Canoro
Resources Ltd. Announces US$4 Million Financing, Operations Update and
Management Changes
Calgary, Alberta
(CNS, TSX-V) 24th July 2009 � Canoro Resources Ltd. ("Canoro"
or the "Company") has entered into an agreement with Gemini Oil and
Gas Fund II, L.P. ("Gemini"), a private fund based in Jersey, Channel
Islands, whereby Gemini will provide limited-recourse funding of US$4.0 million
for the purchase and installation of the gas compression units as part of
development operations in the Company�s Amguri Field in Assam, India. Gemini
will not earn a participating interest in the field, nor will it be responsible
for future capital costs. Gemini will only be entitled to receive
repayments based on Canoro�s 60% share of gross revenue from the Amguri Field
ranging from 8% before recovery of the US$4.0 million and 4% thereafter.
The agreement also provides that Canoro shall have the option between July 2012
and December 31, 2012 after Gemini�s recovery of its initial investment to buy
back Gemini�s entitlement for US$5.1 million. If such option is exercised
by Canoro, Gemini will be granted, subject to TSX Venture approval, warrants to
subscribe for two million common shares of the Company, exercisable within six
months from the date of issue at a subscription price of CDN $0.20 per
share. The transaction between Canoro and Gemini was in part brokered by
Saether Capital Corp., an independent Canadian financial consultancy,
specializing in providing innovative financing alternatives for the Canadian
resource industry (www.saethercapital.com).
Operations update
The Amguri A-14 well was drilled and completed within the Tipam sand in late
2008. Initial test results indicate that the well is capable of flowing
over 6.0 million standard cubic feet per day ("MMcf/d"). No
signs of depletion were apparent from the pressure build-up analysis.
The pipeline for the Amguri A-14 well tie-in into the central process facility
was completed at the end of May 2009. The well was put into production on 2nd
June at an initial rate of 1.0 MMcf/d (0.6 MMcf/d net to Canoro) dry gas on a
10/64" choke with a with a tubing head pressure of 2180 psig (shut in
tubing head pressure was 2200 psig). The rate is expected to be increased
up to 4 MMcf/d (2.4 MMcf/d net to Canoro) in conjunction with the demand for
gas from the local tea gardens that occurs during the six-month growing season
starting in late June. Prior to bringing the A-14 well on production the Amguri
field was producing 4.1 MMcf/d (2.5 MMcf/d net) gas with an associated 300
barrels per day ("bpd") (180 bpd net) of condensate, or 590 barrels
of oil equivalent per day ("boed") net to Canoro. Production has been
restricted pending the installation of the condensate recovery and gas
compression facility. The facility, which is primarily comprised of gas
compression for injection and condensate stabilization, is on schedule for Q1
2010 commissioning. All major pieces of equipment have been ordered and are in
the manufacturing process. Construction is anticipated to commence in Q4 2009.
The Amguri A-11 well is planned to be converted from a Main Barail gas producer
to a dual completion well for gas injection into the Main Barail and production
from the Mid-Barail formations by the end of Q3 2009. Subsequent to
recompletion, the well will be produced solely from the Mid-Barail formation. The
conversion is not expected to add significant incremental condensate daily
production, but designed to preserve the reservoir pressure in the Main Barail
zone until gas injection is implemented for optimal recovery of condensate
reserves.
The planned installation of an electric submersible pump (ESP) in the Amguri
A-5 oil well, brought back on stream in early 2009, has been postponed while
watercut performance is being evaluated. The well had been producing
approximately 30 bpd of oil net to Canoro prior to being shut in due to water
influx. Canoro is currently reviewing the reservoir and well characteristics to
determine the feasibility and options for a water shut-off work over.
Work continues on the Pre-Stack Depth Migration ("PSDM")
re-processing of Amguri 3D seismic data with initial results expected in Q3
2009 and subsequent re-interpretation being completed in Q4 2009.
Management
In line with the Company�s focus on operations and maintaining tight financial
controls, Canoro announces a number of changes to senior management. The
Company is pleased to announce the appointment of the following officers and
senior managers with immediate effect. Mr. S. Brian Gieni is appointed Senior
Vice President, Chief Financial Officer and Country Manager India. Mr.
Gieni replaces Stephen Nerland as Country Manager and is now based in the
Company�s offices in New Delhi.
Ryan Ellson has been appointed Vice President Finance. Mr. Ellson has been
working as Corporate Controller & Director of Finance for the Company since
January 2008. Prior to joining Canoro, Mr. Ellson acted as the Controller of
Delphi Energy Corp. a TSX-listed oil and gas
company. Mr. Ellson is a Chartered Accountant and attended the University of Saskatchewan where he earned a Bachelor
of Commerce degree and a Masters of Professional Accounting degree.
Given the current industry environment and the level of operations, Canoro has
eliminated the position of Vice President of Operations and John Kroshus has
left the organization to pursue other interests.
Formerly Area Managers for the Company�s Amguri operations, Darcy Dorscher and
Ken Read have been appointed joint Directors of Operations. Previous
to joining Canoro, Darcy Dorscher, P.Eng. spent
six years with Nations Energy Company Ltd.'s Kazakh subsidiary,
Karazhanbasmunai, the last year as General Manager and the previous five years
as Manager of its Engineering & Geology Department. Mr. Dorscher has an
additional 15 years experience in reservoir, production, and facility
engineering and production operations, gained at various projects within the
former Soviet Union (FSU), Qatar
and Canada.
He earned his Chemical Engineering degree at the University of Alberta
and is a member of the Society of Petroleum Engineers and Association of
Professional Engineers Geologists and Geophysicists of Alberta.
Previous to joining Canoro, Ken Read spent seven years with Nations Energy in Azerbaijan and Kazakhstan in a variety of
capacities, including Operations Manager, Drilling Manager and Executive
Director. Mr. Read has over 30 years experience in drilling and production
operations in Canada, China and the
former Soviet Union (FSU). He earned a Petroleum Drilling Technologist Diploma
(Honours) from the Southern Alberta Institute of Technology (SAIT) and is a
Certified Engineering Technologist (C.E.T.) by the Alberta Society of
Engineering Technologists (A.S.E.T.).
Mr. Robert Wynne, appointed a director of the Company in November 2008, will
assume an active role in the Company as Managing Director and Chief Operating
Officer. Les Kondratoff will continue as President and Chief Executive Officer
and have a strategic focus on expanding the Company�s asset portfolio.
The Company will announce its Fiscal 2009 year-end audited financial results
and independent reserves evaluation on 29th July 2009.
Canoro is an independent international oil and
gas exploration and production company based in Calgary,
Canada and New
Delhi, India
with operations in the Assam/Arakan basin of northeast India.
For further information, please contact:
Ryan Ellson Robert S. Wynne
Vice President Finance Managing Director & COO
tel: +1 (403) 410-6777 tel: + 1 (403) 592-6295
Suite 700, 717 � 7th Ave SW.
Calgary, Alberta T2P 0Z3
or visit the Company�s website at www.canoro.com
Common shares of Canoro trade on the TSX Venture Exchange under the symbol
�CNS�. The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this News Release.
This news release contains certain forward-looking statements, including
management�s assessment of future plans and operations, and capital
expenditures and the timing thereof, that involve substantial known and unknown
risks and uncertainties, certain of which are beyond Canoro�s control. Such
risks and uncertainties include, without limitation, risks associated with oil
and gas exploration, development, exploitation, production, marketing and
transportation, loss of markets, volatility of commodity prices, currency
fluctuations, imprecision of reserve estimates, environmental risks,
competition from other producers, inability to retain drilling rigs and other
services, delays resulting from or inability to obtain required regulatory
approvals and ability to access sufficient capital from internal and external
sources, the impact of general economic conditions in Canada, the United States
and overseas, industry conditions, changes in laws and regulations (including
the adoption of new environmental laws and regulations) and changes in how they
are interpreted and enforced, increased competition, the lack of availability
of qualified personnel or management, fluctuations in foreign exchange or
interest rates, stock market volatility and market valuations of companies with
respect to announced transactions and the final valuations thereof, and
obtaining required approvals of regulatory authorities. Canoro�s actual
results, performance or achievements could differ materially from those
expressed in, or implied by, these forward-looking statements and, accordingly,
no assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do so,
what benefits, including the amount of proceeds, that Canoro will derive there
from. Readers are cautioned that the foregoing list of factors is not
exhaustive. All subsequent forward-looking statements, whether written or
oral, attributable to Canoro or persons acting on its behalf are expressly
qualified in their entirety by these cautionary statements. Furthermore, the
forward-looking statements contained in this news release are made as at the
date of this news release and Canoro does not undertake any obligation to
update publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required by applicable securities laws.
Non-GAAP terms
The Press Release contains the terms "funds from operations", and
"netbacks" which are not recognized measures under Canadian generally
accepted accounting principles. The Company uses these measures to help
evaluate its performance. Management considers netbacks an important
measure as it demonstrates its profitability relative to current commodity
prices. Management uses funds from operations to analyze performance and
considers it a key measure as it demonstrates the Company�s ability to generate
the cash necessary to fund future capital investments and to repay
debt. Funds from operations has been defined by the Company as net
earnings adjusted for non-cash items (depletion, depreciation and accretion,
stock-based compensation, unrealized (gain)/loss on foreign exchange, and
unrealized investment (gain)/loss) and excludes the change in non-cash working
capital related to operating activities and expenditures on asset retirement
obligations and reclamation. Canoro�s determination of funds from operations
may not be comparable to that reported by other companies nor should it be
viewed as an alternative to cash flow from operating activities, net earnings
or other measures of financial performance calculated in accordance with
Canadian GAAP. .
Barrel of oil equivalent
Where amounts are expressed on a barrel of oil equivalent (boe) basis, natural
gas volumes have been converted to barrels of oil equivalent at six thousand
cubic feet to one barrel of oil equivalent (6 mcf = 1 boe). This
conversion ratio is the convention used in the oil and natural gas industry and
is based on an energy equivalent conversion method primarily applicable at the
burner tip and does not represent a value equivalent at the wellhead. The
use of boe�s may be misleading, particularly if used in isolation.