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Oryx Petroleum Changes Name, Plans $51m Capex

By John Lee.

Oryx Petroleum Corporation has announced that it has changed its name to Forza Petroleum Limited.

2021 Budgeted Capital Expenditures

Budgeted capital expenditures for 2021 are $51 million and dedicated exclusively to the Hawler license area.

The planned work program involves drilling five new wells into proven, producing reservoirs and reservoirs still being appraised in the Demir Dagh, Zey Gawra and Banan fields, completing a previously drilled well in the Ain al Safra field for further evaluation, and installing a gathering system to eliminate trucking in the western part of the Hawler license area to reduce environmental impact and operating expense.

Completion of the full budgeted program is dependent on available funding from one or a combination of increased revenue from oil sales resulting from higher than forecast Brent crude oil prices or production, settlement of past due receivables by the Ministry of Natural Resources of the Kurdistan Region of Iraq in respect of oil sales made between November 2019 and February 2020, and additional funding from third parties.

The Corporation is in discussions with its controlling shareholder regarding financing arrangements to fund budgeted capital expenditure to the extent internal capital is not available.

Operations Update

  • Average gross (100%) oil production of 11,100 bbl/d (participating interest 7,200 bbl/d) for November 2020
  • During November, leased artificial lift equipment used to produce the Banan-4 and Banan-3 wells was demobilized and replaced by a purchased pump in the Banan-4 well, reducing future operating expenditure related to producing the Banan field
  • The previously announced new well targeting the Tertiary reservoir in the Zey Gawra field is not expected to spud before January 2021 as the drilling rig intended for the project continues to be in use by another operator in the region and has not yet been released

CEO’s Comment

Commenting today, Forza Petroleum’s Chief Executive Officer, Vance Querio (pictured), stated:

“We are very encouraged by the rebounding crude oil market and plan to maintain an active program of drilling during 2021 to continue the progressive development of the Hawler license area in the Kurdistan Region of Iraq. We intend to increase our offtake rates from some of our proven, producing reservoirs and to continue evaluating the potential of other accumulations in the area that have not previously been produced.

“During a difficult year related to the global pandemic and other headwinds across the oil and gas industry, we have remained committed to maintaining safe operations and decreasing operating costs where possible. The installation of a gathering system to serve the western flank of the Hawler license area will support both of these objectives by dramatically reducing the potential of environmental impact and the relatively high cost of tanker transport operations in the area.

“We look forward to an improving operating environment in 2021 and to continuing our successful efforts to develop the resources of the Hawler area for the benefit of Forza Petroleum, the Kurdistan Regional Government, the employees of OP Hawler Kurdistan Limited and the citizens of the communities in which we operate.”

(Source: Oryx)

The post Oryx Petroleum Changes Name, Plans m Capex first appeared on Iraq Business News.

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GKP CFO to Chair Oryx

Oryx Petroleum has announces the appointment of Sami Zouari (pictured) as Board Chair and Independent Director with immediate effect.

Mr. Zouari  succeeds Jean Claude Gandur who recently resigned from the Corporation as part of transactions consummated between The Addax and Oryx Group PLC and Zeg Oil and Gas Limited.

Sami Zouari was most recently the Chief Financial Officer and an Executive Director of Gulf Keystone Petroleum Limited, an independent oil and gas company that operates the Shaikan Field in the Kurdistan Region of Iraq. During his tenure, Mr. Zouari played a lead role in the operational and commercial transformation and the financial restructuring of Gulf Keystone into one of the premier independent exploration and production companies operating in the Kurdistan Region of Iraq and the wider Middle East. Prior to appointment at Gulf Keystone, Mr. Zouari held various positions at Total E&P and BNP Paribas.

Commenting today, Independent Director of Oryx Petroleum, Peter Newman, stated:

“We are delighted to welcome Sami to the Board. His extensive experience in the oil and gas sector in the Kurdistan Region of Iraq and the Middle East, his knowledge of financial markets, and his experience with corporate transformation processes will be enormously helpful to us as we confront financial challenges and seek to maximise value from the Hawler license.”

Also commenting today, Chair of Oryx Petroleum, Sami Zouari, stated:

“The Hawler license is an asset I believe has significant potential. I look forward to working with the Board and Management of Oryx Petroleum to transform Oryx Petroleum into one of the leading independent exploration and production operators in the Kurdistan Region.”

(Source: Oryx Petroleum)

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Oryx Petroleum Announces Change in Control

Oryx Petroleum Corporation has announced that the Corporation’s two largest shareholders have informed the Corporation that Zeg Oil and Gas Ltd. acquired control of the Corporation from AOG Upstream BV on July 23, 2020 in the context of the previously announced transaction.

The acquisition was conditional upon and subsequent to the closing of the Loan Settlement announced by the Corporation on July 23, 2020.

In connection with the change in control, Jean Claude Gandur has resigned from the Board of Directors of the Corporation.

As part of securing consent for the change in control of the Corporation’s interest in the Hawler license area from the Ministry of Natural Resources of the Kurdistan Region of Iraq (“MNR”), the Corporation has agreed to amend certain terms of the Production Sharing Contract governing the Hawler license area (pictured).

Specifically, the Corporation has agreed to a 22% reduction in the cost pool related to its interest, and to finance all costs attributed to the 35% interest it does not own for the duration of the development period and without a cap on such financing facility.

Previously, the Corporation was financing only the costs attributable to a 20% interest in the license, to a maximum of US $300 million. The MNR has agreed to waive any rights it has to audit costs incurred up to December 31, 2020.

Depending on actual future revenue and cost profiles, the changes may or may not result in a lower share of future cash flows attributable to the Corporation’s interest compared to the applicable terms prior to amendment.

(Source: Oryx Petroleum)

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Oryx announces 80% Increase in Production

Oryx Petroleum has announced its financial and operational results for the year ended December 31, 2019.

The Corporation also announces agreements with AOG International Holdings Limited (“AOG”) to amend the Loan Agreement dated March 13, 2015 and to establish a new short term credit facility. All dollar amounts set forth in this news release are in United States dollars, except where otherwise indicated.

2019 Financial Highlights:

  • Total revenues of $150.5 million on working interest sales of 2,780,800 barrels of oil (“bbl”) and an average realised sales price of $48.72/bbl for 2019
    – 54% annual increase in revenues versus 2018
    – Q4 2019 revenues increased 14% versus Q3 2019
    – The Corporation has received full payment in accordance with Production Sharing Contract entitlements for all oil sale deliveries into the Kurdistan Oil Export Pipeline through September 2019
  • Operating expenses of $28.9 million ($10.41/bbl) and an Oryx Petroleum Netback(1) of $18.90/bbl for 2019
    – 17% decrease in operating expenses per barrel versus 2018
  • Loss of $59.2 million ($0.11 per common share) in 2019 versus Profit of $43.8 million in 2018 ($0.09 per common share)
    – Loss in 2019 primarily attributable to an impairment expense related to the Hawler license area and an impairment expense and a provision related to the Corporation’s former interest in the Haute Mer B license area
    – Profit in 2018 primarily attributable to an impairment reversal related to the Hawler license area
  • Net cash generated by operating activities was $28.1 million in 2019 versus net cash generated by operating activities of $8.1 million in 2018 comprised of Operating Funds Flow(2) of $26.9 million and an $1.2 million decrease in non-cash working capital
  • Net cash used in investing activities during 2019 was $35.1 million including payments related to drilling and facilities work in the Hawler license area, preparation for drilling in the AGC Central license area, and an increase in non-cash working capital
  • $8.9 million of cash and cash equivalents as of December 31, 2019
  1. Oryx Petroleum Netback is a non-IFRS measure. See the table below for a definition of and other information related to the term.
  2. Operating Funds Flow is a non-IFRS measure. See the table below for a definition of and other information related to the term.

2019 Operations Highlights:

  • Average gross (100%) oil production of 11,700 bbl/d (working interest 7,600 bbl/d) for the year ended December 31, 2019 versus 6,500 bbl/d (working interest 4,200 bbl/d) for the year ended December 31, 2018
    – 80% increase in gross (100%) oil production in 2019 versus 2018; 12% increase in gross (100%) oil production in Q4 2019 versus Q3 2019
    – Successful completion of four producing wells during 2019
    – First successful completion of a well targeting the Cretaceous reservoir at the Demir Dagh field utilising a horizontal well design
  • Gross (working interest) proved plus probable oil reserves of 103 million barrels as at December 31, 2019
  • Environmental and Geohazard Assessments related to planned drilling in the AGC Central license area initiated and largely completed

2020 Operations Update:

  • Average gross (100%) oil production of 14,500 bbl/d (working interest 9,400 bbl/d) and 14,400 bbl/d (working interest 9,400 bbl/d) in January and February 2020, respectively
  • The drilling of a horizontal sidetrack of the previously drilled Banan-1 well in the portion of the Banan field east of the Great Zab river was completed in early 2020
  • Data obtained during drilling indicate that the Tertiary reservoir in the eastern portion of the Banan field contains oil of similar density to oil produced from the Tertiary reservoir in the portion of the Banan field west of the Great Zab river
  • Attempts to complete the well as a producer in the Cretaceous reservoir were unsuccessful
  • Further drilling targeting both the Tertiary and Cretaceous reservoirs is planned in 2020
  • Operations in recent weeks were successful in shutting off water production from the Banan-5 well which is producing oil from the Cretaceous reservoir in the portion of the Banan field west of the Great Zab river
  • The worldwide outbreak of the COVID-19 virus, including within Iraq, has not impacted operations. The Corporation is taking precautions to protect its employees and contractors but does not at this time expect that the virus outbreak will restrict operations
  • The planned drilling of an exploration well in 2020 in the AGC Central license area has been deferred. In 2019, the Corporation requested that the First Renewal Period of its Production Sharing Contract (due to end on October 1, 2020) be extended as a result of ongoing negotiations between Senegal and Guinea Bissau in relation to the accord governing the jointly-administered area offshore Senegal and Guinea Bissau. The Corporation is currently in discussions with the AGC regarding an amendment to its Production Sharing Contract that would implement the requested extension and expects the amendment to be finalised in the coming months.

2020 Forecasted Work Program and Capital Expenditures:

  • 2020 capital expenditure forecast of $53 million (versus $106 million budget). Forecast activities consist of:
    – $50 million dedicated to the Hawler license area: six wells including two wells targeting the Banan Cretaceous reservoir, one well targeting the Zey Gawra Tertiary reservoir, one well targeting the Demir Dagh Cretaceous reservoir, one well targeting the Banan Tertiary reservoir, and a completion of the previously suspended Ain Al Safra-2 well; a pipeline connecting the Banan field to the Hawler production facilities at the Demir Dagh field; storage tanks at the Hawler production facilities and pads, flowlines and infrastructure modifications needed to accommodate incremental drilling and production and to reduce operating costs
    – $3 million dedicated to the AGC Central license area including studies, technical support and license maintenance costs
  • The forecast reflects the deferment of planned drilling in the AGC license area and the deferment of two wells and certain facilities expenditures in the Hawler license area that were included in the budget.

Extension of AOG Loan and New Short Term Credit Facility:

  • AOG has agreed to extend the maturity date of the credit facility provided to Oryx Petroleum in 2015 from July 1, 2020 to July 1, 2021 in consideration for the issuance of 33,149,000 warrants to purchase common shares of Oryx Petroleum. The Toronto Stock Exchange (“TSX”) has reviewed the applicable transaction materials. It is anticipated that the TSX will conditionally approve the extension five business days after the issuance of this news release.
  • AOG has further agreed to provide the Corporation with a $5 million short term credit facility to provide access to working capital in the event of any further delays in receiving payments for oil sales. The TSX has reviewed the applicable transaction materials. It is anticipated that the TSX will conditionally approve the short term credit facility five business days after the issuance of this news release.

Liquidity Outlook:

  • The Corporation expects cash on hand as of December 31, 2019 and cash receipts from net revenues and export sales will allow it to fund its forecasted capital expenditures and operating and administrative costs into early 2021. Additional capital is expected to be required to be able to both meet any contingent consideration obligations that become payable and to fund drilling in the AGC Central license area now planned in 2021.

CEO’s Comment

Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio (pictured), stated:

“2019 was a good year for Oryx Petroleum. During the year we substantially increased production from the Hawler license area thanks to the successful completion of four new producing wells, increasing production from the Banan and Demir Dagh Cretaceous reservoirs. One of the four new wells was a sidetrack of the previously drilled Demir Dagh-3 well utilizing a horizontal well design that is integral to our development plans for the Cretaceous reservoirs in the Hawler area fields.

“In the AGC Central license area, that has best estimate unrisked gross (working interest) prospective oil resources of 2.2 billion barrels, we continue to prepare for exploration drilling. In 2019 we initiated and now have largely completed environmental impact and geohazard assessments with regards to our drilling plans. However, the timing of exploration drilling remains uncertain as we wait for Senegal and Guinea Bissau to agree on a renewal or extension of the accord governing the jointly-administered offshore area. We fully expect that an agreement will be reached but the timing is uncertain.

“Importantly, we completed our work in 2019 without incurring any Lost Time Injuries or having any significant releases or other adverse environmental incidents.

“Our 2020 capital program is focused primarily on the Hawler license area in the Kurdistan Region of Iraq where our program includes the drilling or re-entry of six wells and has been designed to allow us to increase production and to better define the remaining development potential of the four fields in the license. We have completed the sidetrack of the Banan-1 well in recent weeks and expect to spud a second well in the late Spring. In the AGC Central license area, our forecasted capital expenditures include costs related to studies and preparations for exploration drilling in 2021 assuming the AGC accord is renewed or extended in 2020.

“The combination of higher production and regular payments for oil sales in most of 2019 resulted in higher funds flow which together with cash on hand allowed us to fund our business in 2019 without seeking additional capital. We expect that cash on hand and cash receipts from net revenues will fund forecasted capital expenditures and operating and administrative costs into early 2021. AOG, our largest shareholder, has recently agreed to provide us with a short term credit facility to strengthen our liquidity position due to the recent delays in receiving cash payments for oil sales. Most of our capital expenditures are planned in the second half of 2020 and we are prepared to adjust our plans and consider other measures to strengthen our liquidity should recent market developments persist and should there be additional delays in cash receipts for oil sales.

“We look forward to implementing our plans safely in 2020 and to higher production in the Hawler license area while continuing to prepare for an exploration drilling program in the AGC Central license area.”

(Source: Oryx)

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Oryx: Successful Appraisal Well at Banan Field

Oryx Petroleum Announces Successful Appraisal Well at the Banan field

Oryx Petroleum has announced an update on the drilling of an appraisal well targeting the Tertiary reservoir at the Banan field in the Hawler license area in the Kurdistan Region of Iraq.

As at December 31, 2017, 26 million barrels (“bbl”) of unrisked gross (100%) best estimate (2C) contingent oil resources sub-classified as development unclarified (risked: 13 million bbl) were attributed to the Banan Tertiary reservoir by Netherland, Sewell & Associates, Inc. based on data obtained during the drilling of the Banan-2 well in 2014.

In late May and early June 2018, the Banan-3 well was drilled to a depth of approximately 500 metres and completed in open hole partially penetrating the Tertiary reservoir. Oil production from the well has been enabled by the use of a jet pump and has averaged approximately 1,500 bbl/d with 50 scf/stb of gas and no water over the last six days of uninterrupted production.

The stock tank oil has a gravity of 26 degrees API. The Corporation intends to continue the extended production test of the well with the objective of assessing the well’s performance, identifying options for increasing production and obtaining information to refine plans for additional appraisal of the Banan Tertiary reservoir.

Crude oil produced at the Banan field is currently hauled to the Hawler tanker terminal where it is offloaded and then pumped to the Demir Dagh storage system. It is blended with crude oil produced from other Hawler license area wells before being exported through the Kurdistan Region-Turkey Export Pipeline.

Based on results from the Banan-3 well, the Corporation expects that, in its reserves report for year-end December 31, 2018, oil reserves will be attributed to the Banan Tertiary reservoir.

The drilling of the Zey Gawra-3 well targeting the Cretaceous reservoir at the Zey Gawra field in the Hawler license area is in progress with results expected in the coming weeks. The Zey Gawra-3 well is the first well to be drilled in the Hawler license area utilising a horizontal well design.

The drilling or re-entry of wells targeting the Banan Cretaceous, Banan Tertiary and Demir Dagh Cretaceous reservoirs are planned, subject to performance of existing wells, in the second half of 2018.

Commenting today, Oryx Petroleum’s Chief Executive Officer, Vance Querio (pictured), stated:

“We are very pleased to have resumed operations at the Banan field with a successful appraisal well targeting the Tertiary reservoir. The average production rate achieved thus far is consistent with expectations and export of the oil is proceeding smoothly.

“Total average daily crude oil production from the Hawler license area is now approximately 5,300 barrels per day. The drilling of the Zey Gawra-3 well targeting the Cretaceous reservoir is in progress with results expected in the coming weeks. The drilling or re-entry of four more wells is planned for the second half of 2018 subject to the performance of existing wells.”

(Source: Oryx Petroleum)