Suroco Energy Inc.
TSX VENTURE : SRN

Suroco Energy Inc.

April 25, 2013 20:07 ET

Suroco Energy Inc. Announces Filing of Year-End Financial Statements, MD&A and Annual Information Form

CALGARY, ALBERTA--(Marketwired - April 25, 2013) -

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 Audited Consolidated Financial Statements and the related Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2012 and its Annual Information Form for the year ended December 31, 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 2012 we successfully grew the Corporation's reserves, particularly in the Proven and Probable categories due to the 100% success rate in the wells drilled during the year and the commencement of the Cohembi oilfield pilot water injection project. The seven wells drilled during the year helped us appraise the northwestern area of this large oil accumulation and production in the second half of the year grew by 26% compared to the first half as these new Cohembi oil wells were brought on stream. New sales points outside of the Putumayo Basin were established early in the year in order to maintain production and oil sales consistency in the face of disruptions in the Trans- Andean pipeline which resulted in higher operating costs due to greater oil trucking distances, although these costs were partially offset by higher received prices. Operating costs in the fourth quarter were abnormally high as we recognized and expensed several non-recurring items including environmental remediation of a legacy oil spill which existed prior to the Corporation entering the Suroriente Block contract and the recognition of the full year costs of water disposal in the Pinuna/Quillacinga oilfield during the fourth quarter. In 2013 we are forecasting operating costs to be in the range of $30 to $35 per barrel."

Subsequent to the year-end we closed a credit facility for $21 million, which significantly strengthened our working capital position and has provided us with an enhanced ability to pursue new opportunities in our focus area in the Putumayo Basin.

In the first quarter of 2013 production has averaged 1,207 barrels per day net after royalty to the Corporation and production averaged 1,497 barrels per day net after royalty for the first 24 days of April. A comprehensive operations update detailing activities and production will be provided in May."

Financial & Operating Highlights
(All references to $ are United States dollars unless otherwise noted)
3 months ended
December 31
12 months ended
December 31
2012 2011 2012 2011
Financial
Oil and gas revenue ($) 14,295,642 19,292,833 52,186,372 47,107,509
Funds flow from operations (1) ($) 1,544,756 9,930,033 16,419,582 18,711,272
Per share - basic ($) 0.01 0.08 0.13 0.15
Per share - diluted ($) 0.01 0.08 0.12 0.15
Net (loss) income ($) (1,107,158 ) 736,651 6,649,085 574,584
Net (loss) income attributable to shareholders ($) (1,812,790 ) (1,617,953 ) 1,745,122 (3,959,978 )
Per share - basic and diluted ($) (0.01 ) (0.01 ) 0.01 (0.03 )
Total assets ($) 78,626,185 64,931,786 78,626,185 64,931,786
Working capital (deficit) surplus (2) ($) (556,849 ) 8,996,483 (556,849 ) 8,996,483
Common shares outstanding, end of period
Basic 134,329,734 124,064,942 134,329,734 124,064,942
Diluted (3) 147,839,734 162,429,919 147,839,734 162,429,919
Weighted average common shares outstanding
Basic 134,329,734 123,478,047 130,133,459 121,778,323
Diluted (3) 138,897,055 123,478,047 134,816,152 121,778,323
Operational
Average daily net after royalty production (barrels of oil per 1,101 838 991 877
Average reference price - WTI ($ per barrel) 88.01 94.02 94.05 94.88
Operating Netback ($ per barrel)
Average realized price 94.60 107.45 100.96 96.20
Royalties 7.57 8.60 8.08 7.59
Production and transportation expenses 54.39 33.80 39.21 27.52
Operating Netback 32.64 65.05 53.68 61.09
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 generally accepted accounting principles ("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 from 2012

  • Increased average production (net after royalty) to 991 barrels of oil per day ("bopd"), an increase of 13% from the prior year and increased average fourth quarter production to 1,101 bopd (net after royalty), an increase of 31% over the prior year.

  • Drilled and placed on permanent production 7 Cohembi wells during the year.

  • Began water injection for improved recovery within the Cohembi oil field during December of 2012.

  • Increased production costs on a per barrel basis of approximately 42% for the year, due mainly to several one-time items.

  • Booked reserves increased during 2012 in all categories:

    • Total proved reserves of approximately 1.6 million barrels of oil (net after royalty) resulting in a net increase of 81% after accounting for 2012 production.

    • Total proved plus probable reserves of approximately 2.6 million barrels of oil (net after royalty), resulting in a net increase of 46% after accounting for 2012 production.

    • Total proved, probable and possible reserves of approximately 3.9 million barrels of oil (net after royalty), resulting in a net increase of 45% after accounting for 2012 production.

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".

Reserves Information

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

"Possible" reserves are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

FORWARD LOOKING STATEMENTS

Certain statements included in this press release constitute forward-looking statements under applicable securities legislation. These statements relate to future events or future performance of the Corporation. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology. Forward-looking statements or information in this press release include, but are not limited to, the characteristics of the Corporation's oil and natural gas properties, reserve quantities and the discounted present value of future net cash flows from such reserves, net revenue, capital expenditures, operating costs, exploration plans and development plan. In addition, this press release may contain forward-looking statements attributed to third party industry sources. Undue reliance should not be placed on these 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; changes in environmental and other regulations; risks associated with oil and gas operations and future exploration activities; 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. New factors emerge from time to time, and it is not possible for management of the Corporation to predict all of these factors and to assess in advance the impact of each such factor on the Corporation's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement or information. The forward-looking statements contained herein are expressly qualified by this cautionary statement. Moreover, neither the Corporation nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

Statements relating to "reserves" are deemed to be forward-looking statements or information, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitable in the future. There are numerous uncertainties inherent in estimating quantities of proved reserves, including many factors beyond the control of the Corporation. The reserve data included herein represents estimates only. In general, estimates of economically recoverable oil and natural gas reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary considerably from actual results. All such estimates are to some degree speculative and classifications of reserves are only attempts to define the degree of speculation involved. For those reasons, estimates of the economically recoverable oil and natural gas reserves attributable to any particular group of properties and classification of such reserves based on risk of recovery and estimates of future net revenues expected therefrom, prepared by different engineers or by the same engineers at different times, may vary substantially. The actual production, revenues, taxes and development and operating expenditures of the Corporation with respect to these reserves will vary from such estimates, and such variances could be material.

Estimates with respect to proved reserves that may be developed and produced in the future are often based upon volumetric calculations and upon analogy to similar types of reserves rather than actual production history. Estimates based on these methods are generally less reliable than those based on actual production history. Subsequent evaluation of the same reserves based upon production history will result in variations, which may be substantial, in the estimated reserves.

Consistent with the securities disclosure legislation and policies of Canada, the Corporation has used forecast prices and costs in calculating reserve quantities included herein. Actual future net cash flows also will be affected by other factors such as actual production levels, supply and demand for oil and natural gas, curtailments or increases in consumption by oil and natural gas purchasers, changes in governmental regulation or taxation and the impact of inflation on costs.

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