CALGARY, Nov. 19, 2012 /CNW/ - Shona Energy Company, Inc. (TSXV: SHO) ("Shona"
or the "Company"), today announced its financial results and operational
highlights for the quarter ended September 30, 2012.
"We are very pleased with our third quarter results as our production
increased 22% and EBITDA increased 43% over the second quarter of this year.
The Letter of Intent with Altenesol and the Arrangement Agreement with Canacol
which were signed subsequent to quarter end are reflective of our key
initiatives to monetize our gas assets and pursue opportunities for mutually
beneficial business combinations," said James L. Payne, Chairman and CEO of
Shona Energy. "Shona is also planning a four- to five-well drilling program in
2013 on the Esperanza Block which is intended to establish significant
additional reserves that will allow the Altenesol contract to be expanded and
provide uncommitted reserves for new gas sales."
-- Entered into an Arrangement Agreement with Canacol Energy Ltd.
("Canacol") whereby Canacol will acquire 100% of the issued and
outstanding common and preferred shares of Shona in exchange
for a combination of common shares of Canacol and cash
-- Announced that its subsidiary, Geoproduction Oil and Gas
Company of Colombia, had signed a Letter of Intent ("LOI") with
Altenesol LNG Colombia, S.A.S. ("Altenesol") to supply natural
gas for Altenesol's Nataly I liquefied natural gas project
-- Averaged gas sales volumes of 16.2 million cubic feet per day
(Mmcf/d) in the third quarter of 2012
-- Generated US$5.3 million in EBITDA, or US$0.02 per share in the
third quarter of 2012
-- Completed acquisition and processing of 103 square kilometers
of 3-D seismic and 14 kilometers of 2-D seismic on the
Shona anticipates the following activities to occur in the remainder of 2012:
-- Shona Annual and Special Shareholder Meeting to be held on
December 14, 2012 to approve the Plan of Arrangement with
-- Closing of the Plan of Arrangement with Canacol on or around
December 20, 2012
-- Completion of a Definitive Agreement with Altenesol that will
provide for the sale of 17 million cubic feet per day of
natural gas for a period of ten years
Selected Financial and Operating Information
Natural gas revenues $ 7,905,615 $
Income (loss) from 3,845,618 (3,725,751)
Net income (loss) 2,368,943 (4,169,706)
Per share 0.01
(basic and diluted) (0.02)
Total assets 87,520,383 108,129,636
Long-Term Debt 20,549,529 16,211,423
Common - voting 232,675,283 157,536,577
Common - non-voting 77,231,263
Series A 10% 190,796 175,939
Warrants 40,145,993 40,145,993
Natural Gas - Mcf 1,492,894 190,764
Natural Gas - Mcf/d 16,227
Realized prices - $ $
$/Mcf 5.30 4.07
Natural Gas Revenue 5.30
Production Expense (0.30)
Operating Netback $ $
The increase in revenues in the third quarter of 2012 compared with 2011 is
attributable to higher sales volumes from the Nelson field which commenced on
December 1, 2011 and higher gas prices received from the gas sold from this
field. Higher gas sales price due to the redetermination of the La Guajira
price to $5.80 on February 1, 2012 and $6.04 on August 1, 2012 accounted for
$1.8 million of incremental natural gas revenue for the three months ended
September 30, 2012 compared to 2011. The increased volumes added $5.3
million of additional revenue in the third quarter of 2012 when compared to
the same period in 2011. Similarly, for the year to date period of 2012 higher
realized sales prices added $2.1 million and higher volumes added $16.6
million to revenues over the 2011 period.
The increase in production expense in the third quarter of 2012 compared with
2011 is due to increased production from the Nelson field, which commenced
sales in December 2011. The increased royalty expense in the third quarter of
2012 was due to higher sales revenues. Higher operating expense in the third
quarter of 2012 is due to the additional costs associated with the higher
sales volumes in 2012. The higher sales volumes resulted in an average
operating expense of $0.30 per Mcf and $0.39 per Mcf sold in the third quarter
and year to date period, respectively, of 2012 compared to $2.10 per Mcf and
$1.24 per Mcf for the same periods in 2011.
The average depletion, depreciation and amortization (DD&A) expense rate per
Mcf decreased from $2.21 per Mcf in the third quarter of 2011 to $0.88 per Mcf
in the third quarter of 2012 due to the commencement of sales from the Nelson
field on December 1, 2011, which has larger natural gas reserves, and
consequently a lower amortization expense rate per Mcf than the older
fields. This factor also contributed to the decreased average DD&A expense
rate per Mcf from $2.30 per Mcf in the year to date period of 2011 to $0.89
per Mcf in the same period of 2012.
General and administrative (G&A) expense for the three month period ended
September 30, 2012 decreased $2.0 million from the $3.5 million in the third
quarter of 2011 to $1.5 million in 2012, primarily due to higher legal,
consulting and other expenses in 2011 related to the reverse takeover
transaction. G&A expense for the nine months ended September 30, 2012 of
$4.4 million was $5.1 million lower than expense for the same 2011 period for
the same reasons.
At September 30, 2012, Shona had unrestricted cash of $14.6 million and
current working capital of $17.7 million. The Company's total debt at
September 30, 2012 of $22.1 million consisted principally of the debt portion
of the Preferred shares ($19.5 million) and the balance of the new credit
facility ($2.3 million) and the remaining balance on the loan for a seismic
contract ($0.3 million).
Shona is an international oil and natural gas exploration, development and
production company focusing on South America, specifically Colombia and Peru.
The Company's assets currently include interests in the Company-operated
Esperanza block located in Colombia's Lower Magdalena Basin, the non-operated
Serrania, Los Picachos and Macaya Blocks in Colombia's Caguan Basin, and the
non-operated Block 102 in Peru's Maranon Basin. The common shares of the
Company trade on the TSX Venture Exchange under the stock symbol "SHO". More
information on the Company is available at www.shonaenergy.com.
Certain information included in this press release constitutes forward-looking
information under applicable securities legislation. Such forward-looking
information is provided for the purpose of providing information about
management's current expectations and plans relating to the future. Readers
are cautioned that reliance on such information may not be appropriate for
other purposes, such as making investment decisions. Forward-looking
information typically contains statements with words such as "anticipate",
"believe", "expect", "plan", "intend", "estimate", "propose", "project" or
similar words suggesting future outcomes or statements regarding an outlook.
Forward-looking information in this press release may include, but is not
limited to, expectations regarding future oil and gas production from the
Company's properties, the production capacity of the Company's properties, the
anticipated use of seismic data and exploration and development plans on
properties in which the Company holds an interest. Forward-looking
information is based on a number of factors and assumptions which have been
used to develop such information but which may prove to be incorrect.
Although Shona believes that the expectations reflected in such
forward-looking information is reasonable, undue reliance should not be placed
on forward-looking information because Shona can give no assurance that such
expectations will prove to be correct. In addition to other factors and
assumptions which may be identified in this press release, assumptions have
been made regarding and are implicit in, among other things: the ability of
Shona to complete transactions described in this press release, the timely
receipt of any required regulatory approvals, the performance of existing
wells and success obtained in drilling new wells, anticipated expenses, cash
flow and capital expenditures, the application of regulatory and royalty
regimes and prevailing commodity prices and economic conditions. Readers are
cautioned that the foregoing list is not exhaustive of all factors and
assumptions which have been used. Shona undertakes no obligation to update
forward-looking statements if circumstances or management's estimates or
opinions should change, unless required by law. Actual results could differ
materially from those currently anticipated due to a number of factors and
risks. These include, but are not limited to, risks associated with the oil
and gas industry in general (e.g., operational risks in development,
exploration and production; delays or changes in plans with respect to
exploration or development projects or capital expenditures; the uncertainty
of reserve estimates; the uncertainty of estimates and projections relating to
production, costs and expenses, and health, safety and environmental risks),
commodity price and exchange rate fluctuations and uncertainties resulting
from potential delays or changes in plans with respect to exploration or
development projects or capital expenditures.
All dollar references in this press release are to U.S. Dollars.
Neither the 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 press release.
please contact either of the following individuals:
David Gian, Treasurer & Investor Relations Shona Energy Company, Inc.
Houston, Texas 713-622-8809
Shetal Mentlewski, VP Admin & Legal Shona Energy Company, Inc. Houston, Texas
SOURCE: Shona Energy Company, Inc.
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-0- Nov/19/2012 22:00 GMT
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