Q2 2016 Results Published

TORONTO, ONTARIO--(Marketwired - Aug. 29, 2016) - PetroMaroc Corporation plc (TSX VENTURE:PMA), an independent oil and gas company focused on Morocco (the "Company" or "PetroMaroc"), is pleased to announce its financial and operating results for the second quarter of 2016.

Commenting, D. Campbell Deacon, Chief Executive Officer of PetroMaroc, said: "Subsequent to execution of a binding sale and purchase agreement (the "Sale and Purchase Agreement") with Sound Energy plc ("Sound") in March 2016 we are currently progressing in completion of the conditions precedent, including ministerial approvals in Morocco, Debentureholder approval and final approval of the TSX Venture Exchange. Upon completion of the transaction, we look forward to the near-term testing of Kechoula.

"During Q2 2016, general and administrative costs totaled US$0.27 million, representing a 54% decrease in comparison to Q2 2015 (US$0.59 million) and a 68% decrease in comparison to Q2 2014 (US$0.84 million). During Q2 2016, the Company closed a Cdn$0.39 million secured non-convertible debenture financing.

"Subsequent to the quarter-end, in July 2016, US$0.7 million of the Sidi Moktar Bank Guarantee restricted cash was released to the Company. Upon completion of the agreement with Sound, the residual US$1.8 million of the Sidi Moktar Bank Guarantee restricted cash, which is currently held in escrow, is to be released to the Company."

PetroMaroc exited Q2 2016 with cash of US$0.08 million and a working capital deficit as at June 30, 2016 of US$0.8 million (excluding the secured debentures, excluding the secured debenture accrued interest and fees, excluding the unsecured loan and interest, including restricted cash).

The Company has been reviewing alternatives to address its debt and share capital structure with a focus on alternatives for the Company's Cdn$11.09 million principal amount of secured debentures (the "Debentures"). During the quarter, the April 10, 2016 maturity date was extended to September 30, 2016. Upon default, holders of the Debentures (the "Debentureholders") may declare the Cdn$11.09 million principal amount and all accrued interest on the Debentures immediately due and payable and to begin proceedings to realize upon the security held in connection with the Debentures.

The Company continued discussions with its Sidi Moktar creditors to negotiate settlement of the remaining unpaid costs in respect to the Sidi Moktar drilling campaign. Settlement with the unsecured creditors is a necessary measure required in order to pursue the Company's efforts to secure additional funding, and facilitate a corporate restructuring of the secured Debentures and share capital.

The Company is to hold an annual and special shareholder meeting before the end of 2016, in Toronto; such meeting date remains to be determined. The Company seeks to include resolution(s) to restructure the Debentures and share capital; however, the details of such restructuring have not been determined.

In order to fund operational commitments due in less than twelve months (approximately US$2.65 million), PetroMaroc will be required to complete additional financings and/or incur additional debt in the future. At this time, the Company does not have the financial resources to repay the Debentures on maturity. These factors represent a material uncertainty that may cast a significant doubt about the Company's ability to continue as a going concern.

PetroMaroc today filed its financial statements for the quarter ended June 30, 2016, together with its Management's Discussion and Analysis in respect of the Company's financial results for the quarter ended June 30, 2016. These documents are available on the PetroMaroc website at www.petromaroc.co or under the Company profile on SEDAR at www.sedar.com.

Highlights

Financial:

• Unrestricted cash as at June 30, 2016, of US$0.08 million (US$0.1 million as at March 31, 2016).
  
  
• Working capital deficit as at June 30, 2016, US$0.8 million (excludes the Cdn$11.09 million secured debentures [& excludes accrued interest and fees] which mature in September 2016, excludes the Cdn$0.4 million unsecured loan [& accrued interest] which matured in April 2016, includes US$3.1 million restricted cash).
  
  
• During the quarter, the Company entered into a debenture waiver and amending agreement (the "Waiver Agreement") with the April 2014 Cdn $9.7 million Debentureholders and the November 2015 Cdn $1.0 million Debentureholder to extend the maturity date from April 10, 2016 to September 30, 2016 (the "Maturity Date"), under which quarterly interest payments (the "Deferred Interest Payments") will accrue to and be payable on the Maturity Date. In consideration for entering into the Waiver Agreement, the Company has agreed to pay to the Debentureholders a fee equal to 15% of the aggregate amount of their respective Deferred Interest Payments, which fee shall be payable on the Maturity Date.
  
  
• Completed a secured debenture financing of Cdn$0.39 million in June 2016, bearing interest at 15.0% per annum, which secured debenture will mature on September 30, 2016.
  
  
• Continues to engage with its Debentureholders (secured), loan holder (unsecured), and Sidi Moktar creditors (unsecured creditors) from the 2013 - 2014 Sidi Moktar drilling campaign.
  
  

Operations:

• Sidi Moktar onshore:
  • During the quarter PetroMaroc advanced the conditions precedent on the Sale and Purchase Agreement with Sound. Upon completion, the agreement would allow Sound to acquire the Company's Sidi Moktar licences in consideration for issuance to the Company of 21,258,008 shares of Sound, and the Company retaining a 10% net profit interest in any future cash flows from the Kechoula structure within the Sidi Moktar licences, and the Company retaining a 5% net profit interest in any future cash flows from structures within the Sidi Moktar licences other than the Kechoula structure.
  • Previously capitalised exploration costs, which were impaired by US$29.1 million in 2015, continue to remain impaired.
• Zag onshore:
  • The Company committed to its percentage share of further geophysical studies and the drilling of one exploration well, subject to receiving and approving a satisfactory proposal from the operator, as per the terms of the First Extension Period. Following the joint venture not completing the minimum work commitment of the First Extension Period, a twelve-month extension to the First Extension Period was agreed by the joint venture, to May 2016. During the twelve-month extension the Company continued to seek a mutually agreed technical, commercial and financial proposal to reduce its financial exposure insofar as possible. The Company has accrued US$1.2 million penalty costs based on its working interest in the joint venture as the joint venture has not met the minimum work commitments required by the licence and the operator has been notified of the same. The US$0.6 million of restricted cash lodged as a bank guarantee is available to offset this potential penalty.
  • Previously capitalised costs, which were impaired in 2014, continue to remain impaired.

About PetroMaroc

PetroMaroc is an independent oil and gas company focused on its significant land position in Morocco. The Company has a 50 percent operated interest in the Sidi Moktar licence area covering 2,683 square kilometres and is working closely with Morocco's National Office of Hydrocarbons and Mines (ONHYM) as a committed long‐term partner to unlock the hydrocarbon potential of the region. Morocco offers a politically stable environment to work within and has favourable fiscal terms to energy producers. PetroMaroc is a public company listed on the TSX Venture Exchange under the symbol "PMA".

Special Note Regarding Forward Looking Statements

This press release contains forward-looking statements. Such forward-looking statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "project", "potential", "targeting", "intend", "could", "might", "continue" or the negative of these terms or other similar terms. Forward-looking statements in this press release include, but are not limited to, statements regarding the ability of the Company to obtain all necessary approvals to complete the Sale and Purchase Agreement with Sound, including satisfying all conditions precedent and obtaining receipt of Ministerial approvals in Morocco, Debentureholder approval and the final approval of the TSX Venture Exchange; the strength of the ongoing relationship between the Company and Sound; the ability of Sound to conduct further drilling and the degree of success in connection with the proposed drilling of the Kechula structure to prove the commercial viability of Sidi Moktar; the ability of the Company to maintain cost reductions at current levels, the ability of the Company to secure immediate capital by the end of September, 2016 to advance operations and to remain a going concern; the ability of the Company to successfully address its debt and capital structure, including its ability to successfully negotiate with the holders of the Debentures prior to the Maturity Date to amend the terms of the Debentures and negotiate settlement agreements with its trade creditors in respect to the Sidi Moktar drilling campaign; the ability of the Company to access the Sidi Moktar bank guarantee currently held in escrow which constitutes a condition precedent to the closing of the Sale and Purchase Agreement; the ability of the Company to reach agreement with its secured creditors with respect to the proposed corporate restructuring of the Debentures and the share capital of the Company; the ability of the Company to successfully negotiate potential obligations with respect to the Zag offshore property and the US$0.6 million restricted cash being sufficient to offset any potential liability or, if insufficient, the ability of the Company to access other financial resources to pay such potential liability; the completion of evaluations and processing and interpretation of data, the performance characteristics of the Company's oil and gas properties, capital expenditure programmes, supply and demand for oil, gas and commodities, prices for oil and gas, drilling plans, and realization of the anticipated benefits of acquisitions.

Forward-looking statements are only predictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in this press release include, but are not limited to: general economic conditions in Canada, the Kingdom of Morocco and globally; industry conditions, including fluctuations in the price of oil and gas, governmental regulation of the oil and gas industry, including environmental regulation; fluctuation in foreign exchange or interest rates; risks inherent in oil and gas operations; political risk, including obtaining requisite governmental approvals in Morocco; geological, technical, drilling and processing problems; unanticipated operating events which could cause commencement of drilling and production to be delayed; the need to obtain consents and approvals from industry partners, regulatory authorities and other third-parties; stock market volatility and market valuations; competition for, among other things, capital, acquisitions of reserves, undeveloped land and skilled personnel; incorrect assessments of the value of acquisitions or resource estimates; any future inability to obtain additional funding, when required, on acceptable terms or at all; credit risk; changes in legislation; any unanticipated disputes or deficiencies related to title matters; dependence on management and key personnel; and risks associated with operating in and being part of a joint venture.

Although the forward-looking statements contained in this press release are based upon factors and assumptions which management of the Company believes to be reasonable, the Company cannot assure that actual results will be consistent with its expectations and assumptions. Undue reliance should not be placed on the forward-looking statements contained in this news release as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. These statements speak only as of the date of this press release, and the Company does not undertake any obligation to publicly update or revise any forward-looking statements except as expressly required by applicable securities laws.

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

This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities of PetroMaroc in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933 (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons (as defined in the U.S. Securities Act) unless registered under the U.S. Securities Act and applicable state securities laws, or an exemption from such registration is available.