Oryx Petroleum Q2 2020 Financial and Operational Results

Source: www.gulfoilandgas.com 9/2/2020, Location: Middle East

Oryx Petroleum Corporation Limited has announced its financial and operational results for the three and six months ended June 30, 2020. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

Financial Highlights:

- Total revenues of $4.2 million on working interest sales of 241,400 barrels of oil (“bbl”) and an average realised sales price of $15.78/bbl for Q2 2020

- Lower volumes due to shut-in of production from Banan field during Q2 2020

- The Corporation has received payment in accordance with Production Sharing Contract entitlements for all oil sale deliveries into the Kurdistan Oil Export Pipeline through October 2019 and for the months of March through July of 2020. Payments for the months of November 2019, December 2019, January 2020, and February 2020 remain outstanding with the Contractor share totalling $39 million. The Corporation is actively pursuing the outstanding payments and expects payments to resume in the coming months but longer term timing of full settlement is undefined. The Corporation expects future monthly sales invoices to be settled in the following month

- Operating expenses of $3.5 million ($14.63/bbl) and an Oryx Petroleum Netback[1] of negative $5.17/bbl for Q2 2020

- Loss of $3.9 million ($0.01 per common share) in Q2 2020 versus Profit of $2.3 million in Q2 2019 ($0.00 per common share)

- Loss in Q2 2020 primarily attributable to a decrease in net revenues and netback versus Q2 2019 partially offset by, a reversal of the materials inventory provision, lower operating expenses, lower depletion costs and lower general & administrative costs versus Q2 2019

- Net cash generated by operating activities was $3.1 million in Q2 2020 versus net cash generated by operating activities of $11.4 million in Q2 2019 comprised of Operating Funds Flow[2] of negative $2.3 million and a $5.4 million decrease in non-cash working capital

- Net cash used in investing activities during Q2 2020 was $0.6 million including payments related to drilling preparations in the Hawler license area, preparation for drilling in the AGC Central license area, and an increase in non-cash working capital

- $5.6 million of cash and cash equivalents as of June 30, 2020.

Operations Update:

- Average gross (100%) oil production of 4,000 bbl/d (working interest 2,600 bbl/d) in Q2 2020

- Average gross (100%) oil production of 10,000 bbl/d (working interest 6,500 bbl/d) and 11,700 bbl/d (working interest 7,600 bbl/d) for July and August 2020, respectively

- Production from the Banan field resumed in July 2020 due to the improved oil price environment

- The worldwide outbreak of the COVID-19 virus, including within Iraq, has not caused any significant disruption of production operations. The Corporation is continuing to take precautions to protect its employees and contractors but does not expect that the ongoing virus outbreak will restrict operations

- Most of the termination notices issued in March 2020 to employees in the Corporation´s Geneva office, including the Chief Executive Officer, have recently been rescinded

2020 Forecasted Work Program and Capital Expenditures:

- 2020 capital expenditures are forecasted to be $22 million (versus $11 million previous forecast). In addition to the previously planned installation of a pump at the Banan-4 well a number of other operations are now planned: a stimulation of the Demir Dagh-3 well, a new well targeting the Zey Gawra Tertiary reservoir, and infrastructure works on the east fault block of the Banan field.

Liquidity Outlook:

- The Corporation expects cash on hand as of June 30, 2020, cash receipts from net revenues from export sales, and proceeds from the short term credit facility provided by Zeg Oil and Gas Limited (“ZOG”) will allow it to fund its forecasted near term capital expenditures and operating and administrative costs through the end of 2021, and to reduce obligations currently due to suppliers. Collection of overdue net revenues for the November 2019 to February 2020 period and/or external funding is required to be able to fund capital expenditures in the Hawler license area in 2020 and 2021 beyond expenditures currently envisioned or to meet any contingent consideration obligations that become payable in 2020 or 2021.

CEO’s Comment

Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio, stated:

“During the second quarter OP Hawler Kurdistan Limited continued to operate safely, without any recordable incidents, notwithstanding restrictions imposed due to the COVID-19 outbreak. Due to improved crude oil prices we also recently restored production at the Banan field which was shut in for most of the second quarter due to the precipitous drop in crude oil prices that started during March. Our average daily production is now approaching levels achieved earlier in the year.

In response to the lower oil prices and deferred revenue payments, we implemented steps early in the second quarter to reduce expenditures including limiting near term capital expenditure.

As a result of transactions consummated in recent weeks between our two largest shareholders and between AOG and the Corporation, ZOG has acquired control of Oryx Petroleum and shares in the entity holding our interest in the AGC Central license area have been transferred to AOG as settlement for the loan due to AOG. Following the completion of these transactions, ZOG has agreed to provide us with a $10 million credit facility.

With improved crude oil prices, regular revenue payments, an improved financial position, and a reduced cost structure, we are now in a position to resume capital expenditure. The focus of our efforts, at least in the near term, will exclusively be the Hawler license area in the Kurdistan Region of Iraq. In the second half of 2020 we plan to install a pump at the Banan-4 well, stimulate the Demir Dagh-3 well, drill a new well targeting the Zey Gawra Tertiary reservoir, and complete some infrastructure works at the Banan field in preparation for future drilling.

We are excited by our prospects for growth and look forward to an improved operating environment and executing our plans for the remainder of 2020 and beyond.”


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