Current Report No. 22/2016Date: 2016-08-12Issuer's
trading name: SERINUS ENERGY INC.
Title: Q2 2016 Financial and Operating Results
Legal basis: other regulations
Content:Pursuant to Article 62.8 of the Act on Public
Offering [...] the Management of SERINUS ENERGY INC. ("Serinus", "SEN" or
the "Company") informs that in Canada via the SEDAR system it has
published information about its financial and operating results for the
quarter ended June 30, 2016.
Note: with the sale of its 70% ownership interest in Ukraine in early
February 2016, the financial results from those assets have been
reclassified as discontinued operations starting with the three month
period ending March 31, 2016. The comparative financial statements have
been restated to show the discontinued operations separate from
continuing operations. Unless otherwise noted, all figures contained in
this press release are with respect to the continuing operations only.
More information concerning the discontinued operations is contained in
the Financial Statements and Management's Discussion and Analysis.
SECOND QUARTER HIGHLIGHTS
- Production from the Company's continuing operations in the second
quarter was 1,206 boe/d, unchanged vs. 1,206 boe/d in Q2 2015, and 5%
higher than the 1,154 boe/d in Q1 2016. The increase over the prior
quarter was due to higher production from several wells after having
pump changes in Q1.
- Gross revenues for the quarter were $4.1 million, down 40% vs. Q2 2015
and up 8% from Q1 2016. The decrease vs. 2015 was due substantially to
lower commodity prices, while the increase over the immediate prior
period was commensurate with the increase in production and better
- Tunisian netbacks were $11.71/boe in Q2, significantly lower than the
$24.32/boe achieved in Q2 2015, due substantially to the effects of
lower commodity prices. Measured against Q1 2016, the netback increased
slightly from $11.44/boe, reflecting higher oil prices, partially offset
by a higher proportion of production from higher royalty fields.
- Funds from Operations in the second quarter were a loss of $0.7
million, compared to a loss of $0.3 million in Q1 2016, and (positive)
$1.9 million in Q2 2015, driven by the same factors as described above
for royalties and netbacks for each period.
- The net loss for the quarter was $4.0 million as compared to losses of
$1.1 million and $4.1 million in Q2 2015 and Q1 2016 respectively, again
due to the same factors described previously.
- Capital expenditures for the quarter were $0.6 million vs. $2.5
million for the same period in 2015.
OPERATIONAL HIGHLIGHTS & UPDATE- Oil and gas production for
the second quarter were 882 bbl/d and 1.9 MMcf/d respectively. As shown
in the summary table attached, the oil volumes were 7% lower than in the
same period in 2015, while gas was 27% higher. The differences are due
to normal operational variances including workovers, wells shut in for
pressure build-ups, and variable gas offtake by STEG (the national gas
utility to which the gas is sold).
- The Company, through its wholly owned subsidiary Winstar Tunisia B.V.
("Winstar"), has entered into a marketing agreement with Shell
International Trading and Shipping Company Limited for the sale of its
Tunisian oil production. The term of the agreement is for 5 years and
the pricing mechanism is competitive with realized prices that Winstar
has received from other purchasers of its Tunisian crude oil. This
benefits the Company by getting regular crude oil liftings from a large
and highly reputable purchaser.
Average daily production (SEN WI) for the third quarter to date was
approximately 998 boe/d (822 bbl/d of oil, 1.1 MMcf/d of gas). At
Chouech Es Saida, gas sales have been curtailed since early July due to
operational issues at STEG, and the CS-3 well developed a tubing leak,
necessitating remediation. Workover operations have commenced and the
well is expected to be back on production by the end of August.
Management estimates that rectification of these issues will restore
approximately 900 Mcf/d and 100 bbl/d of production respectively.
The Company's focus remains on reducing costs wherever possible while
maintaining existing production in Tunisia. The Company estimates that
new drilling is economically viable at current prices in the mid -
forties per barrel, provided they are sustainable. The 2016 budget will
be re-examined on an ongoing basis in the event of that management
becomes confident that such prices can be sustained, and that funding is
available to recommence drilling. Existing production in Tunisia remains
cash flow positive at prices as low as $30/bbl.
In Romania, Serinus will concentrate on moving the Moftinu-1001
discovery into the experimental production phase. Pending ratification
of the Phase 3 extension of the Satu Mare Licence, management continues
to refine the drilling program and has commenced preliminary design of
the required surface facilities.
The Company is examining several alternatives for funding the
development activities in both Romania and Tunisia.
SUPPORTING DOCUMENTSThe full Management Discussion and Analysis
("MD&A") and Financial Statements have been filed in English on
www.sedar.com and in Polish and English via the ESPI system, and will
also be available on www.serinusenergy.com.
CAUTIONARY STATEMENT:BOEs 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.Test results
are not necessarily indicative of long-term performance or of ultimate
recovery. Test data contained herein is considered preliminary until
full pressure transient analysis is complete.
This text contains selected excerpts from the original news release in
English, which has been filed by Company in Canada (country of its
registered office ) by way of the SEDAR system and is available at the
website www.sedar.com by entering the Company name at
The Polish translation of the entire text of the news release is
available at the website: www.serinusenergy.com
Attachment:Summary of Q2 2016 Financial Results (table)