Achieves Increases in Production, Revenues and Net Operating Income
CALGARY, March 30 /CNW/ - Stream Oil & Gas Ltd. (TSXV: SKO) (the "Company") is pleased to report its financial and operating results for the year ended November 30, 2010.
The full text of Management's Discussion and Analysis ("MD&A") and the Company's audited consolidated financial statements can be found on Stream's website at www.streamoilandgas.com and at www.sedar.com.
2010 Summary of Results
Three Months Ended Year Ended
November 30, November 30,
(US$000s, except as noted) 2010 2009 2010 2009
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Financial
Revenue 705 (151) 5,967 2,215
Net operating income (loss) (499) (359) 3,147 638
Funds from (used in) operations 141 251 95 248
Income (loss) (2,335) (1,206) (1,545) (2,072)
Per share - basic & diluted (0.04) (0.02) (0.03) (0.05)
Additions to property,
plant & equipment 6,360 620 8,148 1,414
Operating
Average production (boed) 445 240 350 272
Average price ($/boed) 38.70 38.69 38.70 34.17
Netback ($/boed) 24.68 16.35 24.90 11.83
As at Nov. 30, Nov. 30,
2010 2009
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Cash and cash equivalents 9,493 263
Shareholders' equity 20,744 5,249
Weighted average shares outstanding (No.) 51,141,013 38,942,913
2010 Achievements:
- Average net production increased by 29% to 350 boed compared to
272 boed in 2009
- Current average net production is 920 boed, a further 106% increase
over year-end volumes
- The average price per boe was $38.70 compared to $34.17 in 2009
- Revenue increased to $6.0 million from $2.2 million, an increase of
269%
- Netback increased to $24.90 boed as compared to $11.83 boed in 2009
- Completed the take-over of all wells and infrastructure of the
Cakran-Mollaj oil field and the Usoja central treatment facility
- Completed a Cdn$3.5 million fund-raising on January 4, 2010. The net
proceeds of Cdn$3.3 million were used to implement production growth
plans
- Established debt facilities for leasing requirements with
Societe Generale in Albania
- Increased Stream's 2010 reserves value as follows:
- Total proved reserves increased 38% to 14.3 MMboe from 10.4 MMboe
in 2009
- Proved plus probable reserves increased 34% to 18.7 MMboe from
13.9 MMboe in 2009
- Possible reserves of 16.7 MMboe were added to the evaluation for
total reserves of 35.4 MMboe
- Reserve value increased 119% from year-end 2009 on a total proved
basis and 75% on a total proved and probable basis, discounted at
10%
- Net asset value is $2.99 per common share on a proved basis and
$3.99 per common share on a proved plus probable basis, based on
the independently estimated reserve value, outstanding debt and
the number of outstanding shares as of February 8, 2011(1)
- Contingent oil resources of 25.6 MMbbl and oil initially-in-place
of 1,128 MMbbl were added
- Contingent gas resources of 31.2 Bcf and gas initially-in-place of
268.5 Bcf were added
Fourth Quarter 2010 Achievements:
- Average net production increased by 86% to 445 boed compared to
240 boed in the fourth quarter 2009
- Revenue increased to $0.7 million, compared to ($0.2 million), due to
a fourth quarter 2009 settlement in accounts receivable
- Operating netback increased to $24.69 boed as compared to $16.35 boed
in 2009
- Received final approval for the Plans of Development for the
Ballsh-Hekal, Cakran-Mollaj and Gorisht-Kocul oil fields by the
Albanian Ministry of Economy, Trade and Energy
- Reviewed Phase II of its Plan of Exploration for the Delvina gas
field with Albania authorities; the program was approved and
commenced (minimum work program of $7.0 million for a period of
36 months)
- Completed a private placement for gross proceeds of Cdn$9.75 million
through the issue of 6.5 million units at Cdn$1.50 per unit
- Accelerated expiry date on its January 2010 warrants, resulting in
aggregate proceeds of $1.8 million to the Company
Subsequent to the quarter, Stream achieved the following:
- Finalized the takeover of the Gorisht-Kocul oilfield, including all
wells, surface infrastructure, treatment facilities and the pipeline
connecting the field to the Company's Usoja treatment facilities
- Received final approval for the execution of the Plan of Development
for the Delvina gas field from the Albanian Ministry of Economy,
Trade and Energy
- Concluded negotiations for an export contract with an Italian
refinery and completed first two exports of crude oil
"We're extremely pleased with our accomplishments over the past year," said Dr. Sotirios Kapotas, President and CEO. "During this time, we've improved our financial results as we started to take over the fields, finalized field development plans, and made preparations to increase reserves and production through the application of primary and enhanced recovery techniques. We're excited about the potential of the year ahead as we implement our growth strategy."
Capitalized expenditures were $8.8 million during fiscal 2010, compared to $1.9 million in fiscal 2009. The increase in capital expenditures in fiscal 2010 results from the implementation of Stream's development plans over the year. Stream plans to continue deploying cash raised in financings along with operating cash flow for further production growth. In addition, Management is studying several funding options to accelerate development activities in 2011.
Under its Petroleum Agreements, Stream has the right to takeover all the existing wells and facilities in its oil and gas fields (approximately 600 wells). Of these wells, 244 are producing with the remainder requiring some type of intervention. By the end of the fourth quarter of 2010, the Company had taken over a total of 124 wells, of which 58 were producing. Subsequent to year-end, Stream took over an additional 268 wells of which 122 were producing.
Stream also continued its resources evaluation program, adding additional personnel to enable prompt conversion of resources into reserves. Veteran personnel were added in Albania in key leadership and management areas to facilitate the achievement of 2011 objectives while enabling the executive to direct more attention to strategic value growth activities for the benefit of shareholders.
Outlook
In 2010, Stream's focus on early addition of production, testing various artificial lift techniques for conventional recovery and continued reservoir assessment yielded strong results in both resource and production increases. Management intends to leverage this success in 2011 through the deployment of incremental oil recovery techniques, development of its gas resources and the further definition of identified EOR opportunities.
Management expects to continue to achieve substantial production increases in 2011, with the objective of attaining average net exit production for 2011 between 2,250 - 2,600 boed (between 3,500 - 4,000 boed on a gross basis). The Company has completed two export shipments to Italy and intends to continue to export production, thereby proactively managing in-country sales risks. As production increases with the Cakran-Mollaj workover program and the gradual takeover of the Ballsh-Hekal field, new contracts are expected to be negotiated to enable the sales of additional oil production.
In 2011, Stream's budget provides increases in cash flow and capital expenditures compared to 2010 and significantly expands the Company's work programs to encompass both well reactivations/interventions and enhanced recovery projects. Based on forecast prices, Stream anticipates that it will invest approximately $34.9 million in capital development in 2011, utilizing available cash flow and funds from other sources.
Stream's growth strategy is focused on increasing production, reserves, sales and cash flow. In 2011, Stream will be focused on activities that will promote its rapid growth through the continuation of primary extraction techniques as well as further development of growth potential through EOR techniques. In addition, the Company will continue its negotiation of longer term export contracts and strengthening its financial resources. These activities are expected to provide substantial value for the Company and its shareholders.
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.
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(1) As per NI 51-101, the estimated net asset values disclosed do not
represent fair market value.
