Mart Resources, Inc.
TSX VENTURE : MMT

Mart Resources, Inc.

May 01, 2012 08:30 ET

Mart Announces Record Financial and Operating Results for the Year Ended December 31, 2011

CALGARY, ALBERTA--(Marketwire - May 1, 2012) - Mart Resources, Inc. (TSX VENTURE:MMT) ("Mart" or the "Company") is pleased to announce its financial and operating results for the year ended December 31, 2011 (all amounts in Canadian dollars unless noted):

YEAR ENDED DECEMBER 31, 2011

  • Net income for the year ended December 31, 2011 totaled $71.8 million ($0.214 per share), compared to net income of $8.7 million ($0.026 per share) for the year ended December 31, 2010.
  • Funds flow from production operations were $144.1 million ($0.429 per share) for the year ended December 31, 2011 compared to $48.2 million ($0.144 per share) for the year ended December 31, 2010 (see note (1) regarding non-IFRS measures under the table below).
  • The average price received by Mart for oil in 2011 was USD $103.21 per barrel of oil ("bbl") (approximately CDN $102.08 per bbl), compared to USD $81.70 per bbl (approximately CDN $84.07 per bbl) in 2010.
  • Mart's share of Umusadege field oil produced and sold for the year ended December 31, 2011 was 1,803,459 bbls compared to 732,101 bbls for the year ended December 31, 2010. The main reason for the production increase was the additions of UMU-8, UMU-7, and UMU-6 wells coupled with an increase in cost oil recovery from 67% to an average rate of 71% during the year.
  • Mart's share of proved Umusadege gross oil reserves after tax increased by 15% to 10.5 million bbls compared to 9.1 million bbls in 2010.
  • Mart's share of proved plus probable Umusadege gross oil reserves after tax increased by 16% to 13.9 million bbls compared to 12.0 million bbls in 2010.
  • In 2011 the Umusadege field had a total of 50 shut-in days due mainly to export pipeline disruptions, and to maintenance and modification of production facilities, compared to a total of 92 shut-in days in 2010.
  • Mart's average daily oil production for 2011 was 4,941 barrels oil per day ("bopd") compared to 2,005 bopd in 2010.

THREE MONTH PERIOD ENDED DECEMBER 31, 2011

  • Net income for Q411 was $21.1 million ($0.063 per share) compared to net income of $2.1 million ($0.006 per share) for Q410.
  • Funds flow from production operations of $36.9 million ($0.110 per share) for Q411 compared to $6.7 million ($0.020 per share) for Q410 (see note (1) regarding non-IFRS measures under the table below).
  • The average price received by Mart for oil in Q411 was USD $109.69 per bbl (approximately CDN $108.49 per bbl) compared to USD $89.21 (CDN $96.86 per bbl) for Q410.

  • Mart's share of Umusadege field oil produced and sold for the three months ended December 31, 2011 ("Q411") was 432,166 bbls compared to 104,255 bbls for the three months ended December 31, 2010 ("Q410").
  • During Q411, the Umusadege field was shut-in for a total of 17 days (Q410 65 days) due to various disruptions in the export pipeline and maintenance and modification of production facilities.
  • UMU-8 well started producing in December 2011 and UMU-9 well was logged showing 260 feet of pay.
  • Mart's average daily oil production for Q411 was 4,697 bopd compared to 1,158 bopd for Q410.

FINANCIAL AND OPERATING RESULTS

The following table provides a summary of Mart's selected financial and operating results for the three month period ended and the years ended December 31, 2011 and 2010:

(CDN$) 3 months
ended
3 months
ended
12 months
ended
12 months
ended
Dec 31,
2011
Dec 31,
2010
Dec 31,
2011
Dec 31,
2010
Mart's share of the Umusadege Field:
Barrels of oil produced and sold 432,166 104,255 1,803,459 732,101
Average sales price per barrel $ 108.485 $ 96.864 $ 102.081 $ 84.073
Mart's percentage share of total Umusadege oil produced and sold during the period

77
%

76
%

71
%

67
%
Mart's share of petroleum sales after royalties
40,945,141

9,027,052

162,431,467

56,524,797
Funds flow from production operations (1)
36,927,682

6,677,197

144,129,393

48,235,615
Basic $ 0.110 $ 0.020 $ 0.429 $ 0.144
Net income 21,123,991 $ 2,127,266 71,801,346 8,698,547
Per share - basic $ 0.063 $ 0.006 $ 0.214 $ 0.026
Per share - diluted $ 0.061 $ 0.006 $ 0.209 $ 0.025
Total assets 198,021,112 118,766,739 198,021,112 118,766,739
Total bank debt Nil 5,627,778 Nil 5,627,778
Shares outstanding - end of period:
Basic 336,084,275 335,548,201 336,084,275 335,548,201
Diluted 344,318,066 342,184,661 344,318,066 342,184,661
Notes:
(1) Indicates non-IFRS measures. Non-IFRS measures are informative measures commonly used in the oil and gas industry. Such measures do not conform to IFRS and may not be comparable to those reported by other companies nor should they be viewed as an alternative to other measures of financial performance calculated in accordance with IFRS. For the purposes of this table, the Company defines "Funds flow from production operations" as net petroleum sales less royalties, community development costs and production costs. Funds flow from production operations is intended to give a comparative indication of the Company's net petroleum sales less production costs as shown in the following table:
(CDN$) 3 months ended
Dec 31, 2011
3 months ended
Dec 31, 2010
12 months ended
Dec 31, 2011
12 months ended
Dec 31, 2010
Petroleum sales 46,883,574 10,098,585 184,100,445 61,549,645
Less: Royalties and community development costs
5,938,433

1,071,533

21,668,978

5,024,848
Net petroleum sales 40,945,141 9,027,052 162,431,467 56,524,797
Less: Production costs 4,017,459 2,349,855 18,302,074 8,289,182
Funds flow from production operations
36,927,682

6,677,197

144,129,393

48,235,615

RESERVES UPDATE:

Mart's total gross proved ("1P") oil reserves in the Umusadege field increased 16% to approximately 11.2 million bbls compared to 9.6 million bbls at December 31, 2010. Mart's total gross proved plus probable ("2P") oil reserves in the Umusadege field increased 15% to approximately 14.9 million bbls compared to 12.9 million bbls at December 31, 2010. Mart's total gross proved plus probable plus possible ("3P") oil reserves in the Umusadege field increased 9% to approximately 22.0 million bbls compared to 20.1 million at December 31, 2010.

OUTLOOK AND OPERATIONS UPDATE:

The UMU-9 well was drilled to a depth of approximately 10,848 feet. The intermediate section was drilled to 8,311 feet and indicated 260 feet of gross oil pay from eleven sands based on open hole logs, and the lower deviated section of the well was drilled from 8,311 feet to 10,848 feet and indicated an additional 170 feet of gross oil pay in eight sands based on open hole logs. This resulted in a total cumulative gross oil pay of approximately 430 feet of 19 sands encountered by the well. Nine sands were identified in the deviated section of the UMU-9 well: three oil bearing sands (XVIa, XV1b, XVIIa) that had been encountered in previous Umusadege wells and six new sands that were discovered by the UMU-9 well. Detailed fluid analysis was conducted on five out of the six new sands, and lab analysis has confirmed that four sands (XVIIb, XVIIIa, XIX, XXb) contain light oil and condensate and one sand (XVIIIB) contains gas condensate. The remaining four sands did not have fluid analysis conducted, however open hole logs indicated the presence of hydrocarbons.

Completion and testing operations were conducted on the UMU-9 well in Q112. The test of the XIV sand was conducted through a 3 1/2 inch tubing on a 32/64 inch choke at a flowing tubing pressure of 480 psi. The well flowed 43 API gravity oil with BS&W of 0.2% and an oil/gas ratio of approximately 90 standard cubic feet per barrel. The 46 foot XIV sand flowed at a stabilized test rate of 4,240 bopd.

During the commingled test of the XIIIa and XIIIb sands, the well flowed 42 API gravity oil through 3 1/2 inch tubing on a 28/64 inch choke at a flowing tubing pressure of 350 psi. Basic sediment and water (BS&W) was 1.0% with no associated gas. A stabilized flow rate of 2,576 bopd was recorded from the commingled 16 foot XIIIa and 15 foot XIIIb sands.

The test of the XIIa sand was conducted through the 2 7/8 inch tubing on a 30/64 inch choke at a flowing tubing pressure of 290 psi. The well flowed 35 API gravity oil with BS&W of 0.8% with no associated gas. The 30 foot XIIa sand flowed at a stabilized test rate of 3,600 bopd.

The test of the X sand was conducted through the 2 7/8 inch tubing on a 28/64 inch choke at a flowing tubing pressure of 160 psi. The well flowed 40 API gravity oil with BS&W of 0.6% and an oil/gas ratio of 43 standard cubic feet per barrel. The 10 foot X sand flowed at a stabilized test rate of 1,300 bopd.

The combined flow rate of the five sands tested in the UMU-9 well is 11,718 bopd. Reserve reports will be updated at a future date to incorporate the results from the UMU-9 well.

To mitigate risks relating to export pipeline capacity, Mart and its co-venturers continue to evaluate new export pipeline options to provide an alternative for future production capacity. Mart and its co-venturers are currently in discussion with an affiliate of Royal Dutch Shell plc, to provide another independent export pipeline for Umusadege field production. If these discussions result in Mart and its co-venturers gaining access to Shell's export facilities, a new 50 kilometer pipeline will be constructed. The upgrade of the central production facility at the Umusadege field to a design capacity of approximately 30,000 bopd is approximately 75% completed.

Subsequent to December 31, 2011, the Company entered into an agreement pursuant to which Mart and Network Exploration & Production Nigeria Limited have amicably terminated Mart's participating interest in the Qua Ibo field. Under the terms of the agreement, Network has assumed responsibility for outstanding liabilities of approximately USD $3.2 million for the Qua Ibo field and has paid Mart a USD $1.0 million termination fee.

CHAIRMAN'S COMMENT:

Wade Cherwayko, Chairman & CEO of Mart said, "We are very pleased to report record financial and operating results for 2011 with $71.8 million of net income, which amounts to $0.214 per share. This continues to demonstrate the significance of the Umusadege field's production capacity. The Company continues to work towards maximizing production and efficiency, and significant steps have been taken towards building an additional export pipeline to enable us to fully exploit the potential of the Umusadege field. Increasing total pipeline capacity will provide the ability to substantially increase production and cash flow. Mart has also had a substantial increase in its share of reserves at the Umusadege field in 2011 as the direct result of continued successful drilling."

ABOUT MART RESOURCES:

Mart Resources, Inc. is an independent, international petroleum company focused on drilling, developing and producing oil and gas from proven petroleum properties in Nigeria, West Africa. The Company is currently producing and developing the Umusadege field along with Midwestern Oil and Gas Co. Plc (the Operator of the field) and SunTrust Oil Ltd. Mart also owns a land drilling rig, has strong local relationships and experience and is evaluating additional proven undeveloped opportunities in Nigeria.

For more information, please contact Wade Cherwayko at Mart's London, England office # +44 207 351 7937 or e-mail: Wade@martresources.com. Additional information regarding Mart Resources, Inc. is available on the company's website at www.martresources.com and under the Company's profile on SEDAR at www.sedar.com.

INVESTOR RELATIONS:

Investors are also welcome to contact one of the following investor relations specialists for all corporate updates and investor inquiries:

FronTier Consulting Ltd.

Mart toll free # 1-888-875-7485

Attn: Sam Grier or Caleb Gilani

Email: inquiries@martresources.com

Note: Except where expressly stated otherwise, all production figures set out in this press release, including bopd, reflect gross Umusadege field production rather than production attributable to Mart. Mart's share of total gross production before taxes and royalties from the Umusadege field fluctuates between 82.5% (before capital cost recovery) and 50% (after capital cost recovery).

Forward Looking Statements

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as "forward-looking statements". These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

In particular, statements (express or implied) contained herein or in Mart's MD&A regarding the following should be considered forward-looking statements: the Company's goals and growth strategy, estimates of reserves and future net revenues, exploration and development activities in respect of the Umusadege field, the Company's ability to finance its drilling and development plans with cash flows from operations, the ability of the Company to successfully drill and complete future wells, the ability of the Company to commercially produce, transport and sell oil from the Umusadege field, future anticipated production rates, export pipeline capacity available to the Company, the expectation of the Company that production and export pipeline disruptions will not have a lasting impact on the Company's future production, timing of completion of the Company's upgrading of the central production facility, the construction and completion of an alternative export pipeline, the acceptance of the Company's tax filings by the Nigerian taxing authorities, treatment under government regulatory regimes including royalty and tax laws, projections of market prices and costs, supply and demand for oil, timing for receipt of government approvals, and the ability of the Company to satisfy its current and future financial obligations to its banks and other creditors.

There can be no assurance that such forward-looking statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release. This cautionary statement expressly qualifies the forward-looking statements contained herein.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law.

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 THE RELEASE.

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