Cygam Energy Inc.
TSX VENTURE : CYG

Cygam Energy Inc.

November 29, 2011 20:03 ET

CYGAM Energy Inc. Announces Q3 Financial Results and Quarterly Filings

CALGARY, ALBERTA--(Marketwire - Nov. 29, 2011) - CYGAM Energy Inc. (TSX VENTURE:CYG) (CYGAM) has filed its Interim Financial Results and Management Discussion & Analysis for the three and nine months ended September 30, 2011 pursuant to the requirements of the Canadian Securities Administrators. These documents may be viewed on the Company's web site (www.cygamenergy.com) or at www.sedar.com.

CYGAM's Q3 results showed significant improvements in both production volumes and revenues over prior periods as Tunisian oil production from the TT structure that is now part of the Bir Ben Tartar Concession in the Sud Remada Permit. Production that significantly increased in June impacted the full quarter for the first time. Strong pricing, excellent netbacks and cash flow from its Brent-priced Tunisian oil production, existing cash and proceeds from the disposition of its non- core assets in Canada, enabled CYGAM during the period to fund its increased capital program. Q3 represented CYGAM's first ever profitable period operationally.

During Q3 production from the TT discovery averaged 1,575 bo/d (137 boo/d net) from three wells. Average sales volumes were 152 boo/d (net) at an average commodity price of $114 per barrel. The difference between production and sales volumes is due to oil inventory held at June 30, 2011 that was sold during the quarter. Operating costs (excluding cash G&A) were $29.55 per barrel. For the balance of 2011 and for 2012, the capital program will be weighted principally towards oil development projects in Tunisia. By late 2012, cash flow from the TT structure is expected to support the majority of development and exploration expenditures on the Sud Remada permit in Tunisia.

HIGHLIGHTS OF THE THIRD QUARTER OF 2011;

In Tunisia:

  • Production increased to 137 BO/D per day for the three months ended September 30, 2011 from nil for the three months ended September 30, 2010;
  • Oil net revenue was $1,591,396 (realized price of $114.04 per BOE) for the three months ended September 30;
  • Operating netbacks were $86.48 per BOO (on revenue of $114.04 per BOO with operating costs of $29.56 per BOO);
  • Income of $137,903 in the third quarter of 2011 increased from a loss of $374,358 in the third quarter of 2010;
  • 4 wells were spud in the third quarter of 2011, which are expected to be completed in the fourth quarter of 2011.

SELECTED FINANCIAL INFORMATION

Three Months ended September 30, Nine Months ended September 30,
2011 2010 2011 2010
Oil sales - Tunisia $ 1,591,396 $ - $ 1,823,722 $ 143,535
Other income 6,218 27,526 - -
1,597,614 27,526 24,482 75,499
1,848,204 219,034
Operating costs 412,433 - - -
General and administrative 665,806 222,768 - -
Stock based compensation 161,501 160,262 545,466 70,546
Financing costs 2,506 923 2,337,694 849,285
Depletion and depreciation 217,464 8,503 778,780 163,972
1,459,711 392,456 5,646 3,808
249,954 58,865
Income (loss) before the following: 137,903 (364,930 ) 3,917,540 1,146,476
Realized gain (loss) on sale of marketable securities - - - -
Net income (loss) from continuing operations 137,903 (364,930 ) (2,069,336 ) (927,442 )
84,927 (569,387 )
Net income (loss) from discontinued operations 29,908 (9,428 ) (1,984,409 ) (1,496,829 )
- -
Net income (loss) $ 167,811 $ (374,358 ) $ (1,984,409 ) $ (1,496,829 )
OPERATING
Three Months ended
September 30,
Nine Months ended
September 30,
2011 2010 2011 2010
Oil revenues (net) $ 1,591,396 $ - $ 1,823,722 $ 143,535
Operating costs $ (412,433 ) $ - $ (545,466 ) $ (70,546 )
Net operating income (1) $ 1,178,962 $ 72,989
Depletion and depreciation $ 217,464 $ 8,503 $ 249,954 $ 58,865
Revenue per boe $ 114.04 $ - $ 113.77 $ 75.94
Operating costs per boe $ 29.56 $ - $ 34.03 $ 37.33
Operating income per boe $ 84.48 $ - $ 79.74 $ 38.62

(1) Net operating income and netback is a non-GAAP measure.

Under the Production Sharing Contract (PSC) established for the Remada Sud Permit and held by the Tunisian state oil company, Enterprise Tunisienne d'Activities Petrolieres (ETAP), CYGAM holds a 14 percent working interest through its wholly owned subsidiary Rigo Oil Company Tunisia Ltd., in partnership with Storm Ventures International, a subsidiary of Chinook Energy Inc. who holds the remaining 86 percent working interest.

With our partner and Operator, a four well development program (TT5, TT6, TT7 and TT8) with two drilling rigs was commenced during the third quarter. Fracture stimulation and flow testing of these wells commenced in late October and we are hopeful of seeing further gross production volumes from the TT discovery by year end. The stratigraphic and well test information that the Operator is gathering from this program will allow construction of a reservoir model that will be the basis of the development plan that the Operator will propose and hopefully come to agreement on with the Tunisian authorities. In parallel with this, the Operator is working on preliminary engineering of the oil production facility, the flow assurance and routing of a 140 km oil sales pipeline, gas conservation strategies and the trajectory, well engineering and rig specifications required executing a successful horizontal test well. The Operator is actively engaged with ETAP in the project management process and will be proposing a 10 to 12 well development program for 2012.

CYGAM is a Calgary-based exploration company with extensive international exploration permits and production in Tunisia. The main focus of the Company is the acquisition, exploration and development of international oil and gas permits, primarily in Italy, Tunisia and the Mediterranean Basin. CYGAM currently holds various interests in seven exploratory permits in Italy and three exploratory permits in Tunisia encompassing approximately 3.0 million gross acres. Visit the CYGAM website at www.cygamenergy.com for more information about CYGAM.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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