CALGARY, ALBERTA — (Marketwired) — 11/12/14 — Serinus Energy Inc. (TSX: SEN)(WARSAW: SEN) (“Serinus”, “SEN” or the “Company”), is pleased to report its financial and operating results for the quarter ended September 30, 2014.
Third Quarter Highlights
Note: Serinus prepares its financial results on a consolidated basis, which includes 100% of its indirectly 70% owned subsidiary, KUB-Gas LLC (“KUB-Gas”). Unless otherwise noted by the phrases “allocable to Serinus”, “net to Serinus”, “attributable to SEN shareholders” or “net to SEN WI”, all values and volumes refer to the consolidated figures. Serinus reports in US dollars; all dollar values referred to herein, whether in dollars or per share values are in US dollars unless otherwise noted.
Summary Financial Results (US$ 000–s unless otherwise noted)
(i) Funds from Operations is not a recognized measure under IFRS. See Management–s Discussion and Analysis for further information on non-IFRS measures.
Operational Highlights & Update
Note on nomenclature: Wells in the Company–s Ukraine properties are named by the initial of the field followed by a well number. Wells in Olgovskoye, Makeevskoye, Vergunskoye, Krutogorovskoye and North Makeevskoye fields use the prefixes “O”, “M”, “V”, “K” and “NM” respectively. For example, the Makeevskoye-17 well is referred to herein as M-17.
Outlook
Average daily production (SEN WI) for the fourth quarter 2014 to date is approximately 5,495 boe/d (1,060 bbl/d of oil, 26.1 MMcf/d of gas, 83 bbl/d of liquids). The decrease vs. the Q3 average is due to the M-16 and M-17 wells in Ukraine being shut-in for three and a half days for pressure build-up testing in October. The increased production in Tunisia in the fourth quarter has been substantially offset by natural declines corporate wide, and no new wells were brought on during Q3 or Q4 to date due to the cessation of drilling in Ukraine.
Ukraine
The official price for November at which gas can be sold to industrial customers in Ukraine is 5,100 UAH per Mcm. At the current exchange rate of 15.85 UAH/USD, that is equivalent to $9.11/Mcf. The price that KUB-Gas receives is approximately 4% lower, reflecting the margins of the traders through whom the gas is sold. The Company–s realized gas price in Ukraine during the third quarter was $10.17/Mcf.
In November, KUB-Gas plans to recomplete the M-16 well in the S5 zone as it has been determined that M-17 alone will be sufficient to recover the gas in the S6 accumulation from which both are currently producing.
As has been reported previously, the National Bank of Ukraine announced Resolution No. 591 on September 22, 2014, under which among other things, foreign exchange transactions associated with the payment of dividends were prohibited effective September 23, 2014 and expiring on December 2, 2014. On November 4, the bank–s Chairman, Valeria Hontareva announced that this prohibition would be lifted. She further stated that this restriction would make further investments in Ukraine impossible. No mention was made with respect to any alternative date for the order to be lifted.
The M-22 well is expected to be completed in mid to late December, and if successful, will be tied into the pre-built flowline in January after the drilling rig moves off the location, and subject to the normal regulatory approvals for new wells and pipelines. The rig will move to the NM-4 well next to resume drilling that was halted in late June due to the security issues at the time.
Tunisia
Once the drilling rig has finished completion operations on WIN-12bis, it will move to the Winstar-13 (“WIN-13”) location. The total time to drill and complete WIN-13 is estimated to be 73 days. It is targeting the same Ordovician Lower Hamra and El Atchane formations that are currently producing in the Sabria field.
Romania
As reported on November 12, 2014, drilling is underway on the Moftinu-1001 well, the first of a two well program targeting Miocene and Pliocene aged sands at depths between 1,800 – 2,000 metres. The second well, Moftinu-1002bis, will follow immediately after rig release from Moftinu-1001, and both wells are expected to be drilled and cased by mid-December. Completion and testing will commence in late January 2015.
The Company is also currently shooting an additional 180 km2 of 3D seismic in the Santau area within Satu Mare, immediately south of Moftinu. Acquisition is expected to be complete by November 15, 2014, and processing and interpretation to be done during Q1 2015.
Supporting Documents
The full Management Discussion and Analysis (“MD&A”) and Financial Statements have been filed in English on and in Polish and English via the ESPI system, and will also be available on .
Abbreviations
Cautionary Statement:
BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
About Serinus
Serinus is an international upstream oil and gas exploration and production company with a diversified portfolio of projects in Ukraine, Tunisia, Romania, Brunei and Syria and with a risk profile ranging from exploration in Brunei, Romania and Syria to production and development in Ukraine and Tunisia. The common shares of the Company trade under trading symbol “SEN” on both the WSE (Warsaw Stock Exchange) and the TSX.
In Ukraine, Serinus owns an effective 70% interest in KUB-Gas LLC through its 70% shareholding of KUBGas Holdings Limited. The assets of KUB-Gas LLC consist of 100% interests in five licences near to the City of Lugansk in the northeast part of Ukraine. Four of the licences are capable of gas production, although two are currently shut in due to security issues in the area.
In Tunisia, Serinus owns a 100% working interest in the Chouech Essaida, Ech Chouech, Sanrhar and Zinnia concessions, and a 45% working interest in the Sabria concession. Four of the concessions are currently producing oil or gas.
In Romania, Serinus has a 60% working interest in the onshore Satu Mare concession, a 2,949 square kilometre exploration and development block, in the northwestern portion of the country.
In Brunei, Serinus owns a 90% working interest in a production sharing agreement which gives the Company the right to explore for and produce oil and natural gas from Block L.
In Syria, Serinus holds a participating interest of 50% in the Syria Block 9 production sharing contract which provides the right to explore for and, upon the satisfaction of certain conditions, to produce oil and gas from Block 9, a 10,032 square kilometre area in northwest Syria. Serinus declared force majeure, with respect to its operations in Syria, in July 2012.
The main shareholder of the Company is Kulczyk Investments S.A., an international investment house founded by Polish businessman Dr. Jan Kulczyk.
For further information, please refer to the Serinus website ().
Translation: This news release has been translated into Polish from the English original.
Forward-looking Statements This release may contain forward-looking statements made as of the date of this announcement with respect to future activities that either are not or may not be historical facts. Although the Company believes that its expectations reflected in the forward-looking statements are reasonable as of the date hereof, any potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors that could impair or prevent the Company from completing the expected activities on its projects include that the Company–s projects experience technical and mechanical problems, there are changes in product prices, failure to obtain regulatory approvals, the state of the national or international monetary, oil and gas, financial, political and economic markets in the jurisdictions where the Company operates and other risks not anticipated by the Company or disclosed in the Company–s published material. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties and actual results may vary materially from those expressed in the forward-looking statement. The Company undertakes no obligation to revise or update any forward-looking statements in this announcement to reflect events or circumstances after the date of this announcement, unless required by law.
Contacts:
Serinus Energy Inc. – Canada
Norman W. Holton
Vice Chairman
Tel.: +1-403-264-8877
Serinus Energy Inc. – Canada
Gregory M. Chornoboy
Director – Capital Markets & Corporate Development
Tel: +1-403-264-8877
Serinus Energy Inc. – Poland
Jakub J. Korczak
Vice President Investor Relations & Managing Director CEE
Tel.: +48 22 414 21 00