Niko Resources Ltd. Provides Updates

Niko Resources Ltd. Provides Updates 
CALGARY, ALBERTA -- (Marketwire) -- 10/19/12 -- Niko Resources Ltd.
("Niko" or the "Company") (TSX:NKO), is pleased to provide the
following updates. 
Update on the Quarter Ended September 30, 2012 
The Company provides an operational and corporate update on the
quarter ended September 30, 2012 (the "current quarter") compared to
the quarter ended June 30, 2012 (the "prior quarter"). Financial
information for the current quarter is based on currently available
information and is subject to revision in connection with the
finalization of actual results scheduled to be reported on November
13, 2012. 
Total average sales volumes for the current quarter are expected to
be 173 MMcfe/d compared to 189 MMcfe/d for the prior quarter,
primarily due to anticipated natural declines in the D6 Block in
India. 
Oil and gas revenue for the current quarter is expected to be $58
million compared to $55 million for the prior quarter. In the prior
quarter, Niko recorded an adjustment of $6 million of additional
profit petroleum expense for the Hazira field, thereby reducing oil
and gas revenue for the period.  
Production and operating expenses and general and administrative
expenses for the current quarter are expected to be consistent with
the prior quarter. 
Capital additions and expensed exploration spending, net of proceeds
of farm-outs and other arrangements, is expected to be between $48
million and $53 million for the current quarter. Spending related
primarily to exploration wells, seismic, other exploration projects,
and branch office costs in Indonesia and Trinidad and Tobago. In
addition, the Company recorded proceeds of farm-outs of an estimated
$9 million, received $36 million from a former partner in exchange
for assuming the partner's obligations for future drilling
commitments and recorded costs related to pre-drilling activities and
drilling inventory to prepare for the upcoming multi-year drilling
campaign in Indonesia using the Ocean Monarch drilling rig. 
Exploration and evaluation expenses are expected to be between $50
million and $55 million for the current quarter, including $35
million to $40 million related to unsuccessful exploration wells.
Exploration and evaluation expenses were $36 million in the prior
quarter. 
Cash and cash equivalents at September 30, 2012 totalled $91 million,
compared to $50 million at June 30, 2012. Amounts outstanding under
our credit facility remained at $41 million throughout the current
quarter, consistent with the June 30, 2012 balance. 
Update on Full Year Guidance 
Production for the full year ended March 31, 2013 is now forecast to
be 168 MMcfe/d, four percent lower than the Company's previous
guidance of 175 MMcfe/d, due to temporary mechanical constraints in
Block 9 in Bangladesh. This decrease is expected to reduce oil and
gas revenue by approximately $2 million for the full year ended March
31, 2013.  
The Company's guidance on its capital program for the year ended
March 31, 2013, net of proceeds of negotiated farm-outs and other
arrangements, has been revised from $210 million to $170 million, due
primarily to deferrals of development spending. In addition, Niko has
funded and will continue to fund certain drilling inventory and other
costs related to its drilling program in future years. Total spending
for the year is expected to be approximately $205 million. The
Company is also currently in negotiations with various third parties
regarding further farm-outs and other arrangements that have the
potential to provide additional proceeds of $135 million during the
year ended March 31, 2013.  
Update on Convertible Debenture maturing on December 30, 2012 
The Company intends to make a prepayment to reduce the amount
outstanding on its convertible debenture from Cdn$310 million to
Cdn$220 million utilizing cash on hand and advances under its credit
facility.  
Niko plans to satisfy the remaining principal amount owing on the
convertible debentures through a combination of any of: 


 
i.   cash on hand, 
ii.  cash proceeds from the sales of assets, farm-outs or other
     arrangements, 
iii. cash proceeds from an offering of high yield debt, 
iv.  cash proceeds from the sale of its equity securities, or 
v.   issuance of common shares in accordance with the terms of the
     convertible debenture agreement. 

 
Update on Exploration Drilling Activities 
Indonesia 
Niko has now entered into the most significant exploration drilling
program in its corporate history with the Ocean Monarch deepwater
semi-submersible drilling rig spudding the Jayarani-1 well in the
Lhokseumawe block in Indonesia on October 10, 2012. This rig has been
contracted for a four-year term with an option for one additional
year and will be utilized to drill numerous prospects in the
Company's extensive exploration portfolio in Indonesia. Results from
the Jayarani-1 well are expected within 30 to 60 days after which the
rig is expected to move across Indonesia to commence drilling of the
Ajek-1 prospect in the Kofiau block, followed by the Cikar-1 prospect
in the West Papua IV block.  
Trinidad and Tobago 
Drilling of the Maestro-1 well in Block 2ab in Trinidad is continuing
with the well currently at 3,753 feet towards a target well depth of
8,307 feet. 
Update on D6 Block Gas Pricing 
According to press reports, the Government of India ("GOI") has
decided in principle that the price of gas from the D6 Block can be
raised. The press reported that a recent high-level meeting convened
at the Prime Minister's Office decided that Reliance, the operator of
the D6 Block, can begin negotiations with the petroleum ministry on
fresh pricing for the gas currently being sold at $4.20/MMBtu. The
press also reported that the government plans to initiate the 10th
round of auction under the New Exploration Licensing Policy regime
after making changes to the existing policy to attract more domestic
and foreign investors. "We look forward to a more investor-friendly
regime before the next round both for investment and from the point
of pricing," oil minister S Jaipal Reddy said. "We have referred the
issue to a committee headed by C Rangarajan," Reddy said. The
committee is likely to submit its report on October 31st. 
Niko believes that gas market demand fundamentals are strong in
India, where gas markets have historically been supply-constrained.
Despite increases in LNG imports and domestic production, the gap
between supply and demand in India has remained high and the Company
believes the gap could grow in the future. In June 2012, Reliance
submitted to the GOI for approval a proposal for a new crude
oil-linked pricing formula to be used in new sales contracts for the
period commencing April 1, 2014. If the formula is approved, it would
result in a gas price of slightly under $13.00/MMBtu based on current
crude oil price levels, and apply to current and future developments
in the D6 Block.  
The revised field development plan for the D1 D3 gas fields submitted
in August 2012 to the Management Committee of the D6 Block estimates
that production from the D1 D3 fields will extend into the next
decade, consistent with the Company's estimates of proved plus
probable reserves evaluated by Ryder Scott Company as at March 31,
2012. 
October 19, 2012 
Forward-Looking Information  
Certain statements in this press release constitute forward-looking
information. Specifically, this press release contains forward
looking information relating to forecast fiscal 2013 production and
capital spending, additional sources of funding from farm-outs and
other arrangements, plans to prepay a portion of the outstanding
convertible debentures prior to maturity, financing plans with
respect to the retirement of the remaining outstanding debentures,
anticipated exploration activities in Indonesia and Trinidad and
Tobago, anticipated increases in gas prices applicable to current and
future developments in the D6 Block and the projected life of the
reserves in the D6 Block. In addition, statements regarding financial
results are estimates and are subject to revision based on the
finalization of the quarterly financial statements that will be
issued November 13, 2012. These forward looking statements are based
on certain key expectations and assumptions, including management's
estimates of future commodity sales prices, estimates of future
sales, production and deliveries, estimated amounts and timing of
capital expenditures, anticipated operating costs, royalty rates,
cash flows, transportation plans and capacity, anticipated access to
infrastructure, or other expectations regarding future events.  
The reader is cautioned that the assumptions used in the preparation
of such information, although considered reasonable at the time of
preparation, may prove to be incorrect. Actual results achieved
during the forecast period may vary from the information provided
herein as a result of numerous known and unknown risks and
uncertainties and other factors and such variations may be material.
Such factors include, but are not limited to: general economic,
market and business conditions; industry capacity; competitive action
by other companies; fluctuations in oil and gas prices; the results
of exploration and development drilling and related activities; the
uncertainty of estimates and projections relating to production,
costs and expenses; uncertainties as to the availability and cost of
financing; fluctuations in currency exchange rates; the imprecision
in reserve estimates; risks associated with oil and gas operations,
such as operational risks in exploring for, developing and producing
crude oil and natural gas; risks and uncertainties involving geology
of oil and gas deposits; the weather in our area of operations; the
ability of suppliers to meet commitments; changes in environmental
and other regulations; actions by governmental authorities including
changes in laws and increases in taxes; decisions or approvals of
judicial or administrative tribunals; risks in conducting foreign
operations (for example, political and fiscal instability or the
possibility of civil unrest or military action); the effect of acts
of, or actions against international terrorism; uncertainties
associated with negotiations with commercial parties; risks and
uncertainties associated with the debt and equity capital markets;
and other factors, many of which are beyond our control. Niko makes
no representation that the actual results achieved during the
forecast period will be the same in whole or in part as those
forecast.
Contacts:
Niko Resources Ltd.
Edward Sampson
Chairman of the Board, President & CEO
(403) 262-1020 
Niko Resources Ltd.
Murray Hesje
VP Finance & CFO
(403) 262-1020
www.nikoresources.com
 
 
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