Antrim Energy Inc. Announces 2016 First Quarter Results
CALGARY, ALBERTA–(Marketwired – May 24, 2016) –
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Antrim Energy Inc. (“Antrim” or “the Company”) (TSX VENTURE:AEN)(AIM:AEY), an international oil and gas exploration company, today reported its financial results for the three month period ended March 31, 2016.
All financial figures are unaudited and in US dollars unless otherwise noted.
Antrim, with its current cash resources, no debt and no decommissioning obligations, continues to maintain a strong financial position. Working capital at March 31, 2016 was US$9.2 million, including cash and cash equivalents of US$9.4 million.
Antrim continues to search for M&A opportunities, using a structured approach in its evaluation. Key criteria include strategic fit, focus on near term appraisal / development, use of funds, transformative potential with upside potential for Antrim shareholders and current or near term cash flow. In a period of significant commodity price volatility, ensuring that the opportunity remains viable in a low oil and gas price environment is a key component in the evaluation.
In Ireland, the Company has a 100% working interest in Frontier Exploration Licence (“FEL”) 1/13, subject to finalization and government approval of the transfer of Kosmos Energy Ireland’s (“Kosmos”) interest to Antrim. Antrim was one of the first companies to realize the oil and gas potential in the southern Porcupine Basin. The Porcupine Basin is the conjugate basin to the eastern Canadian Orphan Basin/Flemish Pass area, where several significant oil discoveries have recently been made. Studies of these conjugate margins have demonstrated many similarities in terms of source rock, maturation, hydrocarbon migration, reservoir characteristics and trap formation.
The Company has identified two highly prospective Jurassic fault blocks and one Cretaceous submarine fan system in the FEL 1/13 licence, as well as numerous other leads. To move exploration of FEL 1/13 forward, Antrim is seeking to extend the first exploration phase of the licence as well as farm-out a portion of its interest in the licence to a new operator. In February 2016 the first round results of the Ireland 2015 Atlantic Margin Licensing Round were announced. In total, 14 new licensing options were awarded with successful participants including Eni, ExxonMobil, Statoil and BP, confirming very strong industry interest in this frontier exploration play. A second announcement of results from the licensing round is expected in May 2016.
Frontier Exploration Licence (“FEL”) 1/13, Antrim 100%
In 2013, Kosmos farmed-in to Antrim’s Licencing Option over the Skellig Block and acquired 75% interest in and operatorship of FEL 1/13 in exchange for carrying the full costs of a 3-D seismic programme and re-imbursement of a portion of Antrim’s past exploration costs. Results from the subsequent 3-D seismic reinforced Antrim’s interpretation based on 2-D seismic and strongly indicated the presence of Lower Cretaceous slope fan and channel deposits similar in geometry and seismic character to many of the recent Cretaceous oil discoveries offshore West Africa. The licence prospect inventory includes two tilted Jurassic fault blocks and a Cretaceous submarine fan, as well as several other leads.
In September 2015, Antrim was advised by Kosmos of its intention to withdraw from all of its licence interests in Ireland to focus on other recent discoveries in their African portfolio. The Company has applied for and anticipates obtaining at no further cost a 100% working interest in and operatorship of the licence, subject to finalization and government approval of the transfer of Kosmos interest in FEL 1/13 to Antrim.
FEL 1/13 has a 15 year term, with an initial three-year term followed by three four-year terms. The initial three-year term expires in early July 2016 and Antrim has submitted a request to extend the first exploration term by an additional two years pending government approval and agreement on an additional technical work program. The Company is also currently seeking a new farm-in partner and operator to complete any additional technical work necessary during the extension period with the ultimate goal that a well commitment could be made at the end of the revised first exploration phase. In the current commodity price environment the cost of drilling an exploration well on the licence has decreased considerably from when the licence was first awarded in 2013. As part of a farm-out transaction Antrim would seek a carry on the first exploration well.
P077 Block 21/28a – Fyne, Antrim 100%
United Kingdom (UK) Seaward Licences require licensees to permanently abandon all suspended wells prior to licence expiry. In the third quarter of 2015 the Company successfully permanently plugged and abandoned three suspended wells on the Fyne Licence and one suspended well on the Erne Licence in the UK Central North Sea. The well abandonment campaign was completed as part of a larger abandonment programme allowing Antrim to share certain common costs offering significant cost savings.
The Company is in discussion with the UK Oil and Gas Authority (OGA), formerly DECC, with respect to relinquishment and possible reapplication for the licence. The carrying value of the Fyne Licence at March 31, 2016 is $nil (December 31, 2015 – $nil).
P1875 Block 21/29d – Erne, Antrim 100%
Previous discoveries on the Erne Licence are not commercial on their own, but may be economic to develop as tie-backs to an adjacent production facility if such a facility were available. Antrim’s interest in the Erne licence increased to 100% after its partner withdrew from the licence following completion of the Erne well abandonment. The carrying value of the Erne Licence at March 31, 2016 is $nil (December 31, 2015 – $nil).
Financial Discussion of Continuing Operations
Cash Flow and Net Income (Loss) from Continuing Operations
In the first quarter of 2016 cash flow used in operations was $1.0 million compared to cash flow from operations of $0.5 million for the corresponding period in 2015. Cash flow used in operations increased due to a $0.6 million foreign exchange loss in the first quarter of 2016 as a result of a strengthening of in the value of the Canadian dollar relative to the US dollar. Excluding foreign exchange gains and losses, cash flow used in operations in the first quarter of 2016 was $0.3 million compared to $0.8 million for the corresponding period in 2015.
In the first quarter of 2016, Antrim had a net loss of $0.9 million compared to net income of $0.5 million for the corresponding period in 2015. Net loss increased due to foreign exchange losses in 2016 compared to foreign exchange gains in 2015.
Financial Resources and Liquidity
Antrim had a working capital surplus at March 31, 2016 of $9.2 million compared to a working capital surplus of $9.6 million as at December 31, 2015. Working capital decreased due to general and administrative expenses incurred in the period.
The Company has been examining various strategic alternatives, including potential business combinations, to maximize shareholder value. The Company has also been actively engaged in reviewing various options for its appraised, but undeveloped UK oil and gas assets. No assurance can be provided that from either of these initiatives a satisfactory opportunity will be identified and if one is identified, that a transaction could be closed on terms acceptable to the Company.
The Company has submitted an application to extend the first exploration term of its Ireland licence by an additional two years, pending government approval and agreement on an additional technical work program. The Company is also seeking a new farm-in partner and operator to complete any additional technical work necessary during the extension period to further de-risk the identified leads and prospects on the licence. No assurance can be provided that an extension or farm-out of the Ireland licence can be concluded in a timely manner on terms acceptable to the Company.
The Company continues to manage its general and administrative expenses, implementing where possible further cost reductions.
Antrim Energy Inc. is a Canadian, Calgary based junior oil and gas exploration company with assets in the UK North Sea and Ireland. Antrim is listed on the TSX Venture Exchange (AEN) and on the London AIM market (AEY). Antrim’s first quarter 2016 interim report (including management’s discussion and analysis and consolidated financial statements), is available on SEDAR and our website. Visit www.antrimenergy.com for more information.
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