Continued Growth in Production, Revenues and Net Operating Income
CALGARY, April 28 /CNW/ - Stream Oil & Gas Ltd. (TSX-V: SKO) (the "Company") is pleased to report its financial and operating results for the quarter ended February 28, 2011.
The full text of Management's Discussion and Analysis ("MD&A") and the Company's unaudited consolidated financial statements can be found on Stream's website at www.streamoilandgas.com and at www.sedar.com.
Q1 2011 Summary of Results
Three Months Ended
February 28,
(US$000s, except as noted) 2011 2010
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Financial
Revenue 2,077 1,282
Net operating income (loss) 1,242 820
Funds from (used in) operations (3,390) (603)
Income (loss) (130) 20
Per share - basic & diluted (0.00) 0.00
Additions to property, plant & equipment 3,271 843
Operating
Average production (boed) 497 288
Average price ($/boed) 40.68 38.70
Netback ($/boed) 26.66 25.18
As at Feb. 28, 2011 Nov. 30, 2010
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Cash and cash equivalents 4,537 9,493
Shareholders' equity 20,723 20,744
Weighted average shares outstanding (No.) 63,797,801 51,141,013
Q1 2011 Achievements:
- Increased average net production by 73% to 497 boed compared to 288
boed in the first quarter of 2010
- Current average net production is around 900 boed
- Improved returns:
- The average price per boe was $40.68 compared to $38.70 in 2010
- Revenue increased to $2.1 million from $1.3 million, an increase
of 62%
- The resulting netback increased to $26.66 boed as compared to
$25.18 boed in 2010
- Received final approval for the execution of the Plan of Development
for the Delvina gas field and finalized complete takeover of the
Gorisht-Kocul oilfield
- Completed exports of crude oil to Italy and continued negotiations to
obtain higher price per barrel
Subsequent to the quarter, Stream achieved the following:
- Finalized the takeover of the Delvina gas pipeline and infrastructure
in the Ballsh and Gorisht fields
- Advanced the Delvina Block gas exploration program Phase II with the
award of the 3D passive seismic contract. The resulting information
will be utilized to determine the location of the planned exploration
well
- Concluded negotiations for higher crude prices for local sales to the
ARMO refinery, increasing average crude price to just over 70% of
Brent crude
- Secured a contract with a deep workover rig for the Delvina gas field
with corresponding equipment and services to drive the 2011
production growth
"The achievements of the first quarter of 2011 create a solid foundation for our growth during the year," said Dr. Sotirios Kapotas, President and CEO. "The additional revenue recognized from higher domestic and export sales contracts will translate into higher cash flow for our development plans. In addition to implementing primary extraction techniques to increase oil production, we're progressing with enhanced oil recovery strategies such as the waterflood pilot at Gorisht-Kocul to further increase reserves and production. These activities are expected to add to the long term benefit for our shareholders."
With the positive results of the recent reserve report and the higher crude price obtained, Management has moved quickly to negotiate a long term debt facility at preferential terms with credible institutions in order to meet its capital requirements for 2011. The Company is working to finalize this in the earliest timeframe in order to help accelerate its growth program.
Outlook
Stream's growth strategy is focused on increasing production, reserves, sales and cash flow. Production continues to increase and cash flow has improved as a result of new and revised sales contracts. The Company intends to continue to developing export opportunities, thereby proactively managing in-country sales risks. Production is forecast to increase significantly in 2011 with the Cakran-Mollaj and Gorisht-Kocul workover programs. Management's plan for 2011 is to focus on high growth, low risk production increases utilizing improved oil recovery methods. These methods include improved artificial lift, integrated reservoir management and production optimization combined with the deployment of incremental oil recovery techniques, development of its gas resources and the further definition of identified enhanced oil recovery ("EOR") opportunities.
Through 2011, the Company will continue additional takeovers in the Ballsh-Hekal field, enabling further production growth, as well as carrying out technical planning for the future deployment of the Gorisht waterflood commercial project and EOR testing for the Cakran-Mollaj, Ballsh-Hekal and Gorisht-Kocul oilfields. Going forward, Stream will continue to focus its technical personnel on further defining its resource potential, including selecting the appropriate recovery mechanisms to test in the 2011 fiscal year.
Management expects to continue to achieve substantial production increases in 2011, with the objective of exiting 2011 at between 2,250 - 2,600 boed average net production. This reflects a near doubling of production for the year and significantly expands Stream's work programs to encompass both well reactivations/interventions and EOR projects. The execution of the Company's growth program, negotiation of longer term export contracts and strengthening of its financial resources is expected to result in additional value to Stream and its shareholders.
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Forward-Looking Statements
Information in this news release respecting matters such as plans of development or exploration, reserves estimates, production estimates and targets, development costs, work programs and budgets constitute forward-looking information (collectively, "forward-looking statements") under the meaning of applicable securities laws, including Canadian Securities Administrators' National Instrument 51-102 Continuous Disclosure Obligations. Such forward-looking information is based on certain assumptions, including the availability of funds for capital expenditures necessary to construct the infrastructure required for future development, a favorable political and economic operating environment, a consistent rate of well re-completions and costs, success rates, production performance and build-up periods for well re-completions that are consistent with or an improvement over historical levels.
The forward-looking statements contained herein are made as of the date of this release solely for the purpose of generally disclosing Stream's 2010 annual results and outlook for 2011. Investors are cautioned that these forward-looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. Such forward-looking information reflect management's current beliefs and are based on assumptions made by and information currently available to the Company, and involves known and unknown risks, uncertainties and other factors which may cause the actual costs and results of the Company and its operations to be materially different from estimated costs or results expressed or implied by such forward-looking statements. Such factors include, among others political and economic risks associated with foreign operations, general risks inherent in petroleum operations, risks associated with equipment procurement and equipment failure, availability of qualified personnel, risks associated with transportation, currency and exchange rate fluctuations and other general risks inherent in oil and gas operations.
Contingent resources disclosed herein represent those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Although the Company has attempted to take into account important factors that could cause actual costs or results to differ materially, there may be other factors that cause costs and timing of the Company's program or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. These forward-looking statements are made as of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances except as required under applicable securities legislation.
Use of Boe Equivalents
The oil and gas industry commonly expresses production and reserve volumes on a barrel of oil equivalent (Boe) basis whereby natural gas volumes are converted at the ratio of six thousand cubic feet of natural gas to one barrel of oil. Boe 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 Stream Oil & Gas Ltd.
Stream Oil & Gas Ltd. is a Canadian-based emerging oil and gas production, development and exploration company focused on the re-activation and re-development of three oilfields and a gas/condensate field in Albania. The Company's strategy is to use proven technology, incremental and enhanced oil recovery techniques to significantly increase production and reserves.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
