Candax Energy Inc.
TSX : CAX

Candax Energy Inc.

November 12, 2014 17:00 ET

Candax Energy Inc. Announces Third Quarter Financial & Operating Results

TORONTO, ONTARIO--(Marketwired - Nov. 12, 2014) - Candax Energy Inc. ("Candax" or the "Company") (TSX:CAX), a company focused on mature oil field development in Tunisia, today announced financial and operating results for the quarter ended September 30, 2014. The unaudited financial statements, notes and MD&A pertaining to the period are available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and by visiting www.candax.com. All monetary figures reported herein are U.S. dollars unless otherwise stated.

Selected Operational & Financial Highlights

  • Production, net of royalties, for the quarter ended September 30, 2014 was 528 bopd compared to 368 bopd for the same period last year. The increase was a result of the improved production due to a successful workover campaign in the Ezzaouia field ending with the restart of Ezzaouia-9 on June 29, 2014. In addition, the gas cycling program on the El Bibane asset continued to yield good results;

  • Revenue for nine months period ended September 30, 2014 was $14.0 million compared to $8.3 million for the same period last year. Additional revenue explained by an anticipation of a second lifting after issues with the Terminal Oil storage tank.

  • The Company reported a loss for the quarter ended September 30, 2014 of $7.5 million compared to a loss of $2.9 million for the same period last year. The difference relies on an impairment loss on El Bibane, amounting to $6.6 million corresponding to a total write-off of the recoverable value of the asset. The Company continues to improve its operating profit;

  • As at September 30, 2014, Candax held cash and cash equivalents of $5.3 million; and

  • As at September 30, 2014, Candax had loans and borrowings of $34 million with a current-portion of $6.3 million including $2.1 million of finance lease obligations over the new gas compressor;

  • Following a leak detected on the main oil storage Tank at the Terminal, Maretap has rented a heated storage barge since September 15, 2014 in order to maintain the Ezzaouia Field production during the investigation of the root cause and the repair of the leak. The investigation has revealed that the tank bottom and the floating membrane are to be fully replaced. As at November 12, 2014, an estimated budget of $6.5 million ($2.9 million net Candax) has been approved to repair the tank bottom in accordance with the design methodology used in 1999, date of the last repair and to install a new complete internal floating cover.

"The financial loss of the third quarter of 2014 is disappointing but remains a non-cash event. The Company has stabilized its overall production and is able to generate positive cash-flow from its operations," said Pierre-Henri Boutant, CFO of Candax.

Review of Key Operations

Candax has 100% ownership of El Bibane, 100% ownership of Robbana and 45% ownership of Ezzaouia, on which Candax has partnered with ETAP, the Tunisian state oil and Gas Company. El Bibane and Robbana are operated from Tunis by Ecumed, a 100% subsidiary of Candax. Ezzaouia is operated from Tunis by Maretap, a 50/50 joint venture between ETAP and Ecumed.

Ezzaouia

During the third quarter, production from the Ezzaouia asset increased to 268 bopd (net) from 121 bopd (net) during the same period last year. This was a result of the successful completion of the workover program.

Maretap also plans to continue to perform geological and geophysical (G&G) studies within the field, which could confirm significant potential for recoverable reserves. Candax views its involvement in Maretap as a strategic benefit intended to gain access to high quality resources and expertise in Tunisia.

A project document, to be jointly submitted by ETAP and ECUMED before the end of the year, has been elaborated to justify the extension of the validity period of the EZZAOUIA concession beyond 2019.

Robbana

The G&G study has shown potential locations for future additional drilling. Work is ongoing to select one location and plan for a drilling operation in 2015. Drilling engineering study, including deviation and side-track scenarios, has been completed in order to be ready to start the procurement of the long-lead items.

The drilling operations, previously tentatively planned to start in the first half of 2015, are currently being re-scheduled following the leak of the oil storage tank at the Maretap terminal.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS

This press release includes "forward looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements.

Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the oil and gas industry (including operational risks in exploration development and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections in relation to production, costs and expenses; the uncertainty surrounding the ability of Candax Energy Inc. to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Candax Energy Inc. to fund the capital and operating expenses necessary to achieve the business objectives of Candax Energy Inc., the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by Candax Energy Inc. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of Candax Energy Inc. should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.

About Candax

Candax is an international energy company with offices in Toronto and Tunis. The Candax group is engaged in exploration and the production of oil and gas in Tunisia and holds a royalty interest in an exploration permit in Madagascar.

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