TORONTO, ONTARIO--(Marketwired - Nov. 12, 2013) - Candax Energy Inc. ("Candax" or the "Company") (TSX:CAX), a company focused on mature oil field development in Tunisia, today announced financial and operating results for the quarter ended September 30, 2013. The unaudited financial statements, notes and MD&A pertaining to the period are available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and by visiting www.candax.com. All monetary figures reported herein are U.S. dollars unless otherwise stated.
Selected Operational & Financial Highlights
- Production, net of royalties, for the quarter ended September 30, 2013 was 368 bopd compared to 443 bopd for the same period last year. The decrease was a result of the loss of production due to a workover campaign in the Ezzaouia field, which was partially offset by the continued success of the gas cycling production process on the El Bibane asset;
- A workover campaign is currently in progress to convert a number of wells from jet pumping extraction methodology to beam pump methodology. Successful workovers on EZZ-17 and EZZ-1 have been completed, resulting in post workover production rates of up to 120 bopd and 275 bopd respectively for each well;
- As previously announced, Candax entered into an agreement with Oyster Oil & Gas Limited to sell its 10% interest in Madagascar Block 1101. The transaction closed in the third quarter;
- Revenue for the quarter ended June 30, 2013 was $nil compared to $nil for the same period last year. The lack of revenue was due to the seasonal time interval between oil liftings, which resulted in no oil being transported to market during the third quarter. The next lifting and resultant revenue recognition is scheduled for November, 2013;
- The Company reported a loss for the quarter ended June 30, 2013 of $2.9 million compared to a loss of $3.4 million for the same period last year. The loss for both periods was reflective of the fact no revenue was recognized for either period;
- As at September 30, 2013, Candax held cash and cash equivalents of $6.9 million; and
- As at September 30, 2013, Candax had loans and borrowings of $36.6 million with a current-portion of $3.3 million.
"Our third quarter was highlighted by our ongoing work program designed to boost Candax's overall production and reserves over the near-term," said Benoit Debray, Chairman and CEO of Candax. "After successful workovers on the EZZ-17 and EZZ-1 wells, we are encouraged by the production rates generated by the beam pump methodology of extraction. Currently, we're in the midst of a workover on Belli, which has produced initial positive results. Once the rig is demobilized from Belli, it will return to the Ezzaouia field to complete the workover campaign. In our El Bibane field, we expect delivery of a second compressor by the end of the year, which will help improve production and provide a back up to the current compressor. These initial steps are the start of our broader plan to solidify a base of cash-yielding assets that are able to fund future exploration programs."
Review of Key Operations
During 2012, Candax consolidated its working interests on its main producing assets. As a result of these transactions, Candax now has 100% ownership of El Bibane, 100% ownership of Robbana and 45% ownership of Ezzaouia, on which Candax has partnered with ETAP, the Tunisian state oil and gas company. The streamlining of the Company's ownership interests allows Candax to develop its fields according to its own vision of their potential. El Bibane and Robbana are operated from Tunis by Ecumed, a 100% subsidiary of Candax. Ezzaouia is operated from Tunis by Maretap, a 50/50 joint venture between ETAP and Ecumed.
The encouraging results of the gas-cycling pilot program, which commenced in May 2012, significantly increased production when compared with the same quarter last year. The success of this program has subsequently enabled the design and planning of the next phase, which will be executed in two steps. The first step will be to increase the gas recompression facilities at the El Bibane onshore Central Processing Facilities (CPF) in order to facilitate an increase of condensate production from the field. A second gas compressor is scheduled for delivery in the fourth quarter of 2013. Production during the first three quarters of 2013 averaged 236 bopd.
The second step will be to investigate, with the Company's Tunisian partners, the possibility of selling 5 to 10 mmscf/d of natural gas to local buyers. Management anticipates that ongoing gas sales could contribute to optimum overall resource recovery by partially liberating dissolved gas present in the remains of the oil rim.
During the second quarter, production from the Ezzaouia asset decreased to 123 bopd (net) from 243 bopd during the same period last year. This was a result of halted production from the EZZ-2, EZZ-9, EZZ-17 and EZZ-1 wells. The Company completed remedial workovers on EZZ-17 and EZZ-1 during the third quarter and is expected to complete workovers on EZZ-2 and EZZ-9 in the coming months. Management is also considering adding the EZZ-18 well to the workover campaign, as it has displayed declining production over the past several months.
Over the coming months, Maretap, expects to continue to bolster its workforce and expertise in order to optimize total Ezzaouia field production. Additionally, Maretap also plans to continue to perform geological and geophysical (G&G) studies within the field, which could confirm significant potential for recoverable reserves. Candax views its involvement in Maretap as a strategic benefit intended to gain access to high quality resources and expertise in Tunisia.
After a 2012 review of Belli's historical performance that was conducted by Maretap, a workover was agreed upon for the BEL-1 well in order to reopen the field and test the Bou Dabbous formation. The well is currently accessing the water-bearing Abiod formation. The workover is in progress and scheduled to be completed by the end of November, 2013. The BEL-1 workover will allow the Company to test the Bou Dabbous formation to determine if possible recharging of the reservoir has occurred. Assuming positive results, a three-month extended production test will be performed prior to additional G&G studies.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION AND STATEMENTS
This press release includes "forward looking statements", within the meaning of applicable securities legislation, which are based on the opinions and estimates of Management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward looking statements.
Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Such risks and uncertainties include, but are not limited to, risks associated with the oil and gas industry (including operational risks in exploration development 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 in relation to production, costs and expenses; the uncertainty surrounding the ability of Candax Energy Inc. to obtain all permits, consents or authorizations required for its operations and activities; and health safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations, the ability of Candax Energy Inc. to fund the capital and operating expenses necessary to achieve the business objectives of Candax Energy Inc., the uncertainty associated with commercial negotiations and negotiating with foreign governments and risks associated with international business activities, as well as those risks described in public disclosure documents filed by Candax Energy Inc. Due to the risks, uncertainties and assumptions inherent in forward-looking statements, prospective investors in securities of Candax Energy Inc. should not place undue reliance on these forward-looking statements. Statements in relation to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future.
Candax is an international energy company with offices in Toronto and Tunis. The Candax group is engaged in exploration and the production of oil and gas in Tunisia and holds a royalty interest in an exploration permit in Madagascar.