Greenfields Petroleum Corporation

June 29, 2011 20:18 ET

Greenfields Petroleum Corporation Announces Financial Results for the First Quarter Ended March 31, 2011

CALGARY, ALBERTA--(Marketwire - June 29, 2011) -


Greenfields Petroleum Corporation (TSX VENTURE:GNF.S) reports today its 2011 first quarter results.

CALGARY, ALBERTA--(Marketwire - June 29, 2011) - Greenfields Petroleum Corporation (the "Company" or "Greenfields") (TSX VENTURE:GNF.S), an independent exploration and production company with assets in Azerbaijan, announces the financial results for the quarter ended March 31, 2011. Greenfields' functional and reporting currency is the United States dollar.

General Highlights:

  • Approval of the Plan of Development ("POD") for rehabilitation and development of the Gum Deniz oil field and Bahar gas field in the Bahar ERDPSA is expected to be officially received from SOCAR in July 2011.
  • Approval of the POD from SOCAR will start the performance period in which the Contractor Parties (Bahar Energy and SOA) are required to increase production in the rehabilitation area within three years to 150% of the 2008 production levels from the Gum Deniz oil field and the Bahar gas field of each of oil and natural gas. The gross 2008 production levels of the Gum Deniz oil field and the Bahar gas field were 1,233 bbl/d and 18.8 mmcf/d, respectively.
  • Workover rig operations are projected to start in July 2011 with the use of three older-style rigs provided by SOCAR and drilling operations are scheduled to start in the fourth quarter of 2011.

First Quarter 2011 Highlights:

  • The Company's entitlement volumes from production for its net interest in the Bahar ERDPSA averaged 1,172 boe/d in the first quarter
  • On January 1, 2011, Greenfields adopted the IFRS accounting and reporting standards. Prior to the adoption of IFRS, the Company followed Canadian Generally Accepted Accounting Principles ("Canadian GAAP"). Greenfields has reported its results in accordance with IFRS starting in the first quarter 2011, with comparative IFRS information for the 2010 fiscal year.


Mr. John W. Harkins, President and Chief Executive Officer of Greenfields, reports "SOCAR has indicated that they should be providing their final approval of our Bahar Plan of Development by mid July 2011. This is a significant milestone for the project as it will start the performance period in which the Contractor Parties (Bahar Energy and SOA) are required to increase production in the rehabilitation area within three years to 1.5 times the 2008 production levels from the Gum Deniz oil field and the Bahar gas field of each of oil and natural gas. Meeting this performance target confirms the contract period for a minimum of 25 years."

Operational Activities:

Mr. Rich MacDougal, Chief Operating Officer, advises that Greenfields, through its 33.33% affiliate Bahar Energy, has started the field workover and redevelopment programs with the acquisition of both 2-D (76 of 144 linear kilometers acquired) and 3-D seismic (77 square kilometers planned) and the planning for the forthcoming 164 well workover and development drilling campaign in the Bahar gas field and the Gum Deniz oil field. The workover program is expected to begin in the third quarter of 2011 (using three in- country SOCAR drilling rigs) and development drilling (using two imported rigs) in the last quarter of 2011. The in-country rigs are now on location while the first of the two new workover rigs is expected to arrive in the third quarter 2011. The second rig is expected to follow in the first quarter of 2012.

In preparation for the workover and drilling, Bahar Energy has completed several facility upgrades and started an extensive refurbishing program on six offshore platforms. Bahar Energy has acquired recompletion equipment, workover materials and the two western-style workover rigs noted above. The initial Phase-1 development drilling program for the Gum Deniz field includes 57 development wells and 107 existing-well workovers.

Mr. Alex Warmath, Chief Technical Officer, reports that during the first quarter of 2011 Greenfields' share of entitlement production averaged 448 boe/d and 4,349 mcf/d or approximately 1,172 boe/d. This production was from a total of 45 active wells from both the Gum Deniz and Bahar fields located in the Bahar ERDPSA.

The Company's 33.33% share of Bahar Energy production for the second quarter declined by approximately 7% from January 2011 to 1,129 boe/d (453 bbl/d and 4.06 mmcf/d). No drilling or significant re-completion activity has been undertaken since the effective date of October 1, 2010. The limited drilling, recompletion and resulting production declines indicate the lack of readily available equipment and materials necessary to complete routine well maintenance and repairs.

The 2-D seismic and 3-D seismic programs are both progressing but, due to equipment and weather setbacks, both seismic programs are approximately 45 days behind our expectations. Based on the progress to-date, completion of the first 2-D seismic shoots is anticipated to be completed in early August 2011. These lines will be the first that have ever been shot over the Bahar and Gum Deniz fields in the Bahar ERDPSA

In the Bahar (BE-2) exploration area, the shooting of the 3-D seismic program will start up immediately upon the completion of the 2-D program. Completion of the 3-D seismic program is projected to be in October 2011. If the 3-D seismic results confirm an attractive target in the BE-2 exploration area, Bahar Energy will plan to move one of the drilling rigs temporarily off the Gum Deniz oil field development program to drill an exploratory well there in 2012.

The selected information below is from the Company's Management Discussion & Analysis. The Company's complete financial statements as of and for the three-month periods ended March 31, 2011 and 2010, with the notes thereto and the related Management's Discussion & Analysis can be found either on Greenfields' website at or on SEDAR at All amounts below are in thousands of US dollars unless otherwise noted.

Selected Information
($000s, except as noted) Three Months Ended
March 31, December 31 March 31,
Financial 2011 2010 2010(2 )
Revenues $ 6,439 $ 7,672 $ 251
Net Loss ($831 ) ($1,710 ) ($1,166 )
Per share, basic and diluted ($0.06 ) ($0.14 ) ($0.16 )
Operating (since effective date of ERDPSA on October 1, 2010)
Average oil, condensate production (bbls/d)(1) 448 452 -
Average natural gas production (mcf/d)(1) 4,349 4,455 -
Average oil equivalent production (boe/d)(1) 1,172 1,194 -
Average oil price ($/bbl) $ 100.98 $ 83.06 -
Average natural gas price ($/mcf) $ 3.96 $ 3.96 -
Average net back oil price ($/bbl) $ 97.23 $ 79.38 -
Average Brent oil price ($/bbl) $ 103.52 $ 86.54 -

(1) Daily production volumes include compensatory petroleum and government's share of profit petroleum

(2) The Company adopted IFRS effective on January 1, 2011; the presentation of prior year amounts have been adjusted accordingly.

Selected Balance Sheet Items
March 31, December 31, March 31,
($000s) 2011 2010(2 ) 2010
Cash and cash equivalents $ 36,328 $ 47,977 $ 5,362
Total assets $ 62,995 $ 57,316 $ 5,789
Working capital $ 46,309 $ 47,492 $ 3,713
Shareholders' equity $ 50,230 $ 50,457 $ 4,015

United States Advisory

The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), have been offered and sold outside the United States to eligible investors pursuant to Regulation S promulgated under the U.S. Securities Act, and may not be offered, sold, or resold in the United States or to, or for the account of or benefit of, a U.S. Person (as such term is defined in Regulation S under the United States Securities Act) unless the securities are registered under the U.S. Securities Act, or an exemption from the registration requirements of the U.S. Securities Act is available. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state in the United States in which such offer, solicitation or sale would be unlawful.

About Greenfields Petroleum Corporation

Greenfields is a junior oil and natural gas corporation focused on the development and production of proven oil and gas reserves principally in the Republic of Azerbaijan. The Company plans to expand its oil and gas assets through further farm-ins and acquisitions of Production Sharing Agreements from foreign governments containing previously discovered but under developed international oil and gas fields, also known as "greenfields". More information about the Company may be obtained on the Greenfields website at

Forward Looking Statements

This press release contains forward-looking information that involves substantial known and unknown risks and uncertainties, most of which are beyond the control of Greenfields, including, without limitation, those listed under the headings "Notice to Investors – Special Note Regarding Forward-Looking Statements" and "Risk Factors" in Greenfields final prospectus and in the Company's Management's Discussion & Analysis which may be viewed on Forward-looking information in this press release includes, but is not limited to, information concerning potential future acquisitions.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information. Accordingly, prospective investors should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this press release and, other than as required by applicable securities laws, Greenfields does not assume any obligation to update or revise them to reflect new events or circumstances.

The term "boe" can be misleading, particularly if used in isolation. A barrel of oil equivalent ("boe") conversion ratio of 6 thousand cubic feet ("mcf") of gas to 1 barrel ("bbl") of crude oil is based on an energy content conversion method primarily applicable "at the burner" tip and does not represent a value equivalency at the wellhead.

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

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