Suroco Energy Inc.
TSX VENTURE : SRN

Suroco Energy Inc.

August 20, 2012 20:12 ET

Suroco Energy Inc. Announces Filing of Second Quarter Financial Statements and MD&A

CALGARY, ALBERTA--(Marketwire - Aug. 20, 2012) -

(NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA)

Suroco Energy Inc. (TSX VENTURE:SRN) (the "Corporation") is pleased to announce that it has filed its Unaudited Condensed Consolidated Financial Statements and the related Management's Discussion and Analysis ("MD&A") for the quarter ended June 30, 2012 on the System for Electronic Document Analysis and Retrieval ("SEDAR").

Copies of these documents can be found on the SEDAR website at www.sedar.com.

Alastair Hill, the Corporation's President and CEO commented, "During the second quarter we brought two new wells on production and a third just subsequent to the quarter end, maintaining a 100% success rate in appraisal drilling in the Cohembi oilfield. Average daily production was however flat when compared with the preceding quarter primarily due to the significant amount of pipeline disruptions experienced by Ecopetrol, the operator of the pipeline on which the majority of our production is shipped. The impact of these disruptions was diminished by our ability to find alternative oil export routes and although these routes involved longer trucking distances this cost was offset by the sales prices received and consequently our field operating netbacks remained at a level above $60 per barrel. Subsequent to the quarter end other additional export routes have been established to provide more optionality on where our oil is sold."

Financial & Operating Highlights
(All references to $are United States dollars unless otherwise noted)
3 months ended June 30 6 months ended June 30
2012 2011 2012 2011

Financial
Oil and gas revenue ($) 10,705,514 9,307,448 22,957,406 18,692,072
Funds flow from operations (1) ($) 4,250,681 3,611,509 9,391,864 6,211,567
Per share - basic and diluted ($) 0.03 0.03 0.07 0.05
Net income ($) 2,950,208 1,069,172 4,981,666 943,642
Net income (loss) attributable to shareholders ($) 1,546,301 169,074 2,259,063 (788,330 )
Per share - basic and diluted ($) 0.01 0.00 0.02 (0.01 )
Total assets ($) 65,218,581 55,103,613 65,218,581 55,103,613
Working capital surplus (2) ($) 14,016,025 10,830,412 14,016,025 10,830,412
Common shares outstanding, end of period
Basic 130,109,734 121,643,176 130,109,734 121,643,176
Diluted (3) 162,276,805 158,990,729 162,276,805 121,643,176
Weighted average common shares outstanding
Basic 127,963,290 121,442,509 126,044,203 121,218,037
Diluted (3) 136,113,390 139,232,972 132,830,319 121,218,037
Operational
Average daily net after royalty production (barrels of oil per day) 873 1,011 875 857
Average reference price - WTI ($ per barrel) 93.43 102.55 98.16 98.33
Operating Netback ($ per barrel)
Average realized price 102.08 98.40 102.99 89.45
Royalties 8.17 7.88 8.24 6.90
Production and transportation expenses 31.27 29.65 32.09 23.50
Operating Netback 62.64 60.87 62.66 59.05
Notes:
(1) Funds flow from operations is cash flow from operating activities before changes in other non-cash working capital items. Funds flow from operations is not a measure recognized by GAAP. See "Non-GAAP Measures" in the MD&A.
(2) Working capital surplus includes current assets less current liabilities. Working capital surplus is not a measure recognized by GAAP. See "Non-GAAP Measures" in the MD&A.
(3) In periods where there were losses attributable to shareholders, all potentially dilutive securities were considered anti-dilutive and were therefore excluded from the fully diluted number of weighted average common shares outstanding calculation. All potentially dilutive securities were considered for the calculation of diluted number of shares outstanding at the end of period.
Highlights
  • Increased year to date production to 875 barrels of oil per day compared to 857 barrels of oil per day for the second quarter of 2011.

  • Approximately 16% of the Corporation's production capacity during the quarter (166 barrels of oil per day net to the Corporation after royalties) was deferred due to ongoing disruptions of the Trans Andean Pipeline ("OTA").

  • The Corporation found alternative shipping routes for 493 barrels of oil per day of net production, thereby mitigating the impact of the OTA pipeline disruptions.

  • Placed Cohembi 5 well on production on April 23rd with average production of 1,295 barrels of oil per day (189 barrels of oil per day net to the Corporation after royalties). The well was produced intermittently due to pipeline disruptions which resulted in 20 days of deferred production.

  • Drilled Cohembi 7 well during the quarter and placed well on production on May 26th with average production of 1,271 barrels of oil per day (185 barrels of oil per day net to the Corporation after royalties). The well was produced intermittently due to pipeline disruptions which resulted in 27 days of deferred production.

  • Operating netbacks were $62.64 for the quarter compared to $60.87 for the second quarter of 2011.

  • Continued with the Cohembi appraisal program by completing construction of the Cohembi 4 well pad and then spudding the Cohembi 4 well on June 13, 2012. The well was completed subsequent to quarter end and put on permanent production.

Forward Looking Statements

This press release contains forward-looking statements relating to the operational and exploration activities for the Corporation, evaluation of certain prospects in which the Corporation holds an interest and other statements that are not historical facts. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, estimates, forecasts, projections and other forward-looking statements will not occur, which may cause actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These assumptions, risks and uncertainties include, among other things, the state of the economy in general and capital markets in particular; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; the uncertainty of reserve and resource estimates; changes in environmental and other regulations; risks associated with oil and gas operations and future exploration activities, including disruptions in production and transportation; the risk that the conversion of the Corporation's 28% economic interest in the San Antonio Block into a full 28% undivided working interest in the San Antonio Block will not occur if the necessary approvals are not obtained; and other factors, many of which are beyond the control of the Corporation. You can find an additional discussion of those assumptions, risks and uncertainties in the Corporation's Canadian securities filings.

The forward-looking statements contained in this press release are made as of the date of this press release. Except as required by law, the Corporation disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, the Corporation undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

The Corporation is a Calgary-based junior oil and gas company, which explores for, develops, produces and sells crude oil, natural gas liquids and natural gas in Colombia. The Corporation's common shares trade on the TSX Venture Exchange under the symbol "SRN".

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

Contact Information

  • Suroco Energy Inc.
    Alastair Hill
    President and Chief Executive Officer
    (403) 232-6784
    (403) 264-7455 (FAX)

    Suroco Energy Inc.
    Travis Doupe
    VP Finance and Chief Financial Officer
    (403) 232-6784
    (403) 264-7455 (FAX)
    www.suroco.com