||616|| ||9,074|| |
| || |
|Common shares outstanding (000's)|| || || || || || || || |
|End of period||184,731|| ||184,731|| ||184,731|| ||184,731|| |
|Weighted average - basic||184,731|| ||184,848|| ||184,731|| ||184,388|| |
|Weighted average - diluted||184,731|| ||185,681|| ||184,731|| ||185,528|| |
|(1)||Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to "No n-IFRS Measures" in Management's Discussion and Analysis.|
Antrim Energy Inc. is a Canadian, Calgary based 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 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 and future net revenues from Antrim's reserves of oil, natural gas liquids ("NGL") and natural gas production levels. 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, future development plans with respect to Causeway and Cormorant East properties, factors affecting production processed at the North Cormorant platform, commodity prices, foreign currency exchange rates and interest rates, capital expenditure programs and other expenditures, Antrim's financing arrangements, the proposed Transaction for the sale of ARNIL, 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, 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 meet its obligations under the Payment and Oil Swap and the forward sale of Brent oil crude, 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 the risk that the proposed ARNIL Sale is delayed or not completed for any reason, the consideration to be received pursuant to the ARNIL Sale, the anticipated benefits of the ARNIL sale, 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, platform shutdowns affecting production levels, 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 and to repay its obligations under the Payment and Oil Swap, 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 of adverse results from litigation, 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 Cormorant East 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 in Antrim's Annual Information Form for the year ended December 31, 2013. Readers are specifically referred to the risk factors described under "Risk Factors" 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 press release. Mr. Fulton has over 30 years operating experience in the upstream oil and gas industry.